1975 (8) TMI 121 - SC - Indian Laws

Cinema lease not 'accommodation' under Rent Control Act. Landlord granted eviction decree. Appeal allowed.

The court concluded that the cinema theatre lease did not fall under the definition of 'accommodation' as per the U.P. (Temporary) Control of Rent and ... Definition of 'accommodation' in rent-control law - dominant intention test for characterising a lease - lease of business/industrial undertaking versus lease of building - construction and role of an exclusionary proviso - mense profitsDefinition of 'accommodation' in rent-control law - dominant intention test for characterising a lease - lease of business/industrial undertaking versus lease of building - Whether the demised cinema theatre and its equipment fell within the statutory meaning of 'accommodation' under s.2(a) as amended - HELD THAT: - Applying the amended definition, the Court held that the term 'accommodation' is meant to protect tenancies of buildings (residential and non-residential) and appurtenances, furniture and fittings that are ancillary and subservient to the building's enjoyment. Where a demise is composite, the decisive test is the dominant intention of the parties. If the primary object of the transaction is the business or industrial undertaking (the running or ready-to-launch cinema with projectors and costly apparatus) and the building is made over only incidentally to accommodate that business, the transaction is not a lease of 'accommodation' within the Act. On the admitted facts - apportionment of rent heavily in favour of equipment, prior running cinema business, commencement of lease tied to first show, and counsel's admission that the leases constituted a single transaction for an industrial purpose - the dominant intent was to demise the cinema business and equipment, with the building secondary. Accordingly the lease did not fall within 'accommodation' as defined and was not protected by the rent-control enactment.Lease held not to be 'accommodation'; landlord entitled to decree for eviction.Construction and role of an exclusionary proviso - definition of 'accommodation' in rent-control law - Effect of the proviso inserted by the 1954 amendment excluding accommodation 'used as a factory or for an industrial purpose where the business ... is also leased out by the same transaction' - HELD THAT: - The Court construed the proviso as clarificatory and narrowly operative: it was intended to remove doubt about marginal cases where a superficially bare building with minimal fixtures in truth constituted a business or factory. A proviso must be read in relation to the principal enacting clause and does not expand the protected area of building tenancies to embrace business leases. Thus the proviso was construed to carve out from seeming building-tenancies those marginal instances that are in substance leases of businesses, not to import businesses into the main definition.Proviso construed as exclusionary/clarificatory; it does not enlarge the definition of 'accommodation' to include leases of businesses.Mense profits - Fixation of mense profits claimed by the landlord - HELD THAT: - The Court noted the respondent's admission of a 'net income' and the appellant's claim combining that with rent to arrive at mense profits, but observed that the precise decree for mense profits requires factual quantification. Given the admissions and the unsettled state of law, the Court directed that the trial court determine and fix the mense profits to be decreed from the date of the suit.Matter remitted to the trial court to fix mense profits from the date of the suit.Lease of business/industrial undertaking versus lease of building - Whether the repeal of the old Act and the 1972 Act's express exclusion of cinemas affects the present proceedings - HELD THAT: - The Court observed that it need not and does not decide the effect of the later (1972) Act's express exclusion of cinemas because it held on the primary issue that the old Act did not cover the lease in question. Thus the question of the later Act's applicability was left undecided.Question of applicability of the 1972 Act not decided as unnecessary.Equitable relief and time to vacate - Relief and incidental orders as to costs and time to vacate - HELD THAT: - Taking account of the uncertain law, divergent decisions and the business hardship in uprooting a long-standing cinema, the Court directed that parties bear their own costs and granted the respondent one year's time to vacate the premises.Each party to bear its own costs; respondent given one year to vacate.Final Conclusion: The lease was held not to be 'accommodation' under the amended definition since the dominant intention was to demise a cinema business and equipment rather than the building as such; the exclusionary proviso was read as clarificatory and not as expanding protection to business leases; mense profits were remitted to the trial court for fixation from the date of the suit; the question of the later Act's exclusion of cinemas was not decided; appeal allowed, eviction decree directed, parties to bear their own costs and respondent given one year to vacate. Issues Involved:1. Definition of 'accommodation' under the U.P. (Temporary) Control of Rent and Eviction Act, 1947.2. Impact of the 1954 amendment to the Act.3. Effect of the repeal of the Act and exclusion of cinema houses from the 1972 Act.Issue-wise Detailed Analysis:1. Definition of 'Accommodation':The primary issue was whether a cinema theatre, equipped with projectors and other fittings, qualifies as an 'accommodation' under Section 2(1)(d) of the U.P. (Temporary) Control of Rent and Eviction Act, 1947. The term 'accommodation' was defined to include both residential and non-residential buildings along with furniture and fittings for beneficial enjoyment. The court examined whether the cinema theatre, with its equipment, was primarily a building lease or a business lease. It was determined that the lease was essentially for the cinema business, with the building being secondary. The dominant purpose of the lease was the cinema equipment and not the building itself.2. Impact of the 1954 Amendment:The 1954 amendment added a proviso excluding accommodations used as factories or for industrial purposes where the business carried on in or upon the building is also leased out by the same transaction. The court deliberated whether this proviso expanded or limited the definition of 'accommodation.' It was concluded that the proviso clarified the exclusion of business leases from the definition, reinforcing that the Act was intended to protect building leases and not business leases. The cinema theatre, being a business lease, fell outside the scope of 'accommodation' as defined by the Act.3. Effect of the Repeal of the Act and Exclusion from the 1972 Act:The court considered whether the repeal of the 1947 Act and the exclusion of cinema houses from the 1972 Act affected the landlord's right to evict the tenant. The court noted that the new Act explicitly excluded cinema houses, but since the old Act itself did not cover the suit lease, this point was rendered moot. The landlord was entitled to a decree for eviction based on the old Act's definition and the dominant intent of the lease being for the cinema business.Conclusion:The court concluded that the lease in question was not covered under the definition of 'accommodation' as per the 1947 Act. The appellant landlord was entitled to a decree for eviction. The court also directed the trial court to fix the mense profits from the date of the suit and granted one year's time for the respondent to vacate the premises due to the financial and business implications of an immediate eviction. The appeal was allowed, with both parties bearing their respective costs.