R. Sambasivam vs Thangavelu Dhanabagyam

S.S. Subramani, J.—Tenant in R.C.O.P. 5 of 1995 on the file of Rent Controller, Mannargudi is the revision petitioner. Landlords filed

application for eviction of tenant on the ground of default in payment of rent and also in the ground that they need scheduled building for their own

occupation, i.e., for the occupation of their daughter and son-in-law, who are dependants on them. Material averments in the eviction petition are

thus.

Scheduled building originally belonged to one Abdul Subban and Abdul Samad. Both of them leased out the property to respondent. As per

registered sale deed dated 12.10.1992 (Ex. P1) Abdul Subban and Abdul Samed sold the properties to petitioner. Adjoining property also

belongs to very same persons which was occupied by one Rasu Chettiar. Sale deed dated 12.10.1992 covers that portion also. After purchase,

Rasu Chettiar vacated the premises and landlords obtained possession. According to landlords, they purchased the property only to accommodate

their daughter and son in law who are residing in a rented building at Mannargudi and they wanted this building to accommodate them. It is also

said that whenever they come to India, they also want to occupy the building along with their daughter. After Ex. P1 was executed, the fact was

informed to tenant as per registered notice dated 26.8.1993 calling upon tenant to attorn the tenancy, According to landlord after they purchased

the property, rent was not paid and in spite of notice dated 26.8.1993, no rent was paid by tenant. Rate of rent according to landlords in Rs. 650/-

and on the date of eviction petition more than Rs. 17,550/- was due towards rent arrears. Eviction petition was therefore filed for eviction of

tenant.

In the counter statement filed by tenant he admitted that he became tenant under Abdul Subban and Abdul Samad. But according to him, rate of

rent is not Rs. 650, but 250/-. He further said that Abdul Samad had entered into an agreement for sale with one Swaminathan and at the request

of Abdul Samad, rent was paid to Swaminathan. He also alleged that after receipt of notice, he used to deposit rent in court. According to him, he

is not defaulter and admitted rent is being paid. Regarding claim for eviction for bona fide own occupation, it is not answered in the counter

statement.

Rent Controller took oral and documentary evidence. Exs. P1 to P3 were marked on the side of landlords and Exs.R1 were marked on the side

of tenant. Oral evidence consists of PW. 1 and 2 RWs. 1 and 2.

After evaluating entire evidence. Rent Controller held that tenant is defaulter in payment of rent and said default is wilful. Rent Controller took

the view that there is no explanation offered by tenant for not paying rent even after Ex. P2 notice. It further held that tenant was paying rent to

Swaminathan also cannot be believed even though Swaminathan has been examined as RW. 2. Rent Controller believed the evidence of P.W. 2

owner of the property and held that rate of rent is only Rs. 650. Rent Controller also found that landlords require building for their own occupation

i.e., for occupation of their daughter and son-in-law.

Aggrieved by the order, tenant preferred R.C.A. 1 of 1997 on the file of Rent Control Appellate Authority, Nagapattinam. Appellate Authority

also reconsidered the entire evidence and dismissed the appeal and allowed eviction giving two months time to vacate the premises. It is against the

concurrent findings of authorities below, tenant has preferred this revision u/s 25 of the Rent Control Act.

I heard the learned Counsel on both sides.

One of the contentions that was raised by learned Counsel for petitioner is that eviction petition itself is not maintainable and should have been

thrown out at the threshold since the person who has filed the eviction petition is not competent to file the same. The argument is that landlords are

represented by power agent Kalaiselvi and learned counsel submitted that power of attorney is not produced in the court.

I do not find any merit in the said submission. This contention was not taken at the earliest stage of proceedings. Even in the counter, revision

petitioner has no case that PW 1 is not power agent of landlords. Apart from the same, at the time when eviction petition was filed, power agent

filed power of attorney and also moved an application seeking permission to act as power agent and to prosecute the petitioner. An order was

passed on 28.3.1995 permitting power of attorney to act as power agent of landlords and prosecute the application. The order of Rent Controller

is dated 28.3.1995 and the same was not challenged by tenant. P.W. 1 also spoken in her evidence that she is power agent. She was also not

cross-examined at that time. Present contention in revision therefore cannot be entertained and on merits also the contention cannot stand.

An argument was taken by learned counsel that these landlords have purchased the property violating the provisions of Section 31 of Foreign

Exchange Regulation Act and therefore they cannot seek eviction. This contention also was not raised at the earliest stage but being a question of

law, this also could be answered. Section 31 of the Foreign Exchange Regulation Act reads thus.

Sec. 31 (1) No person who is not a citizen of India and no company other than a banking company which is not incorporated under any law in

force in India shall except with the previous general or special permission of the Reserve Bank, acquire or hold or transfer or dispose of by sale,

mortgage, lease, gift, settlement or otherwise any immovable property situate in India:

Provided that nothing in this sub-section shall apply to the acquisition or transfer of any such immovable property by way of lease for a period not

exceeding five years.

(2) Any person or company referred to in sub-section (1) and requiring a special permission under that sub-section for acquiring, or holding or

transferring, or disposing of, by sale, mortgage, lease, gift, settlement or otherwise any immovable property situate in India may make an

application to the Reserve Bank in such form and containing such particulars as may be specified by the Reserve Bank.

(3) On receipt of an application under sub-section (2), the Reserve Bank may, after making such inquiry as it deems fit, either grant or refuse to

grant the permission applied for. Provided that no permission shall be refused unless the applicant has been given a reasonable opportunity for

making a representation in the matter.

Provided further that if before the expiry of a period of ninety days from the date on which the application was received by the Reserve Bank, the

Reserve Bank does not communicate to the applicant that the permission on applied for has been refused, it shall be presumed that the Reserve

Bank has granted such permission.

Explanation-In computing the period of ninety days for the purposes of the second proviso, the period, if any taken by the Reserve Bank for giving

an opportunity to the applicant for making a representation under the first proviso shall be excluded. (4) Every person and company referred to in

sub-section (1) holding at the commencement of this Act any immovable property situate in India shall, before the expiry of a period of ninety days

from such commencement or such further period as the Reserve Bank may allow in this behalf, make a declaration in such form as may be

specified by the Reserve Bank regarding the immovable property or properties held by such person or company.

From the objects and reasons for enacting the provision it is clear that the clause is incorporated with a view to reduce the scope of drainage of

foreign exchange by way of income from such property and also contingent, exchange liability by way of repatriation of capital which would arise

from capital appreciation.

Before going to the scope of Section 31 of Foreign Exchange Regulation Act, it is better to consider what is the effect of transfer by lessor to a

third party. Section 109 of Transfer of Property Act provide for the same. After extracting the section the Honourable Supreme Court in the

decision reported in Sk. Sattar Sk. Mohd. Choudhari Vs. Gundappa AMabadas Bukate, in paragraphs 17 to 19 considered the effect of Section

109 of TP Act and held thus.

This section is based on the maxim, qui in jus oininiumve alierius succedit jure ejus uti debet, that is to say, rights and liabilities attached to the

property (arising out of possession and control of that property) pass with the property.

A bare reading of the first part of the section indicates that if the property is either transferred as a whole or any part thereof alone is

transferred, the transferee comes to possess all the rights of the lessor.

The proviso appended to the first part of the section contemplates that before a tenant can be made liable to pay rent to the transferee, he must

have knowledge of the transfer either through the lessor or by his transferee by a notice. Requirement of knowledge of transfer in this section as

also in Sections 37 to 50 is based on the general principle of law set out by Willes, J. in De Nicholas v. Saunders (1870) 22 LT 661 : 18 W.R

1106 : LR 5 CP 589) that if a person fulfils his obligations without notice of the rights of a third party, his obligation is treated as discharged.

Requirement of knowledge and the communication of notice regarding transfer of the part or the whole of the property in occupation of a tenant is

a condition precedent for creating a liability in the tenant to pay rent to the transferee or the assignee of the demised premises, but it does not have

the effect of postponing the assignment or transfer of property till the receipt of the notice. The title passes to the assignees immediately on the

execution of the deed of transfer or assignment.

On the basis of Section 109 along with the interpretation given by Supreme Court, it is clear that title passes to purchase; immediately after the sale

deed is executed.

Now, I will come to the effect of Section 31 of Foreign Exchange Regulation Act. In ILR 1987 (2) P&H 96 (Piara Singh v. Jagtar Singh), very

same question came for consideration. In paras 10 and 11 of the Judgment it is held thus,

I have given my thought consideration to the argument but do not find any merit in it. In order to decide the matter, it is necessary to read

relevant portion of the said sub-section (1) of Section 31 of the Act which is as follows:

Sec. 31(1). ""No person who is not a citizen of India and no company (other than a banking company) which is not incorporated under any law in

force in India or in which the non-resident interest is more than forty percent, shall, except with the previous general or special permission of the

Reserve Bank, acquire or hold or transfer or dispose of by sale, mortgage, lease, gift, settlement or otherwise any immovable property situate in

India:

Provided that nothing in this sub-section shall apply to the acquisition or transfer of any such immovable property by way of lease for a period not

exceeding five years.

It is true that the section provides that without the previous permission of the Reserve Bank, a person who is not a citizen of India, cannot

acquire property, but it does not provide that if some one purchases any property the title therein does not pass to him. What the Act provides is

that if a person contravenes Section 31 and some other sections, he can be penalized u/s 50 and can also be prosecuted u/s 56. However, there is

no provision in the Act which makes transaction void or says that no title in the property passes to the purchaser in case there is contravention of

the provision of sub-sections (1) of Section 31, Section 31, Section 63 ""contains a proviso regarding confiscation of certain properties but it does

not contain any provision for confiscation if there is breach of the provisions of sub-section (1) of Section 31. Therefore, the property purchased in

contravention of sub-section (1) of Section 31 is also not liable to confiscation. In the circumstances, it cannot be held that the plaintiffs are not

entitled to obtain possession of the property or recover damages for its use and occupation.

From the above decision also it is clear that landlords herein have acquired valid title and when they became landlords, entitled to receive rent from

the tenant. Section 31 of Foreign Exchange Regulation Act is not having the effect of nullifying the transfer and the purchasers are also getting good

title to the property.

Further question arises for consideration is whether the finding of authorities below are liable to be interfered with u/s 25 of the Rent Control

Act when tenant is wilful defaulter and landlord also requires building for their own occupation. Regarding this fact, the decision is against tenant in

both courts.

Regarding the claim for eviction on the ground of bona fide own occupation, I have already said that this claim has not been disputed by tenant

in the counter statement. Landlords have said that their daughter has no building of her own and daughter and son-in-law are residing in a rented

building at Manargudi and it is for their requirement property has been purchased. This allegation is not denied in the counter. PW 1 also spoke

about their requirements. When landlord want that their daughter must be provided with an accommodation and when they have no other building

of their own, presumption of bona fide arise. It is for tenant to rebut the presumption. Absolutely no evidence has been adduced in this case to

show that landlords have come to court with oblique motive to evict tenant. Both authorities have held that the claim of landlord is bona fide and

that is a finding of fact.

Regarding the claim for eviction on the ground of wilful default, according to landlords rate of rent is Rs. 650/- whereas according to tenant, it

is only Rs. 250/-. The person with whom tenant has entered into rental arrangement was examined as PW 2, PW 2 has said that rate of rent is Rs.

650/-. It is not the case of tenant that PW 2 has anything to act against the interest of tenant and speaking falsehood. It is the case of tenant that he

has been paying rent to Swaminathan under instructions of PW 2. That is also denied by him. Tenant further contended that PW 2 has entered into

rental arrangement with Swaminathan and that permitted him to pay rent to him. The said contention also was denied by PW 2. Swaminathan was

also examined as RW 2. He is also not in a position to produce any agreement entitling him to recover arrears of rent or monthly rent from tenant.

When original owner comes before court and asserts that he has not entered into any agreement with Swaminathan and never authorised him to

collect rent, any payment to Swaminathan will not amount to valid tender.

Ex. P2 is registered notice issued by previous landlord informing the sale of property and asking him to at torn the tenancy. Even after receipt

of notice, tenant did not pay any rent to landlord or other power agents. According to him, he has deposited rent in Court. Such deposit cannot be

considered as valid tender. Landlord has not refused to receive rent. In fact, after Ex. A2 no attempt was made by tenant to pay tenant to

landlords. Courts below have believed the evidence of PWs. 1 and 2 held that tenant has committed default in payment of rent and there is no

explanation offered by him for not paying rent after Ex. A2 notice. From his conduct it is clear that he was indifferent in paying rent and he

intentionally did not want to tender rent to landlords. The question whether PW 2 is to be believed or not also cannot be agitated in revision. Rent

Controller had the opportunity to see the witness and appreciate his demeanor. Appellate Authority also reconsidered the entire evidence and held

that PW 2 is to be believed. Learned counsel for petitioner did not have the case that authorities below did not consider material piece of evidence

and have given importance only to irrelevant evidence. It is also not his case that authorities below did not decide the case in accordance with law.

Even if another view is possible that also cannot be a ground for interference u/s 25 of Tamil Nadu Buildings (Lease and Rent Control) Act. The

concurrent findings of authorities below are not liable to be interfered with. In the result the revision petition is dismissed with costs.