Shaha Ratansi Khimji and Sons v. Proposed Kumbhar Sons Hotel
Background
A firm rented a godown and alleged that the purchaser of the surrounding property damaged its foundations by excavation, blocked access and later demolished a wall. The godown ultimately collapsed. The firm's suit failed in the lower courts on the view that destruction of the building had ended the tenancy, leading to a larger-bench reference on conflicting precedents.
Decision Breakdown
The Supreme Court allowed the appeal and held that destruction of the building alone did not end this tenancy while the land beneath it continued to exist. A lease of a building ordinarily includes its site, and termination must follow the applicable statutory grounds rather than an assumed rule that the structure's loss automatically ends the lease. The Court approved T. Lakshmipathi and overruled the contrary approach in Vannattankandy Ibrayi. Because the firm had been out of possession for a long time, it declined to restore possession. Instead, it ordered the respondent to pay Rs. 20 lakh compensation within two months, with six per cent annual interest from the judgment date if payment was delayed.
Lesson Learnt
A rented building's collapse or demolition does not necessarily erase the tenant's interest in the site. This decision protected the surviving lease but awarded compensation in its particular circumstances; it did not give an unrestricted right to rebuild without permission.