Saturday, 23 February 2019

Whether suit for specific performance of contract is tenable before small causes court?

In the case of (ING Vysya Bank Ltd. v. Modern India Ltd.), MANU/MH/0066/2008 : 2008 (2) Bom. C.R. 255 the learned single Judge of this Court considered an application in section 9 of the Arbitration and Conciliation Act, 1996 for granting interim relief to a licensee against the licensor from terminating his license and taking over possession. In that case also the licensee claimed to be in possession of the licensed premises which was later renewable and consequently the right of extension/renewal of the license was claimed under the agreement. The respondent claimed that the application was essentially for specific performance of the agreement which relief could not be granted by the Court of Small Causes at Bombay under section 19(h) of the Act.

The Court considered that the substance and essence of the suit as required to be seen, to look to the kernel and not the chaff and to see the jural relationship between the parties upon the nature of the cause of action and the character of the reliefs. The Court also observed that in a suit relating to recovery of possession some of the reliefs may be structured around a claim for specific performance. If the theme and the foundation relate to recovery of possession such a relief could not be seen an isolation. Consequently the Civil Court's jurisdiction would have to be considered upon seeing the substance of the suit. The Court further observed that the basis to protect the possession against the dispossession in a preexisting relationship was important to consider and if that relationship was between the licensor and licensee (as also landlord and tenant or lessor and lessee) then the substance of the claim would be to protect the possession against recovery which would be a suit relating to possession. Hence it is observed in para 17 of the judgment that only a suit for specific performance simplicitor would not be covered. But if the suit was not for specific performance but essentially for continuation of the existing leasehold right it would be covered by the aforesaid legislation.

The Court noted that one of the reliefs was the execution of fresh leave and license agreement upon the declaration sought and not a bare relief of specific performance. Consequently it held that the Civil Court would be barred from trying such a suit.

IN THE HIGH COURT OF BOMBAY

Chamber Summons (L) No. 1075 of 2015 in Suit No. 1930 of 2002

Decided On: 26.06.2015

 Manilal & Sons Bombay Forigings Ltd. Vs. Manilal & Sons

Hon'ble Judges/Coram:
R.S. Dalvi, J.
Citation: 2016 Bom RC183.

1. This Chamber Summons is for rejection of the plaint under Order 7 Rule 11(d) of the CPC as having been barred by section 41 of the Presidency Small Causes Courts Act, 1882 (the PSCC Act) which is pari materia of section 33 of the Maharashtra Rent Control Act, 1999 (the MRC Act). The plaintiff is the lessee of the defendant under a Deed of Lease dated 4th April, 1972 under which the lease commences from 16.2.1972. The lease was for the period of 30 years. It was extendable for the further period of 30 years on the plaintiff, as the lessee, complying with the terms and conditions of the lease. The 30 years period of lease would initially expire on 16.2.2002. The lease would be extended till 16.2.2032 provided the plaintiff complied with all the terms and conditions of the lease.

2. The plaintiff would claim that it was extendable at the option of the plaintiff for a period of 30 years and again for a period of 30 years. The plaintiff exercised the first option. The lease would stand extended. There would be a further period of extension of a further 30 years under the Lease Deed. Hence the plaintiff would claim that the lease was in substance for 90 years and extendable at the option of the plaintiff twice. The plaintiff exercised the first option in 2002 and hence the plaintiff sued for declaration that the lease was for the term of 90 years and stood extended with effect from 16.2.2002 for the second term of 30 years on the terms and conditions contained in the Lease Deed. The plaintiff also sued for declaration that there was a valid, subsisting and binding agreement for renewal of the lease between the parties and further sued for specific performance of the obligations under the lease of renewing it and for executing necessary documents upon such renewal. The plaintiff further sued for an injunction restraining the defendant for interfering with the plaintiffs possession of the suit property and in the alternative for damages with which this Court is at present not concerned.

3. The defendant would claim that in substance the suit is for protecting the possession of the plaintiff which would be protecting the plaintiff against the recovery of possession by the defendant from the plaintiff. The defendant would claim that consequently the suit would fall within the ambit of the aforesaid legislations.

4. Under section 33 of the MRC Act suits between a landlord and a tenant (lessor and lessee or licensor and licensee) "relating to recovery of...............possession" would fall within the jurisdiction of the Court of Small Causes, Mumbai.

5. Similarly section 41 of the PSCC Act also considers the suits relating to recovery of possession of property for which the Court of Small Causes alone would have jurisdiction to be instituted in that Court.

6. Ordinarily a suit for recovery of possession would be filed by the landlord/lessor/licensor from the tenant/lessee/licensee. That would be suits for recovery of possession. The suits relating to recovery of possession may be filed either by the landlord/lessor/licensor for getting back the possession or by tenant/lessee/licensee for protecting his/her possession against such recovery. It has been held in the case of (Mansukhlal Dhanraj Jain v. Eknath Vithal Ogale) MANU/SC/0633/1995 : 1995 (3) Bom. C.R. 240 that the phrase "relating to recovery of possession is comprehensive in nature and takes in its sweep all suits and proceeding which are concerned with the recovery of possession of property. It, therefore, holds that a suit for an injunction restraining the defendant from effecting forcible recovery of possession filed by a licensee would be covered under the said phrase. The judgment takes into account section 41(1) of the PSCC Act to consider whether the suit can be tried only by the Court of Small Causes. The Supreme Court observed in para 14 of the judgment that the suit filed by the licensees was on the basis that they were licensees and hence was the suit between the licensee and the licensor and being comprehensive would fall within the clear language of Section 41(1) of the PSCC Act. The Supreme Court further considered the case of (Babulal Bhuramal v. Nandram Shivram) MANU/SC/0136/1958 : 1959 S.C.R. 367: A.I.R. 1958 S.C. 677 in which the suit for declaration of tenancy and the declaration of sub-tenancy was held to be a suit for protection from eviction by a tenant and hence was held liable to be filed under section 28 of the Bombay Rent Act (the predecessor of section 33 of the MRC Act). The Supreme Court, therefore, observed in para 15 of the judgment that when the licensees claim to protect their possession by invoking the help of the Court by parity of reasoning, they would be in substance seeking protection of the Rent Act and hence their suit would fall within the Rent Act and consequently be within the jurisdiction of the Court of Small Causes.

7. In the case of (ING Vysya Bank Ltd. v. Modern India Ltd.), MANU/MH/0066/2008 : 2008 (2) Bom. C.R. 255 the learned single Judge of this Court considered an application in section 9 of the Arbitration and Conciliation Act, 1996 for granting interim relief to a licensee against the licensor from terminating his license and taking over possession. In that case also the licensee claimed to be in possession of the licensed premises which was later renewable and consequently the right of extension/renewal of the license was claimed under the agreement. The respondent claimed that the application was essentially for specific performance of the agreement which relief could not be granted by the Court of Small Causes at Bombay under section 19(h) of the Act.

The Court considered that the substance and essence of the suit as required to be seen, to look to the kernel and not the chaff and to see the jural relationship between the parties upon the nature of the cause of action and the character of the reliefs. The Court also observed that in a suit relating to recovery of possession some of the reliefs may be structured around a claim for specific performance. If the theme and the foundation relate to recovery of possession such a relief could not be seen an isolation. Consequently the Civil Court's jurisdiction would have to be considered upon seeing the substance of the suit. The Court further observed that the basis to protect the possession against the dispossession in a preexisting relationship was important to consider and if that relationship was between the licensor and licensee (as also landlord and tenant or lessor and lessee) then the substance of the claim would be to protect the possession against recovery which would be a suit relating to possession. Hence it is observed in para 17 of the judgment that only a suit for specific performance simplicitor would not be covered. But if the suit was not for specific performance but essentially for continuation of the existing leasehold right it would be covered by the aforesaid legislation.

The Court noted that one of the reliefs was the execution of fresh leave and license agreement upon the declaration sought and not a bare relief of specific performance. Consequently it held that the Civil Court would be barred from trying such a suit.

8. The substance of this suit is that the lease of the suit property stands extended upon the renewal of the lease as per the contract between the parties under the Deed of Lease so that the defendant must specifically perform its obligations under the lease by renewing it and by executing the necessary documents being a fresh lease or any writing to that effect and not interfere with the possession of the plaintiff in the suit property. Only in the alternative, upon seeing that the lease stood extended and renewed but has not been renewed, the suit is to grant the plaintiff certain damages upon the breach of the Deed of Lease.

9. The suit, therefore, ultimately seeks to protect the plaintiffs possession in the suit premises against a forcible or possible dispossession by eviction upon the termination of the initial period of 30 years of the lease.

10. Mr. Kapadia would argue that this is a suit for declaration of the extension of lease and hence the title of the plaintiff as the lessee would have to be determined by the Civil Court. He relied upon the judgment in the case of (William Jacks & Co. (India) Ltd. v. Nilima Dinesh Prasad), MANU/MH/0025/1992 : A.I.R. 1992 Bombay 126 which was the suit on title by the owner for declaration that the defendant had no right, title and interest in the suit property and for completing the title in favour of the plaintiff. The plaintiff applied for interim relief restraining the defendant in the Court of Small Causes at Bombay. The reliance upon the judgment is wholly misconceived. An owner would sue on trespass if he does not accept the defendant as his tenant or licensee and a suit on trespass by an owner would be filed in the Civil Court no matter what the defence. The position in law is different if the relationship between the parties as lessor and lessee is admitted.

11. Consequently the suit relates to the recovery of possession of the lessee from its lessor and hence the Civil Court's jurisdiction is barred. The plaint filed in the Civil Court is seen to be barred under the aforesaid legislation. Upon such a bar the plaint is rejected under Order 7, Rule 11(d) of the CPC. In view of this order the other applications in this suit are disposed of accordingly.


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