Decided on July 15,1955

Nooney Venkataswami And Sons Appellant
Sakala Virabhadraswami Respondents


VISWANATHA SASTRY,J. - (1.)The petitioner is the landlord and the respondent is the tenant. The landlord applied under Section 7 (3) (a) (iii) of the Madras Buildings (Lease and Rent Control) Act 1949 for eviction of the tenant on the ground that he required the building to carry on his business. The tenant opposed the claim of the landlord on the ground that the application for eviction was not bona fide. Both the Rent Controller and the Appellate Tribunal held that the landlord wanted the premises for his business and ordered eviction. On revision, the learned District Judge of Guntur reversed the order of the Appellate Tribunal and dismissed the landlord's application. The landlord is a cloth merchant. He has been doing business as a wholesale dealer in cloth in Guntur for a number of years. He has been carrying on this wholesale business in his own premises. Latterly, he wanted to start a retail business in cloth and for that purpose he obtained a licence from the Textile Control Officer, the licensing authority, on payment of the prescribed fee. Under the rules governing the issue of licenses a retail shop should be conducted in premises separate from the dealer's wholesale shop and with separate establishment and accounts. The landlord obtained the licence for carrying on retail trade in cloth some time in May 1951 and obtained quotas for cloth for the purpose of the retail business. Having obtained the licence and the quotas, he applied to the Rent Controller for eviction of the tenant from the premises on 29-9-1951. The learned District Judge dismissed the landlord's application on the ground that at the time when he applied for eviction of the tenant he had not obtained a licence and was not carrying on retail business in cloth and was therefore not entitled to evict the tenant having regard to the language of Section 7 (3) (a) (iii). The words used in the above provision are "for purposes of a business which he is carrying on". The argument for the petitioner is that that he is already a dealer in cloth, though a wholesale dealer, that he wanted to expand his business by opening a retail cloth shop, that for this purpose he paid the requisite fee and obtained a licence and the necessary quotas from the licensing and controlling authorities and that as he could not, under the rules and the conditions of the licence, carry on the retail business in the shop where he carries on wholesale business in cloth, he requires the premises from which eviction of the tenant is now sought, for carrying on the retail business. The phrase "carrying on business" has no fixed connotation and its meaning and effect have to be ascertained from the context in which it is used, the nature of the business and the transaction incidental to it. If a dealer carrying on wholesale business in cloth has also obtained the necessary licence and quota for carrying on retail business in cloth and all that remains for him is to remove the cloth from his wholesale shop into the retail shop and begin to sell the cloth, he has started his business operations. There is no yardstick by which we can measure the range of activities necessary to constitute the carrying on of a business. A business may take some time for its being organised and set on foot as a trading venture. When companies are formed for the purpose of carrying on business, there is often a considerable interval of time between the formation and the registration of the company and the actual commencement of the business for which it was formed. In businesses as in professions, there are initial stages and periods when there is very little activity visible to outsiders but nevertheless, the business or profession is regarded as being carried on. The contention of the respondent would lead to this result that a wholesale dealer in cloth who wants to carry on retail cloth business in another shop as required by the rules would have to take out a shop on rent for some time, stock his goods there and sell them in the rented premises before he can claim to get possession of his own premises for the retail business. This is hardly a result which could have been contemplated by the Legislature. If there is no bonafide preparation for running the business, then of course it is open to the Court to say that the demand for eviction is unjustified. Here, however, the facts tell the other way. The learned District Judge erred in assuming that the licence and quotas had not been obtained for the retail cloth business when the application for eviction was filed. A part of the business of retail cloth sale consisted in obtaining the licences on payment of the requisite fee and getting the quotas and that part of the business had already been completed. What remained was to get a place to carry on the retail trade, carry the goods to that place and start selling the goods. For this purpose the premises now in question were required by the dealer and it cannot be said that he did not require the premises for carrying on his business. The wording of the relevant provision is no doubt somewhat unhappy and it would have been better if the words "for purposes of carrying on a business" had been used instead of the words "for purposes of a business which he is carrying on". Even on the language of the clause as it stands, it can be said that the petitioner requires his building for a business which he is carrying on.
(2.)The learned Advocate for the respondent points out that the tenant had pleaded that the application of the landlord was not a bonafide one but was one made with the ulterior object of getting enhanced rent for the premises. This contention was negatived by the Rent Controller as well as by the Appellate Tribunal. The Appellate Tribunal found in agreement with the Rent Controller that the landlord required the building bonafide for his own use. It is no doubt true that the judgment of the learned District Judge does not refer to this point and proceeds only on the interpretation of Section 7 (3) (a) (iii) of the Act. But from this circumstance it cannot be said that the point whether the application was bonafide or not was raised or argued before the learned District Judge and omitted to be considered by him. I am, therefore, unable to accede to the contention that the District Judge should be asked to consider the question of the bona fides of the application.
(3.)For these reasons, I allow the Civil Revision Petition and restore the Order of the Appellate Tribunal with costs.
Revision allowed.


Click here to view full judgement.
Copyright © Regent Computronics Pvt.Ltd.