Second Appeal No.43 of 2004

7th February, 2014

Petitioner Counsel: Mr. SUDESH USGAONKAR, Ms. A. MATONKAR
Respondent Counsel: Mr. P.S. LOTLIKAR, Mr. J. SIMOES

Cases Cited:
Hari Rao Vs. N. Govindachari, AIR 2005 SC 3389 [Para 7,12]
M. Arul Jothi Vs. Lajja Bal, AIR 2000 SC 1122 [Para 7,9]
Gurdial Batra Vs. Raj Kumar Jain, AIR 1989 SC 1841 [Para 8,10]
Mohan Lal Vs. Jai Bhagwan, AIR 1988 SC 1034 [Para 9,10]

JUDGMENT

JUDGMENT :- The parties are landlord and tenant.

2. The landlord has leased his premises to the tenant under the deed of lease dated 11.5.1981. The parties agreed in writing inter alia that the lessee (tenant) agreed to "use the leased premises to run paint business as mentioned in clause (7) of the lease."

3. In clause 8 of the agreement, the parties agreed that if the lessee violates any of the clauses of the agreement, eviction would follow.

4. The tenant started the business of paint and later changed it to the business of toys. The landlord claimed to injunct the tenant from starting the business. He claimed that, without his written permission, the leased premises cannot be used for any other business because a specific business is shown in the agreement upon which the landlord has leased the premises to the tenant. He has obtained the necessary injunction. There are concurrent findings of fact. In fact, these are admitted facts.

The only substantial question of law that is required to be answered is:--

"Whether the appellants intending to conduct the other business in the leased premises in addition to the business specified in the lease agreement, would amount to committing breach of the term of the lease agreement and consequently whether the Courts below were right in granting injunction restraining the appellants from starting other businesses in the shop?"

5. The relation between the landlord and the tenant is not like that of other contractual parties. Tenants are specifically protected under the various tenancy laws. Tenants can be evicted only on specified grounds. It would have to be seen whether the tenant can be otherwise evicted without statutory violation as would result in eviction.

6. The agreement between the parties shows the user of leased premises to run the paint business of the tenant. There are two specified broad users:- residential user and commercial user which cannot be changed or altered without the permission of the landlord and in accordance with other laws. Within the broad user for commercial purpose, the user for paint business specified in the agreement would show the intention of the lessee at the time of lease to carry on a particular business made known to the landlord/lessor. It has no other implication upon his possession as a tenant. The agreement therefore specifies the precise kind of business that has to be conducted by the tenant and is allowed by the landlord. There is no other restriction on the user in the agreement between the parties. There is no specific mandate not to use the leased premises for any business other than the paint business. It will have to be seen whether in the absence of a negative covenant, the tenant's freedom to carry on any business other than the specified business is prohibited or restricted.

7. The learned counsel on behalf of the landlord has drawn the Court's attention to the two judgments of the Supreme Court. In the judgment in the case of Hari Rao Vs. N. Govindachari, AIR 2005 SC 3389 and M. Arul Jothi Vs. Lajja Bal, AIR 2000 SC 1122, the Supreme Court considered restrictive covenants in a tenancy agreement. The question before the Supreme Court was when the tenant uses a shop for a purpose other than the one specified in the tenancy agreement, would he be liable for eviction. In that case there was a specified restrictive covenant which ran thus:-

"shall be used by the tenant only for carrying on his own business dealing in radios, cycles, fans, clocks and steel furniture and for nonresidential purposes and the tenant shall not carry on any other business than the above said business."

8. The tenant commenced the business of provisions of parts of cycles and the like. The tenant contended that he had not changed the commercial user and the tenant was not using the tenanted premises for residential purpose which would constitute different purpose. Indeed, it was observed that change of business does not change its use from commercial purpose and it would not constitute a ground for eviction. The Court also considered Section 108(o) of the Transfer of Property Act in which the tenant is enjoined not to use the property for the purpose other than for which it was used. The Court considered that purposes were only two; residential purpose and commercial purpose.

Relying upon the case of Gurdial Batra Vs. Raj Kumar Jain, AIR 1989 SC 1841, the Court held that change of user by mere change of business would not constitute the use for the purpose other than for which the property was leased. It held that the premises could broadly be let for residential or commercial purpose. It also considered the analogous Rent Act having similar provisions in which the object was to protect the interest of the tenant for the change of user.

The Court distinguished Gurudial Batra' case with regard to a negative covenant. It observed in paragraph 5 of the judgment that in the absence of any words in the rent lease which are restrictive or limiting for carrying on or not carrying on any business except the one stated in the lease, a different business cannot be prohibited. Hence it concluded that, the letting could either be for residential or commercial purpose.

9. The Court also considered the case of Mohan Lal Vs. Jai Bhagwan, AIR 1988 SC 1034 in which the tenant was to run a liquor shop. The tenant commenced the business for a departmental store for general merchandise. In that case there was no restrictive covenant. It only specified the specific business to be done. The purpose of the user still remained commercial. There was no clause prohibiting the appellant to change to any other business in the shop.

The Court distinguished these cases in the case of the case of M. Arul Jothi (supra), in which there was a specific prohibition clause in the lease deed specifying that the property shall be used only for carrying on a particular business and tenant should not carry on any other business. The Court held that by the use of the word "only" with reference to the tenant doing business coupled with the mandate that the tenant will not carry on any other business as in the case cited above, the tenant should not carry on any other business as the user was restricted only for the business specified in the lease deed. Consequently, the Court observed that in those cases only Section 108(o) of Transfer of Property Act would come into play. However when there is a contract to the contrary, Section 108(o) would not be applied. A restrictive covenant expressly prohibits the use for any purpose other than the purpose for which premises was let. Therefore, if there is no restrictive covenant, the case would be different.

10. This case would be analogous to what has been held in the case of Gurdial Batra and Mohan Lal (supra). There is no negative covenant in the lease deed. Clause 7 of the lease deed only shows what at that time was contemplated to be the business of the tenant. It reflects that the tenant would use the premises for commercial use and not for residential use. The user of the premises would be commercial use and residential use would be violation of the lease deed. User for commercial purpose but for any other business not specifically prohibited or restricted would therefore require to be allowed. Upon the user of the premises for doing any other business but for commercial use, the tenant would not be liable to be evicted.

11. Consequently by analogy the tenant could not be injuncted to carry on such business, if he was otherwise entitled to carry on the other business without the pain of eviction.

12. In the case of Hari Rao Vs. N. Govindachari, AIR 2005 SCC 3389, the conversion of the user of the business from residential to non- residential was considered. It was held that a lease was granted for the purpose of a trade. In the absence of any covenant in the contract prohibiting the user different from the particular one mentioned in the lease deed, the tenant is entitled to carry on any trade in the premises, consistent with the location and the nature of the premises. The only restriction would be that the premises let for commercial purpose could not be used for residential purpose. Whilst running a trade if only a commodity was altered the tenant could not be held to be using the premises for the purpose other than the purpose for which the premises was let in the absence of a covenant barring the use of the tenanted premises for running any other trade. It is also observed that it was open to the tenant to use the premises for expansion of his trade or for taking up other lines of trade when there is no negative covenant.

13. Every citizen has freedom to carry on his own trade subject to only specific contract in that behalf to the contrary and specific law prohibiting a particular business. Tenants, who are protected under law against needless eviction except on specific grounds set out in respective Rent Control Act by which they are governed, cannot be evicted on any ground by way of expanding the right of landlord and restricting the user of the premises by the tenant. Consequently, the clause to carry on particular business such as clause 7 in our case, cannot be interpreted strictly to read a negative covenant therein when none is mentioned by the parties constituting a "contract to the contrary."

14. The contention on behalf of the tenant that without the permission of the landlord the business cannot be altered because the initial business was specified with his consent is, therefore, incorrect. The landlord's right cannot be extended without a negative covenant. Consequently reliance upon Clause 22(2)(ii) of the Goa Daman and Diu (Lease, Rent and Eviction) Control Act, 1968 which suggests that all the activities other than the ones mentioned in the agreement of lease are prohibited activities which would constitute abuse of tenanted property cannot be accepted. To test the eviction it would only have to be seen that tenanted premises was used for the purpose other than the purpose for which it was leased. When merely business changed, the commercial use remains. The premises was tenanted for commercial use and if it was used for any other purpose other than that use, it would fall under Section 22(2)(ii) and not otherwise.

15. Consequently, the aforesaid question of law must be decided to hold that unless there was an express negative covenant, a change in the business carried out by the tenant cannot grant the landlord the right to injunct him.

16. Consequently, the appeal succeeds. The impugned judgment dismissing the appeal of the tenant and consequently the decree of injunction granted by the trial Court are set aside.

Appeal allowed.