Supreme Court Upholds Landlord’s Right to Evict Tenant for Business Needs: Deepak Tandon vs. Rajesh Kumar Gupta (2019)

Introduction

Date of the Judgment: 07 February 2019
Citation: (2019) INSC 123
Judges: Abhay Manohar Sapre, J., Dinesh Maheshwari, J.
Can a landlord evict a tenant from a property if the tenant uses a portion of it for residence and the landlord needs it for business? The Supreme Court of India addressed this question in a recent case, clarifying the scope of Section 21(1)(a) of the U.P. Urban Buildings (Regulation of Letting, Rent and Eviction) Act, 1972. The core issue was whether a landlord could seek eviction for business purposes when the tenant used part of the premises for residential purposes. The judgment was delivered by a two-judge bench consisting of Justice Abhay Manohar Sapre and Justice Dinesh Maheshwari, with Justice Sapre authoring the opinion.

Case Background

The appellants, Deepak Tandon and another, are the owners and landlords of House No. 18/15, Hastings Road (1/5 Nyay Marg), Tandon Quarters, Allahabad, referred to as the “suit house.” They had rented out the suit house to the respondent, Rajesh Kumar Gupta, on a monthly rent basis. The appellants filed an application before the Prescribed Authority under Section 21(1)(a) of the U.P. Urban Buildings (Regulation of Letting, Rent and Eviction) Act, 1972, seeking the respondent’s eviction. The ground for eviction was the appellants’ bona fide need to use the suit house for their business operations. The appellants stated that they were currently conducting their business in a rented premises located about 50-60 meters from the suit house and had no other suitable place of their own in the city to carry on their business. The respondent, in his reply, admitted that the appellants were operating their business at the location they mentioned but claimed they were not paying rent there because the owners were their relatives. The respondent also contended that the appellants owned another vacant shop in the city, which they could use for their business.

Timeline

Course of Proceedings

The Prescribed Authority allowed the eviction application on 10.01.2013, holding that a landlord-tenant relationship existed, the appellants had a bona fide need for the premises for their business, and the alternative space suggested by the respondent was insufficient. The District Judge dismissed the respondent’s appeal on 30.05.2014, affirming the Prescribed Authority’s order. The High Court, however, allowed the respondent’s writ appeal, setting aside the orders of the lower courts and dismissing the appellants’ application. The High Court held that the application under Section 21(1)(a) of the Act, 1972 was not maintainable because the tenancy was primarily for residential purposes, whereas the eviction was sought for commercial needs. The High Court did not examine the merits of the findings of the lower courts. The High Court also dismissed the review application filed by the appellants.

Legal Framework

The case revolves around Section 21(1)(a) of the U.P. Urban Buildings (Regulation of Letting, Rent and Eviction) Act, 1972, which allows a landlord to seek eviction of a tenant if the building is required bona fide for occupation by the landlord or any member of his family or for any person for whose benefit the building is held. The High Court interpreted the proviso to this section to mean that if the tenancy was essentially for residential purposes, the landlord could not seek eviction for commercial purposes. The Supreme Court, however, clarified that if the tenancy is for a composite purpose, i.e., both residential and commercial, the landlord can seek eviction for either residential or commercial needs.

The relevant provision is:

“Section 21(1)(a) of the U.P. Urban Buildings (Regulation of Letting, Rent and Eviction) Act, 1972: A landlord may apply to the Prescribed Authority for an order of eviction of a tenant from a building let out to him, if—(a) the building is bona fide required either in its existing form or after demolition and new construction by the landlord for occupation by himself or any member of his family, or for any person for whose benefit the building is held…”

Arguments

Appellants’ (Landlords’) Arguments:

• The appellants argued that they had a genuine need for the suit house to conduct their business operations.
• They contended that they were currently operating their business from a rented place and had no other suitable place of their own.
• They asserted that the High Court erred in dismissing their application based on a plea of maintainability, which was not raised by the respondent in the lower courts.
• They argued that the High Court should not have interfered with the concurrent findings of fact by the lower courts, which had ruled in their favor.

Respondent’s (Tenant’s) Arguments:

• The respondent argued that the appellants were not paying rent for the place where they were currently conducting their business.
• He contended that the appellants owned another vacant shop in the city, which they could use for their business.
• The respondent argued that the tenancy was primarily for residential purposes, and thus, the eviction application for commercial purposes was not maintainable, as per the proviso to Section 21 of the Act.

Issues Framed by the Supreme Court

The Supreme Court framed the following issue for consideration:
✓ Whether the Single Judge of the High Court was justified in allowing the respondent’s writ appeal and dismissing the appellants’ application filed under Section 21(1)(a) of the Act, 1972 as not maintainable.

Treatment of the Issue by the Court

Authorities

The Supreme Court did not cite any specific cases or books in this judgment. However, the court considered the following legal provision:

• Section 21(1)(a) of the U.P. Urban Buildings (Regulation of Letting, Rent and Eviction) Act, 1972: This provision allows a landlord to seek eviction of a tenant if the building is required bona fide for occupation by the landlord or any member of his family, or for any person for whose benefit the building is held.

Judgment

How each submission made by the Parties was treated by the Court?

How each authority was viewed by the Court?

• Section 21(1)(a) of the U.P. Urban Buildings (Regulation of Letting, Rent and Eviction) Act, 1972: The Court interpreted this provision to allow eviction for either residential or commercial needs if the tenancy is for a composite purpose.

What weighed in the mind of the Court?

The Supreme Court was primarily influenced by the fact that the plea of maintainability was raised for the first time in the High Court, after not being raised in the lower courts. The High Court should not have interfered with the concurrent findings of fact by the lower courts, which had ruled in favor of the appellants. The Court also noted that the question of whether the tenancy was solely for residential purposes was a mixed question of law and fact, requiring evidence, and should not have been decided by the High Court based on pleadings alone. The Supreme Court also clarified that if a tenancy is for a composite purpose, the landlord can seek eviction for either residential or commercial needs.

The Court’s reasoning can be summarized as follows:

“First, it is not in dispute that the respondent (opposite party) had not raised the plea of maintainability of the appellants’ application under Section 21(1)(a) of the Act, 1972 in his written statement before the Prescribed Authority.”

“Second, since the respondent failed to raise the plea of maintainability, the Prescribed Authority rightly did not decide this question either way.”

“Fifth, it is more so when such plea is founded on factual pleadings and requires evidence to prove, i.e., it is a mixed question of law and fact and not pure jurisdictional legal issue requiring no facts to probe.”

Key Takeaways

• A plea of maintainability must be raised in the initial stages of litigation and cannot be raised for the first time in the High Court.
• The High Court should not interfere with concurrent findings of fact by lower courts unless there is a clear error of law.
• If a tenancy is for a composite purpose (both residential and commercial), a landlord can seek eviction for either residential or commercial needs.
• The question of whether a tenancy is solely for residential purposes is a mixed question of law and fact and requires evidence.

Directions

The Supreme Court directed the respondent to vacate the suit house within three months, subject to furnishing an undertaking in the Court and paying all arrears of rent, along with three months’ rent in advance for use and occupation.

Specific Amendments Analysis

There is no specific discussion of amendments in this judgment.

Development of Law

The ratio decidendi of this case is that if a tenancy is for a composite purpose, the landlord can seek eviction for either residential or commercial needs. This clarifies the interpretation of Section 21(1)(a) of the U.P. Urban Buildings (Regulation of Letting, Rent and Eviction) Act, 1972, and ensures that landlords are not unduly restricted in seeking eviction when they have a genuine need for their property.

Conclusion

The Supreme Court allowed the appeals, setting aside the High Court’s order and restoring the orders of the Prescribed Authority and the Appellate Court. The Court held that the High Court erred in dismissing the appellants’ application on the ground of maintainability, as this plea was not raised in the lower courts and was a mixed question of law and fact. The Court clarified that if a tenancy is for a composite purpose, the landlord can seek eviction for either residential or commercial needs.