Full Judgment Text
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PETITIONER:
MAGANLAL CHHOTALAL DESAI
Vs.
RESPONDENT:
CHANDRAKANT MOTILAL
DATE OF JUDGMENT:
22/04/1968
BENCH:
BACHAWAT, R.S.
BENCH:
BACHAWAT, R.S.
SHELAT, J.M.
GROVER, A.N.
CITATION:
1969 AIR 37 1969 SCR (1) 58
CITATOR INFO :
F 1970 SC1221 (5)
F 1985 SC 369 (5)
ACT:
Bombay Rents, Hotel and Lodging House Rents Control Act (57
of 1947), ss. 12(1), 12(3) (b) and 20--Scope of--Overpayment
of rent-Adjustment against rent due when permissible.
Code of Civil Procedure (Act 5 of 1908), s. 115--Revisional
jurisdiction of High Court.
HEADNOTE:
The appellant was a tenant in the respondent’s house on a
contractual rent of Rs. 300 per month. The respondent filed
a suit claiming possession on the ground of non--payment of
rent and claimed arrears of rent and mesne profits. The
appellant filed his written statement, asking for fixation
of the standard rent at Rs. 125 per month. He alleged that
the respondent had recovered more than the, rent
legitimately due and prayed for the dismissal of the suit.
He; also filed a suit on 14th March 1957 claiming refund of
rent paid between 14th March 1950 and 4th August 1954 at the
rate of Rs. 300 per month, but he did not pay the standard
rent due from him from 4th August 1954 nor was he ready and
willing to pay it. The trial court decreed the respondent’s
suit for eviction. The appellate court set aside the decree
holding that the standard rent was Rs. 125 and directed the
respondent to render an account of the over payments made to
him. In revision, the High Court accepted the finding of
the appellate court that the standard rent was Rs. 125 but
set aside the decree of the appellate court holding that the
rent was in arrear from 4th August 1954 and directed the
appellant to pay mesne profits at Rs. 125 per month.
In appeal to this Court it was contended that (1) the High
Court had no jurisdiction. to interfere with the decree of
the appellate Court under s.115, Civil Procedure Code;(2)
The rent was not in arrear and should be treated as paid by
adjustment or deduction of the overpayments; and (3) the
appellant was entitled to the protection of s. 12(1)
and s.12 (3) (b) of the Bombay Rents, Hotel and Lodging
House Rents Control Act, 1947.
HELD : (1 ) On the pleadings in the respondent’s suit, the
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appellate Court had acted illegally and with material
irregularity as it had no power to pass a decree directing
the respondent to render an account in respect of any
overpayment of rent made to him. Therefore, the High Court
had power to revise the decree. [61D]
(2) Section 20 of the Act gives the tenant a general right
to recovery of overpaid rent within 6 months from the date
of payment. He may also adjust the overpayment by deduction
from any rent payable by him, But if the amount is incapable
of recovery because of the bar of limitation it cannot be
recovered by deduction, that is. the right of recovery by
deduction is barred at the same time as the right of
recovery by suit. [62D]
In the present case, the right of recovery of the excess
rent paid before 4th August 1954 became barred on and after
4th February 1955. As the claim for recovery became barred.
the appellant could not thereafter deduct it from the rent
failing due. Since he never deducted it from the
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rent at any time, but filed a suit for its recovery, the
overpayment could not be deducted from or adjusted against
the rent falling due after 4th August 1954, and therefore,
the rent was in arrears. [63F--G]
Sohrab Tavaria v. Jafferali, 58 Bom. L.R. 680, 687-88 and
Karamsey Kanji v. Velji Virji, 56 Bom. L.R. 619, 626,
approved.
Bayley v-.Walker, [1925] 1 K.B. 447, referred to.
(3) The appellant could not claim the protection of s.
12(1) or s.12(3) (b) of the Act, because, (a) he was never
ready or willing to pay the standard rent during the
pendency of the suit, (b) he did not at the first hearing of
the, suit or on any other date fixed by the trial court pay
or tender the standard rent and (c) he did not thereafter
continue to pay or deposit in Court such rent till the suit
was finally decided [63H; 64A B]
JUDGMENT:
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 392 of 1965.
Appeal by special leave from the judgment and order, dated
August 29, November 20, 1962 of the Gujarat High Court in
Civil Revision Application No. 456 of 1960.
M. C. Chagla, and B. R. Agarwala, for the appellant.
S. T. Desai, P. C. Bhartari, J. B. Dadachanji, O. C. Mathur
and Ravinder Narain, for the respondents.
The Judgment of the Court was delivered by
Bachawat, J. This appeal arises out of a suit between
landlord and tenant. The defendant was a tenant of Moti
Villa, Bungalow No. 1 in Ahmedabad under the plaintiff. The
contractual rent was Rs. 300/- per month. Since October 1,
1948 the defendant stopped payment of rent on the ground
that it was excessive. The disputes between the parties
were referred to the arbitration of one Sankalchand Parikh
who made an award fixing the standard rent at Rs. 300/- per
month and directing the defendant to deliver possession of
the premises and to pay arrears of rent and future rent at
that rate. A decree was passed according to the award on
September 21, 1949. The plaintiff recovered moneys by
executing the decree but the defendant continued in posses-
sion. On April 20, 1950 the defendant made an application
for fixation of standard rent. This application was
withdrawn by him on November 11, 1950. On August 1, 1955
the High Court declared that the award decree was null and
void on the ground that the claim for fixation of the
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standard rent and recovery of possession could not be
referred to arbitration.
On September 5, 1955 the plaintiff served a notice upon the
defendant demanding payment of arrears of rent and asking
him to vacate the premises on the expiry of the month of
October next. On December 26, 1955 the plaintiff instituted
Suit No. 5092 of 1955 claiming possession on the ground of
non-payment of rent and sub-letting and also claiming
arrears of rent and mesne
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profits. The defendant filed his written statement on May
1, 1956 asking for fixation of the standard rent at Rs.
125/- per month, denying the sub-letting and alleging that
the plaintiff had recovered more than the rent legitimately
due to him. On March 14, 1957 he filed Suit No. 34 of 1957
against the plaintiff claiming refund of Rs. 15,224/-
realised in execution of the void decree. The first date of
the hearing of Suit No. 5092 of 1955 was December 26, 1957.
On June 19, 1958 the Trial Court decreed the suit and
directed the defendant to give possession of the premises
and to pay Rs. 10,750/- on account of arrears of rent and
mesne profits at the rate of Rs. 500/- per month from the
date of the suit. The Trial Court held that the defendant
sub-let the premises, that having withdrawn his application
for fixation of the standard rent it was not open to him to
ask for fixation of the standard rent, that if the matter
were still open the standard rent would be Rs. 125/- per
month, that a sum of Rs. 14,169/2/- was realised from the
defendant in execution of the award decree, that the
defendant was liable to pay rent at Rs. 300/- per month,
that the rent was in arrear and that the notice to quit
dated September 5, 1955 was valid. The defendant filed an
appeal against this decree. During the pendency of the
appeal the plaintiff recovered the sum of Rs. 10,750/-
decreed by the trial Court. The Assistant Judge, Ahmedabad
allowed the appeal, set aside the decree of the Trial Court
and directed the plaintiff to render an account of the
overpayments made to him. He held that the defendant did
not sub-let the premises, that the standard rent was Rs.
125/- per month, that it was open to the defendant to ask
for fixation of standard rent, that in execution of the
award decree since 1950 the plaintiff recovered Rs.
14,169/2/- before the institution of the suit and Rs.
10,750/- during the pendency of the appeal and that taking
into account all the recoveries the rent was not in arrear.
The plaintiff filed a revision application against this
decree. On November 20, 1962 the High Court allowed the
revision application, set aside the decree of the Assistant
Judge, restored the decree for eviction passed by the Trial
Court and directed the defendant to pay mesne profits at Rs.
125/- per month from the date of the suit until recovery of
possession. The High Court accepted the findings of the
court below that there was no sub-letting of the premises,
that the standard rent was Rs. 125/per month, that it was
open to the defendant to ask for fixation of the standard
rent and that Rs. 14,160/2/- was recovered from him in
execution of the award decree before the institution of the
suit. The High Court held that the rent was in arrear, that
the defendant was not ready and willing to adjust the
overpayment against the rent falling due, that the amount
recovered from the defendant was less than the standard rent
due from him and the cost of the suit and that he was not
entitled to the protection of sees. 12(1) and 12(3) (b) of
the Bombay Rents, Hotel and Lodg-
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ing House Rents Control Act, 1947 (Bombay Act No. LVII of
1947). The High Court refused to allow the defendant to
raise a new contention, viz., that there was no valid notice
under sec. 12(2) of the Act. The defendant filed this
appeal after obtaining special leave from this Court.
Mr. M. C. Chagla contended that the High Court had no
jurisdiction to interfere with the decree of the Assistant
Judge under sec. 115 of the Code of Civil Procedure. We are
unable to accept this contention. The decree passed by the
Assistant Judge was manifestly illegal. Suit No. 5092 of
1955 was for possession, arrears of rent and mesne profits.
In his written statement, the defendant asked for fixation
of standard rent and prayed for dismissal of the suit. In
that suit the court had no power to pass a decree directing
the plaintiff to render an account in respect of any over
payment of rent made to him. In giving the direction that
"the landlord do render an account of the over payments made
to him", the Assistant Judge acted illegally and with
material irregularity. The High Court had full power to
revise this decree under sec. 115 and to give such direction
in the matter as it thought fit.
Mr. Chagla then contended that there was no valid notice
under sec. 12(2). He argued that this point arose on the
pleadings and the issues. But we find that in the Trial
Court the contention was that there was no valid notice to
quit. It was not argued that there was no valid notice
under see. 12(2). The point regarding the validity of the
notice was not raised before the Assistant Judge. The High
Court properly refused to allow the point to be taken for
the first time in revision. We are of the opinion that the
point about the absence of a proper notice under sec. 12(2)
is not now open.
The crucial point in the case was whether the defendant paid
or was ready and willing to pay the standard rent due from
him. According to the defendant he was compelled to pay Rs.
15,224/2/ between March 14, 1950 and August 4, 1954. The
courts below found that between those two dates he paid Rs.
14,169/2/on account of rent from October 1, 1948 at Rs.
300/- per month. From the plaint in Suit No. 34 of 19 ’ 57
it appears that until March 14, 1957 the defendant did not
make any other payment. As the High Court pointed out, no
further payment was made by the defendant till the disposal
of suit No. 5092 of 1955.
Thus upto August 4, 1954 the defendant paid Rs. 14,169/2/on
account of rent due upto that date at Rs. 300/- per month.
The payments were in excess of the standard rent. He did
not pay rent falling due after August 4, 1954. The question
is whether the rent was in arrear or whether it should be
treated as paid
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by adjustment or deduction of the over payments.. The right
of a tenant to recover the over-paid rent is regulated by
sec.2C That section reads :-
"Any amount paid on account of rent after the
date of the coming into operation of this Act
shall, except in so far as payment thereof is
in accordance with the provisions of this Act,
be recoverable by the tenant from the landlord
to whom it was paid or on whose behalf it was
received or from his legal representative at
any time within a period of six months from
the date of payment and may, without prejudice
to any other remedy for recovery, be deducted
by such tenant from any rent payable by him to
such landlord."
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The section gives ’the tenant a general right of recovery of
the overpaid rent within six months from the date of
payment. Without prejudice to any other mode of recovery,
he may deduct the overpayment from any rent payable by him
to the landlord. Deduction is one mode of recovery. If the
amount is incapable of recovery because of the bar of
limitation, it cannot be recovered by deduction. In other
words, the right of recovery by deduction is barred at the
same time as the right of recovery by suit. If the tenant
seeks recovery of the overpaid amount he must bring the suit
or make the deduction within six months.
In Karamesy Kanji v. Velji Virji(1) the learned Chief
Justice of the Bombay High Court repelled the tenant’s
contention that for deduction of rent no period of
limitation was provided by sec. 20. He observed
"It seems to me clear on a plain and natural
construction of the section itself ’that if a
tenant could not recover any excess amount
paid by him beyond six months from the date of
payment and if such amounts became
irrecoverable, it is difficult to understand
how a tenant could deduct what he could not
recover and what was irrecoverable in law.
The same view of the law has been taken in a
parallel piece of legislation in England in
Bayley v. Walker(1). I see no reason to take
a view different from that taken by the
appellate court that ’the interpretation put
by the English Court on a similar provision of
law is the correct interpretation."
In Bayley v. Walker(2) the tenant on discovering that he had
overpaid considerable sums in excess of the standard rent
stopped pay-
(1) 56 Bom.L.R. 619,626.
(2) [1925] 1 K.B. 447.
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ment of rent retaining the amounts as they fell due by way
of deduction under the provisions of s. 14, sub-sec. 1, of
the Increase of Rent and Mortgage Interest (Restriction)
Act, 1920. He continued to deduct his rent after expiry of
the period of limitation prescribed by see. 8, sub-sec. 2 of
the Rent and Mortgage Interest Restrictions Act, 1923. The
landlord contended that the tenant had no right to so
continue to deduct and that consequently his rent was in
arrear and on that ground brought an action for possession.
The question was whether the rent was in arrear or not. The
matter turned on the construction of s. 14 of the Act of
1920, and see. 8 of the Act of 1923. Section 14, sub-
section 1 gave the tenant a general right of recovery of
overpaid rent and the amount recoverable might without
prejudice to any other mode of recovery be deducted by the
tenant from any rent payable by him. Section 8 sub-sec. 2
provided that any sum which under sub-sec. 1 of sec. 14 of
the principal Act (of 1920) is recoverable by the
tenant...... shall be recoverable at any time within six
months from the date of payment, but not afterwards or in
the case of a payment made before the passing of this Act,
at any time within six months from the passing of this Act
but not afterwards." Salter, J. held that the period of
limitation prescribed by sec. 8 of the Act of 1923 applied
to recovery by deduction as well as recovery by action. As
the,, amount was incapable of recovery by action, it could
not be recovered by deduction. The rent was therefore in
arrear and the landlord was entitled to recover possession
on that ground. In Sohrab Tavaria v. Jafferali(1) a
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Division Bench of the Bombay High Court approved of these
decisions.
Now the right of recovery of the excess rent paid before
August 4, 1954 became barred on and after February 4, 1955.
Within that period the defendant took no steps for recovery
of the amount by filing a suit or making a deduction. As
the claim for recovery of the amount became barred after
February 4, 1955, he could not thereafter deduct it from the
rent falling due. As a matter of fact, he did not deduct it
from rent at any time. Instead of making any deduction he
filed a suit for its recovery. The overpayments cannot now
be deducted from or adjusted against the rent falling due
since August 4, 1954. It follows that the rent was in
arrear.
In these circumstances, the defendant could not claim
protection of s. 12(1) of the Rent Act. During the pendency
of the suit he did not pay the standard rent due from him
from August 4, 1954 nor was he ready or willing to pay it.
Instead of showing his readiness and willingness to pay the
rent due he claimed that he was not liable to pay any
amount at all.
(1) 58 Bom. L.R. 680,687-88.
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Likewise he could not claim the protection under sec. 12(3)
(b). Before the first hearing of the suit on December 26,
1957 or any other date fixed by the trial court he did not
pay or tender in court the standard rent then due from him.
Nor did he thereafter continue to pay or deposit in court
such rent till the suit was finally decided. It follows
that the defendant cannot claim protection from eviction
under the Rent Act. The High Court therefore rightly
decreed the suit for eviction.
In the result, the appeal is dismissed. We direct that
execution of the decree for eviction be stayed for a period
of one year from today. In all the circumstances of the
case, we make no order as to costs.
V.P.S. Appeal dismissed.
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