Owner Of Premises Cannot Be Made Liable For Third Party Damages Due To Conduct Of Business Of Tenant: Kerala High Court

Justice Sathish Ninan stated that the owner could at best be expected to oversee that the business was conducted by the tenant in accordance with the licence deed but could not be made liable for damages to a third party.

“The owner of the premises could not be made liable for any damage that occurred to a third party consequent on the conduct of the business by the occupier of the premises-the second defendant. However, the position would have been different if the entrustment was for the conduct of a business which is not permitted under law.”

The first defendant (owner) is the appellant who was the owner of a building containing shop rooms. He had let out his shop room to the second defendant (tenant) for storing explosive substances.

In the year 1997, an explosion took place in the store room. From the explosion, the plaintiff who has his building opposite to the owner suffered damages. The plaintiff filed a suit for damages seeking rupees 3 lakhs and the suit was decreed. The plaintiff alleges that the owner was liable since he had a partnership business with the tenant and that he owned the shop room. The owner was made liable by the Trial Court and aggrieved by this, he approached the High Court with a first appeal.

The Counsel for the plaintiff argued that the owner let out his building for conducting dangerous activity and he has the liability to indemnify third parties against damages from the activity in the leased premises. Relying upon Apex Court judgments, it was contended that the owner had absolute liability and was responsible for the damages caused by the explosion.

The Counsel for the appellant submitted that the owner of the premises, who was not an occupier cannot be made liable for the reason that he had let out the premises for the conduct of a business sanctioned under law in adherence to the explosives laws. It was also argued that the tenant had all licences to store the explosives and no articles prohibited by the Government or Municipality were kept on the premises.

The Court found that there was no evidence to show that the owner was a partner in the business of the tenant, hence, it stated that there was no liability for joint partnership or ownership of the business.

It further found that the tenant was the owner of the business and explosive articles the owner could not have been made liable.

“The 2nd defendant was the owner of the business and the articles. It was the 2nd defendant-tenant, who had control over the premises demised to him. It was he who was dealing with the explosive articles. As was noticed supra, Ext.B3 deed specifically required the second defendant to do the business in strict adherence to the relevant laws. At best it could be contended that the first defendant-owner of the premises was bound to see that the second defendant conducts the business in adherence with the terms of Ext.B3”, stated the Court.

The Court added that the situation would have been different if the owner of the building had leased the building for a business not permitted under law. In the facts of the case, the Court stated that there was no case that the tenant was carrying a business against the law without possessing licences and permissions.

Accordingly, the Court allowed the appeal and stated that the 1^st defendant-owner cannot be held liable for the damages claimed.

Counsel for appellant: Advocates Sumathi Dandapani, Millu Dandapani

Counsel for respondents: Advocate G Sreekumar (Chelur)

Citation: 2024 LiveLaw (Ker) 153

Case title: Johny Padikala V P C Hassan

Case number: RFA NO. 544 OF 2004

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