Full Judgment Text
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PETITIONER:
RAVAL & CO.
Vs.
RESPONDENT:
K. C. RAMACHANDRAN & ORS.
DATE OF JUDGMENT11/12/1973
BENCH:
ALAGIRISWAMI, A.
BENCH:
ALAGIRISWAMI, A.
RAY, A.N. (CJ)
KHANNA, HANS RAJ
MATHEW, KUTTYIL KURIEN
BHAGWATI, P.N.
CITATION:
1974 AIR 818 1974 SCR (2) 629
1974 SCC (1) 424
CITATOR INFO :
F 1974 SC2331 (4)
RF 1975 SC1750 (8)
APR 1976 SC 869 (5)
RF 1978 SC1518 (9,11)
E 1979 SC1745 (7,15,17)
D 1986 SC1444 (4)
R 1987 SC2117 (21)
D 1988 SC 458 (8)
D 1989 SC1110 (15)
E&D 1991 SC 884 (14)
ACT:
Tamil Nadu Buildings (Lease and Rent Control) Act (18 of
1960). S. 4(1), 7-Definition of "landlord" and "tenant"
under Applicability to contractual tenancies and statutory
tenancies-Fixation of fair rent-Landlord whether entitled to
apply for fixation of fair rent during subsistence of
contractual tenancy-Interpretation of statutes.
Constitution of India, Art. 141 And precedents-General
observations in Supreme Court decision-Binding nature of
Evidence Act, 1972, Sec. 92-Variation in permission of
registered lease deed Oral evidence regarding variation
barred.
HEADNOTE:
On the tenants’ appeal, the Full Bench of the Madras High
Court held that the Act controls both contractual and
statutory tenancies and it enables both landlords and
tenants to seek the benefit of fixation of fair rent.
Thereafter, the matter came up before a Single Judge of the
High Court who applying the provisions of the’ Act to the
facts of the-case, held that the Act did not apply to the
premises in question. The Division Bench reversed this
decision, In the appeal by special leave the tenants mainly
contended that a landlord has no right to apply for the
fixation of a fair rent at a figure higher than the
contractual rent, where there was a subsisting contract of
tenancy.
Dismissing the appeal,
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HELD : (per majority and Bhagwati, JJ. Contra)
The present Act which replaces the 1949 Act adopts a
completely new scheme of its own and provides for every
contingency, i.e. in ’the relationship of landlord and
tenant. The provisions of the Act show that the Madras
Legislature deliberately proceeded on, the basis that fair
rent was to be fixed which was to be fair both to the
landlords as ’well as to the tenants, and that only the
poorer class of tenants needed protection. ’the assumption
that the Act like ill rent acts, is intended only for the
to on of tenants is not warranted by the provisions of the
Act. It is clear therefore, that the fair rent under
the present Act is payable during the contract period as
well as after the expiry of the contract period. [636C-F]
The analysis. of the Act shows that it has a scheme of its
own and it is intended to provide a complete code in respect
of. both contractual tanancees. the definitions of the term
"landlord" and "tenant" show that the Act applies to
contractual tenancies,as well as to. cases of statutory
tenants and their landlords. On some supposed general
principles governing all Rent Acts it cannot be argued that
such fixation can only be for the benefit of the tenants
when the Act clearly lays down that both landlords and
tenants can apply for fixation of fair. rent. A close
reading of the Act shows that the fair rent is fixed for the
building and it is payable by whoever is the-tenant whether
a contractual tenant or statutory tenant. What is fixed is
not the fair rent payable by the tenant or to, the landlord
who applies for fixation of fair rent but fair rent for the-
building somethings like an incident of the tenure,
regarding; the building. [637F]
630
The general observations to the contrary in Bhaiya Punjalal
Bhagwanddin v. Dave Bhagwat Prabhuprasad [1963] 3 S.C.R. 312
and Manujendra v. Purendu Prasad [1967] 1 S.C.R. 475, held
obiter.
Sri Brij Raj Krishna v. S. K. Shaw and Bros. [1951] S.C.R.
145, Hem Chand V. Sham Devi, I.L.R. [1955] Punj, 36, R.
Krishnamurthy v. Parthasarathy A.I.R. 1949 Mad. 780,
distinguished.
Abbashails case [1964] 5 S.C.R. 157 and Mangilal v.
Sugarchand Rathi [1964] 5 S.C.R. 239, referred to.
Per Mathew and Bhagwati, JJ : Two basic considerations must
guide our approach to the question whether a landlord can,
during the subsistence of the contractual tenancy, apply for
fixation of fair rent under section 4(1) of the Act. The
first is that the rent which is the result of contract
between the parties must continue to bind them so long as
the contract subsists, unless there is anything in the
statute which expressly or by necessary implication over-
rides the contract. It is to counter act the in justice
resulting from in equality in bargaining power and to bring
about social or distributive justice that social legislation
interferes with sanity of contract. Ordinarily, we do not
find and in deed it would be a strange and rather
incomprehensible phenomenon,that legislation intervenes to
disturb the sanctity of contract for the benefit of a
stronger party who does not need the protective bind of the
legislature. Secondly the Act has been enacted inter alia,
with the object of controlling rents of residential and non-
residential buildings and preventing unreasonable a diction
of tenants. Tamil Nadu Act 18 of 1960 is in its essential
character as also in its object and purpose similar to what
may conveniently be described rent control legislation, in
other States, such as Maharashtra, Gujarat, West Bengal and
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Madhya Pradesh. The general purpose and intendment of rent
control legislation and its positive thrust and emphasis on
the protection of the tenant cannot be lost sight of when we
are construing a similar legislation like the Tamil Nadu Act
18 of 1960 [642C]
Bhaiya Punjalal Bhagwanddin v. Dave Bhagwat prasad
Prabhuprasad [1963] 3 S.C.R. 312, Mangi Lal v. sugarchand
Rathi [1964] 5 S.C.R. and Manujendra v. Pwendu prasad
[1967] 1 S.C.R. 475 referred to.
Having regard to the basic character of the statute as a
rent control legislation and the scheme of its provisions
and reading sec. 4(1) in its contextual setting and in the
light of the other provisions of the statute, the conclusion
is inescapable that the ward "landlord" in sec. 4(1) is used
in a limited sense and it does not include contractual
landlord. The landlord does not have the right to apply for
fixation of fair rent during the subsistence of the
contractual tenancy. It is only when the contract of
tenancy is lawfully determined that he becomes entitled to
apply for fixation of fair rent, for it is only then that he
can recover fair rent higher than the agreed rent from the
statutory tenant, there being no contract of tenancy to bind
him down to the agreed rent. [646G]
(2) Per majority : General observations in earlier
decisions of this Court should be confined to the facts of
those case. Any general observation cannot apply in
interpreting the provisions of an Act unless this Court has
applied its mind to and analysed the provisions of that
particular Act. Therefore, the observations in (1967) 1
S.C.R. 475, that rent acts are not ordinarily intended to
interfere with contractual leases and are Acts for the
protection of tenants and are consequently restrictive and
not enabling conferring no now right but restricting the
existing rights either under the contract or under the
general law, should not be held to apply to all rent Acts
irrespective of the scheme of those acts and their
provisions. The present Act did not proceed on the basis
that the legislation regarding rent control was only for the
benefit of the tenants. It wanted the legislation to be
fair both to the landlord and the tenant. [834B]
(per Mathew and Bhagwati,JJ). The meaning of the term
landlord’ must not be confined to that given
in the definition or to its ordinary etymological meaning
but must be understood in the context of the setting in
which it occurs, and the scheme and object of the Act. The
Provisions of the Act, particularly of sec. 7, are clearly
restrictive in character and not enabling provisions
empowering the landlord to recover the fairrent where it is
higher than the agreed rent. This is the only rational
631
construction which can be placed on the relevant provisions
of the Act relating to control of rent and such a
construction is not only compelled by grammar and language
but also accords with the broad general considerations in
interpreting the rent control legislation.[646B]
Cog v.Hakes(1890) A.C. 15, and Whethered v. Calcutta(842)5
Scctt.N.R. 409,referred to.
(3)Any variation of rent reserved by registered lease deed
must be made by another registered instrument. The
agreement between the landlord and the tenant by which the
rent was increased being in variation of a written
contract,evidence of that was barred under section 92 of the
Evidence Act.
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JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeals Nos. 50 of 1968
and 1201 of 1970.
From the judgment and Order dated the 20th January 1966,
and’ 26th November 1968 of the Madras High Court in Writ
Appeals Nos. 1124 of 1963 and 153 of 1966.
K.S. Ramamurthy and S. Gopalakrishnan, for the appellant (in
both the appeals).
S.V. Gupte and A.S. Nambiar, for respondent Nos. 1-3 (in
both-., the appeals).
S. Govindaswaminathan, A.V..Rangam, N.S. Sivam and A.
Subshashini, for respondent No. 5 (in both the appeals).
B.R. Agrawala, for intervener (in C.A. 50/68).
The Judgment of A.N. Ray, C.J., H.R. Khanna and A. Alagiri--
swami, JJ. was delivered by Alagiriswami, J. The dissenting
Opinion of’ K.K. Mathew and P.N. Bhagwati JJ. was delivered
by Bhagwati, J.
ALAGIRISWAMI, J. The appellants are the tenants of a
property bearing door Nos. 16 and 17 on the Poonamallee High
Road in the city of Madras. They became tenants of this
building in May 1929, when the property was with one of the
predecessors in title of the present landlords, who are the
respondents in these appeals. Though, the appellants became
tenants in 1929 a registered lease deed came into existence
only in 1935 under which the lease was to run upto 1-5-1969.
The lessee was entitled to renewal on the same terms, and
conditions for another period of fifteen years. The monthly
rent agreed upon was Rs. 225/- and a sum of Rs. 225/- was
payable as an annual contribution towards repairs and Rs.
220/- towards public charges and taxes. In 1949 the parties
mutually agreed that the tenants were to pay a 25 per cent
increase in rent and also certain other amounts, The present
landlords purchased the property in 1962 and soon after
filed an application under Section 4 of the Madras (now
Tamil Nadu) Buildings (Lease and Rent Control) Act, 1960 for
fixation of fair rent. Thereupon the tenants filed writ
Petition No. 1124 of 1963 seeking, to restrain the landlords
from proceeding with that petition. The learned Single
Judge who heard the petition felt that in view of a long,
series of decisions of Madras High Court under the various
Rent Control Acts in force in Madras that they applied also
to contractual
632
tenancies in the matter of payment of rent as well as
eviction, the matter should be considered by a Full Bench
in view of the decisions of this Court in Rent Control
cases from certain other States.
The Full Bench after an elaborate consideration came to the
conclusion that the Act controls both contractual as well as
statutory tenancies, that it is a complete Code, and enables
both landlords and tenants to seek the benefit of fixation
of fair rent, whether a contractual tenancy prevails or it
has been determined. Thereafter the matter again came up
before the same learned Single Judge who, applying the
provisions of the Act to the facts of the case held that the
Act did not apply to the premises in question. On appeal by
the landlords a Division Bench of the High Court held that
the premises were not exempted from the provisions of the
Act and the Rent Controller has therefore jurisdiction to
entertain and dispose of on merits the application for
fixation of fair rent filed by the landlords. These two
appeals ;are against the judgments of the Full Bench
(reported in 1966 2 MLJ 68) and the Division Bench
respectively.
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Before we go further into a discussion of the questions that
arise :it is necessary to look into certain relevant
provisions of the Act.
Clause (6) of section 2 of the Act defines landlord thus :
"Landlord" includes the person who is
receiving or is entitled to receive the rent
of a building, whether on his own account .or
on behalf of another or on behalf of himself
and others or as an agent, trustee, executor,
administrator, receiver or’ .,guardian or who
would so receive the rent or be entitled to
receive the rent, if the building were let to
a tenant;"
Clause 8, in so far as it is relevant, defines
tenant as follows
"tenant" means any person by whom or on whose
account rent is payable for a building and
includes the surviving spouse, or any son, or
daughter, or the legal representative of a
deceased tenant who had been living with the
tenant in the building as a member of the
tenant’s family up to the death of the tenant
and a person continuing in possession after
the termination of the tenancy in his
favour......
Section 4 provides for an application for fixation of a fair
rent by the tenant as well as the landlord. The fair rent
for any residential building is to be six per cent gross
return per annum on the total cost of the building if it is
residential and nine percent if it is nonresidential. The
total cost has to be calculated by taking the cost of const
ruction at prescribed rates less depreciation at
prescribed rates as well as the market value of the site on
which the building stands. It is to include allowances for
such considerations as locality, features of architectural
interest, accessibility to market, dispensary or hospital,
nearness to the railway station or educational institution
and such ,other amenities as may be prescribed.
633
Section 5 provides that when the fair rent of a building has
been fixed no further increase shall be permissible except
in cases where some addition, improvement or alteration has
been carried out at the landlord’s expense and at the
tenant’s request. Similarly,. if there is a decrease or
diminution in the accommodation or amenities provided,, the
tenant may claim a reduction in the fair rent.
Section 6 provides for payment of additional sums in cases
where the taxes and cesses payable to local authorities are
increased.
Section 7 prohibits the landlord from claiming or receiving
or stipulating for the payment of any premium or anything in
excess of’ fair rent. It also provides that where a fair
rent has not been fixed the landlord shall not claim
anything in excess of the agreed rent.
Section 10 deals with the eviction of tenants and lays down
the conditions under which an eviction could be asked for.
One of those conditions mentioned in sub-section (3) is when
the Landlord requires. a residential building for his own
occupation or a non-residential building for the purpose of
his business. Clause (d) of sub-section (3) provides that
where the tenancy is for a specified period agreed upon
between the landlord and the tenant, the landlord shall not
be entitled to apply under that sub-section before the
expiry of such period.
Sections 12 and 14 provide for recovery of possession by
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landlord for repairs or for reconstruction.
Section 17 provides that the landlord is not to interfere
with the amenities enjoyed by the tenant.
Section 30 exempts from the provisions of the Act (1) any
building the construction of which was completed after the
commencement of the Act, and (2) any residential building in
respect of which the monthly rent payable exceeds two
hundred and, fifty rupees. We shall refer to other details
as and when they become relevant.
The above short analysis of the Act would show that the Act
provides for every contingency that is likely to arise in
the relationship ,of landlord and tenant.
On behalf of the appellants reliance is placed upon two
decisions of this Court, Bhaiya Punjalal Bhagwanddin v. Dave
Bhagwat prasad Prabhuprasad (1963 3 SCR 312) and Manujendra
v. Purendu Prasad (1967 1 SCR 475). They are cases dealing
with eviction. In those two cases it was held, broadly
speaking, that the provisions of the Acts there under
consideration were in addition to and not in derogation of
the provisions of the Transfer of Property Act. There are
certain general observations in those two decisions upon
which reliance was placed to contend that they apply to
cases of fixation of rent also. The argument was that as it
was held in those cases that the Acts did not provide the
landlord with additional rights which he did not possess
under his contract of tenancy, similarly where there was a
subsisting
634
contract of tenancy it is not open . to the landlord to take
advantage of the provisions of the Act to apply for fixation
of a fair rent at a figure higher than the contract rent.
We are not called upon in this case to consider whether
those two cases were correctly decided. But we must point
out that the general observations therein should be confined
to the facts of those cases. Any general observation
,cannot apply in interpreting the provisions of an Act
unless this Court has applied its mind to and analysed the
provisions of that particular Act. We may also point out
that in both those cases the contract of ’tenancy was not
subsisting. In a sense, therefore, the observations therein
were not really necessary for deciding those cases. We may
also point out that in Rai Brii Raj Krishna v. S.K. Shaw
Bros. (1951 SCR 145) dealing with the Bihar Buildings
(Lease, Rent and Eviction) Control Act, 1947 and
interpreting section 11 of that Act this Court observed as
follows :
’.’Section 11 begins with the words
’Notwithstanding anything contained in any
agreement or law to the,contrary’, and hence
any attempt to import the provisions relating
to the law of transfer of property for the
interpretation of the section would seem to be
out of place. Section II is a self-contained
section, and it is wholly unnecessary to go
outside the Act for determining whether a
tenant is liable to be evicted or not, and
under what conditions he can be evicted. It
clearly provides that a tenant is not liable
to be evicted except on certain conditions,
and one of the conditions laid down for the
eviction of a month to month tenant is non-
payment of rent."
’Similarly in Shri Hem Chand v. Shrimati Sham Devi (ILR 1955
Punj 36) which dealt with the Delhi and Ajmer Merwara Rent
Control Act, section 13(i) of which provided that no decree
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or order for the recovery of possession of any premises
shall be passed by any court in favour of the landlord
against a tenant, notwithstanding anything to the contrary
contained in any other law or any contract, it was h.-Id
that the Act provided the procedure for obtaining the relief
of ejectment and that being so the provisions of s. 106 of
the Transfer or Property Act had no relevance. Both these
cases were referred to in the decision in Bhaiya Punjalal
Bhagwanddin v. Dave Bhagwatprasad Prabhuprasad. Therefore,
the following observations in Manujendra ,v. Purendu Prosad
that
"Rent Acts are not ordinarily intended to
interfere with contractual leases and are Acts
for the protection of tenants and are
consequently restrictive and not enabling,
conferring no new rights of action but
restricting the existing rights either under
the contract or under the general law."
should not be held to apply to all Rent Acts irrespective of
the scheme of those Acts and their provisions. The decision
of the Madras High ’Court in R. Krishnamurthy v.
Parthasarathy (AIR 1949 Mad. 780-1 949 1 MLJ 412) where it
was held that section 7 of the Madras Buildings (Lease and
Rent Control) Act of 1946 had its own scheme
635
of procedure and therefore there was no question of an
attempt to reconcile that Act with the Transfer of Property
Act and that an application for eviction could be made to
the Rent Controller even before the contractual tenancy was
terminated by a notice to quit, should not have been
summarily dismissed on the grounds that it was contrary to
the decisions of this Court in Abbasbhai’s Case (1964 5 SCR
157) and Mangilal’s Case (1964 5 SCR 239) and therefore was
not a correct law, without examining the provisions of that
Act.
Be that as it may, we are now concerned with the question of
fixation of a fair rent. The legislation regarding control
of rents started during the Second World War. In Madras
first two orders under the Defence of India Rules were
issued as the Madras House Rent Control Orders, 1941 and the
Madras Godown Rent Control Order, 1942. In1945 these orders
were reissued with slight changes, as the Madras House
Rent Control Order, 1945 and the Madras Non-Residential
Buildings Rent Control Order, 1945. These were replaced by
the Madras Buildings (Lease and Rent Control) Act, 1946.
Under that Act for the first time both the tenant as well as
the landlord were given the right to apply for fixation of a
fair rent. This Act was later replaced by the Madras
Buildings (Lease and Rent Control) Act, 1949, which again
had a similar provision. But the important thing to note
about the fixation of a fair rent under both these Acts is
that the fair rent was related to the rents prevailing in
April 1940 and only a fixed percentage of increase from 8
11/3 to 50 per cent depending upon the rent payable was
allowed. The 1960 Act which replaced the 1949 Act adopted a
completely new scheme of its own. It provided for the
fixation of a fair rent on the basis of the cost of
construction and the cost of land and after allowing for
depreciation provided for a return of 6 per cent in the case
of residential buildings and 9 per cent in the case of non-
residential buildings. It also provided for increase in
rent for such factors as locality, nearness to railway
station, market, hospital, school etc. Another significant
fact is that all new buildings constructed after 1960 were
exempt from the scope of the Act. Still another departure
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was that the Act applies, in the case of residential
buildings, only if the monthly rent does not exceed Rs. 250.
The Act also provides for fixation of fair rent under the
new provisions even though fair rent for the building might
have been fixed under the earlier repealed enactments. All
these show that the Madras Legislature had applied its mind
to the problem of housing and control of rents and provided
a scheme of its own. It did not proceed on the basis that
the legislation regarding rent control was only for the
benefit of the tenants. It wanted it to be fair both to the
landlord as well as the tenant. Apparently it realised that
the pegging of the rents at the 1940 rates had discouraged
building construction activity which ultimately is likely to
affect every body and therefore in order to encourage new
constructions exempted them altogether from the provisions
of the Act. It did not proceed on the basis that all
tenants belonged to the weaker section of the community and
needed protection and that all landlords
636
belonged to the better off classes. It confined the
protection of the Act to the weaker section paying rents
below Rs. 250. It is. clear, therefore, that the Madras
Legislature deliberately proceeded on the basis that fair
rent was to be fixed which was to be fair both to the
landlords as well as to the tenants and that only the poorer
classes of tenants needed protection. The facile assumption
on the basis of which an argument was advanced before this
Court that all Rent Acts are intended for the protection of
tenants and, therefore, this Act also should be held to be
intended only for the protection of tenants breaks down
when the provisions of the Act are examined in detail. The
provision that both the tenant as well as the
landlord can apply for fixation of a fair rent would become
meaningless if fixation of fair rent can only be downwards
from the contracted rent and the contract rent was not to be
increased. Of course, it has happened over the last few
years that rents have increased enormously and that is why
it is argued on behalf of the tenants that the contract
rents should not be changed. If we could contemplate a
situation where rents and prices are coming down this
argument will break down. It is a realisation of the fact
that prices and rents have enormously increased and there-
fore if the rents are pegged at 1940 rates there would be no
new construction and the community as a whole would suffer
that led the Madras Legislature to exempt new buildings from
the scope of the Act, it realised apparently how dangerous
was the feeling that only "fools build houses for wise men
to live in". At the time the 1960 Act was passed the Madras
Legislature had before it the precedent of the Madras
Cultivating Tenants (Payment of Fair Rent) Act, 1956. That
Act provides for fixation of fair rent. It also provides
that the contract rent, if lower, will be payable during the
contract period. Even if the contract rent is higher only
the fair rent will be payable. After the contract period is
over only the fair rent is payable. The Madras Legislature
having this Act in mind still made only the fair rent
payable and not the contract rent if it happens to be lower.
It is clear, therefore, that the fair rent under the present
Act is payable during the contract period as well as after
the expiry of the contract period.
It was argued that the basis of the decisions in Rai Brij
Raj Krishan’s Case and Shri Hem Chand’s Case was the non-
obstante clause in those two Acts. But it is well settled
that the intention that a legislation should, take effect
notwithstanding any earlier legislation on the subject can
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be both explicit and implicit and that is the Position in
the present case. We do not also feel called upon to refer
to the decisions in Glossop v. Ashley (1921 2 KB 450), a
Newell v. Crayford Cottage Society (1922 1 KB 656), and Kerr
v. Bryde (1923 Act 16), nor to the various statements
regarding the law in Megarry’s work on the Rent Acts relied
upon by Sri K. S. Ramamurthy on behalf of the appellants.
They are based on the relevant provisions of the Act,in
force in England particularly section 3(1) of the Increase
of Rent & Mortgage Interest (Restrictions) Act, 1920 which-
reads.
637
"Nothing in this Act shall be taken to
authorise any increase of rent except in
respect of a period during which but for this
Act the landlord would be entitled to obtain
possession."
The provisions of the Act under considerations show that the
are to take effect notwithstanding any contract even during
the subsistence of the contract. We have already referred
to the definition of the terms ’landlord’ and ’tenant’ which
applies both to subsisting tenancies as well as tenancies
which might have come to an end. We may also refer to the
provision in section 7(2) which lays down that where the
fair rent of a building has not been fixed the landlord
shall not claim anything in addition to the agreed rent,
thus showing that the fair rent can be fixed even where
there is an agreed rent. That is why we have earlier
pointed out that the various English decisions which provide
for fixation of rent only where the contractual tenancy has
come to an end do not apply here. We may also refer to sub-
section (3) of section 16 which deals with cases where a
landlord requires a residential or non-residential building
for his own use. Clause (d) of that sub-section provides
that where the tenancy is for a term the landlord cannot get
possession before the expiry of the term, thus showing that
in other cases of eviction covered by section 10 eviction is
permissible even during the continuance of the contractual
tenancy if the conditions laid down in section 10 are
satisfied.
The Madras High Court reviewed all the decisions of this
Court’ except the latest one in Manujendra v. Purendu
Prosad. We have already pointed out that the criticism made
in that decision regarding Krishnamurthy’s Case was not
justified. We are in agreement with the view of the Full
Bench of the Madras High Court that the various decisions of
this Court were based upon particular provisions of the
Acts. which were under consideration, mainly the Bombay Act
which is vitally different from the Madras Act. A close
analysis of the Madras Act shows that it has a scheme of its
own and it is intended to provide a complete code in respect
of both contractual tenancies as well as what are popularly
called statutory tenancies. As noticed earlier the
definition of the term ’landlord’ as well as the term
’tenant’ shows that the Act applies to contractual tenancies
as well as cases of "statutory tenants" and their.
landlords. On some supposed general principles governing
all Rent Acts it cannot be argued that such fixation can
only be for the benefit of the tenants when the Act clearly
lays down that both landlords and tenants can apply for
fixation of fair rent. A close reading of the Act shows
that the fair rent is fixed for the building and it is
payable by whoever is the tenant whether a contractual
tenant. or statutory tenant. What is fixed is not the fair
rent payable by the tenant or to the landlord who applies
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for fixation of fair rent act fair rent for the building,
something like an incident of the fair regarding the
building.
We have then to deal with Civil Appeal No. 1201 of 1970.The
learned Single Judge considering that as the total amount
annually in respect of these premises was Rs. 5032/-, which
lakhs the rent payable to exceed Rs. 400/- a month, the
building was outside 15-M602Sup. CI 74
638
the scope of the Act and therefore the petition for fixation
of fair rent does not lie. (This provision was removed by an
Amending Act of 1964). The learned Judges of the Division
Bench on the other hand held that the agreement of the year
1949 between the landlord and the tenant by which the rent
was increased was one in variation of a written contract and
therefore evidence of it is barred under section 92 of the
Evidence Act. Clearly any variation of rent reserved by a
registered lease deed must be made by another registered
instrument. We are not able to accept the argument of Sri
K. S. Ramamurthy on behalf of the tenants that the agreement
of 1949 was one by the landlord to give up his right to
apply for fixation of fair rent in consideration of the
additional rent agreed to be paid by the tenant and is,
therefore, not covered by section 92 of the Evidence Act.
The correspondence between the parties makes it clear beyond
doubt that the agreement was to pay increased rent. If this
agreement is left out of account the rent payable is below
Rs. 400/- a month, and, therefore, the decision of the
Division Bench is correct.
Before concluding we must refer to one other argument on
behalf of the appellants. Under section 30 of the Act, as
originally enacted, any residential building the rent of
which exceeded Rs. 250 /- per month and any non-residential
building whose rent exceeded Rs. 400/- a month were outside
the scope of the Act. In 1964 the Act was amended so as to
provide that all non-residential buildings would be within
the scope of the Act. This amendment was attacked on the
ground that it contravened the provisions of Art. 19(1) of
the Constitution. In view of our finding earlier that this
case should be decided on the basis of the monthly rent
being below Rs. 400/- this argument does not fall to be
considered.
In the result the appeals are dismissed. The appellants
will pay the respondents’ costs.
BHAGWATI J. We have had the advantage of reading the
judgment prepared by our brother Alagiriswami, J., and
though we, agree with him in regard to the decision in Civil
Appeal No. 1201 of 1970, we find it difficult to assent to
the view taken by him in Civil Appeal No. 50 of 1968. The
facts giving rise to the two appeals have been stated
clearly and succinctly in the judgment given by our learned
brother and we think it would be a futile exercise to
reiterate them. We may straight away proceed to examine the
question which arises for consideration in. Civil Appeal
No. 50 of 1968. The question is whether a landlord can
during the subsistence of the contractual tenancy, apply for
fixation of fair rent under s. 4 of the Tamil Nadu Buildings
(Lease and Rent Control) Act, 1960 (hereinafter referred to
as the Tamil Nadu Act 18 of 1960). The determination of
this question depends on the true interpretation of certain
provisions of the Tamil Nadu Act 18 of 1960 and we may,
therefore, refer to those provisions and see what is their
proper meaning and effect.
The long title and the preamble of the Tamil Nadu Act 18 of
1960 show that it is enacted "to amend and consolidate the
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law relating to the regulation of the letting of residential
and non-residential buildings and the control of rents of
such buildings and the preven-
639
tion of unreasonable eviction of tenants therefrom in the
State of Tamil .Nadu". See, 2, cl. (6) gives an inclusive
definition of ’landlord’ and according to this definition,
’landlord’ includes "the person who is receiving or is
entitled to receive rent of a building, whether on his own
account or on behalf of another or on behalf of himself and
others or as an agent, trustee, executor, administrator,
receiver or guardian or who would so receive the rent or be
entitled to receive the rent, if the building were let to a
tenant". Thus the owner of a building which becomes vacant
would be ’landlord’ within the meaning of that expression as
defined in s. 2, cl. (6) and so also would be the landlord
during the subsistence of the contractual tenancy as also
after the termination of the contractual tenancy where the
tenant continues to remain in possession of the building.
’Tenant’ is defined in s. 2, cl. (8) to mean "any person by
whom or on whose account rent is payable for a building and
includes the surviving spouse, or any son, or daughter, or
the legal representative of a deceased tenant who had been
living with to tenant in the building as a member of the
tenant’s family up to the death of the tenant and a person
continuing in possession after the termination of the
tenancy in his favour". This definition is wide enough to
include not only a contractual tenant but also a tenant
remaining in possession of the building affect the termi-
nation of the contractual tenancy. Section 3 enacts
detailed provisions regulating the letting of residential
and non-residential buildings. The broad scheme of this
section is that when a building becomes vacant, the landlord
is required to give notice of the vacancy to the authorised
officer and if the building is required "for the purposes of
the State or Central Government or of any local authority or
of any public institution under the control of any such
Government or for the occupation of any officer of such
Government", the authorised officer may give necessary
intimation in that behalf to the landlord and on receipt of
such intimation, the landlord would be bound to deliver
possession of the building to the authorised officer or to
the allottee named by the authorised officer, as the case
may be, and the Government would be deemed to be the tenant
of the landlord on such terms as may be agreed upon between
the landlord and the Government, or in default of agreement,
determined by the Controller. The rent payable by the
Government to the landlord would be the "fair rent, if any,
fixed for the. building under the provisions of this Act and
if no fair rent has been so fixed, such reasonable rent as
the authorised officer may determine", but "the reasonable
rent fixed by the authorised officer-shall be subject to
such fair rent as may be fixed by the Controller". Section
4 provides for fixation of fair rent of a building on the
application of the tenant or the landlord. Sub-s. (1) of
the section is material and it says that "The Controller
shall, on, application by the tenant or the landlord of a
building and .after holding such inquiry as the Controller
thinks fit, fix the fair rent for such building in
accordance with the principles set out in subsection (2) or
in sub-section (3) as the case may be, and such other
principles as may be prescribed". Sub-s. (2) lays down the
principles for fixation of fair rent of residential building
and sub-s. (3), for fixation of fair rent of non-residential
building. The fiar rent is to be such as would provide 6 %
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gross_return per annum on
640
the total cost of the building, if it is residential and 9
gross return per annum on the total cost of the building, if
it is non-residential. The total cost of the building is to
be computed by taking the cost of construction as calculated
according to the prescribed rates less depreciation also at
the prescribed rates and adding to it the market value of
that portion of the site on which the building is
constructed and making allowances for such considerations as
locality in which the building is situated, features of
architectural interest, accessibility to market, dispensary
or hospital, nearness to the railway station or educational
institution and such other amenities as may be prescribed.
It may be pointed out that under the Madras Buildings (Lease
and Rent Control) Act, 1946 and the Madras Buildings (Lease
and Rent Control) Act, 1949, which preceded the Tamil Nadu
Act 18 of 1960, the scheme of fixation of fair rent was
different, in that the fair rent was related "to the
prevailing rate of rent in the locality for the same or
similar accommodation in similar circumstances during the
twelve months period to 1st April, 1940" and only a fixed
percentage of increase varying from 8 1/3 % to 50 % was
allowed on such rate of rent, depending upon whether it
exceeded or did not exceed a certain limit’ But the
Legislature while enacting the Tamil Nadu Act 18 of 1960
made a departure from that scheme presumably because it felt
that in view of the staggering and disproportionately heavy
fall in, the purchasing power of the rupee over the last 30
years, it was most, unrealistic to peg the fair rent to the
level of rents prevailing during the period of 12 months
prior to 1st April, 1940 and allow only an ad hoc percentage
of increase, and therefore, in s. 4, sub-ss. (2) and (3), it
adopted a different basis for fixation of fair rent which
would not unduly depreciate the yield permissible to the
landlord and at the same time, be not extortionate or
exploitative of the tenant. Now once the fair rent of a
building is fixed under s. 4, sub-s. (1), no further
increase in such fair rent is ’permissible except in cases
where some addition, improvement or alteration has been
carried out at the expense of the landlord and if the
building is then in the occupation of a tenant, at his
request and similarly, if there is a decrease or diminution
in the accommodation or amenities, the tenant may claim
reduction in such fair rent. Vide s. 5. Section 6 provides
that where the amount of the taxes and cesses payable in
respect of a building to a local authority for any half year
commencing on 1st April, 1950 or on any later date exceeds
the amount of taxes and cesses payable for the half year
commencing on 30th September, 1946 or for the first complete
half year after the date on which the building was first let
out, whichever is later, the landlord shall be entitled to
claim such excess from the tenant in addition to the rent
payable for the building. The consequences of fixation of
fair rent are set out in s. 7, sub-s (1) and (3). Sub-
section (1) says that where the Controller has fixed the fair
rent of a building-
"(a) the landlord shall not claim, receive or
stipulate for the payment of (i) any premium
or other like sum in addition to such fair
rent, or (ii) save as provided in section 5 or
section 6, anything. in, excess of such fair
rent
641
(b)...... any premium or other like. sum or
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any rent paid in addition to, or in excess of,
such fair rent whether before or after the
date of the commencement of this Act, in
consideration of the grant, continuance or re-
newal of the tenancy of the building after the
date of such commencement, shall be refunded
by the landlord to the person by whom it was
paid or at the option of such person, shall be
otherwise adjusted by the landlord;
Provided that where before the fixation of the
fair rent, has been paid in excess thereof,
the refund or adjustment shall be limited to
the amount paid in excess for the period
commencing on the date of application by the
tenant or landlord under sub-section (1) of
section 4 and ending with the date of such
fixation."
Sub-sec. (3) declares that any stipulation in contravention
of sub-s. (1) shall be null and void. These are the only
provisions of the Tamil Nadu Act 18 of 1960 which have a
direct bearing on the determination of the question before
us, but reference was also made to certain other provisions
of that Act dealing with eviction of tenants for the purpose
of drawing support by way of an a logical reasoning from the
decisions of this Court interpreting those provisions and we
must, therefore, briefly advert to them. Section 10 confers
protection on the tenant against eviction "in execution of a
decree or otherwise" by providing that he shall not be
evicted except in accordance with the provisions of that
section or sections 14 to 16. Sub-ss. (2) and (3) of s. 10
set out the grounds on which the tenant my be evicted by the
landlord. One of the grounds-that set out in cl. (a) of
sub-s. (3)-is that the landlord requires the building, if
residential, for his ,own occupation or for the occupation
of his son, and if non-residential, for a business which he
or his son is carrying on, but in respect of this ground,
there is a limitation imposed by cl. (d) of sub-s. (3) that
when the tenancy is for a specified period agreed upon
between the landlord and the tenant, the landlord shall not
be entitled to apply for possession under sub-s. (3) before
the expiry of such period. Sections 12 to 14 provide for
recovery of possession of the building by the landlord for
repairs or reconstruction. These provisions are not
material and we need not refer to them in detail. Then we
go straight to s. 30 which exempts certain buildings from
the operation of the Act. Every new building the
construction of which is completed after the commencement of
the Act is exempted under cl. (i). The reason obviously is
that the legislature wanted to encourage construction of new
buildings so that more and more buildings would become
available for residential as well as non-residential
purposes and that would help relieve shortage of
accommodation. Cl. (ii) exempts any residential building or
part thereof occupied by any tenant, if the monthly rent
paid by him exceeds Rs. 250/Here the object of the
Legislature clearly was that the the protection of the
beneficent provisions of the Act should be available only to
,small tenants paying rent not exceeding Rs. 250/- per
mouth, as they
642
belong to the weaker sections of the community and really
need protection against exploitation by rapacious landlords.
Those who can afford to pay higher rent would ordinarily be
well-to-do people and they would not be so- much in need of
protection and can, with,out much difficulty, look after
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themselves.
It is in the light of these provisions of the Tamil Nadu Act
18 of 1960, that we have to consider whether a landlord can,
during the subsistence of the contractual tenancy, apply for
fixation of fair rent under. s. 4, sub-s. (1). Two basic
considerations must guide our approach to this question.
The first is that the agreed rent which is the result of
contract between the parties must continue to bind them so
long as the contract subsists, unless there is anything in
the statute which expressly or by necessary implication
overrides the contract, It is true that with the decline of
the doctrine of laissez faire and the assumption by the
State of a more dynamic and activists role, the principle of
sanctity of contract which is one of the pillars of a free
market economy, has in a number of cases been eroded by
legislation. But if we examine such legislation it will be
apparent that this has happened invariably in aid of the
weaker party to the contract. Where there is unequal
bargaining power between the parties, freedom of contract is
bound to produce injustice and social legislation therefore
steps in and overrides the. contract, with a view to
protacting the weaker party from the baneful Consequences of
the contract. It is to contract the injustice resulting
from inequality in bargaining power and to bring about
social or distributive justice that social legislation
interferes with sanctity of contract. It seeks to restore
the balance in the scales which are otherwise weighted in
favour of the stronger party which has larger bargaining
power. Ordinarily we do. not find, and indeed it would be a
strange and rather incomprehensible phenomenon, that
legislation intervenes to disturb the sanctity of contract
for the benefit of a stronger party who does not need the
protective hand of the legislature. This consideration we
must constantly keep. before us while construing the
relevant provisions of the Tamil Nadu Act 18 of 1960.
Secondly the Tamil Nadu Act 18 of 1960, as its long title
and preamble show, has been enacted inter alia with the
object of controlling rents of residential and non-
residential buildings and preventing unreasonable eviction
of tenants. Now, there can be no doubt that in so far as it
is calculated to prevent unreasonable eviction of tenants,
the Tamil Nadu Act 18 of 1960 is a protective measure
intended to safeguard tenants against indiscriminate
eviction by landlords. Equally, by controlling the rents by
keeping them within fair and reasonable limits, the Tamil
Nadu Act 18 of 1960 seeks to protect tenants against greedy
and rapacious landlords who taking advantage of the great
scarcity of housing- accommodation which prevails in almost
all urban areas, may extract excessive and unconscionable
rent from tenants. The Tamil Nadu Act 18 of 1960 is in its
essential character as also in its object and purpose
similar to what may conveniently be described as rent
control legislation, in other States, such as Maharashtra,
Gujarat, West Bengal and Madhya Pradesh.
643
Now it is well settled by decisions of this Court that rent
control Acts are "not ordinarily intended to interfere with
contractual leases and are Acts for the protection of
tenants and are consequently restrictive and not enabling or
conferring any rights of action but restricting the existing
rights either under the contract or under the general law."
That is what this Court said in Manuiendra Dutt v. Purendu
Prosad Roy Chowdhury & Ors.(1), while dealing with the
Calcutta Thika Tenancy Act, 1949. The same view was taken
by this Court in Bhaiya Punjalal Bhagwanddin v. ’Dave
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Bhagwat Prasad Prabhuprasad(2) in relation to Bombay Rents,
Hotel and Lodging House Rates. Control Act, 1947 which
prevails in Maharashtra and Gujarat and which has long title
and preamble in almost the same terms as the Tamil Nadu Act
18 of 1960. This Court said in that case: "the Act,", that
is the Bombay Rent Act "intended therefore to restrict the
rights which the landlords possessed either for charging
excessive rents or for evicting tenants". The Madhya
Pradesh Accommodation Control Act, 1955 was also construed
in the same way by this Court in Mangilal v. Sugarchand
Bathi.(3) This general purpose and intendment of rent
control legislation and its positive thrust and emphasis on
the protection of the tenant cannot be lost sight of when we
are construing a similar legislation like the Tamil Nadu Act
18 of 1960.
We may now turn to examine the relevant provisions of the
Tamil Nadu Act 18 of 1960 against the background of these
general considerations. Section 4, sub-s. (1) contemplates
that an application for fixation of fair rent of a building
may be made by the tenant or the landlord. The definition
of "tenant", as we have pointed out above, includes
contractual tenant as well as tenant remaining in possession
of the building after determination of the contractual
tenancy, that is, statutory tenant, and both contractual
tenant and statutory tenant can, therefore, apply for
fixation of fair rent under S. 4, sub-S. (1). The
Government, who is deemed to be the tenant of the landlord
under S. 3, sub-s. (5), can also similarly avail of the
provision for fixation of fair rent in s. 4, sub-s. (1).
The question is as to who are the persons comprehended
within the expression ’landlord’ who can apply for fixation
of fair rent under S. 4, sub-s. (1). The landlord, where
the Government is deemed. to be the tenant under. S. 3,
sub-s. (5), would certainly be entitled to make such
application and, having regard to the wide definition of the
expression ’landlord’, which includes not only contractual
landlord but also statutory landlord, if one may use that
expression to describe the counterpart of statutory tenant,
it was common ground between the parties that the statutory
landlord can also avail of this provision, but the dispute
was whether the contractual landlord is within the ambit of
this provision. Can he apply for fixation of fair rent
under S. 4, sub-s. (1)p ? Now prima facie according to ’the
definition as also according to its plain natural
connotation, the expression ’landlord’ includes contractual
landlord and it might, therefore, appear at first blush, on
a purely literal construction, that the contractual landlord
can make an application for fixation of fair rent under s.
4, sub-s. (1). But is well settled that a definition
clause
(1) [1967] 1 S.C.R. 475.
(2) [1963] 3 S.C.R. 312.
(3) [1964] 5 S.C.R. 239.
644
is not to be taken as substituting one set of words for
another or as strictly defining what the meaning of a term
must be under all circumstances, but as merely declaring
what may be comprehended within the term, when the
circumstances require that it should be so comprehended. It
would, therefore, always be a matter of interpretation
whether or not a particular meaning given in the definition
clause ,applies to the word as used in the statutory
propriety. That would depend on the subject and the
context. Moreover, it is equally well established that the
meaning of words used in a statute. is to be found, not so
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much in strict etymological propriety of language, nor even
in popular use, as in the subject or occasion on which they
are used and the object which is intended to be achieved.
The context, the ,collocation and the object of the words
may show that they are not intended to be used in the sense
which they ordinarily bear, but are meant to be used in a
narrow and limited sense. Lord Herschell pointed out in Cox
v. Hakes (1) "It cannot, I think, be denied that, for the
purpose of construing any enactment, it is right to look,
not only at the provision immediately under construction,
but at any others found in connection with it which may
throw light upon it, and afford an indication that general
words employed in it were not intended to be applied without
some limitation." However wide in the abstract, general
words must be understood as used with reference to the
subject matter in the mind of the legislature and limited to
it. Thus, in Whethered v. Calcutta(2) a statute which,
reciting the inconveniences arising from church wardens and
overseers making clandestine rates, enacted that those
officers should permit "every inhabitant" of the parish to
inspect the rates under a penalty for refusal, was held not
to apply to a refusal to one of the church wardens, who was
also an inhabitant. As the object of the statute was to
protect those in habitants who had previously no access to
the rates (which the church wardens had, the meaning of the
term ’inhabitants’ was limited to them. The same approach
in interpretation must be adopted by us in the present case.
We must not allow ourselves to be unduly obsessed by the
meaning of ’landlord’ given in the definition or by its
ordinary etymological meaning but we must examine the scheme
of the relevant provisions of the statute, the contextual
setting in which s. 4, sub-s. (1) occurs and the object
which the legislation is intended to achieve, in order to
determine what is the sense in which the word ’landlord’ is
used in s. 4. sub-s. (1)-whether it is intended to include
contractual landlord.
It is necessary for this purpose to consider what are the
consequences of fixation of fair rent, for that furnishes
the key to the solution of the problem before us. The fair
rent, when fixed, becomes an attribute or incidence of the
building and there can be no change in it except in the
circumstances set out in s. 5. When the fair rent is fixed,
three possibilities may arise. The fair rent may be the
same as the agreed rent in which case no difficulty arises.
Or the fair rent may be less than the agreed rent. Where
that happens, s. 7, sub-s. (i), ,el. (a) operates and it
provides that the landlord shall not be entitled to claim,
receive or stipulate for payment of anything in excess of
the
[1890] 15 A.C. 506.
(2) [1842] 5 Scott. N.R, 409.
645
fair rent. The landlord, can, in such a case, claim,
receive or recover only the fair rent and nothing more,
despite the contract of tenancy which provides for payment
of higher rent. To that extent sanctity of contract is
interfered with by the legislation in order to protect the
tenant against exploitation by the landlord so that the
landlord may not take undue advantage of shortage of housing
accommodation and extract excessive rent from a needy and
helpless tenant. The stipulation in the contract of tenancy
for payment of higher rent would in such a case be clearly
in contravention of sub-s. (1) of s. 7 and would be null and
void under s. 7, sub-s. (3). But what happens if the fair
rent fixed is higher than the agreed rent? Can the landlord
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claim to recover such fair rent from the tenant, overriding
the contract of tenancy which provides for payment of lesser
rent? We do not think so. There is nothing in s. 7 or in
any other provision of the Tamil Nadu Act 18 of 1960 which
can by any process of construction be read as authorising
the landlord to override the contract of tenancy and claim
fair rent higher than the agreed rent from the tenant. If
the legislative intent were that, even though the contract
of tenancy is subsisting, the landlord should be entitled to
recover fair rent higher than the agreed rent, we should
have expected the Legislature to say so in so many terms,
as it has done in s. 7, sub-s. (1), cl. (a) when it wanted
the landlord not to be able to recover the agreed rent where
it is in excess of the fair rent. It may no noted that
whenever the Legislature intended to confer on the landlord
a right to recover any amount which he would not otherwise
have under the contract or the general law, the Legislature
has done so in clear and specific language as in s. 6 of the
Act. But here we do not find any such provision, either
express or necessarily implied. We may also profitably com-
pare the language of the provision in s. 3, sub-s. (5).
There it is provided that "the reasonable rent fixed by the
authorised officer-shall be subject to such fair rent as may
be fixed by the Controller". The words "subject to" clearly
take in both kinds of cases, where the fair rent fixed is
higher as well as lower than the reasonable rent. in s. 7,
sub-s. (1), cl. (a), however the Legislature has departed
from this phraseology and instead of saying that the agreed
rent shall be subject to the fair rent or the rent payable
by the tenant shall be the fair rent, the Legislature has
merely laid an embargo on the landlord prohibiting him from
recovering anything in excess of the fair rent. This provi-
sion is clearly, without doubt, restrictive in character. it
is not an enabling provision empowering the landlord to
recover the fair rent where it is higher than the agreed
rent. But quite apart from these considerations, there is
inherent evidence in s. 7 itself which strongly reinforces
our interpretation and that is to be found in sub-s. (3).
That sub-section says that any stipulation in. contravention
of sub-S. .shall be null and void. If, therefore, there is
a stipulation in the contract of tenancy for payment of rent
higher than the fair rent, it would be invalid. , Such a
stipulation would not be enforceable by the landlord against
the tenant. Only the fair rent would be payable by the
tenant. If, however, there is a stipulation for payment of
rent which is less than the fair rent, it would not be in
contravention of sub-sec. (1) and hence would not be
invalidated by sub-s. (3) but would remain
646
enforceable and binding on the parties and if that be so,
the landlord would not be entitled to claim the fair rent in
breach of such stipulation. Section 7, sub-s. (3) clearly
indicates that the stipulation in the contract of tenancy as
regards rent is overridden only where the fair rent is less
than the agreed rent and not where it is higher than the
agreed rent. This is the only rational construction which,
in our opinion, can be placed on the relevant provisions of
the Act relating to control of rent. It is not only
compelled by grammar and language, but also accords with the
broad general considerations we have already discussed. It
is difficult to believe that the Legislature should have
chosen to interfere with contractual rights and obligations
in favour of the landlord who is ordinarily, in view of the
acute shortage of housing accommodation, in a stronger and
more dominating position than the tenant qua bargaining
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power. The Legislature while enacting a social legislation
could not have intended to confer on the landlord a new
right of action a right to override the contract of tenancy
and to impose a greater burden on the tenant than that
permitted under the contract of tenancy. It would be a
startling proposition to assume that the Tamil Nadu
Legislature was so solicitous of the welfare of the
landlord, who is admittedly, as a class, stronger party and
much more favorably situated in respect of bargaining power
than the tenant, that it enacted a provision in the Act for
relieving the landlord against the consequences of an unwise
contract entered into by him with open. eyes. To take such
a view would be to pervert the legitimate end of a social
legislation and proselytise its true object and purpose.
These considerations impel us to the conclusion that the
Legislature could not have. intended that the landlord
should have the right to apply for fixation of fair rent
during the subsistence of the contractual tenancy. If it
was not the intention of the Legislature to benefit the
landlord by giving him a right to override the contract of
tenancy and claim fair rent higher than the agreed rent from
the tenant during the subsistence of the contractual
tenancy, it must follow a fortiorari that it could not have
been intended by the Legislature that the landlord should
have the right to apply for fixation of fair rent whilst the
contract of tenancy is subsisting. Having regard to the
basic character of the statute as a rent control legislation
and the scheme of its provisions and reading s. 4, sub-s.
(1) in its contextual setting and in the light of the other
provisions of the statute, the conclusion is inescapable
that the word ’landlord’ in s. 4, sub-s. (1) is used in a
limited sense and it does not include contractual landlord.
The landlord is not given the right to apply for fixation of
fair rent during the subsistence of the contractual tenancy.
It is only when the contract of tenancy is lawfully
determined that he becomes entitled to, apply for fixation
of fair rent, for it is only then that he can recover fair
rent higher than the agreed rent from the statutory tenant,
there being no contract of tenancy to bind him down to the
agreed rent.
We were referred to certain decisions of this Court relating
to the interpretation of the provisions of various Rent
Control Acts dealing with the eviction’ of tenants. Some of
these decisions have
647
already been noticed by us earlier while discussing the
general object and intendment of Rent Control Acts. They
have no direct bearing on the determination of the question
before us, but they do lend some support to the view we are
taking as to the interpretation of the word ’landlord’ in s.
4, sub-s. (1). These decisions which are given in reference
to Rent Control Acts of Maharashtra, Gujarat, West Bengal
and Madhya Pradesh, clearly establish that the Rent Control
Acts do not give a right to the landlord to evict a
contractual tenant without first determining the contractual
tenancy. So long as the contractual tenancy subsists, the
tenant does not need protection because he cannot be-evicted
in breach of the ’Contract of tenancy. It is only after the
contract of tenancy is determined and the landlord becomes
entitled to the possession of the premises, that the tenant
requires protection and it is there that the Rent Control
Acts step in and prevent the landlord from enforcing his
right to possession except under certain conditions. The
Rent Control Acts do not confer on the landlord a new right
of eviction, but merely restrict his existing right to
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recover possession under the contract or the general law.
The landlord cannot, therefore, sue for recovery of
possession on any of the grounds recognised as valid by the
Rent Control Acts unless he has first determined the
contractual tenancy of the tenant. This view. which has-
been taken by the decisions of this Court in regard to the
Rent Control Acts of Maharashtra, Gujarat,, West Bengal and
Madhya Pradesh, applies equally in regard to the Tamil Nadu
Act 18 of 1960. It is true that the High Court of Madras
took a different view in R. Krishnamurti v. Perthasarthi (1)
in regard to the Madras Buildings (Lease and Rent Control)
Act’ ’1945 which was in material respects in almost
identical terms as the, Tamil Nadu Act 18 of 1960 and held
that s. 7 of that Act, corresponding to s. 10 of the present
Act, had its own scheme of procedure and there was no
question of any attempt .to reconcile that Act with the
Transfer of Property Act and an application for eviction
could, therefore, be made under that Act without terminating
the contractual tenancy of the tenant. But in Manujendra
Dutt. v. Purendu Prosad Roy Choudhury & ors.(2) this
decision of the Madras High Court was expressly overruled
and held not to be correct law by this Court. The argument
on behalf of the respondents was that the observation of
this Court disapproving the view taken by the Madras High
Court was a casual observation made without examining the
scheme of the Madras Act and no validity could attach to it.
We fail to see-how such an argument can possibly be advanced
with any degree of plausibility. It is clear from the dis-
cussion of the Madras decision which we find in the judgment
of Court that the attention of this Court was specifically
directed to the reasoning of the Madras decision which
proceeded on the basis that s. 7 of the Madras Act had its
own self-contained scheme which excluded the Transfer of
Property Act and it was because this Court found the
reasoning to be incorrect, that it held that the Madras
decision was not good law. It would not be fair to presume
that this Court cavalierly overruled the Madras decision
without applying its mind and caring to examine the scheme
of the Madras Act.
(1) A.I.R. 1949 Mad. 780.
(2) [1967] 1 S.C.R. 475
648
Such a charge cannot be made merely because this Court did
not elaborately discuss the merits of the Madras decision
but disposed it of in a few words. The brevity of the
discussion does not signify casualness or lack of proper
consideration. We must, in the circumstances, hold that the
observation of this Court that the Madras decision cannot be
regarded as good law was a deliberate and considered pro-
nouncement and the view taken by this Court in regard to the
Rent Control Acts of Maharashtra, Gujarat, West Bengal and
Madhya Pradesh must equally prevail in regard to the Tamil
Nadu Act 18 of 1960.
We may point out that in any event we do not find any cogent
reason to question the validity of the observation made by
this Court disapproving of the Madras decision. We are
wholly in agreement with that observation as we do not see
any material difference between the language and the scheme
of s. 10 of the Tamil Nadu Act 18 of 1960 and the language
and scheme of the corresponding provisions of the other Rent
Control Acts which came to be construed by this Court. The
only distinctive feature which could be pointed out on
behalf of the respondents was the provision in s. 10, sub-s’
(3), cl. (d). But that provision does not make any material
difference because all that it provides is that though, in a
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case where the tenancy is for a specified period and it is
determined by forfeiture before the expiration of the term,
the landlord would have been, but for cl. (d), entitled to
recover possession of the building under cls. (a), (b) or
(c), he shall be precluded from doing so until the
expiration of the period for which the tenancy was created.
If there is any other ground available to him for claiming
possession, for example, a ground specified in s. 10, sub-
s. (2), he can seek to recover possession on that ground and
cl. (d) would not afford the tenant any protection. But cl.
(d) would stand in the way of the landlord, if possession is
sought on any of the grounds set out in cls, (a), (b) and
(c). The object of cl. (d) clearly is that even though the
tenancy has come to an end by forfeiture and the landlord
has become entitled to the possession of the building under
the general law., the tenant shall be protected from
eviction on any of the grounds set out in cls. (a), (b) and
(c) so long as the period for which the tenancy was created
in his favour has not a expired, This construction receives
considerable support from the tact that the Legislature has
used the words "before the expiry of such period" and not
the words "before the determination of the tenancy" to
indicate the length of time for which protection is given to
the tenant under cl. (d). We do not therefore think that it
would be right to infer from cl. (d) that, save in cases
falling within that provision, the landlord would be
entitled to apply for possession under sub-s. (2) or sub-cl.
(3) of s. 10 without determining the tenancy of the tenant.
There can be no doubt, having regard to the judicial
pronouncements of this Court, that the word ’landlord’ in s.
10 of the Tamil Nadu Act 18 of 1960 :is used in a limited
sense to refer only to a landlord who has terminated the
tenancy of the tenant and does not include a contractual
landlord. if the’ word ’landlord’ in s. 10 is found
subjected to a limitation excluding a contractual landlord,
it forms a strong argument for subjecting the word
’landlord’ in s.4.,sub-s.(1) also to the like limitation.
649
It may also be noted that, whatever be the correct
interpretation of the word ’landlord’ in s. IO, it is clear
from the decisions of this Court in regard to the other Rent
Control Acts. that it is not at all unusual,, having regard
to the object and purpose of Rent Control legislation, to
read the word ’landlord’ in a limited. sense so as ’to
exclude contractual landlord and we are therefore not doing
anything startling or extraordinary but merely following the
path eked out by the decisions of this Court when we place a
limited meaning on the word ’landlord’in s. 4, sub-s. (1)
which would exclude contractual landlord. That is in fact
in conformity with the object and purpose of the Tamil Nadu
Act 18 of 1960, which, to quote the words used by this Court
in P.J. Irani v. State of Madras (1) in reference to the
earlier Tamil Nadu Act 25 of 1949 which was in material
respects in identical terms as the present Act, is intended
to protect "the rights of tenants in occupation of buildings
from being charged unreasonable rates of rent" and not to
benefit landlords by conferring on them a new right against
tenants which they did not possess before.
Since we are of the view that it is not competent to the
landlord to apply for fixation of fair rent under s. 4, sub-
s. (1) during the subsistence of the contractual tenancy, we
set aside the decision of the High Court of Tamil Nadu which
has taken the view that the Controller has jurisdiction to
entertain the application of the respondents and allow Civil
Appeal No. 50 of 1968. There will be no order as,. to costs
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all throughout.
ORDER
In accordance with the opinion of the majority, the appeal
is dismissed. The appellant will pay the respondents costs.
S.B.W.
(1) [1962] 2 S.C.R. 169.
650