Full Judgment Text
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PETITIONER:
SHAH DHANSUKHLAL CHHAGANLAL
Vs.
RESPONDENT:
DALICHAND VIRCHAND SHROFF AND OTHERS
DATE OF JUDGMENT:
01/03/1968
BENCH:
MITTER, G.K.
BENCH:
MITTER, G.K.
SHAH, J.C.
BACHAWAT, R.S.
CITATION:
1968 AIR 1109 1968 SCR (3) 346
CITATOR INFO :
RF 1976 SC2005 (23)
RF 1977 SC1707 (12)
E&R 1978 SC 955 (1,4,5,10)
C 1980 SC 954 (11)
ACT:
Bombay Rents Hotel and Loadging House Rates Control Act,
1947-Ss. 12(1) and 12(3) (b)-Conditions for benefit under.
HEADNOTE:
The appellant was a tenant of the respondent. Having fallen
into arrears of rent he was given a notice (a) demanding
arrears of rent and permitted increases under the Bombay
Rents. Hotel and Lodging House Rat-as Control Act, 1947,
and (b) terminating his tenancy in terms of s. 106 of the
Transfer of Property Act, Receiving no response to the
notice the respondent filed a suit against the appellant.
On the first day of the Heading of the suit and during its
pendency the appellant deposited part of the arrears in
Court but not the full amount due. The trial Court passed a
decree against him which was confirmed by the appellate
Court. The High Court dismissed his revision petition.
With special leave-- he appealed to this Court and urged
that (i) he was entitled to the benefit of s. 12 ( 1 ) of
the Act and that (ii) even if s. 12 (3) (b) was applied he
was not liable to be eiected.
HElD : (i) Section 12(1) must be read with the Explanation
and so read it means that a tenant can only be considered
"to be ready and willing to pay" if, before the expiry of
the period of one month after notice referred to in sub-s.
(2), he makes an application to the court under sub-s. (3)
of section 11 and hereafter pays or tenders the amount of
rent or permitted increases specified by the court. The
readiness and willingness to pay has to be judged in the
light of the facts of the case. Where as in the present
case a suit is filed on the ground that the tenant was in
arrears for a period of more than six months and although
raising a dispute as to the standard rent or permitted
increases recoverable under the Act, the tenant makes no
application in terms of s. 11(3) he cannot claim the
protection of s. 12(1) by merely offering to pay or even
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paying aii arrears due from him when the court is about to
pass a decree against him. [351 H-352 B]
Shah Bhojraj Kuverji Oil Mills and Ginning Factory v.
Subbash Chandra Yograi Sinha, [1962] 2 S.C.R. 159,
distinguished.
Vora Abbasbhal Alimahomed v. Haii Gulamnabi Haii Safibhai,
[1964] 5 S.C.R. 157, Mrs. Manordma Masurekar v. Mrs.
Dhanlaxmi G. Shah and another. [1967] 1 S.C.R. 135, applied.
(ii) The case did not come under s. 12(3) (b). To be within
the protection of that provision, the tenant must not only
pay all the arrears due from him on the first day of the
hearing of the suit, but he must thereafter continue to ’pay
or tender in court regularly the rent and the permitted
increase till the suit is finally decided. There was a
failure on the part of the appellant to pay or tender in
court all the amounts which fell due, and he could not
therefore get the protection of s. 12(3) (b) of the Act.
[353 B-E]
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 455 of 1965.
Appeal by special leave from the judgment and order dated
September 11, 1962 of the Gujarat High Court in Civil
Revision Application No. 150 of 1960.
347
G. L. Sanghi, and B. R. Agarwala, for the appellant.
O. P. Malhotra and Ravinder Narain, for the respondents
Nos. 1 to 4.
The Judgment of the Court was delivered by
Mitter, J. This is an appeal by special leave from a judg-
ment of the High Court of Gujarat passed in a Civil Revision
Application arising out of a suit filed by the plaintiff-
respondent against the defendant-appellant to recover
possession of certain premises situate in Surat.
The facts are as follows. The appellant became a tenant of
the respondent under a rent note executed on February 27,
1947 whereby rent was fixed at Rs. 40 per month and the
tenancy was to be for a period of one year from 22nd
February, 1947. After the expiry of the said period, the
appellant continued as a monthly tenant on the same terms
and conditions as were to be found in the rent note. He
fell into arrears of payment of rent and the respondent sued
him for eviction some time in 1951. The suit was eventually
compromised by a petition put in court bearing date
September 16, 1952. Under the terms of the compromise, the
defendant continued as a tenant from September 1, 1952 on
the terms and conditions of the rent note dated February 27,
1947: the original conditions in respect of rent also
continued excepting that the rate was lowered from Rs. 40/-
-to quote the words of the compromise-to "standard rent of
Rs. 27" and "in the matter of taxes and interest also the
defendant was to act in accordance with the conditions of
the aforesaid rent note." Paragraph 2 of the compromise
petition contained an account of payments made by the
defendant the final. result thereof being that it was agreed
between the parties that the defendant had-paid Rs. 104-5-3
"which amount was to be rcmbursed by the plaintiff to the
defendant when accounting the future payment of rent." It
should be noted here that according to the rent note of 1947
the tenant had agreed to pay the monthly rent of Rs. 40
together with interest at Rs. 0-12-0 per cent per annum in
respect of any balance due for rent. Even after the
compromise, the defendant fell in arrears again. The only
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payments made thereafter up to the institution of the second
suit out of which the present proceedings have arisen were a
sum of Rs. 250 on July 19, 1954 and Rs. 200 on March 17,
1955. The defendant did not make any payment to the
plaintiff in rcspect of the permitted increases under the
Bombay Rents, Hotel and Lodging House Rates Control Act,
1947 from the 1 st of April, 1954; neither did he pay the
taxes agreed upon. The plaintiff gave a notice to the
defendant on April 18, 1955 demanding the arrears of rent
and permitted increases in terms of the said Act and also
terminating the tenancy of the defend-
348
ant with effect from May 31, 1955 in terms of s. 106 of the
Transfer of Property Act. The notice was received by the
defeiidant on April 21, 1955. No reply was sent thereto nor
was any payment made to the plaintiff. The suit for
ejectment was filed on March 15, 1956 the ground thereof as
laid in the plaint being that the defendant was in arrears
of payment of rent and permitted increases and as such not
entitled to the protection of the Act. In paragraph 6 of
the plaint the dues under various heads were specified
showing the arrears of rent, increases permitted thereon,
interest in terms of the rent note and taxes for three
years. It was pleaded by the defendant in the written
statement that rent at Rs. 27 had been fixed by the court
without going into the merits of the case and that standard
rent or reasonable rent of the property in suit had to be
fixed first and a preliminary issue in that respect should
be framed. The defendant did not admit the claim to the
arrears as laid in paragraph 6 of the plaint.
He also pleaded that the notice of ejectment was not a valid
one as the tenancy was to be reckoned in terms of the
Gujarati calendar and not the Gregorian calendar.
The date fixed for settlement of issues was September 3,
1956 which can be taken to be the date of the first hearing
of the suit for the purposes of the Act. On that day the
defendant deposited in court a sum of Rs. 1,000. Thereafter
the defendant made a deposit of a sum of Rs. 150 on February
25, 1957. The suit was decreed by the trial Judge on March
25, 1957. The trial Judge after considering the evidence on
record determined the standard rent of the premises at Rs.
27, exclusive of the permitted increases and water tax and
sanitary tax, payable by the defendant to the plaintiff.
Holding that the defendant had not complied with section
12(3)(b) of the Act he passed a decree for eviction. The
defendant went in appeal to the District Judge, Surat. He
raised no contention even at the hearin- of the appeal
either in regard to the standard rent of the premises or in
regard to interest on arrears of rent or municipal taxes or
permitted increases. The finding of the trial Judge that
the standard rent of the premises exclusive of permitted
increases and water tax and sanitary tax was Rs. 27,1- per
month was not challenged by the defendant. Nor was any
question raised as to the finding that the defendant was
liable to pay the plaintiff a sum of Rs. 123-4-0 as and by,
way of interest on arrears of rent, a sum of Rs. 81 as and
by way of water tax and sanitary tax for a period of three
years prior to the date of the suit and a sum of Rs. 2-1-9
per month as and by way of permitted increases from April 1,
1954. The point regarding the validity of the notice of
ejectment was however raised in the appeal. According to
the judgment of the High Court, "the only contention urged
349
before the learned Assistant Judge was, whether the
defendant had or had not complied with the requirements of
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section 12(3)(b) of the Rent Act." The Assistant Judge
concluded that there had been no compliance with that
section and upheld the decree for eviction.
In revision three contentions were. raised before the High
Court, namely, (1) as to the validity of the notice of
ejectment; (2) whether s. 12(3)(a) or 12(3)(b) of the Act
applied; and(3) whether the defendant was entitled to
protection under s. 12(1) of the Act. The High Court held
that it was not open to the tenant to raise the question of
the validity of the notice in a revision application.
Moreover, there was no substance in it as the compromise
petition expressly recorded that the tenancy in terms of it
should commence on September 1, 1952. With regard to the
second question the High Court held that "it was common
ground between the parties before the Assistant Judge that
the case of the defendant fell within section 12(3) (b) of
the Rent Act." The learned Judge of the High Court noted:
(a) The trial Judge turned down the
applicability of s. 12(3) (a) of the Act
holding that the defendant had disputed the
municipal taxes and permitted increases;
(b) The, conditions under s. 12(3) (b) of
the Act were not fulfilled;
(c) No contention about the applicability of
12(3) (a) was raised before the Assistant
Judge in appeal and he therefore did not go
into the question at all; and
(d) The conditions necessary for the
applicability of s. 12(3)(a) were not present,
as besides the amount of Rs. 27 mentioned in
the compromise petition, the tenant had to pay
other sums not due from him every month.
The High Court further found that after the first date of
hearing of the suit on September 3, 1956 rent of the
premises which fell due on 1st October 1956, 1st November
1956, 1st December 1956, 1st January 1957, 1st February 1957
and 1st March, 1957 remained unpaid on March 25, 1957 when
the suit was disposed of. As the defendant did not pay or
deposit in court regularly the amount of standard rent which
became due on the aforesaid dates barring the 1st of March
1957 (taking into account the deposit of Rs. 150 on February
25, 1957) there was default on the part of the defendant
attracting the operation of s. 12(3)(b) of the Act.
350
The High Court turned down the contention based on s. 12(1)
of the Act.
At the hearing of the appeal before us, learned counsel for
the appellant raised two points, namely:
(1) The provisions of S. 12(1) of the Act
were applicable throughout the hearing of the
suit and down to the date of the final
hearing. If at that stage it was found that
the defendant had paid up all arrears due from
him he could not be ejected.
(2) Even applying S. 12(3)(b) there was no
default on the part of the defendant which
would render him liable to eviction.
In order to appreciate the first contention it
is necessary to set out section 12 of the Act
as it stood at the relevant time :
"12(1)A landlord shall not be entitled to the
recovery of possession of any premises so long
as the tenant pays, or is ready and willing to
pay, the amount of the standard
rent and
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permitted increases, if any, and observes and
performs the other conditions of the tenancy,
in so far as they are consistent with the pro-
visions of this Act.
(2) No suit for recovery of possession shall
be instituted by a landlord against a tenant
on the ground of non-payment of the standard
rent or permitted increases due until the
expiration of one month next after notice in
writing of the demand of the standard rent or
permitted increases has been served upon the
tenant in the manner provided in section 106
of the Transfer of Property Act, 1882.
(3) (a) Where the rent is payable by the
month and there is no dispute regarding the
amount of standard rent or permitted
increases, if such rent or increases are in
arrears for a period of six months or more and
the tenant neglects to make payment thereof
until the expiration of the period of one
month after notice referred to in sub-section
(2), the Court may pass a decree for eviction
in any such suit for recovery of possession.
(b) In any other case, no decree for
eviction shall be passed in any suit, if, on
the first day of hearing of the suit or on or
before such other date as the Court may fix,
the tenant pays or tenders in Court the
standard rent and permitted increases then due
and thereafter conti-
351
nues to pay or tender in court regularly such
rent and permitted increases till the suit is
finally decided and also pays costs of the
suit as directed by the court.
(4) Pending the disposal of any such suit,
the Court may out of any amount paid or
tendered by the tenant pay to the landlord
such amount towards payment of rent or
permitted increases due to him as the Court
thinks fit.
Explanation.-In any case where there is a
dispute as to the amount of standard rent or
permitted increases recoverable under this Act
the tenant shall be deemed to be ready and
willing to pay such amount if, before the
expiry of the period of one month after notice
referred to in sub-section (2), he makes an
application to the Court under sub-section (3)
of Section 11 and thereafter pays or tenders
the amount of rent or permitted increases
specified in the order made by the Court."
Learned counsel drew our attention to a judgment of this
Court in Shah Bhojraj Kuverji Oil Mills and Ginning Factory
v. Subbash Chandra Yograj Sinha(1). There the landlord had
filed a suit for possession of the premises on April 25,
1957, the period of tenancy fixed under the rent note having
expired on March 14, 1957. Under s. 6 of the Act a
notification was issued applying Part II of the Act to the
area where the property was situate. The appellants claimed
protection of s. 12 of the Act and the main question which
engaged the attention of this Court was, whether by virtue
of the first proviso to s. 50 of the Act, all the provisions
in Part 11 including s. 12 were made expressly applicable to
all suits; and secondly, whether by virtue of s. 12(1) of
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the Act the suit was rendered incompetent. This Court
turned down the contention of the respondent that the
operation of s. 12(1) was limited to suits filed after it
came into force in a particular area and observed that under
s. 12(1) the landlord was not to be entitled to recover
possession and the point of time when the sub-section would
operate was when the decree for recovery of possession would
have to be passed,
It appears to us that there is no substance in the
contention put forward on behalf of the appellant. Section
12(1) must be read with the Explanation and so read it means
that a tenant can only be considered "to be ready and
willing to pay" if, before the expiry of the period of one
month after notice referred to in sub-section (2), he makes
an application to the court under sub s. (3) of section
11 and thereafter pays or tenders the amount of
(1) [1962] 2 S.C.R. 159.
352
rent or permitted increases specified by the court. We have
already noted that the tenant made no payment within the
period of one month of the notice of ejectment and although
in his written statement he raised a dispute about the
standard rent he made no application in terms of s. 1 1(3)
of the Act. The readiness and willingness to pay has
therefore to be judged in the light of the facts of the
case. Where as here a suit is filed on the ground that the
tenant was in arrears for a period of more than 6 months and
although raising a dispute as to the standard rent or per-
mitted increases recoverable under the Act, the tenant makes
no application in terms of s. 11(3) he cannot claim the
protection of s. 12(1) by merely offering to pay or even
paying all arrears due from him when the court is about to
pass a decree against him. In Vora Abbasbhai Alimahomed lv.
Hai; Gulamnabi Haji Safibhai(1) it was pointed out that s.
12(1) of the Act applied to a tenant who continued to remain
in occupation even after the expiry of the contractual
tenancy so long as he paid or was, ready and willing to pay
the amount of the standard rent and permitted increases.
The protection was howsoever available to a tenant subject
to the provisions of s. 13 and to the limitations contained
in s. 12(2) and s. 12(3)(a) of the Act.
In Mrs. Manorama Masurekar v. Mrs. Dhanlaxmi G. Shah and
another ( 2 ) rent was in arrears for a period of more than
six months and the tenant neglected to make payment of the
same within one month of the notice under s. 12(2). There
the rent was payable by the month and there was no dispute
regarding the amount of the rent. It was held that if the
conditions of sub-s. (3)(a) of s. 12 were satisfied the
tenant could not claim any protection from eviction by
tendering the arrears of rent after the expiry of one month
from the service of notice under sub-s. (2). It was
observed :
"It is immaterial whether the tender was made
before or after the institution of the suit.
In a case falling within sub-s. (3)(a), the
tenant must be dealt with under the special
provisions of sub-s. (3)(a), and he cannot
claim any protection from eviction under the
general provisions of sub-s. (1)"
As already noted, if sub-s. (3)(a) is not attracted, the
tenant, if he is in arrears, cannot sit quiet and offer to
pay all the amount due from him at the time of the hearing
of the suit so as to get the protection of s. 12(1). To be
within the protection of subs. (1) where he raises a dispute
about the standard rent payable, he must make an application
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to the court under sub-s. (3) of S. 11 and thereafter pay or
tender the amount of rent and permitted
(1) [1964] 5 S.C.R. 157.
(2) [1967] 1 S.C.R. 135.
353
increases, if any, specified in the order made by the Court.
If he does not approach the court under s. 1 1(3), it is not
open to him thereafter to claim the protection of s. 12(1).
The case clearly does not come within s. 12(3)(b). To be
within the protection of that provision, the tenant must not
only pay all the arrears due from him on the first day of
hearing of the suit, but he must thereafter continue to pay
or tender in court regularly the rent and the permitted
increases till the suit is finally decided. Before the date
of the suit, the appellant was entitled to a credit of Rs.
104-5-3; the total payments up to the date of the first
hearing including the. sum of Rs. 1,000 come to Rs. 1,554-5-
3. The amounts due from him, up to that date were :
(a) rent at the rate of Rs. 27
per month for 48 months. Rs. 1296-0-0
(b) permitted increases from
1-4-54 to 1-9-56. 61-3-9
(c) taxes. 81-0-0
(d) Interest on arrears at 9% p.a. 123-3-0
-------
making a total ofRs. 1561-6-9
Moreover, there was failure on the part of the appellant to
pay or tender in court the amounts which fell due from the
1st of October 1956 to the 1st of March, 1957. Thus,
leaving out of consideration the question of costs awarded
against him under the decree, the appellant cannot get the
protection under s. 12(3)(b) of the Act. A faint attempt
was made to raise the point about the invalidity of the
notice of ejectment on the plea that the same had to comply
with s. 12(2) of the Act. This is clearly fallacious as the
said section merely lays down the manner in which a notice
of demand of standard rent and permitted increases has to be
made.
The contentions raised on behalf of the appellants are
therefore without any merits and the appeal is dismissed
with costs.
G.C. Appeal dismissed.
354