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1998 DIGILAW 223 (KAR)

BHAGYASHREE COMBINES, A REGISTERED PARTNERSHIP FIRM, BELLARY v. DISTRICT MAGISTRATE, BELLARY

1998-03-31

body1998
BHASKAR RAO, J. ( 1 ) THE appellant-writ petitioner filed appeal assailing the judgment of the learned single Judge dismissing the writ petition. ( 2 ) THE facts of the case are : appellant was a lessee of a cinema theatre known as Sri Raja Rajeshwari Theatre at Bellary. The appellant has taken the theatre with all equipments and lease- cum-hire vide agreement dated 14-7-1990. The period of lease was upto 22-7-1994 and was extended at first instance upto 23-12-1994 and again extended upto 28-2-1995. It is the case of the appellant that even after the expiry of the said period he continued to run the cinema show in the theatre and the licence issued under the Karnataka Cinemas (Regulation) Act, 1964 continued upto 31-5-1995. ( 3 ) THE appellant applied to the respondent 1 (Licencing Authority) for renewing of licence for the period from 1-6-1995 to 31-12-1995. The 3rd respondent who is the owner of the theatre and equipment filed an objection opposing the renewal of the licence on the ground that the appellant is continuing in the possession of the premises after 28-2-95 illegally as the lease was not extended and the 3rd respondent was the licence holder, and the appellant could not seek renewal. It is the case of the appellant that even though the lease has expired he was in possession lawfully as a tenant. He also filed O. S. No. 173/95 on the file of the Additional Munsiff, Bellary, and obtained order of restraining 3rd respondent from interfering with the possession and use of the theatre, therefore, licence should be renewed. The licencing authority rejected the request of the petitioner for grant of licence holding that petitioner has no locus standi and no right to get the licence and he is not in lawful possession of the premises. Against that order petitioner filed appeal before 2nd respondent and he dismissed the appeal vide order dt. 24-2-96. Assailing that order writ petition is filed. ( 4 ) IT is the case of the appellant that 3rd respondent who is the owner of the cinema theatre and equipment and which has been granted licence to run the cinema theatre under Karnataka Cinemas (Regulation) Act, 1964 (hereinafter called the 'act') has leased the theatre with equipment subject to terms and conditions contained in the agreement. ( 4 ) IT is the case of the appellant that 3rd respondent who is the owner of the cinema theatre and equipment and which has been granted licence to run the cinema theatre under Karnataka Cinemas (Regulation) Act, 1964 (hereinafter called the 'act') has leased the theatre with equipment subject to terms and conditions contained in the agreement. After expiry of the agreed lease period the appellant is continuing as a statutory tenant by virtue of the protection against eviction as provided under Karnataka Rent Control Act, 1961, so he is in lawful possession and running the theatre and entitled to seek renewal of licence and respondent-3 landlord has no right to object for renewal. The lease of the building amounts to lease of building with fittings as defined u/s. 3 (a) of the Karnataka Rent Control Act, 1961. ( 5 ) THE respondent 3 contended that the lease was a composite lease of theatre building and cinema equipment and dominant purpose of lease was not letting out a building with furniture and fittings, but to let out the cinema business. The lease of the running cinema theatre building with equipment would fall outside the scope of the 'building' as defined in the Karnataka Rent Control Act. So the appellant is not entitled to statutory protection against eviction under the Rent Control Act. There after expiry of the lease period the appellant seems to be in unlawful possession of the premises, so cannot claim renewal of licence. It is further contended that appellant could not apply for renewal of licence as the licence did not stand in the name of appellant but stood in the name of 3rd respondent, owner of the theatre, and only respondent-3 is entitled to obtain renewal of licence. Therefore, rejection of the application of the appellant and dismissal of appeal by Appellate Authority was wholly in accordance with law. ( 6 ) THE learned single Judge heard both the counsels and perused entire material on record at the stage of admission itself and held that the lease of the cinema theatre along with the equipment is not a lease of building as defined under Karnataka Rent Control Act and it is a composite lease of equipment along with the building of the lease of the cinema business. So it will not fall within the definition of building as defined u/s. 3 (a) of the Karnataka Rent Control Act, 1961. Therefore, appellant is not in lawful possession of the premises, so he is not entitle for licence. Secondly, it is held that the licence is granted to the respondent-3, the owner of the theatre and the lease of the cinema business is granted to the appellant and when once original licence is not granted to the appellant he is not entitled for renewal. The rejection of the licence and dismissal of appeal by Appellate Authority is quite proper. The writ petition was dismissed as there were no merits. ( 7 ) AGAINST that present appeal is filed. ( 8 ) THE learned counsel for the appellant firstly contended that lease of the theatre building and equipment amounts to the lease of the building and fittings as defined u/s. 3 (a) of the Karnataka Rent Control Act, therefore, appellant is deemed to be in lawful possession even after expiry of lease. Therefore, he is entitled for the licence. ( 9 ) ON the other hand counsel for respondent 3 contended that the lease is a composite lease of building and cinema equipment along with permission to run the theatre as the licence is granted in favour of respondent 3. Therefore, he is not entitled and so he is not covered by Karnataka Rent Control Act. So, he is not a statutory tenant and not in lawful possession of the building premises after expiry of the lease. ( 10 ) IN view of the abovesaid contention the important question of law that arises for our consideration is whether a lease of a cinema business i. e. , lease of a building and equipment will amount to lease of a building or not? ( 11 ) TO appreciate the above contention it is relevant to refer provisions of the Karnataka Rent Control Act, 1961. Section 21 of the Rent Control Act extend the protection of eviction of tenant in regard to any premises. Tenant under the Act includes a person in possession after the termination of the tenancy. ( 12 ) PREMISES is defined in S. 3 (n) as a building as defined in Cl. (a), Sec. 3 and any land not used for agricultural purposes. Tenant under the Act includes a person in possession after the termination of the tenancy. ( 12 ) PREMISES is defined in S. 3 (n) as a building as defined in Cl. (a), Sec. 3 and any land not used for agricultural purposes. Clause (a) of Sec. 3 defined the building as under:" (A) Building means any building or hut or part of a building or hut other than a farm house, let or to be let separately for residential or non-residential purposes and includes- (i) the garden, grounds and out-houses, if any, appurtenant of such building or hut and let or to be let along with such building or hut or part of building or hut; (ii) any furniture supplied by the landlord for the use in such building or hut or part of a building or hut; (iii) any fitting affixed to such building or part of a building for the more beneficial enjoyment thereof, but does not include a room or other accomadmation in a hotel or a lodging house;"thus, it is manifest that any building which is let-out for residential or non-residential purpose including any furniture supplied by landlord or any fittings affixed to such building for more beneficial enjoyment thereof is a premises to which Rent Control Act will apply. ( 13 ) THE important question for consideration is whether leasing of a cinema business with the right to use the licence obtained (to screen pictures) and held by the lessor can be said to be a letting-out of a building as defined under the Karnataka Rent Control Act?it is necessary for this purpose to look into the terms of agreement dt. 14-7-90. The preamble to the agreement states that the subject-matter of the agreement is hiring of a theatre with equipment for exhibition of pictures for the purpose of realising collections and profits by screening the pictures. Clause (3) of the agreement provided that a consolidated hire charges of Rs. 14000/- per month shall be paid for equipment and the theatre. Cl. (4) provides that if the lessee unable to screen the pictures due to the failure on the part of the lessor to secure a licence for exhibition or on account of non-payment of public charges payable in regard to the theatre, the hire charges/lease amount shall not become payable and will not be payable for the period of suspension of exhibition. Clause (5) provides that if the lessee is not able to screen the picture, on account of strikes, epidemics, civil riots, commotions or other causes, of vis major or for causes of no fault on the part of lessee or on account of Government interference, then for days of such loss, no rent/hire charges shall be payable by the lessee. Clause (7) provides that in the event of Government bringing any legislation whereby the private ownership of the theatre is abolished by nationalisation, the lease shall come to an end and the deposit shall be refunded immediately. Clause (8) provides that equipment, machinery, building, projector, screens, lighting equipments, cooling apparatus, should be used by the lessee with due care an caution. Clauses (9) and (10) require the lessee to abide by the rules and regulations, notices, notifications and instructions etc. , that are imposed on exhibitors of films, by law, rules, notifications, notices issued by the competent authority and the lessee shall be answerable to the licensor for any default in adhering to the said instructions. Clause (11) provides that the lessee shall pay the salary and other allowances to the chief operator, who shall be appointed by the lessor; and the lessee shall also pay the electricity charges, water charges, entertainment taxes, health cess, Indian News Reel hire and such other taxes as also the expenses of the staff appointed by him to run the shows. Clause (14) provides that the lessor shall give utmost co-operation and all facilities to the lessee to screen the picture of his choice during the lease period, without any interference. Clause (16) provides that the spare parts of the machinery shall be purchased with the consent of the lessor and the cost thereof shall be reimbursed by the lessor to the lessee. Clause (17) requires that the lessor shall be responsible for the maintenance and upkeep of the entire projection equipment, fans and all other fittings, plumbings and sanitary fittings, transformer and the buildings, and the lessor shall undertake to get all the licenses, certificates and permits required to run the shows renewed at its cost; and that any alteration, additions and changes that the licensing authority may require from time to time shall be carried out by the licensors at its cost so as to conform to the Karnataka Cinemas Regualtions/act and the Rules framed thereunder. Clause (19) requires the lessee to deliver the theatre building with equipment in good condition and to the satisfaction of the lessor, on the expiry of the lease period of four years. Clause (21) requires the lessee to furnish to the lessor, copies of no due certificate from the concerned authorities at the end of each year. ( 14 ) A perusal of the above terms of the agreement makes it manifest that what was let-out is the cinema business (theatre building with equipment, fittings which are necessary for running a cinema) with a benefit of licence obtained by lessor. The appellant also in his suit filed for injunction admitted the lease as composite lease of building equipment for the purpose of screening of pictures. The agreement provides that if the lessee is not able to run the show on account of any act of omission on the part of the owner or on account of any failure on the part of the lessor to secure the licence for exhibition of films or on account of any reason beyond the control of lessee, the lessee will not be liable to pay hire charges of the lease for the suspension of show. This clause is a special clause in the agreement is not found in respect of the building. The above clause read with other clauses of agreement make it clear that the dominant intention of the parties to transaction is the lease of a cinema business and not lease of the building with fittings. It is relevant here to refer the case law on the subject. ( 15 ) IN Uttamchand v. S. M. Lalwani, AIR 1965 SC 716 , the question that arose for consideration befor the Court was whether the lease of a dal mill building fixed with machinery and accessories in sound working condition for the purpose of running a dal mill could be held to be letting of an 'accommodation' under the provisions of M. P. Accommodation Control Act, 1955. The Court held that the dominant intention of parties in granting the lease should be ascertained by the Court to determine whether the lease was of 'accommodation' as defined in the said Act. The definition of the term 'accommodation' of the Act is similar to definition of the term 'building' under the Karnataka Rent Control Act, 1961. The Court held that the dominant intention of parties in granting the lease should be ascertained by the Court to determine whether the lease was of 'accommodation' as defined in the said Act. The definition of the term 'accommodation' of the Act is similar to definition of the term 'building' under the Karnataka Rent Control Act, 1961. The Court held that the machinery of a dal mill cannot be said to be fittings fixed for the more beneficial enjoyment of the building and the dominant intention of the lease was to use the building and machinery as a dal mill; and though the document purported to be lease in respect of dal mill building, the description was not decisive and building with machinery had to be used as a dal mill and the mill was the subject-matter of the lease and it was the mill that was intended to be let out and the building had inevitably to be let out along with the mill. The Court distinguished the lease of the dal mill with the lease of accommodation and held that what was let out was not a building or accommodation, which fell within the purview of M. P. Accommodation Control Act, 1955. ( 16 ) IN Dwaraka Prasad v. Dwaraka Das, AIR 1975 SC 1758 , the Supreme Court has considered whether a lease of the cinema theatre with cinema equipment is lease of accommodation within the meaning of that expression under the U. P. (Temporary) Control of Rent and Eviction Act, 1947? The definition of the 'accommodation' in the U. P. Act is similar to definition of 'building' under the Karnataka Rent Control Act, 1961. The Supreme Court held:"a lease of an 'accommodation' must essentially be a building - not a business or industry together with the building in which it is situated. Of course, a building which is ordinarily let, be it for residential or non-residential purposes, will not be the bare walls, floor and roof, but will have necessary amenities to make habitation happy. That is why the legislature has fairly included gardens, grounds and out-houses, if any, appurtenant to such building. Likewise, leases sometimes are of furnished buildings and that is why 'any furniture supplied by the landlord for use in such building' is treated as part of the building. These additions are appurtenant, subservient and beneficial to the building itself. That is why the legislature has fairly included gardens, grounds and out-houses, if any, appurtenant to such building. Likewise, leases sometimes are of furnished buildings and that is why 'any furniture supplied by the landlord for use in such building' is treated as part of the building. These additions are appurtenant, subservient and beneficial to the building itself. They make occupation of the building more convenient and pleasant but the principal thing demised is the building and the additives are auxiliary. Where the lease is composite and has a plurality of purposes, the decisive test is the dominant purpose of the demise. Under the Act the protected category of accommodation is residential and non-residential buildings and not business houses. . . " ( 17 ) IN view of principle laid down by the Supreme Court in Uttamachand's case ( AIR 1965 SC 716 ) and Dwaraka Prasad's case ( AIR 1975 SC 1758 ), we have to hold that the lease of the cinema business (with equipment) cannot be held as a lease of a building under the Karnataka Rent Control Act. Therefore, the position of the lessee after expiry of lease cannot be said to be lawful position. ( 18 ) THE Supreme Court further observed that the lease of lucrative theatre with expensive equipments cannot be reduced to mere tenancy of a building together with fittings which make use and (sic) more comfortable do not fall within the definition of the term 'accommodation. ' ( 19 ) THE Supreme Court in M. C. Chokkalingam v. V. Manickavasagam, AIR 1974 SC 104 , held that on the expiry of lease, the lessee cannot be said to continue in 'lawful possession' of the leased property against the wishes of the landlord if such a possession is not otherwise statutorily protected under the law against even lawful eviction through Court process, such as under the Rent Control Act. 'lawful possession' is not litigious possession and must have some foundation in a legal right to possess the property. 'lawful possession' is not litigious possession and must have some foundation in a legal right to possess the property. ( 20 ) LEARNED counsel for the appellant contended that merely because the lease has expired the lessee cannot be forcibly thrown out of the premises and the lessee has to be evicted after following the procedure laid down by law and relied on the judgment in M/s. Patil Exhibitors (P) Ltd. v. B. C. C, ILR 1985 Kant 3700 : (AIR 1986 Kant 194 ). There is no dispute about the principle laid down in the above judgment. The question in the present case is whether renewal of licence to the appellant is proper or not. We have already held after considering all the contentions of the appellant that the appellant is not entitled for renewal of licence. The principle laid down in the above case is not applicable to the facts of the present case. ( 21 ) THE principle laid down in the judgments of the aforesaid Supreme Court cases squarely applies to the facts of the case. Therefore, we hold that the lease of cinema business (along with building, equipment and permission to screen pictures) will not fall within the scope of the 'building' as defined under Sec. 3 (a) of the Karnataka Rent Control Act. So the statutory protection against the eviction will not be available in regard to such leases. ( 22 ) THE learned counsel for the appellant relied on the decision of the Supreme Court in Kumaravelu's case (1996) 1 JT (SC) 30 : ( AIR 1996 SC 982 ) and contended that the Supreme Court has held in the case that the lease of a cinema theatre with the equipment was a lease of 'building' under Karnataka Rent Control Act. The above case arose from the decision of this Court in ILR 1994 Kant 1477, which deal with the lease of the cinema theatre with reference to the provisions of the Karnataka Rent Control Act 1961. In this case what was laid out was a cinema theatre building with fittings and furniture and some equipments but without the speakers, amplifier, screen and projector. The question that arose for consideration was, whether what was laid out was a building within the meaning of the Rent Control Act. In this case what was laid out was a cinema theatre building with fittings and furniture and some equipments but without the speakers, amplifier, screen and projector. The question that arose for consideration was, whether what was laid out was a building within the meaning of the Rent Control Act. The Division Bench of this Court held that the lease was of a theatre building with furniture, moveables, machineries and equipments meant for running cinema theatre and such lease is a composite lease which fall outside the purview of the Rent Control Act. The Supreme Court after examining the said case reversed the judgment and held that in the absence of projectors, amplifiers, screen and speakers which are main equipment required for exhibition of films it cannot be said that the lease was in respect of business of a cinema theatre for running fully equipped cinema theatre; and what was let out was only a building with certain fittings and equipments. So, it held that the dominant intention of the parties was not to let out cinema business but to let out building fit for running cinema theatre with certain furnitures and fittings. In those circumstances the Supreme Court held that what was let out was 'building' as defined under Rent Control Act. So the tenant was entitled to protection against eviction under the provisions of Rent Control Act. So, the suit filed for eviction in the Civil Court is not maintainable. ( 23 ) THE facts of this case are quite different and it is squarely covered by the decisions of the Supreme Court in Uttamchand ( AIR 1965 SC 716 ) and in, Dwaraka Prasad's cases ( AIR 1975 SC 1758 ). The Supreme Court reiterated principle laiddown in the decision of Uttamchand, Dwaraka Prasad and Kumaravelu's case ( AIR 1996 SC 982 ) and decided Kumaravelu's case on the facts of that case. Therefore, the decision of the Kumaravelu's case is not applicable to facts of the present case. ( 24 ) IT is also relevant to refer a Division Bench decision of this Court in Sri Krishnaknath Desai v. Additional Commissioner of Wealth-tax (W. P. No. 1467/1973 and connected cases, disposed of on 11-4-1980, reported in (1980) 2 Kant LJ Short Notes item No. 81 ). ( 24 ) IT is also relevant to refer a Division Bench decision of this Court in Sri Krishnaknath Desai v. Additional Commissioner of Wealth-tax (W. P. No. 1467/1973 and connected cases, disposed of on 11-4-1980, reported in (1980) 2 Kant LJ Short Notes item No. 81 ). In this case the question for consideration was whether an equipped cinema theatre fall under the provisions of the Karnataka Rent Control Act, in the context of Wealth-tax Act. The Court after referring to the decisions of the Supreme Court in Uttamchand and Dwaraka Prasad's cases, held that a fully equipped cinema theatre does not fall within the definition of 'building' as defined in Sec. 3 (a) of the Act and lease of the cinema theatre building with fittings meant for the beneficial enjoyment of the building, therefore, would not come under the purview of the Karnataka Rent Control Act. ( 25 ) LEARNED counsel for the appellant contended secondly that Transfer of Property Act provides lease of moveable and immoveable Property and composite lease is unknown to law. Therefore, the lease of cinema business cannot be considered separately than the lease of a building. ( 26 ) WE are unable to agree with the said contention. Sections 105 to 117 of Transfer of Property Act deal with the lease of immoveable property and rights and liabilities of lessor and lessee and other conditions. The hiring of the equipment is covered by the terms of the agreements. There is no law prohibiting a composite lease of building along with the equipment or lease of a Mill which includes building and machinery or lease of a factory similarly which includes lease of a building along with machinery and other equipments. All these leases are recognised by law and accepted by the Courts. The judgment of the Supreme Court in Uttamchand's ( AIR 1965 SC 716 ) and Dwaraka Prasad's cases ( AIR 1975 SC 1758 ), specifically recognised and upheld a composite lease of the Dal Mill and Cinema business. The law is laid down by the Supreme Court on all Courts in India as per Art. 141 of the Constitution of India. Therefore, the composite lease of the cinema business (along with equipment etc.) is valid and contention of the appellant's counsel is not tenable. The law is laid down by the Supreme Court on all Courts in India as per Art. 141 of the Constitution of India. Therefore, the composite lease of the cinema business (along with equipment etc.) is valid and contention of the appellant's counsel is not tenable. ( 27 ) THE third question which arises for our consideration is whether the appellant is entitled to obtain licence?it is an admitted fact that licence was granted to respondent 3 to screen the pictures and it was valid up to 31-5-95. Whereas lease was expired on 28-2-85 and there was no extension of lease. When the appellant applied for renewal of licence, his licence was rejected. The question is whether the appellant who was not granted licence under Karnataka Cinemas (Regulation) Rules, 1971 is entitled for the grant of renewal. It is relevant here to refer to the Rules governing the grant of licence and renewal of licence. ( 28 ) SECTION 5 of the Karnataka Cinemas (Regulation) Act, empowers the licencing authority to grant licence. Section 6 of the Act provides the requirements to be considered by the licencing authority while granting licence. Section 8 of the Act lays down the restrictions on the powers of the licencing authority stating that licencing authority shall not grant licence unless it is satisfied that the Rules made under the Act have been substantially complied with. Section 9 says that licence shall be personal to the person to whom it is granted and not transferrable except with the permission of the licencing authority. This, licence granted to a person cannot be transferred without permission of licensing authority. Section 17 empowers the licencing authority to suspend the licence. Section 18 provides revisional powers of State Government. ( 29 ) RULE 6 of the Cinemas (Regulation) Rules, (hereinafter called the 'rules') provides that if the applicant for licence is the owner of the site, building or equipment he shall produce before licencing authority necessary records relating to his ownership and possession. If he is not the owner, he shall produce to the satisfaction of the licencing authority, documentary evidence in proof of his lawful possession of the site, building or equipment. If he is not the owner, he shall produce to the satisfaction of the licencing authority, documentary evidence in proof of his lawful possession of the site, building or equipment. Therefore, under Rule 6 it is mandatory that if the person is not the owner of the building and equipment he has to produce the documentary evidence in proof of his lawful possession of site, building and equipment. Where it is not produced or produced record show that the applicant is not in lawful possession the licence cannot be granted. In this case lease is already expired and also possession cannot be said to be lawful possession. Further, the original licence was not granted in the name of the appellant. Therefore, the appellant was not entitled to file application for renewal unless he is empowered to file renewal application by the original grantee either by executing power of attorney or by giving consent. In present case both of that were absent. Further, the appellant was not in lawful possession of the theatre. Therefore, the rejection of the licence by the original authority and dismissal by the Appellate Authority are justified as the petitioner has no locus standi to file the renewal application. ( 30 ) AS Sec. 8 of the Karnataka Cinemas (Regulation) Act, demands licencing authority not to grant licence unless it is satisfied that Rules made under the Act is complied with, therefore, by reading all the above provisions of the Cinemas (Regulation) Act and Rules it is made clear unless an applicant proves that he is in lawful possession of the site, building or equipment no licence can be granted to him. Otherwise it amounts to violation of Sec. 8 of the Act and Rules thereunder. ( 31 ) IT is lastly, contended by the learned counsel for the appellant that respondent-landlord received the rent after expiry of the lease, therefore it must be deemed to be in lawful possession of the premises. When the lease of the building is defined under the Karnataka Rent Control Act and it is a composite lease of a Cinema Business, merely receiving rent for the building it cannot be said the lessee is in lawful possession unless there is renewal of lease. Therefore, we are unable to concede with the contention of the learned counsel for appellant. Therefore, we are unable to concede with the contention of the learned counsel for appellant. ( 32 ) THE learned counsel for appellant contended that the writ petition was dismissed at the admission stage, even before notice was ordered to the respondent-3 and respondent-3 has appeared before the Court and he was heard. Therefore, the learned single Judge ought not to have imposed costs. It is well settled proposition of law, imposition of costs follows results and the learned single Judge exercised his discretion and awarded costs, we do not want to interfere with the same. ( 33 ) WE do not see any merit in the appeal; accordingly, it is dismissed with no costs. Appeal dismissed. --- *** --- .