Full Judgment Text
REPORTABLE
2025 INSC 1309
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL No. 2561 OF 2025
K. SUBRAMANIAM (DIED) THROUGH LRS
K.S. BALAKRISHNAN & ORS. … APPELLANTS
VERSUS
M/S KRISHNA MILLS PVT.LTD. … RESPONDENT
J U D G M E N T
D IPANKAR D ATTA , J.
HE PPEAL
T A
1. This is an appeal by the heirs of a lessee seeking reversal of a revisional
1
judgment and order dated 22.06.2021 of the High Court of Judicature
2
at Madras . The impugned order affirmed an appellate order of eviction
dated 25.02.2020 which, in turn, had reversed the original order of
Signature Not Verified
dismissal of the eviction petition dated 06.02.2019.
Digitally signed by
JATINDER KAUR
Date: 2025.11.11
17:51:11 IST
Reason:
1
impugned order
2
High Court
1
ACTUAL ATRIX
F M
2. The basic facts giving rise to the impugned order are not in dispute. To
the extent germane for disposal of the present appeal, the same are
adverted to in brief hereunder:
3
a. The sole respondent, M/s. Krishna Mills Pvt. Ltd. , is the owner
of a godown bearing D. No. 1084, Avinashi Road,
Pappanaickenpalayam, Coimbatore, Tamil Nadu, and the
4
adjacent building .
b. The three appellants are the sons and heirs of K. Subramanian
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(since deceased), (proprietor of M/s. Royal Agencies). The
petition property consists of three portions of buildings
measuring 5000 sq. ft. each, totalling to 15000. sq. ft., and a
separate shed on the western side measuring 500 sq. ft.
c. A lease agreement, dated 11.10.1999, was executed by and
between M/s. Krishna and the lessee, whereby a portion of the
petition property, measuring 5000 sq. ft. was leased out at a
monthly rent of Rs. 15,000/- for a period of 15 years. In
October 2000, another 5000 sq. ft. of land and building was
taken on lease for a monthly rent of Rs. 15,000. From
01.05.2000, the separate shed of 500 sq. ft. was taken on lease
for a monthly rent of Rs. 3000. Subsequently, in October 2001,
another 5000 sq. ft. was taken on lease for a monthly rent of
Rs. 15,000. Thus, the total extent of 15,500 sq. ft. of land and
3
M/s. Krishna, hereafter
4
petition property
5
Lessee, hereafter
2
building was leased for an aggregate monthly rent of Rs.
48,000/-. However, the lessee contended that the rent payable
was Rs. 33,000/- p.m.
d. In 2004, M/s. Krishna filed an application for fixation of fair
6
rent before the Rent Controller, Coimbatore, alleging that the
original rent was Rs. 48,000/- p.m. and not Rs. 33,000/- as
claimed by the lessee; and consequently, fixation of Rs.
3,76,800/- p.m. as fair rent was sought. The Rent Controller
allowed the application in part on 10.01.2007, and fixed the fair
rent at Rs. 2,43,600/- p.m., payable from 01.02.2005.
7
e. M/s. Krishna then filed an application on 17.07.2007 seeking
eviction of the lessee on the ground of wilful default. While it
was alleged that an extent of 15,500 sq. ft. had been given on
lease at a monthly rent of Rs.48,000/- p.m., the lessee
contended that the rent was only Rs.33,000/- p.m. Earlier, as
noted above, on M/s. Krishna’s application, the Rent Controller
by its order dated 10.01.2007 had fixed the fair rent at
Rs.2,43,600/- p.m. and subsequently, a demand of
Rs.68,87,400/- was claimed towards arrears.
f. The lessee challenged the fixation of fair rent by carrying it in
8
an appeal before the Rent Control Appellate Authority,
Coimbatore, which came to be dismissed on 20.02.2008,
thereby confirming the fair rent.
6
RCOP No. 44 of 2005
7
RCOP No.134 of 2007
8
RCA No.21 of 2007
3
9
g. Against such dismissal, the lessee filed a revisional application
before the High Court. By an interim order, the High Court
directed deposit of Rs.25,00,000/- before the Rent Controller
and further payment of Rs.75,000/- p.m. without prejudice to
the parties’ contentions. Complying with the said order, the
lessee deposited the sum, as directed, and commenced paying
Rs.75,000/- p.m.
h. On 09.09.2011, the High Court partly allowed the revisional
application and reduced the rent to Rs.2,37,500/- p.m.
i. A legal notice dated 01.10.2011 followed, whereby M/s. Krishna
demanded arrears of Rs.1,22,22,000/- after giving credit for
Rs.25,00,000/-. The lessee, under protest, remitted
Rs.2,13,750/- (after TDS) on 21.10.2011 towards rent for
September, 2011 and thereafter preferred special leave
10
petitions before this Court. During the pendency of these
petitions, M/s. Krishna filed a revised memo of calculation on
23.12.2011.
j. By an order dated 23.03.2012, this Court dismissed the special
leave petitions but directed the lessee to pay arrears in
th
instalments of Rs.15,00,000/- by the 15 of each month, along
with regular rent of Rs.2,37,500/- p.m., clarifying that such
arrangement was without prejudice to the rights of the parties
in the pending proceedings.
9
CRP (NPD) No.2511 of 2008
10
SLP (C) Nos.6500-6501 of 2012
4
k. In compliance therewith, the lessee remitted Rs.13,50,000/-
(after TDS) on 05.05.2012 and tendered two further cheques
of Rs. 2,13,750/- (after TDS) and Rs. 13,50,000/- (after TDS)
on 09.06.2012 towards arrears and rent.
l. The lessee sought a statement of accounts for audit purposes
on 02.01.2013, and on 11.01.2013 sent a cheque of
Rs.2,22,000/- (after TDS) in full settlement of arrears,
asserting that all dues stood discharged. M/s. Krishna, by reply
dated 05.02.2013, confirmed receipt of the arrears but stated
that the same was received without prejudice to their rights in
RCOP No. 134 of 2007.
m. On 06.02.2013, M/s. Krishna raised invoices claiming service
tax and interest from 01.06.2007 to 31.12.2012. By letter
dated 17.04.2013, the lessee reiterated that all dues had been
cleared and denied wilful default, further contending that
service tax liability did not fall upon him under the lease.
n. Following the demise of the lessee, M/s. Krishna filed an
amended application on 23.10.2017 under Section 10(2)(i) of
11
the Tamil Nadu Buildings (Lease and Rent Control) Act, 1960 ,
impleading the appellants (i.e., the heirs of the deceased
lessee). Appellants filed their additional counter in February
2018, contending that no arrears were outstanding.
o. By an order dated 06.02.2019, the Rent Controller, Coimbatore,
dismissed RCOP No.134 of 2007, holding that M/s. Krishna had
11
Rent Control Act, 1960
5
failed to establish that original rent was Rs.48,000/- p.m. and
further that since the lessee had paid fair rent in terms of the
orders of this Court, no wilful default was made out.
12
p. Aggrieved thereby, M/s. Krishna preferred an appeal . By a
judgment and order dated 25.02.2020, the Principal
Subordinate Judge, Coimbatore, reversed the Rent Controller’s
finding, observing that despite fair rent proceedings attaining
finality, the lessee had failed to tender arrears promptly and
that clearance in instalments, even after dismissal of the special
leave petitions, amounted to wilful default. The Principal
Subordinate Judge finally held that the appellants were liable
to be evicted on the ground of wilful default.
q. Appellants then mounted a challenge to the judgment and
13
order of reversal dated 25.02.2020 in a revisional application .
Upon hearing the parties, vide the impugned order, the High
Court on 22.06.2021 dismissed such application holding that
the interim direction to deposit Rs.25,00,000/- and to pay
Rs.75,000/- p.m. was only for the purpose of admission of the
civil revision petition and that the Court had not granted any
stay of the order.
r. Although the appellants commenced paying rent as fixed by the
High Court from 21.10.2011, belated payment of accumulated
arrears nonetheless constituted wilful default.
12
RCA No.32 of 2019
13
CRP No.2053 of 2020
6
RGUMENTS ON EHALF OF THE PPELLANTS
A B A
3. Mr. Jaideep Gupta, learned senior counsel appearing for the appellants,
contended that the eviction petition as originally filed was untenable.
According to him, no notice had been issued by M/s. Krishna prior to
the filing of RCOP No.44 of 2005, wherein wilful default in payment of
rent was alleged on the ground that the monthly rent was Rs.48,000/-
p.m., whereas the lessee consistently asserted that the rent was
Rs.33,000/- p.m. He further contended that until disposal of CRP
(NPD) No.2511 of 2008, no notice was ever served calling upon the
lessee to pay arrears based on fixation of Rs.2,43,600/- p.m. as the
fair rent by the Rent Controller with effect from 01.02.2005, covering
the period up to 30.06.2007. He invited our attention to the letter
dated 05.02.2013 of M/s. Krishna, wherein it acknowledged that the
arrears had been received at the rate of Rs.2,37,500/- p.m., i.e., the
fair rent as modified by the High Court on 09.09.2011. In such
circumstances, it was urged that the belated amendment in RCOP
No.134 of 2007, filed in the year 2017 after the demise of the lessee,
impleading the present appellants and resurrecting the ground of wilful
default for the very same arrears, was nothing but an afterthought and
liable to be rejected.
4. Mr. Gupta maintained that the conduct of the lessee or the appellants
was not that of a defaulter or an irregular payer of rent, since they
continued to pay the originally agreed rent in compliance with the
orders of various fora. Reliance was placed on the decision in Chordia
7
14
Automobiles v. S Moosa to contend that when the arrear amount
was in dispute and the proceedings were pending, it was reasonable
for the lessee to follow the interim arrangements, and the same could
not be held to be a case of wilful default.
5. It was next contended by Mr. Gupta that pursuant to the interim order
dated 30.07.2008 in CRP (NPD) No.2511 of 2008, the lessee had,
without delay, started remitting the rent in consonance with the
directions of the High Court. While arrears were not cleared in a lump
sum immediately, this was on account of the pendency of SLP (C)
Nos.6500-6501 of 2012 preferred against the order of the High Court
dated 09.09.2011. The matter attained finality only upon the dismissal
of the said special leave petitions by this Court on 23.03.2012 and,
thereafter, the appellants’ father scrupulously adhered to the directions
of this Court by paying instalments of Rs.15,00,000/- towards arrears
along with the monthly rent of Rs.2,37,500/-. To address the issue of
finality in the fixation of fair rent, he placed reliance on the decision in
15
Visalakshi Ammal v. T.B. Sathyanarayana , wherein it was held
that the liability to pay fair rent would arise only upon the passing of
the fair rent order by the Rent Controller, and that such liability would
not attain finality so long as the order remained under challenge in
appeal or revision. It was, therefore, submitted that the appellants
cannot be branded wilful defaulters when the arrears were paid strictly
in terms of the orders of this Court.
14
(2000) 3 SCC 282
15
(1997) 2 MLJ 453
8
6. Mr. Gupta contended, by placing reliance on PM Punnoose v. KM
16
Munneruddin , that whenever there is a bona fide dispute on the
quantum of arrears, the Controller should exercise his power under the
proviso to sub-section (2) of Section 10 of the Rent Control Act, 1960
by passing an order thereunder and giving the tenant a reasonable
time, not exceeding 15 days, to pay or tender the amount due to the
landlord up to the date of such payment of rent. He also contended
that the tenant had cleared the entire arrears and is willing to repay
the outstanding arrears if any in two months, arguing against the order
of eviction.
7. Reliance was further placed on N. Velmurugan v. K.N.
17
Govindarajan to contend that once the execution petition was filed
and the High Court had, by an interim order, permitted deposit and
extended time for payment, there was no scope to allege wilful default.
The expression “without prejudice” occurring in the order of this Court
dated 23.03.2012 in SLP (C) Nos.6500-6501 of 2012, it was argued,
could not be interpreted to enable M/s. Krishna, after having accepted
arrears and rent pursuant to this Court’s directions, to revive
proceedings for wilful default in respect of the very same arrears.
8. Mr. Gupta next placed reliance on the decision of this Court in Rupa
18
Ashok Hurra v. Ashok Hurra to urge that the principle of finality
attaches only to the judgment of the Court of last resort, namely, this
Court. It was argued that until the dismissal of SLP (C) Nos. 6500–
16
(2003) 10 SCC 610
17
(2002) 2 SCC 500
18
(2002) 4 SCC 388
9
6501 of 2012 on 23.03.2012, the issue of fixation of fair rent remained
sub judice and, consequently, any alleged default prior thereto could
not, in law, be characterised as “wilful”. According to him, it was only
after the dismissal of the said special leave petitions that the
determination of fair rent at Rs.2,37,500/- p.m. attained finality, and
from that stage onwards the lessee continued to make regular
payments without fail. He further contended that reliance placed on
the Tamil Nadu Regulation of Rights and Responsibilities of Landlords
19
and Tenants Act, 2017 was wholly misplaced, inasmuch as Section 4
of the said enactment expressly exempts tenancies governed by
written agreements, which was the case here. It was also argued by
him that a unilateral termination letter issued by the landlord could not
by itself oust the jurisdiction of the civil court to entertain a tenant’s
defence under the governing rent control legislation.
9. Furthermore, on the issue of precedents concerning Order XLI Rule 5
of the Code of Civil Procedure, 1908, Mr. Gupta submitted that such
authorities were of no relevance in the present context. He contended
that those decisions merely recognise the appellate court’s discretion
to grant conditional stay of execution pending appeal, whereas the
question before the Court in the present case was whether the lessee
could be held guilty of “wilful default” within the meaning of Section
10(2)(i) of the Rent Control Act, 1960. According to him, the principle
governing determination of wilful default is distinct: liability of the
lessee is to be assessed with reference to whether he neglected to pay
19
2017 Act
10
rent from the date it became due despite the opportunity to do so, and
not with reference to interlocutory directions issued by appellate courts
while entertaining appeals.
10. Mr. Gupta then referred to the own pleadings of M/s. Krishna in RCOP
No.134 of 2007, where the period of alleged default was stated to be
from 01.10.2000 to 31.01.2005, quantified at Rs.7,80,000/-,
computed at a monthly rent of Rs.15,000/-. He pointed out that such
a claim was never substantiated by M/s. Krishna at any stage of the
proceedings. In this regard, reliance was placed upon the findings
recorded in the order dated 06.02.2019 in RCOP No.134 of 2007,
wherein the Rent Controller itself noted the absence of evidence
establishing Rs.15,000/- p.m. as the rent for the relevant period.
11. Finally, as regards the quantum of arrears claimed in the eviction
petition, Mr. Gupta submitted that the figure of Rs.61,07,400/- as
averred by M/s. Krishna was untenable. His submission was twofold:
first, that the amount was computed on the basis of the fair rent of
Rs.2,43,600/- p.m. fixed by the Rent Controller on 10.01.2007,
whereas the revisional court, by its order dated 09.09.2011, had
reduced the fair rent to Rs.2,37,500/- p.m.; and secondly, that the
said fair rent determination reached finality only upon dismissal of the
special leave petitions by this Court on 23.03.2012. Thus, it was
contended that any claim predicated upon the figure of Rs.2,43,600/-
p.m. or upon a demand raised prior to the finality of the proceedings
was legally unsustainable.
11
12. Resting on the aforesaid arguments, Mr. Gupta prayed that the civil
appeal be allowed by setting aside the impugned order passed by the
High Court in CRP No. 2053 of 2020.
A RGUMENTS OF THE R ESPONDENT (M/ S . K RISHNA )
13. Per contra , Ms. V. Mohana, learned senior counsel appearing for M/s.
Krishna, contended that the dispute was initially governed by the Rent
Control Act, 1960, but with the enactment of the 2017 Act the
jurisdiction of the civil courts stood excluded and landlord-tenant
disputes could thereafter be adjudicated only by Rent Courts and Rent
Tribunals. She urged that the appellants had wilfully defaulted in
payment of fair rent, a finding concurrently recorded by the Appellate
Authority and the High Court, since fair rent was determined on
10.01.2007, yet, the lessee cleared the arrears only on 11.01.2013.
20
Relying on J. Vishalakshmi Ammal v. T.B. Sathyanarayana , Ms.
Mohana contended that the expression “rent” in Section 10(2)(i) of
the Rent Control Act, 1960 includes fair rent fixed by the court, and
non-payment thereof amounts to wilful default.
14. Ms. Mohana next heavily relied on the decision of a learned Judge of
the High Court in Giridharilal Chandak & Bros. v. Mehdi
21
Ispahani . On the anvil thereof, she vehemently submitted that
mere filing of an appeal does not by itself operate as a stay, and
unless specifically prayed, the appellate court may in its discretion
either grant or refuse stay; hence, pendency of proceedings cannot
20
1996-2-L.W. 849
21
2011 (5) CTC 252
12
excuse non-payment of rent. She referred to the dismissal of the
special leave petitions by this Court on 23.03.2012, whereby the
lessee was directed to pay arrears at Rs.15,00,000/- p.m. along with
th
the regular rent of Rs.2,37,500/- p.m. by the 15 of each succeeding
month until the arrears were cleared, the said payment being directed
without prejudice to the rights of the parties in the pending eviction
proceedings. According to her, the appellants chose to pay only in
instalments and failed to comply fully.
15. It was urged that the pendency of eviction proceedings foreclosed
any plea of ignorance on the part of the appellants as to the
consequences of default, and that mere deposit of arrears pursuant
to interim orders could not absolve them of wilful default within the
meaning of Section 10(2)(i) of the Rent Control Act, 1960.
16. Ms. Mohana submitted the details of the wilful default committed by
the appellants, as follows:
a. The monthly rent agreed upon by and between the parties was
Rs. 48,000/- p.m.; however, the lessee paid only Rs. 33,000/-
p.m. from 01.07.2007.
b. The Rent Controller fixed the fair rent vide order dated
10.01.2007, whereas the full and final settlement of dues as
per the fair rent happened only on 11.01.2013. Appellants
wilfully withheld payment of rent during the pendency of the
eviction petition.
c. Even in an appeal filed by the appellants against the order of
the Rent Controller fixing fair rent, the Appellate Authority did
13
not grant a stay of the order of the Rent Controller, vide order
dated 20.02.2008. Even after this order refusing to stay the
Rent Controller’s order, the appellants did not settle the fair rent
until 11.01.2013.
17. It was then brought to our notice by Ms. Mohana that M/s. Krishna had
filed I.A. No.100 of 2008 under Section 11(4) of the Rent Control Act,
1960 before the Rent Controller, seeking a direction to the lessee to
deposit the arrears, failing which an order of eviction be passed. Even
after the High Court fixed fair rent at Rs.2,37,500/- p.m. by its order
dated 09.09.2011 passed in the revisional proceedings, and despite
subsequent notices issued by M/s. Krishna demanding the arrears, the
appellants continued to remain in default.
18. Ms. Mohana further argued that Section 10(2) of the Rent Control Act,
1960 does not contemplate a prior notice by the landlord as a pre-
condition for seeking eviction. Reliance was placed on Sundaram
22
Pillai & Ors. v. V.R. Pattabiraman to submit that issuance of such
notice is discretionary, not mandatory. In any event, the appellants
neither raised the plea of want of notice in the eviction petition nor
objected to the proceedings on that ground at any earlier stage, and
are therefore estopped from so objecting at this belated stage.
19. In the sequence of these submissions, Ms. Mohana urged that the
appellants had been persistent defaulters, and that no ground for
interference was made out with the concurrent findings of the
22
(1985) 1 SCC 591
14
appellate court and the High Court. Accordingly, she prayed that the
appeal be dismissed.
UESTION
Q
20. The sole question arising for decision is, whether the High Court was
right in the exercise of its revisional jurisdiction in declining to reverse
the appellate order of eviction obtained by M/s. Krishna against the
appellants on the ground of wilful default in payment of rent initially
by the lessee and then by the appellants?
R EASONING
21. We consider it appropriate to first address the question of wilful default,
which constitutes the principal ground on which the decree of eviction
rests. It is not in dispute that by its order dated 10.01.2007, the Rent
Controller, Coimbatore fixed the fair rent at Rs. 2,43,600/- p.m.,
payable with effect from 01.02.2005. Despite this order, the lessee
continued to pay only the earlier contractual rent at the rate of Rs.
48,000 p.m., leading to an accumulation of arrears from 01.02.2005 to
30.06.2007, amounting to Rs. 68,87,400/-, exclusive of subsequent
dues. The lessee, however, neither sought nor obtained a stay of the
said order before the appellate or revisional fora. Despite the appellate
authority having dismissed his appeal on 20.02.2008, thereby
confirming the fair rent, the lessee persisted in paying only a fraction
thereof. The situation continued even after the High Court, by order
dated 09.09.2011, modified the fair rent marginally to Rs.2,37,500
p.m. A legal notice dated 01.10.2011 was thereafter issued by the
15
landlord demanding arrears of Rs.1,22,22,000/-, after giving credit for
the deposit of Rs.25,00,000/- earlier made under the interim direction
of the High Court. Instead of settling the arrears, the tenant merely
remitted Rs.2,13,750/- (after TDS) on 21.10.2011 towards rent for
September 2011 and allowed the arrears to mount.
22. After the accumulation of arrears for over five years and the matter
had traversed through multiple fora, it was only after this Court, by
order dated 23.03.2012 dismissed SLP (C) Nos. 6500–6501 of 2012
that the lessee commenced remitting arrears in May and June 2012 by
issuing cheques of Rs.13,50,000/- and Rs.2,13,750/-, after deduction
of TDS. Even then, full and final settlement was effected belatedly on
11.01.2013, nearly six years after the fixation of fair rent and ten
months after the dismissal of the special leave petitions. In our opinion,
the plea that pendency of proceedings created uncertainty as to the
quantum payable is of no avail to the appellants.
23. At this juncture, a profitable reference can be made to the decision in
Girdharilal Chandak and Bros. (HUF) (supra). While considering the
Rent Control Act, 1960, Justice V. Ramasubramanian (as His Lordship
then was) speaking for the High Court held as follows:
14. Irrespective of whether the order passed by this Court on 28.10.2005
in CRP (NPD) Nos. 1657 & 1658 of 2005 was a conditional order or not, it
is an admitted fact that the Petitioner himself did not seek a stay of the
orders passed by the Rent Controller and the Appellate Authority, while
challenging the same by way of Revision. If a person does not seek stay of
an order passed by a Court below, it would only indicate either of the two
things viz., (i) that he is willing to comply with the order, or (ii) that he has
no objection to the orders of the Court below being put into execution. The
failure of a person to seek from an Appellate forum, a stay of the order of
a subordinate forum, cannot mean anything else than the above two
factors.
*
16
15. Order 41, Rule 5(1), C.P.C, makes it clear that an Appeal shall not
operate as a stay of the proceedings under a decree or order appealed from,
except so far as the Appellate Court may order. It also makes it clear that
the execution of a decree need not be stayed merely by reason of an Appeal
having been preferred from the decree.
*
21. As a matter of fact, the Tamil Nadu Buildings (Lease and Rent Control)
Act, 1960, enables the Appellate Authority under Section 23(2) to grant
stay of further proceedings pending decision on the Appeal. There is no
similar provision under Section 25. What is worse is the fact that under
Section 23(4), the decision of the Appellate Authority is final and is not
liable to be called in question in any Court of Law, except as provided in
Section 25. Therefore, finality is reached in every proceeding under the Act,
the moment an order is passed by the Appellate Authority. But it is made
subject to the Revisional jurisdiction of this Court. Therefore, in the absence
of a stay, by this Court in a Revision, the order of the Appellate Authority
becomes final until it is modified or set aside by this Court. Moreover, Rule
12 of the Tamil Nadu Buildings (Lease and Rent Control) Rules, 1974,
prescribes the procedure for the disposal of the Applications. The Third
Proviso to sub-rule (3) of Rule 12, states that whenever an Application for
setting aside an ex parte order is received for the first time, all Execution
proceedings would stand stayed till the disposal of that Application. In other
words, the Act contains one provision for stay under Section 23(2), subject
to the discretion of the Appellate Authority. The Rules contain one provision
for automatic stay of execution, under the Third Proviso to Rule 12(3).
Therefore, the construction that the admission of a Revision, without any
order of stay, would automatically take away the finality conferred under
Section 23(4) to an order of the Appellate Authority, would do violence to
the Act and the Rules. Hence, the second contention is also unacceptable.
24. In the present case, the lessee challenged the fixation of fair rent but
did not seek a stay of its operation before the appellate or revisional
fora. Mere filing of an appeal does not operate as a stay of the
decree/order under appeal is the statutory ordainment in sub-rule (1)
of Rule 5 of Order XLI, CPC. Payments were made belatedly and only
after protracted litigation. Such conduct cannot be reconciled with bona
fide doubt as to liability. Appellants, it is clear, defaulted in payment of
rent and such default, on facts and in the circumstances, is undoubtedly
a wilful default. The concurrent finding of the appellate authority,
affirmed by the High Court, that the lessee and thereafter the
appellants had been in wilful default, rests on sound appreciation of the
legal position and the appellants’ own admissions.
17
25. Furthermore, as regards the import and effect of Section 10(2)(i) of
the Rent Control Act, 1960, along with its proviso and explanation, we
need to refer to the decision in Sundaram Pillai (supra) relied upon
by Ms. Mohana. The said decision is by a three-Judge Bench of this
Court. The majority view was authored by Hon’ble A. Varadarajan, J.
(as His Lordship then was). The relevant paragraphs from it read as
follows:
56. We may, therefore, extract the Explanation again to find out what it
really means and to what extent does it affect the provisions of the proviso:
“ Explanation.— For the purpose of this sub-section default to pay or tender
rent shall be construed as wilful, if the default by the tenant in the payment
or tender of rent continues after the issue of two months' notice by the
landlord claiming the rent.”
57. If we analyse the various concomitants of the Explanation, the position
seems to be that—
( a ) there should be a default to pay or tender rent,
( b ) the default should continue even after the landlord has issued two
months' notice claiming the arrears of rent,
( c ) if, despite notice, the arrears are not paid the tenant is said to have
committed a wilful default and consequently liable to be evicted forthwith.
*
59. Another aspect that must be stressed at this stage is that where a
tenant has committed default after default without any lawful or reasonable
cause and the said defaults contain all the qualities of a wilful default viz.
deliberate, intentional, calculated and conscious, should he be given a
further chance of locus poenitentiae ? After hearing counsel for the parties
at great length, we feel that although the question is a difficult one yet it is
not beyond solution. If we keep the objects of the proviso and the
Explanation separate, there would be no difficulty in deciding these cases.
60. To begin with, Section 10(2)( i ) of the Act lays down that where the
Controller is satisfied that the tenant has not paid or tendered the rent
within 15 days after the expiry of the time fixed in the agreement of tenancy
or in the absence of any such agreement, by the last date of the month
next following that for which the rent is payable, he (tenant) undoubtedly
commits a default. Two factors mentioned in Section 10(2)( i ) seem to give
a clear notice to a tenant as to the mode of payment as also the last date
by which he is legally supposed to pay the rent. This, however, does not put
the matter beyond controversy because before pacing ( sic, passing) an
order of eviction under the proviso, it must also be proved that the default
was wilful and if the Controller is of the opinion that the default in the
circumstances and facts of the case was not wilful, in the sense that it did
not contain any of the qualities or attributes of a wilful default as indicated
by us above, he may give the tenant a reasonable time, not exceeding 15
days, to pay the entire rent and if this is complied with, the application for
ejectment would stand rejected. The difficulty, however, is created by the
18
Explanation which says that once a landlord gives a two months' notice to
his tenant for paying the arrears of rent but the tenant continues in default
even thereafter, then he is liable to be evicted. There is a good deal of force
in this argument which has its own advantages. In the first place, it protects
the court from going into the intricate question as to what is a wilful default
and whether or not the conditions of a wilful default have been satisfied
which, if permitted would differ from case to case and court to court. But
the difficulty is that if such a blanket ban is put on the court for not
examining the question of wilful default once the conditions laid down in the
Explanation are satisfied then it would undoubtedly lead to serious injustice
to the tenant. A subsidiary consequence of such an interpretation would be
that even though the tenant, after receipt of the notice, may be wanting to
pay the arrears of rent but is unable to do so because of unforeseen
circumstances like, death, accident, robbery, etc., which prevent him from
paying the arrears, yet under the Explanation he has to be evicted.
61. Another view which, in our opinion, is a more acceptable one and flows
from the actual words used by the proviso is that where the Explanation
does not apply in the sense that the landlord has not issued two months'
notice, it will be for the court to determine in each case whether the default
is wilful having regard to the tests laid down by us and if the court finds
that the default is wilful then a decree for eviction can be passed without
any difficulty.
62. *
A correct interpretation, in our opinion, would be that where—
( 1 ) no notice, as required by the Explanation, is given to the tenant, the
Controller or the court can certainly examine the question whether the
default has been wilful and to such a case the Explanation would have no
application,
( 2 ) the landlord chooses to issue two months' notice and the rent is not
paid then that would be a conclusive proof of the default being wilful unless
the tenant proves his incapability of paying the rent due to unavoidable
circumstances.
63. The argument of the counsel for landlords was that even if a notice
under the Explanation is given that does not take away the jurisdiction of
the proviso to determine whether or not the default has been wilful if it
contains the qualities and attributes referred to above because what the
Explanation does is merely to incorporate an instance of a wilful default and
is not conclusive on the point and would have to be construed by the court
in conjunction with the conditions mentioned in the proviso. We are,
however, unable to go to this extreme extent because that will actually
thwart the object of the Explanation. As we read the Explanation, it does
not, at all take away the mandatory duty cast on the Controller in the
proviso to decide if a default is wilful or not. Indeed, if the landlord chooses
to give two months' notice to his tenant and he does not pay the rent, then,
in the absence of substantial and compelling reasons, the Controller or the
court can certainly presume that the default is wilful and order his eviction
straightaway. We are unable to accept the view that whether two months'
notice for payment of rent is given or not, it will always be open to the
Controller under the proviso to determine the question of wilful default
because that would render the very object of Explanation otiose and
nugatory. We express our view in the matter in the following terms:
“( 1 ) Where no notice is given by the landlord in terms of the Explanation,
the Controller, having regard to the four conditions spelt out by us has the
undoubted discretion to examine the question as to whether or not the
default committed by the tenant is wilful. If he feels that any of the
19
conditions mentioned by us is lacking or that the default was due to some
unforeseen circumstances, he may give the tenant a chance of locus
poenitentiae by giving a reasonable time, which the statute puts at 15 days,
and if within that time the tenant pays the rent, the application for
ejectment would have to be rejected.
( 2 ) If the landlord chooses to give two months' notice to the tenant to clear
up the dues and the tenant does not pay the dues within the stipulated time
of the notice then the Controller would have no discretion to decide the
question of wilful default because such a conduct of the tenant would itself
be presumed to be wilful default unless he shows that he was prevented by
sufficient cause or circumstances beyond his control in honouring the notice
sent by the landlord.”
26. Hon’ble Sabyasachi Mukharji, J. (as the Chief Justice then was)
dissented. Although we find His Lordship’s opinion expressed in
paragraphs 79, 81, 83, 84, 86, 87 and 90 of the report to be logical,
the same pales into insignificance in view of the same being the
minority view. Having regard to the Constitution Bench decision of this
Court in Trimurthi Fragrances (P) Ltd. v. Government of N.C.T.
23
of Delhi , the decision in Sundaram Pillai (supra) has to be
regarded as a judgment of a three-Judge Bench which binds us sitting
in a combination of two.
27. Thus, on consideration of the proposition of law laid down by the
majority in Sundaram Pillai (supra), this Court is not persuaded to
accept the contention of the appellants that the absence of a two
months’ notice under the Explanation to Section 10(2)(i) of the Rent
Control Act, 1960 would ipso facto disentitle the landlord from
maintaining the proceedings for eviction on the ground of wilful
default. The statute, when read as a whole, does not render such
notice an indispensable condition precedent to the assumption of
jurisdiction by the Rent Controller. The Explanation merely provides an
23
2022 SCC OnLine SC 1247
20
additional instance where, upon service of notice and continued non-
payment, the default may be presumed to be wilful; it does not, by
necessary implication, obliterate the discretion vested in the Controller
under the proviso to determine wilfulness even in the absence of such
notice.
28. That apart, the nature of default committed by the lessee satisfies the
attributes of a wilful default as explained in Sundaram Pillai (supra)
and leaves little room for us to hold that no wilful default had been
committed.
29. Further, we have perused the brief order dated 23.03.2012 dismissing
the special leave petitions of the lessee. This Court was careful in using
the words “without prejudice”. The implication of “without prejudice”
used in the order of dismissal would mean, in the circumstances, that
notwithstanding the liberty granted to the lessee to make payment, as
per liberty granted, such payments were not to be seen as a waiver of
M/s. Krishna’s rights to realise unpaid rent and even to proceed for the
lessee’s ejectment owing to wilful default committed by him. The
position seems to be absolutely clear on this front and no advantage
can be derived by the appellants by contending that payments having
been made in terms of this Court’s order, the issue stood closed.
30. We are also not impressed by the argument of Mr. Gupta based on the
principle of law laid down in Rupa Ashok Hurra (supra). Judicial
proceedings attain finality upon a decision being rendered by the apex
court in the hierarchy of courts. There is, as such, no quarrel with the
said proposition of law. Nonetheless, proceedings do attain finality
21
even at the level of the high courts, or the district courts or the trial
courts if the immediate next superior forum is not approached by the
party suffering the decree/order of the court seized of the lis. However,
the principle of finality of a judicial decision would have no applicability
in a situation where a party, despite owing money (unpaid rent, here)
to his adversary in terms of a judicial determination, approaches the
superior forum but prefers not to seek a stay of such determination
pending the proceedings leaving the other party deprived of the
benefits flowing from the said judicial determination. The bogey of
judicial finality cannot, thus, be pressed into service to unfairly deny a
party the benefits of a judicial decision, operation of which does not
suffer from any interdiction by the superior court.
31. Having bestowed anxious consideration to the rival submissions and
on perusal of the materials placed on record, we find ourselves in
agreement with Ms. Mohana that the lessee, and subsequently the
appellants, taking shelter of the pending appeal against the order
fixing fair rent without, however, seeking a stay thereof and also in
light of the parting observation made by this Court while disposing of
SLP (C) Nos. 6500–6501 of 2012, had no protective umbrella over
him/them so as to remain absolved from tendering payment to M/s.
Krishna.
32. Having regard to the afore-canvassed factual and legal position and on
acceptance of the instances of default referred to by Ms. Mohana, we
answer the question arising for decision in the affirmative. We conclude
that the High Court, in exercise of its revisional jurisdiction, rightly
22
refrained from re-examining factual determinations and such an
approach being reasonable and unexceptionable, it committed no error
in affirming the appellate order of eviction passed against the
appellants on the ground of wilful default.
33. The appeal, in our view, is unmeritorious. It is liable to be and is,
accordingly, dismissed.
34. The appellants are, however, granted time of six months from the date
of this order to vacate and hand over vacant possession of the decretal
property to M/s. Krishna, subject to the usual undertakings being filed
within a fortnight from date positively. In default, grant of time of six
months shall stand vacated and M/s. Krishna would be at liberty to
institute execution proceedings in accordance with law to recover
possession.
35. Parties shall, however, bear their own costs.
…………………....…………………J.
(DIPANKAR DATTA)
…….…….…..………………………J.
(MANMOHAN)
NEW DELHI;
NOVEMBER 11, 2025.
23
2025 INSC 1309
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL No. 2561 OF 2025
K. SUBRAMANIAM (DIED) THROUGH LRS
K.S. BALAKRISHNAN & ORS. … APPELLANTS
VERSUS
M/S KRISHNA MILLS PVT.LTD. … RESPONDENT
J U D G M E N T
D IPANKAR D ATTA , J.
HE PPEAL
T A
1. This is an appeal by the heirs of a lessee seeking reversal of a revisional
1
judgment and order dated 22.06.2021 of the High Court of Judicature
2
at Madras . The impugned order affirmed an appellate order of eviction
dated 25.02.2020 which, in turn, had reversed the original order of
Signature Not Verified
dismissal of the eviction petition dated 06.02.2019.
Digitally signed by
JATINDER KAUR
Date: 2025.11.11
17:51:11 IST
Reason:
1
impugned order
2
High Court
1
ACTUAL ATRIX
F M
2. The basic facts giving rise to the impugned order are not in dispute. To
the extent germane for disposal of the present appeal, the same are
adverted to in brief hereunder:
3
a. The sole respondent, M/s. Krishna Mills Pvt. Ltd. , is the owner
of a godown bearing D. No. 1084, Avinashi Road,
Pappanaickenpalayam, Coimbatore, Tamil Nadu, and the
4
adjacent building .
b. The three appellants are the sons and heirs of K. Subramanian
5
(since deceased), (proprietor of M/s. Royal Agencies). The
petition property consists of three portions of buildings
measuring 5000 sq. ft. each, totalling to 15000. sq. ft., and a
separate shed on the western side measuring 500 sq. ft.
c. A lease agreement, dated 11.10.1999, was executed by and
between M/s. Krishna and the lessee, whereby a portion of the
petition property, measuring 5000 sq. ft. was leased out at a
monthly rent of Rs. 15,000/- for a period of 15 years. In
October 2000, another 5000 sq. ft. of land and building was
taken on lease for a monthly rent of Rs. 15,000. From
01.05.2000, the separate shed of 500 sq. ft. was taken on lease
for a monthly rent of Rs. 3000. Subsequently, in October 2001,
another 5000 sq. ft. was taken on lease for a monthly rent of
Rs. 15,000. Thus, the total extent of 15,500 sq. ft. of land and
3
M/s. Krishna, hereafter
4
petition property
5
Lessee, hereafter
2
building was leased for an aggregate monthly rent of Rs.
48,000/-. However, the lessee contended that the rent payable
was Rs. 33,000/- p.m.
d. In 2004, M/s. Krishna filed an application for fixation of fair
6
rent before the Rent Controller, Coimbatore, alleging that the
original rent was Rs. 48,000/- p.m. and not Rs. 33,000/- as
claimed by the lessee; and consequently, fixation of Rs.
3,76,800/- p.m. as fair rent was sought. The Rent Controller
allowed the application in part on 10.01.2007, and fixed the fair
rent at Rs. 2,43,600/- p.m., payable from 01.02.2005.
7
e. M/s. Krishna then filed an application on 17.07.2007 seeking
eviction of the lessee on the ground of wilful default. While it
was alleged that an extent of 15,500 sq. ft. had been given on
lease at a monthly rent of Rs.48,000/- p.m., the lessee
contended that the rent was only Rs.33,000/- p.m. Earlier, as
noted above, on M/s. Krishna’s application, the Rent Controller
by its order dated 10.01.2007 had fixed the fair rent at
Rs.2,43,600/- p.m. and subsequently, a demand of
Rs.68,87,400/- was claimed towards arrears.
f. The lessee challenged the fixation of fair rent by carrying it in
8
an appeal before the Rent Control Appellate Authority,
Coimbatore, which came to be dismissed on 20.02.2008,
thereby confirming the fair rent.
6
RCOP No. 44 of 2005
7
RCOP No.134 of 2007
8
RCA No.21 of 2007
3
9
g. Against such dismissal, the lessee filed a revisional application
before the High Court. By an interim order, the High Court
directed deposit of Rs.25,00,000/- before the Rent Controller
and further payment of Rs.75,000/- p.m. without prejudice to
the parties’ contentions. Complying with the said order, the
lessee deposited the sum, as directed, and commenced paying
Rs.75,000/- p.m.
h. On 09.09.2011, the High Court partly allowed the revisional
application and reduced the rent to Rs.2,37,500/- p.m.
i. A legal notice dated 01.10.2011 followed, whereby M/s. Krishna
demanded arrears of Rs.1,22,22,000/- after giving credit for
Rs.25,00,000/-. The lessee, under protest, remitted
Rs.2,13,750/- (after TDS) on 21.10.2011 towards rent for
September, 2011 and thereafter preferred special leave
10
petitions before this Court. During the pendency of these
petitions, M/s. Krishna filed a revised memo of calculation on
23.12.2011.
j. By an order dated 23.03.2012, this Court dismissed the special
leave petitions but directed the lessee to pay arrears in
th
instalments of Rs.15,00,000/- by the 15 of each month, along
with regular rent of Rs.2,37,500/- p.m., clarifying that such
arrangement was without prejudice to the rights of the parties
in the pending proceedings.
9
CRP (NPD) No.2511 of 2008
10
SLP (C) Nos.6500-6501 of 2012
4
k. In compliance therewith, the lessee remitted Rs.13,50,000/-
(after TDS) on 05.05.2012 and tendered two further cheques
of Rs. 2,13,750/- (after TDS) and Rs. 13,50,000/- (after TDS)
on 09.06.2012 towards arrears and rent.
l. The lessee sought a statement of accounts for audit purposes
on 02.01.2013, and on 11.01.2013 sent a cheque of
Rs.2,22,000/- (after TDS) in full settlement of arrears,
asserting that all dues stood discharged. M/s. Krishna, by reply
dated 05.02.2013, confirmed receipt of the arrears but stated
that the same was received without prejudice to their rights in
RCOP No. 134 of 2007.
m. On 06.02.2013, M/s. Krishna raised invoices claiming service
tax and interest from 01.06.2007 to 31.12.2012. By letter
dated 17.04.2013, the lessee reiterated that all dues had been
cleared and denied wilful default, further contending that
service tax liability did not fall upon him under the lease.
n. Following the demise of the lessee, M/s. Krishna filed an
amended application on 23.10.2017 under Section 10(2)(i) of
11
the Tamil Nadu Buildings (Lease and Rent Control) Act, 1960 ,
impleading the appellants (i.e., the heirs of the deceased
lessee). Appellants filed their additional counter in February
2018, contending that no arrears were outstanding.
o. By an order dated 06.02.2019, the Rent Controller, Coimbatore,
dismissed RCOP No.134 of 2007, holding that M/s. Krishna had
11
Rent Control Act, 1960
5
failed to establish that original rent was Rs.48,000/- p.m. and
further that since the lessee had paid fair rent in terms of the
orders of this Court, no wilful default was made out.
12
p. Aggrieved thereby, M/s. Krishna preferred an appeal . By a
judgment and order dated 25.02.2020, the Principal
Subordinate Judge, Coimbatore, reversed the Rent Controller’s
finding, observing that despite fair rent proceedings attaining
finality, the lessee had failed to tender arrears promptly and
that clearance in instalments, even after dismissal of the special
leave petitions, amounted to wilful default. The Principal
Subordinate Judge finally held that the appellants were liable
to be evicted on the ground of wilful default.
q. Appellants then mounted a challenge to the judgment and
13
order of reversal dated 25.02.2020 in a revisional application .
Upon hearing the parties, vide the impugned order, the High
Court on 22.06.2021 dismissed such application holding that
the interim direction to deposit Rs.25,00,000/- and to pay
Rs.75,000/- p.m. was only for the purpose of admission of the
civil revision petition and that the Court had not granted any
stay of the order.
r. Although the appellants commenced paying rent as fixed by the
High Court from 21.10.2011, belated payment of accumulated
arrears nonetheless constituted wilful default.
12
RCA No.32 of 2019
13
CRP No.2053 of 2020
6
RGUMENTS ON EHALF OF THE PPELLANTS
A B A
3. Mr. Jaideep Gupta, learned senior counsel appearing for the appellants,
contended that the eviction petition as originally filed was untenable.
According to him, no notice had been issued by M/s. Krishna prior to
the filing of RCOP No.44 of 2005, wherein wilful default in payment of
rent was alleged on the ground that the monthly rent was Rs.48,000/-
p.m., whereas the lessee consistently asserted that the rent was
Rs.33,000/- p.m. He further contended that until disposal of CRP
(NPD) No.2511 of 2008, no notice was ever served calling upon the
lessee to pay arrears based on fixation of Rs.2,43,600/- p.m. as the
fair rent by the Rent Controller with effect from 01.02.2005, covering
the period up to 30.06.2007. He invited our attention to the letter
dated 05.02.2013 of M/s. Krishna, wherein it acknowledged that the
arrears had been received at the rate of Rs.2,37,500/- p.m., i.e., the
fair rent as modified by the High Court on 09.09.2011. In such
circumstances, it was urged that the belated amendment in RCOP
No.134 of 2007, filed in the year 2017 after the demise of the lessee,
impleading the present appellants and resurrecting the ground of wilful
default for the very same arrears, was nothing but an afterthought and
liable to be rejected.
4. Mr. Gupta maintained that the conduct of the lessee or the appellants
was not that of a defaulter or an irregular payer of rent, since they
continued to pay the originally agreed rent in compliance with the
orders of various fora. Reliance was placed on the decision in Chordia
7
14
Automobiles v. S Moosa to contend that when the arrear amount
was in dispute and the proceedings were pending, it was reasonable
for the lessee to follow the interim arrangements, and the same could
not be held to be a case of wilful default.
5. It was next contended by Mr. Gupta that pursuant to the interim order
dated 30.07.2008 in CRP (NPD) No.2511 of 2008, the lessee had,
without delay, started remitting the rent in consonance with the
directions of the High Court. While arrears were not cleared in a lump
sum immediately, this was on account of the pendency of SLP (C)
Nos.6500-6501 of 2012 preferred against the order of the High Court
dated 09.09.2011. The matter attained finality only upon the dismissal
of the said special leave petitions by this Court on 23.03.2012 and,
thereafter, the appellants’ father scrupulously adhered to the directions
of this Court by paying instalments of Rs.15,00,000/- towards arrears
along with the monthly rent of Rs.2,37,500/-. To address the issue of
finality in the fixation of fair rent, he placed reliance on the decision in
15
Visalakshi Ammal v. T.B. Sathyanarayana , wherein it was held
that the liability to pay fair rent would arise only upon the passing of
the fair rent order by the Rent Controller, and that such liability would
not attain finality so long as the order remained under challenge in
appeal or revision. It was, therefore, submitted that the appellants
cannot be branded wilful defaulters when the arrears were paid strictly
in terms of the orders of this Court.
14
(2000) 3 SCC 282
15
(1997) 2 MLJ 453
8
6. Mr. Gupta contended, by placing reliance on PM Punnoose v. KM
16
Munneruddin , that whenever there is a bona fide dispute on the
quantum of arrears, the Controller should exercise his power under the
proviso to sub-section (2) of Section 10 of the Rent Control Act, 1960
by passing an order thereunder and giving the tenant a reasonable
time, not exceeding 15 days, to pay or tender the amount due to the
landlord up to the date of such payment of rent. He also contended
that the tenant had cleared the entire arrears and is willing to repay
the outstanding arrears if any in two months, arguing against the order
of eviction.
7. Reliance was further placed on N. Velmurugan v. K.N.
17
Govindarajan to contend that once the execution petition was filed
and the High Court had, by an interim order, permitted deposit and
extended time for payment, there was no scope to allege wilful default.
The expression “without prejudice” occurring in the order of this Court
dated 23.03.2012 in SLP (C) Nos.6500-6501 of 2012, it was argued,
could not be interpreted to enable M/s. Krishna, after having accepted
arrears and rent pursuant to this Court’s directions, to revive
proceedings for wilful default in respect of the very same arrears.
8. Mr. Gupta next placed reliance on the decision of this Court in Rupa
18
Ashok Hurra v. Ashok Hurra to urge that the principle of finality
attaches only to the judgment of the Court of last resort, namely, this
Court. It was argued that until the dismissal of SLP (C) Nos. 6500–
16
(2003) 10 SCC 610
17
(2002) 2 SCC 500
18
(2002) 4 SCC 388
9
6501 of 2012 on 23.03.2012, the issue of fixation of fair rent remained
sub judice and, consequently, any alleged default prior thereto could
not, in law, be characterised as “wilful”. According to him, it was only
after the dismissal of the said special leave petitions that the
determination of fair rent at Rs.2,37,500/- p.m. attained finality, and
from that stage onwards the lessee continued to make regular
payments without fail. He further contended that reliance placed on
the Tamil Nadu Regulation of Rights and Responsibilities of Landlords
19
and Tenants Act, 2017 was wholly misplaced, inasmuch as Section 4
of the said enactment expressly exempts tenancies governed by
written agreements, which was the case here. It was also argued by
him that a unilateral termination letter issued by the landlord could not
by itself oust the jurisdiction of the civil court to entertain a tenant’s
defence under the governing rent control legislation.
9. Furthermore, on the issue of precedents concerning Order XLI Rule 5
of the Code of Civil Procedure, 1908, Mr. Gupta submitted that such
authorities were of no relevance in the present context. He contended
that those decisions merely recognise the appellate court’s discretion
to grant conditional stay of execution pending appeal, whereas the
question before the Court in the present case was whether the lessee
could be held guilty of “wilful default” within the meaning of Section
10(2)(i) of the Rent Control Act, 1960. According to him, the principle
governing determination of wilful default is distinct: liability of the
lessee is to be assessed with reference to whether he neglected to pay
19
2017 Act
10
rent from the date it became due despite the opportunity to do so, and
not with reference to interlocutory directions issued by appellate courts
while entertaining appeals.
10. Mr. Gupta then referred to the own pleadings of M/s. Krishna in RCOP
No.134 of 2007, where the period of alleged default was stated to be
from 01.10.2000 to 31.01.2005, quantified at Rs.7,80,000/-,
computed at a monthly rent of Rs.15,000/-. He pointed out that such
a claim was never substantiated by M/s. Krishna at any stage of the
proceedings. In this regard, reliance was placed upon the findings
recorded in the order dated 06.02.2019 in RCOP No.134 of 2007,
wherein the Rent Controller itself noted the absence of evidence
establishing Rs.15,000/- p.m. as the rent for the relevant period.
11. Finally, as regards the quantum of arrears claimed in the eviction
petition, Mr. Gupta submitted that the figure of Rs.61,07,400/- as
averred by M/s. Krishna was untenable. His submission was twofold:
first, that the amount was computed on the basis of the fair rent of
Rs.2,43,600/- p.m. fixed by the Rent Controller on 10.01.2007,
whereas the revisional court, by its order dated 09.09.2011, had
reduced the fair rent to Rs.2,37,500/- p.m.; and secondly, that the
said fair rent determination reached finality only upon dismissal of the
special leave petitions by this Court on 23.03.2012. Thus, it was
contended that any claim predicated upon the figure of Rs.2,43,600/-
p.m. or upon a demand raised prior to the finality of the proceedings
was legally unsustainable.
11
12. Resting on the aforesaid arguments, Mr. Gupta prayed that the civil
appeal be allowed by setting aside the impugned order passed by the
High Court in CRP No. 2053 of 2020.
A RGUMENTS OF THE R ESPONDENT (M/ S . K RISHNA )
13. Per contra , Ms. V. Mohana, learned senior counsel appearing for M/s.
Krishna, contended that the dispute was initially governed by the Rent
Control Act, 1960, but with the enactment of the 2017 Act the
jurisdiction of the civil courts stood excluded and landlord-tenant
disputes could thereafter be adjudicated only by Rent Courts and Rent
Tribunals. She urged that the appellants had wilfully defaulted in
payment of fair rent, a finding concurrently recorded by the Appellate
Authority and the High Court, since fair rent was determined on
10.01.2007, yet, the lessee cleared the arrears only on 11.01.2013.
20
Relying on J. Vishalakshmi Ammal v. T.B. Sathyanarayana , Ms.
Mohana contended that the expression “rent” in Section 10(2)(i) of
the Rent Control Act, 1960 includes fair rent fixed by the court, and
non-payment thereof amounts to wilful default.
14. Ms. Mohana next heavily relied on the decision of a learned Judge of
the High Court in Giridharilal Chandak & Bros. v. Mehdi
21
Ispahani . On the anvil thereof, she vehemently submitted that
mere filing of an appeal does not by itself operate as a stay, and
unless specifically prayed, the appellate court may in its discretion
either grant or refuse stay; hence, pendency of proceedings cannot
20
1996-2-L.W. 849
21
2011 (5) CTC 252
12
excuse non-payment of rent. She referred to the dismissal of the
special leave petitions by this Court on 23.03.2012, whereby the
lessee was directed to pay arrears at Rs.15,00,000/- p.m. along with
th
the regular rent of Rs.2,37,500/- p.m. by the 15 of each succeeding
month until the arrears were cleared, the said payment being directed
without prejudice to the rights of the parties in the pending eviction
proceedings. According to her, the appellants chose to pay only in
instalments and failed to comply fully.
15. It was urged that the pendency of eviction proceedings foreclosed
any plea of ignorance on the part of the appellants as to the
consequences of default, and that mere deposit of arrears pursuant
to interim orders could not absolve them of wilful default within the
meaning of Section 10(2)(i) of the Rent Control Act, 1960.
16. Ms. Mohana submitted the details of the wilful default committed by
the appellants, as follows:
a. The monthly rent agreed upon by and between the parties was
Rs. 48,000/- p.m.; however, the lessee paid only Rs. 33,000/-
p.m. from 01.07.2007.
b. The Rent Controller fixed the fair rent vide order dated
10.01.2007, whereas the full and final settlement of dues as
per the fair rent happened only on 11.01.2013. Appellants
wilfully withheld payment of rent during the pendency of the
eviction petition.
c. Even in an appeal filed by the appellants against the order of
the Rent Controller fixing fair rent, the Appellate Authority did
13
not grant a stay of the order of the Rent Controller, vide order
dated 20.02.2008. Even after this order refusing to stay the
Rent Controller’s order, the appellants did not settle the fair rent
until 11.01.2013.
17. It was then brought to our notice by Ms. Mohana that M/s. Krishna had
filed I.A. No.100 of 2008 under Section 11(4) of the Rent Control Act,
1960 before the Rent Controller, seeking a direction to the lessee to
deposit the arrears, failing which an order of eviction be passed. Even
after the High Court fixed fair rent at Rs.2,37,500/- p.m. by its order
dated 09.09.2011 passed in the revisional proceedings, and despite
subsequent notices issued by M/s. Krishna demanding the arrears, the
appellants continued to remain in default.
18. Ms. Mohana further argued that Section 10(2) of the Rent Control Act,
1960 does not contemplate a prior notice by the landlord as a pre-
condition for seeking eviction. Reliance was placed on Sundaram
22
Pillai & Ors. v. V.R. Pattabiraman to submit that issuance of such
notice is discretionary, not mandatory. In any event, the appellants
neither raised the plea of want of notice in the eviction petition nor
objected to the proceedings on that ground at any earlier stage, and
are therefore estopped from so objecting at this belated stage.
19. In the sequence of these submissions, Ms. Mohana urged that the
appellants had been persistent defaulters, and that no ground for
interference was made out with the concurrent findings of the
22
(1985) 1 SCC 591
14
appellate court and the High Court. Accordingly, she prayed that the
appeal be dismissed.
UESTION
Q
20. The sole question arising for decision is, whether the High Court was
right in the exercise of its revisional jurisdiction in declining to reverse
the appellate order of eviction obtained by M/s. Krishna against the
appellants on the ground of wilful default in payment of rent initially
by the lessee and then by the appellants?
R EASONING
21. We consider it appropriate to first address the question of wilful default,
which constitutes the principal ground on which the decree of eviction
rests. It is not in dispute that by its order dated 10.01.2007, the Rent
Controller, Coimbatore fixed the fair rent at Rs. 2,43,600/- p.m.,
payable with effect from 01.02.2005. Despite this order, the lessee
continued to pay only the earlier contractual rent at the rate of Rs.
48,000 p.m., leading to an accumulation of arrears from 01.02.2005 to
30.06.2007, amounting to Rs. 68,87,400/-, exclusive of subsequent
dues. The lessee, however, neither sought nor obtained a stay of the
said order before the appellate or revisional fora. Despite the appellate
authority having dismissed his appeal on 20.02.2008, thereby
confirming the fair rent, the lessee persisted in paying only a fraction
thereof. The situation continued even after the High Court, by order
dated 09.09.2011, modified the fair rent marginally to Rs.2,37,500
p.m. A legal notice dated 01.10.2011 was thereafter issued by the
15
landlord demanding arrears of Rs.1,22,22,000/-, after giving credit for
the deposit of Rs.25,00,000/- earlier made under the interim direction
of the High Court. Instead of settling the arrears, the tenant merely
remitted Rs.2,13,750/- (after TDS) on 21.10.2011 towards rent for
September 2011 and allowed the arrears to mount.
22. After the accumulation of arrears for over five years and the matter
had traversed through multiple fora, it was only after this Court, by
order dated 23.03.2012 dismissed SLP (C) Nos. 6500–6501 of 2012
that the lessee commenced remitting arrears in May and June 2012 by
issuing cheques of Rs.13,50,000/- and Rs.2,13,750/-, after deduction
of TDS. Even then, full and final settlement was effected belatedly on
11.01.2013, nearly six years after the fixation of fair rent and ten
months after the dismissal of the special leave petitions. In our opinion,
the plea that pendency of proceedings created uncertainty as to the
quantum payable is of no avail to the appellants.
23. At this juncture, a profitable reference can be made to the decision in
Girdharilal Chandak and Bros. (HUF) (supra). While considering the
Rent Control Act, 1960, Justice V. Ramasubramanian (as His Lordship
then was) speaking for the High Court held as follows:
14. Irrespective of whether the order passed by this Court on 28.10.2005
in CRP (NPD) Nos. 1657 & 1658 of 2005 was a conditional order or not, it
is an admitted fact that the Petitioner himself did not seek a stay of the
orders passed by the Rent Controller and the Appellate Authority, while
challenging the same by way of Revision. If a person does not seek stay of
an order passed by a Court below, it would only indicate either of the two
things viz., (i) that he is willing to comply with the order, or (ii) that he has
no objection to the orders of the Court below being put into execution. The
failure of a person to seek from an Appellate forum, a stay of the order of
a subordinate forum, cannot mean anything else than the above two
factors.
*
16
15. Order 41, Rule 5(1), C.P.C, makes it clear that an Appeal shall not
operate as a stay of the proceedings under a decree or order appealed from,
except so far as the Appellate Court may order. It also makes it clear that
the execution of a decree need not be stayed merely by reason of an Appeal
having been preferred from the decree.
*
21. As a matter of fact, the Tamil Nadu Buildings (Lease and Rent Control)
Act, 1960, enables the Appellate Authority under Section 23(2) to grant
stay of further proceedings pending decision on the Appeal. There is no
similar provision under Section 25. What is worse is the fact that under
Section 23(4), the decision of the Appellate Authority is final and is not
liable to be called in question in any Court of Law, except as provided in
Section 25. Therefore, finality is reached in every proceeding under the Act,
the moment an order is passed by the Appellate Authority. But it is made
subject to the Revisional jurisdiction of this Court. Therefore, in the absence
of a stay, by this Court in a Revision, the order of the Appellate Authority
becomes final until it is modified or set aside by this Court. Moreover, Rule
12 of the Tamil Nadu Buildings (Lease and Rent Control) Rules, 1974,
prescribes the procedure for the disposal of the Applications. The Third
Proviso to sub-rule (3) of Rule 12, states that whenever an Application for
setting aside an ex parte order is received for the first time, all Execution
proceedings would stand stayed till the disposal of that Application. In other
words, the Act contains one provision for stay under Section 23(2), subject
to the discretion of the Appellate Authority. The Rules contain one provision
for automatic stay of execution, under the Third Proviso to Rule 12(3).
Therefore, the construction that the admission of a Revision, without any
order of stay, would automatically take away the finality conferred under
Section 23(4) to an order of the Appellate Authority, would do violence to
the Act and the Rules. Hence, the second contention is also unacceptable.
24. In the present case, the lessee challenged the fixation of fair rent but
did not seek a stay of its operation before the appellate or revisional
fora. Mere filing of an appeal does not operate as a stay of the
decree/order under appeal is the statutory ordainment in sub-rule (1)
of Rule 5 of Order XLI, CPC. Payments were made belatedly and only
after protracted litigation. Such conduct cannot be reconciled with bona
fide doubt as to liability. Appellants, it is clear, defaulted in payment of
rent and such default, on facts and in the circumstances, is undoubtedly
a wilful default. The concurrent finding of the appellate authority,
affirmed by the High Court, that the lessee and thereafter the
appellants had been in wilful default, rests on sound appreciation of the
legal position and the appellants’ own admissions.
17
25. Furthermore, as regards the import and effect of Section 10(2)(i) of
the Rent Control Act, 1960, along with its proviso and explanation, we
need to refer to the decision in Sundaram Pillai (supra) relied upon
by Ms. Mohana. The said decision is by a three-Judge Bench of this
Court. The majority view was authored by Hon’ble A. Varadarajan, J.
(as His Lordship then was). The relevant paragraphs from it read as
follows:
56. We may, therefore, extract the Explanation again to find out what it
really means and to what extent does it affect the provisions of the proviso:
“ Explanation.— For the purpose of this sub-section default to pay or tender
rent shall be construed as wilful, if the default by the tenant in the payment
or tender of rent continues after the issue of two months' notice by the
landlord claiming the rent.”
57. If we analyse the various concomitants of the Explanation, the position
seems to be that—
( a ) there should be a default to pay or tender rent,
( b ) the default should continue even after the landlord has issued two
months' notice claiming the arrears of rent,
( c ) if, despite notice, the arrears are not paid the tenant is said to have
committed a wilful default and consequently liable to be evicted forthwith.
*
59. Another aspect that must be stressed at this stage is that where a
tenant has committed default after default without any lawful or reasonable
cause and the said defaults contain all the qualities of a wilful default viz.
deliberate, intentional, calculated and conscious, should he be given a
further chance of locus poenitentiae ? After hearing counsel for the parties
at great length, we feel that although the question is a difficult one yet it is
not beyond solution. If we keep the objects of the proviso and the
Explanation separate, there would be no difficulty in deciding these cases.
60. To begin with, Section 10(2)( i ) of the Act lays down that where the
Controller is satisfied that the tenant has not paid or tendered the rent
within 15 days after the expiry of the time fixed in the agreement of tenancy
or in the absence of any such agreement, by the last date of the month
next following that for which the rent is payable, he (tenant) undoubtedly
commits a default. Two factors mentioned in Section 10(2)( i ) seem to give
a clear notice to a tenant as to the mode of payment as also the last date
by which he is legally supposed to pay the rent. This, however, does not put
the matter beyond controversy because before pacing ( sic, passing) an
order of eviction under the proviso, it must also be proved that the default
was wilful and if the Controller is of the opinion that the default in the
circumstances and facts of the case was not wilful, in the sense that it did
not contain any of the qualities or attributes of a wilful default as indicated
by us above, he may give the tenant a reasonable time, not exceeding 15
days, to pay the entire rent and if this is complied with, the application for
ejectment would stand rejected. The difficulty, however, is created by the
18
Explanation which says that once a landlord gives a two months' notice to
his tenant for paying the arrears of rent but the tenant continues in default
even thereafter, then he is liable to be evicted. There is a good deal of force
in this argument which has its own advantages. In the first place, it protects
the court from going into the intricate question as to what is a wilful default
and whether or not the conditions of a wilful default have been satisfied
which, if permitted would differ from case to case and court to court. But
the difficulty is that if such a blanket ban is put on the court for not
examining the question of wilful default once the conditions laid down in the
Explanation are satisfied then it would undoubtedly lead to serious injustice
to the tenant. A subsidiary consequence of such an interpretation would be
that even though the tenant, after receipt of the notice, may be wanting to
pay the arrears of rent but is unable to do so because of unforeseen
circumstances like, death, accident, robbery, etc., which prevent him from
paying the arrears, yet under the Explanation he has to be evicted.
61. Another view which, in our opinion, is a more acceptable one and flows
from the actual words used by the proviso is that where the Explanation
does not apply in the sense that the landlord has not issued two months'
notice, it will be for the court to determine in each case whether the default
is wilful having regard to the tests laid down by us and if the court finds
that the default is wilful then a decree for eviction can be passed without
any difficulty.
62. *
A correct interpretation, in our opinion, would be that where—
( 1 ) no notice, as required by the Explanation, is given to the tenant, the
Controller or the court can certainly examine the question whether the
default has been wilful and to such a case the Explanation would have no
application,
( 2 ) the landlord chooses to issue two months' notice and the rent is not
paid then that would be a conclusive proof of the default being wilful unless
the tenant proves his incapability of paying the rent due to unavoidable
circumstances.
63. The argument of the counsel for landlords was that even if a notice
under the Explanation is given that does not take away the jurisdiction of
the proviso to determine whether or not the default has been wilful if it
contains the qualities and attributes referred to above because what the
Explanation does is merely to incorporate an instance of a wilful default and
is not conclusive on the point and would have to be construed by the court
in conjunction with the conditions mentioned in the proviso. We are,
however, unable to go to this extreme extent because that will actually
thwart the object of the Explanation. As we read the Explanation, it does
not, at all take away the mandatory duty cast on the Controller in the
proviso to decide if a default is wilful or not. Indeed, if the landlord chooses
to give two months' notice to his tenant and he does not pay the rent, then,
in the absence of substantial and compelling reasons, the Controller or the
court can certainly presume that the default is wilful and order his eviction
straightaway. We are unable to accept the view that whether two months'
notice for payment of rent is given or not, it will always be open to the
Controller under the proviso to determine the question of wilful default
because that would render the very object of Explanation otiose and
nugatory. We express our view in the matter in the following terms:
“( 1 ) Where no notice is given by the landlord in terms of the Explanation,
the Controller, having regard to the four conditions spelt out by us has the
undoubted discretion to examine the question as to whether or not the
default committed by the tenant is wilful. If he feels that any of the
19
conditions mentioned by us is lacking or that the default was due to some
unforeseen circumstances, he may give the tenant a chance of locus
poenitentiae by giving a reasonable time, which the statute puts at 15 days,
and if within that time the tenant pays the rent, the application for
ejectment would have to be rejected.
( 2 ) If the landlord chooses to give two months' notice to the tenant to clear
up the dues and the tenant does not pay the dues within the stipulated time
of the notice then the Controller would have no discretion to decide the
question of wilful default because such a conduct of the tenant would itself
be presumed to be wilful default unless he shows that he was prevented by
sufficient cause or circumstances beyond his control in honouring the notice
sent by the landlord.”
26. Hon’ble Sabyasachi Mukharji, J. (as the Chief Justice then was)
dissented. Although we find His Lordship’s opinion expressed in
paragraphs 79, 81, 83, 84, 86, 87 and 90 of the report to be logical,
the same pales into insignificance in view of the same being the
minority view. Having regard to the Constitution Bench decision of this
Court in Trimurthi Fragrances (P) Ltd. v. Government of N.C.T.
23
of Delhi , the decision in Sundaram Pillai (supra) has to be
regarded as a judgment of a three-Judge Bench which binds us sitting
in a combination of two.
27. Thus, on consideration of the proposition of law laid down by the
majority in Sundaram Pillai (supra), this Court is not persuaded to
accept the contention of the appellants that the absence of a two
months’ notice under the Explanation to Section 10(2)(i) of the Rent
Control Act, 1960 would ipso facto disentitle the landlord from
maintaining the proceedings for eviction on the ground of wilful
default. The statute, when read as a whole, does not render such
notice an indispensable condition precedent to the assumption of
jurisdiction by the Rent Controller. The Explanation merely provides an
23
2022 SCC OnLine SC 1247
20
additional instance where, upon service of notice and continued non-
payment, the default may be presumed to be wilful; it does not, by
necessary implication, obliterate the discretion vested in the Controller
under the proviso to determine wilfulness even in the absence of such
notice.
28. That apart, the nature of default committed by the lessee satisfies the
attributes of a wilful default as explained in Sundaram Pillai (supra)
and leaves little room for us to hold that no wilful default had been
committed.
29. Further, we have perused the brief order dated 23.03.2012 dismissing
the special leave petitions of the lessee. This Court was careful in using
the words “without prejudice”. The implication of “without prejudice”
used in the order of dismissal would mean, in the circumstances, that
notwithstanding the liberty granted to the lessee to make payment, as
per liberty granted, such payments were not to be seen as a waiver of
M/s. Krishna’s rights to realise unpaid rent and even to proceed for the
lessee’s ejectment owing to wilful default committed by him. The
position seems to be absolutely clear on this front and no advantage
can be derived by the appellants by contending that payments having
been made in terms of this Court’s order, the issue stood closed.
30. We are also not impressed by the argument of Mr. Gupta based on the
principle of law laid down in Rupa Ashok Hurra (supra). Judicial
proceedings attain finality upon a decision being rendered by the apex
court in the hierarchy of courts. There is, as such, no quarrel with the
said proposition of law. Nonetheless, proceedings do attain finality
21
even at the level of the high courts, or the district courts or the trial
courts if the immediate next superior forum is not approached by the
party suffering the decree/order of the court seized of the lis. However,
the principle of finality of a judicial decision would have no applicability
in a situation where a party, despite owing money (unpaid rent, here)
to his adversary in terms of a judicial determination, approaches the
superior forum but prefers not to seek a stay of such determination
pending the proceedings leaving the other party deprived of the
benefits flowing from the said judicial determination. The bogey of
judicial finality cannot, thus, be pressed into service to unfairly deny a
party the benefits of a judicial decision, operation of which does not
suffer from any interdiction by the superior court.
31. Having bestowed anxious consideration to the rival submissions and
on perusal of the materials placed on record, we find ourselves in
agreement with Ms. Mohana that the lessee, and subsequently the
appellants, taking shelter of the pending appeal against the order
fixing fair rent without, however, seeking a stay thereof and also in
light of the parting observation made by this Court while disposing of
SLP (C) Nos. 6500–6501 of 2012, had no protective umbrella over
him/them so as to remain absolved from tendering payment to M/s.
Krishna.
32. Having regard to the afore-canvassed factual and legal position and on
acceptance of the instances of default referred to by Ms. Mohana, we
answer the question arising for decision in the affirmative. We conclude
that the High Court, in exercise of its revisional jurisdiction, rightly
22
refrained from re-examining factual determinations and such an
approach being reasonable and unexceptionable, it committed no error
in affirming the appellate order of eviction passed against the
appellants on the ground of wilful default.
33. The appeal, in our view, is unmeritorious. It is liable to be and is,
accordingly, dismissed.
34. The appellants are, however, granted time of six months from the date
of this order to vacate and hand over vacant possession of the decretal
property to M/s. Krishna, subject to the usual undertakings being filed
within a fortnight from date positively. In default, grant of time of six
months shall stand vacated and M/s. Krishna would be at liberty to
institute execution proceedings in accordance with law to recover
possession.
35. Parties shall, however, bear their own costs.
…………………....…………………J.
(DIPANKAR DATTA)
…….…….…..………………………J.
(MANMOHAN)
NEW DELHI;
NOVEMBER 11, 2025.
23