Case: – Johny Padikala v/s P C Hassan; RFA No. 544 of 2004
The High Court of Kerala at Ernakulam recently delivered a judgment which dealt with the aspect of the liability of an owner of premises for damages which were caused by the tenant in course of the conduct of his business. The case revolves around the issue that whether the owner of a building can be held responsible for damages caused by the activities of a tenant, particularly when the business involves inherently dangerous substances.
The appellant, Johny Padikala, contested a decree that held him liable for damages arising from an explosion in a shop room he owned, where explosive substances were stored by his tenant. The trial court had found Johny Padikala, as the owner of the premises, responsible for the damages incurred due to the explosion. However, the appellant challenged this decision, arguing that he should not be held liable for the actions of his tenant.
The key argument put forth by the appellant was that he had leased out the premises to the tenant with all necessary precautions and in compliance with the Explosives Laws. The lease agreement explicitly stated that the tenant must adhere to all legal requirements and prohibited the storage of any unauthorized articles. Therefore, the appellant contended that since he had taken all necessary steps to ensure lawful conduct on the premises, he should not be held accountable for the explosion caused by the tenant’s activities.
The Hon’ble High Court in this judgment emphasized the principle that the owner of premises cannot be automatically held liable for damages caused by a tenant’s business activities, especially when the owner has taken reasonable precautions and the business is conducted in accordance with the law. He highlighted that the liability of the owner would be different if the business conducted by the tenant was illegal or prohibited by law.
Ultimately, the High Court ruled in favour of the appellant, stating that the owner of the premises cannot be held liable for damages resulting from the conduct of the tenant’s business.
This judgment underscored the importance of differentiating between the responsibilities of the owner and the tenant in such scenarios, particularly when the owner has fulfilled their obligations and the business is legally permitted.

Author of this article:
Adv. Ravish Bhatt,
Partner, R&D Law Chambers,
Dual Qualified Lawyer Solicitor | International Tax Affiliate

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