Dismissed

Hubli-Dharwad Municipal Corporation v. Lalji

Karnataka HC10 Mar 2017RSA/2039/2005

Case brief

AI extract

What is this about?

In this appeal against a decree dismissing a suit for declaration and perpetual injunction regarding illegal rent revision, the High Court held that under the lease deed, rent revision must occur during the lease term. The court found the municipality waived its right by failing to revise rent periodically within the lease periods and issued a deemed waiver.

What did the court decide?

The appeal filed by the Hubli-Dharwad Municipal Corporation to challenge the dismissal of the suit regarding the illegal demand notice for rent revision was dismissed.

Hubli-Dharwad Municipal Corporation Vs Lalji — Landlord and Tenant | Karnataka HC (2017)

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IN THE HIGH COURT OF KARNATAKA DHARWAD BENCH

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DATED THIS THE 10^TH DAY OF MARCH, 2017

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BEFORE

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THE HON’BLE MR.JUSTICE SREENIVAS HARISH KUMAR

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R.S.A. NO.2039/2005

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BETWEEN:

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HUBLI-DHARWAD MUNICIPAL CORPORATION, REPRESENTED BY ITS COMMISSIONER, UNIT-OFFICE, DHARWAD

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... APPELLANT

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(BY SRI.R G DEVADHAR, ADVOCATE)

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AND

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LALJI S/O MANAJI PATEL, AGE ABOUT 50 YEARS, OCC:BUSINESS, R/O DHARWAD, BY HIS GPA HOLDER SRI KHETABHAI S/O MEGHAJI PATEL, AGE: MAJOR, OCC:SAW MILL & BUSINESS R/O KAMALAPUR, DHARWAD, PIN - 580001

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... RESPONDENT

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(BY SRI. ASHOK R KALYANASHETTY, ADVOCATE FOR C/R)

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THIS RSA IS FILED U/S. 100 OF CPC, AGAINST THE JUDGEMENT & DECREE DATED:30.06.2005, PASSED IN R.A.NO.210/2003 (OLD NO.87/1999), ON THE FILE OF THE PRINCIPAL DISTRICT JUDGE, DHARWAD DISMISSING

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THE APPEAL AND CONFIRMING THE JUDGEMENT AND DECREE DATED:31.03.1999, PASSED IN OS.286/1994 ON THE FILE OF THE III ADDITIONAL CIVIL JUDGE (JR.DN) DHARWAD.

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THIS APPEAL HAVING BEEN HEARD AND RESERVED FOR JUDGMENT ON 17.02.2017, AND COMING ON FOR PRONOUNCEMENT THIS DAY, THIS COURT DELIVERED THE FOLLOWING: -

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JUDGMENT

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This appeal was admitted on the substantial question of law, “Whether suit of the plaintiff is maintainable without issuing statutory notice under Section 482 of Karnataka Municipal Corporation Act.”? But the appellant, who is defendant, has not pleaded about maintainability of the suit. For this reason, an issue was also not framed in this regard. The learned counsel for the appellant who argued the matter confined his argument on another point. Therefore, the question of law needs to be reformulated. Before that, the pleadings can be briefly stated here.

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The suit land measures 19 Guntas 896 sq. ft. and it belongs to Hubli-Dharwad Municipal Corporation, the appellant-defendant (hereafterwards referred to as defendant). The defendant leased this property to the respondent-plaintiff (hereafterwards referred to as plaintiff)

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on 15.11.1976 for establishment of a saw-mill. The plaintiff started a saw-mill there. This lease was for a period of one year and on 14.11.1977 it was extended for a period of three years on ground rent of Rs.1000/- per annum plus tax of Rs.275/-. This period of lease having expired on 14.11.1980, there came into existence another lease on 20.03.1981 for a period of 10 years on ground rent of Rs.2,500/- per annum plus tax, with a condition that there should be revision of rent every 3 years. But the rent was not revised at all as stipulated in the agreement. But the plaintiff paid the agreed ground rent upto 1991. On 22.07.1994, the plaintiff received a demand notice issued by the defendant and according to that notice, he was required to pay Rs.51,600/- being the arrears of rent. The plaintiff pleaded that the defendant revised the rent unilaterally every 3 years commencing from 15.11.1983. He should have been a given an opportunity before effecting revision after expiry of lease period. The claim for arrears of ground rent was barred by time and that the Standing Committee for Finance and Taxation of the defendant was not competent to determine the ground rent. Therefore, the plaintiff by filing a suit challenged this demand notice seeking declaration that it was illegal and

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perpetual injunction to restrain the defendant taking any action pursuant to notice dated 22.07.1994.

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The defendant admitted the lease transaction between it and the plaintiff. But it took up a contention that there was no need to hear the plaintiff before revising the rent as revising the rent was its responsibility and that there was no such rule that the rent should be revised as per the terms of the agreement. The defendant also pleaded that under the provisions of Karnataka Municipal Act 1976, it had full power to increase the rent, more so in view of the order of the Government of Karnataka. For this reason, the Standing Committee for Finance and Taxation passed a resolution on 10.04.1992, increasing the rent by effecting revision periodically. The amount of rent revised and fixed by the Standing Committee was quite reasonable, legal and valid. The resolution passed by the Committee was final and cannot be questioned in the court of law. Therefore, it is stated that according to the calculation made, the plaintiff was to remit Rs.51,600/-. In this regard, a notice was issued to the plaintiff. The plaintiff himself had agreed that in case of extension of the lease period, the rent could be revised

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and therefore, the rent came to be revised. The revision thus made was within the statutory powers of the defendant.

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The Trial Court referred to condition No.2 of the lease deed, marked as Ex.P-2 and held that whenever revision of rent took place, separate document should come into existence. The defendant having failed to invoke this condition pertaining to revision of rent would get no powers to revise the rent 4 years after expiry of the lease. Therefore it was nothing but waiver of its right to revise. The Trial Court also referred to Sec. 474 of Karnataka Municipality Act to further hold that if at all a demand could have been made for arrears of rent, it should be within 6 years after the amount fell due. Therefore, demand notice issued by the defendant after laps of lease period could not be held to be legal.

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Even the learned District Judge while deciding the appeal concurred with the findings of the Trial Judge and held that the defendant could not have revised the rent after expiry of the lease period and therefore, dismissed the appeal preferred by the defendant.

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In view of the findings of the Trial Court and the First Appellate Court, the following substantial question of law can be formulated now for being answered.

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“Whether both the Courts below are justified in holding that revision of rent as per contract of lease after expiry of the lease period is illegal?”

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I have heard the arguments of the learned counsel for the appellants. It was his argument that the lease deed specifically provided for revision of rent by the defendant once in every three years. It exercises statutory powers. The revision of rent was within the exclusive domain of the defendant. There was no need for giving any notice to the plaintiff before effecting revision. If the defendant by exercising its statutory power enhanced the rent and accordingly issued demand notice, it cannot be said that the said notice is illegal. Both the courts below have wrongly held that the defendant could not have revised the rent unilaterally after the expiry of the lease period and therefore, this appeal is to be allowed. At last the learned counsel made a submission that in case this court comes to a conclusion that the judgments of the Courts below could not disturbed,

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liberty may be given to the defendant for effecting revision of rent.

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The suit property having been leased to the plaintiff by the defendant is not disputed and the lease deed as per Ex.P-2 is also not disputed. Condition No.2 of the lease deed is so clear that for every three years the rent could be revised and that power was with the defendant. Said condition also stipulates that in case of increase in rent, a separate document has to be executed. Therefore, on going through this condition, though it can be said that it was within the exclusive domain of defendant to effect revision of rent, but it cannot be after the expiry of the lease period. Any revision of rent has to take place during the subsistence of lease period. The plaintiff has clearly stated that till 1991 he regularly paid the agreed rent i.e. rent fixed at the inception. This is not disputed by the defendant. Ten years period expired on 14.11.1990 and even after expiry, the plaintiff continued to occupy the leased land and that he paid the same rent. So in these circumstances, the defendant could not have revised the rent after expiry of the lease period. Condition No.2 of Ex.P-2 is as below:

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“2. ¸ÀzÀgÀ eÁUÉAiÀÄ ¨sÀÆ-¨ÁrUÉAiÀÄ£ÀÄß ¥Àæw ªÀÄÆgÀÄ ªÀgÀÄµÀPÉÆÌªÉÄä ¥ÀjµÀÌj¹ ¤zsÀðj¸À®Ä ªÀÄºÁ£ÀUÀgÀ ¸À¨sÉUÉ C¢üPÁgÀ«zÉ. D ¥ÀæPÁgÀ ¨sÀÆ-¨ÁrUÉ vÀÄA§®Ä ¨sÀÆ¨ÁrUÉzÁgÀ£ÀÄ §zÀÞ£ÁVzÁÝ£É. ºÉaÑUÉ ªÀiÁrzÀÝ°è EzÀgÀ §UÉÎ ¨ÉÃgÉ PÁUÀzÀ ¥ÀvÀæUÀ¼À£ÀÄß ªÀiÁqÀ¯ÁUÀÄªÀÅzÀÄ.”

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Given a strict interpretation to condition No.2 found in a lease deed, as extracted above, it can be said that any revision of rent should be during the lease period and in case of increase in rent, a separate document should be executed. Therefore, the defendant having not exercised its right after expiry of every three years during the period of lease, waived its right to revise. Taking a decision to revise the rent after the expiry of the lease period and issuing demand notice in the year 1994 is nothing but illegality. It has no sanction of law. The plaintiff and the defendant are governed by the contract as per Ex.P-1 and therefore, violating the terms of contract if rent revision is made, it cannot be accepted. In this background, both the courts have rightly appreciated the evidence and applied the law. Therefore, the point now raised is answered in the affirmative.

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Regarding the submission made by the

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appellant’s counsel that liberty be given to the defendant for effecting revision of rent, it has to be stated that the Court’s permission in this regard is unnecessary as it is left to the parties either to continue the contract of lease or not.

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So from the above discussion, I come to the conclusion that this appeal deserves to be dismissed and accordingly it is dismissed. There is no order as to costs.

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Sd/JUDGE

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yan

Hubli-Dharwad Municipal Corporation v. Lalji

Case brief

What is this about?

What did the court decide?

Hubli-Dharwad Municipal Corporation v. Lalji

Case brief

What is this about?

What did the court decide?

What the court decided

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