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PETITIONER: HARBANSLAL JAGMOHANDAS & ANR.

       Vs.

RESPONDENT: PRABHUDAS SHIVLAL

DATE OF JUDGMENT12/03/1976

BENCH: RAY, A.N. (CJ) BENCH: RAY, A.N. (CJ) BEG, M. HAMEEDULLAH SINGH, JASWANT

CITATION:  1976 AIR 2005            1976 SCR  (3) 628  1977 SCC  (1) 575  CITATOR INFO :  R          1978 SC 955  (10)  C          1980 SC 954  (11)  R          1988 SC1817  (4)

ACT:      Bombay Rents  Hotel and Lodging House Rates Control Act 1947-Explanation I  to s.  12-Sec. 11-12(3)(a)(b)-Whether  a tenant must  raise dispute  as to  standard rent  within one month from  receipt of  notice or  whether can  be raised in written statement.

HEADNOTE:      Both the  appeals raise a common question as to whether a tenant  in order to resist passing of a decree of eviction under the  provisions contained in s. 12(3)(a) of the Bombay Rent Act  1947 must  dispute the  standard rent  within  one month from  the date  of receipt  of  the  notice  from  the landlord terminating the tenancy on the ground of arrears of rent or  whether a  tenant can  raise such  a dispute in the written statement.  The Gujarat  High Court took a view that the dispute  as to standard rent has to be raised within one month from  the service  of the  notice on  the tenant.  The Bombay High  Court has  taken a  contrary view and held that the tenant  can raise  a dispute  as to standard rent in his written statement  in answer  to the suit and in such a case the provisions  of s. 12(3)(a) of the Act will apply. In the Gujarat case,  the High  Court found that the tenant did not raise the  dispute within  one month  of the  service of the notice terminating  the tenancy inter alia, on the ground of arrears of rent for more than 6 months. In the Bombay appeal the dispute was not raised within one month from the date of the receipt  of the  notice. It  was, however, raised in the written statement.  Under s.  11 of  the Act,  the court has power to  determine standard  rent when  there is  a dispute between the  landlord and  tenant regarding  the  amount  of standard rent. ^      HELD: (1)  Under s.  12 of  the Act the landlord is not entitled to  recover possession  of the  premises so long as the tenant pays or is ready and willing to pay the amount of standard  rent   and  permitted   increases.  Section  12(2)

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provides that  no suit  for recovery  of possession shall be instituted by  a landlord  against a tenant on the ground of non-payment of the standard rent until the expiration of one month next  after notice  in writing  of the  payment of the standard rent.  Section  12(3)(a)  provides  for  passing  a decree for eviction of the tenant is in arrears for a period of 6  months and  neglects to  make the  payment  after  the expiration of the notice period provided there is no dispute regarding the  amount  of  standard  rent.  Clause  12(3)(a) provides that  in any  other case  no  decree  for  eviction should be  passed if the tenant pays or tenders in the court the standard  rent and  permitted increases which is due and thereafter continues  to pay  or tender  in court  regularly such rent till the suit is finally decided. Explanation I to s. 12  provides that  where there  is a  dispute as  to  the amount of  standard rent  or permitted increases recoverable under this  Act the  tenant shall  be deemed to be ready and willing to  pay such  amount if  before the  expiry  of  the period of  one month from the receipt of the notice he makes an application  under s. 11 for the fixation of the standard rent and  thereafter pays the rent fixed by the Court. [632- B, G]      (2) The Bombay High Court view overlooks the limitation of time  within which  a dispute  is  to  be  raised  as  to standard rent.  The view  of  the  Bombay  High  Court  that dispute within  one month  of  the  service  of  the  notice terminating the tenancy is one mode of raising a dispute and there is another mode of raising the dispute at any stage of the suit,  nullifies the  provisions contained  in s. 12 and explanation thereto  and confers a right on the tenant where the  legislation   does  not  contemplate  such  right.  The provisions in s. 11(3) of the Act deal with orders which may be  passed   by  the   court  during  the  pendency  of  the application disputing  the rent.  Provisions of  s. 11(4) of the Act deal with orders which may be passed consequent upon dispute as to rent. It is 629 only when  an application  disputing the rent is made within the time  contemplated by  Explanation I to s. 12 of the Act that the provisions on sub-sections (3) and (4) of s. 11 are attracted. [635F-H, 636A]

JUDGMENT:      CIVIL APPELLATE  JURISDICTION: Civil  Appeal No. 282 of 1971.      Appeal by  special Leave  from the  Judgment and  Order dated 22-12-70  of the Gujarat High Court in C.R.A. No. 1353 of 1970 and                   CIVIL APPEAL NO. 2068/71      Appeal by  Special Leave  from the  Judgment and  Order dated the  31-3-71 of the Bombay High Court in Special Civil Application No. 859 of 1967.      D. V.  Patel, S.  K. Dholakia  and  R.  C.  Bhatia  for Appellants in C. A. 282/71.      V. S. Desai, Makohn F. A. Pereize and H. S. Parihar for Appellants in C. A. 2068/71.      V. S.  Desai, H.  S.  Parihar  and  I.  N.  Shroff  for Respondent in C.A. 282/71.      The Judgment of the Court was delivered by      RAY, C.J.-Civil  Appeal No.  282 of 1971 referred to as the Gujarat  Appeal is by special leave from the order dated 22 December,  1970 of  the High Court of Gujarat rejecting a revision application  against the judgment and decree passed

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by the Extra Assistant Judge on 17 September, 1970.      Civil Appeal  No. 2068  of 1971 hereinafter referred to as the  Bombay Appeal  is by special leave from the judgment and order dated 21 March, 1971 of the High Court of Bombay.      Both the  appeals raise a common question as to whether the provision  contained in  section 12(3) (a) of the Bombay Rents, Hotel  and Lodging  House  Rates  Control  Act,  1947 hereinafter referred to as the Act applies. The Gujarat High Court took  the view  that the  provisions of section 12 (3) (a) of the Act apply to the suit. The Bombay High Court took the view that the provisions contained in section 12 (3) (a) of the  Act do  not apply  to the suit, but that the suit is governed by  the provisions  contained in section 12 (3) (b) of the Act.      The principal  question is  whether  on  receipt  of  a notice from  the landlord  terminating the  tenancy  on  the ground of arrears of rent dispute as to standard rent has to be raised before the expiry of the period of one month after the service of the notice.      The Gujarat  High Court  has taken  the view  that  the dispute as to standard rent is to be raised within one month from the  service of  the notice  on the  tenant. The Bombay High Court  has taken  a contrary  view and  held  that  the tenant can  raise a  dispute as  to  standard  rent  in  his written statement in answer to the suit and in 630 such a  case the provisions of section 12 (3) (b) of the Act will apply.      In the  Gujarat appeal  the respondent filed a suit for recovery of possession of a portion of the ground floor of a building on  the ground that the appellant was in arrears of rent from  1 September, 1964 and also on the ground that the respondent bonafide  required possession  of the premises in suit. The  Third Joint Civil Judge in the trial court gave a decree in  favour of  the respondent  for possession  of the premises. The  trial court  held that the appellants were in arrears of  rent from  1 September,  1964 and that they were not ready  and willing  to pay  the rent.  The  trial  Court further held  that the  contractual rent  in respect  of the premises was not unreasonable and excessive.      The appellants in the Gujarat appeal filed an appeal in the court of District judge of Surat. The Appellate Court by judgment dated 17 September, 1970 confirmed the judgment and decreed the suit.      The appellants  thereafter filed a revision application before the  Gujarat High  Court on the ground that the court should have held that the case fell under section 12 (3) (b) of the Act. The High Court rejected the revision application at sight.      The facts  found in  the Gujarat appeal are as follows: The appellants  paid rent to the respondent up to 31 August, 1964. The  respondent landlord  by notice dated 14 November, 1966 terminated  the tenancy  of the appellants, inter alia, on the  ground that  the appellants  were in arrears of rent for more than six months. The appellants received the notice on 6  December, 1966.  The respondent  filed the  suit on  2 February, 1967.      In the  Gujarat appeal  appellants contended  that they raised the  dispute about the standard rent by their letters dated 17  November, 1966; 19 December, 1966 and 11 February, 1967, and therefore, there was a dispute as to standard rent and the  provisions contained  in section  12 (3) (a) of the Act do not apply. The Appellate Court found that the letters dated 17  November, 1966  and 19  December, 1966  alleged to have been  written by  the appellants to the respondent were

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manufactured by  the  appellants  and  the  certificates  of posting were  obtained by  unscrupulous  means.  As  to  the alleged letter of the appellants dated 11 February, 1967 the Appellate Court  found that  in that  letter the  appellants referred to  the letters  dated 17  November,  1966  and  19 December,  1966.  The  respondent  by  his  reply  dated  16 February, 1967  denied that the respondent ever received any letter dated 17 November, 1966 or 19 December, 1966. On this evidence the Appellate Court found that there was no dispute as to  rent within  one month  of the  service of the notice terminating the tenancy.      In the Bombay Appeal the notice terminating the tenancy was dated  5  April,  1963  to  deliver  possession  on  the expiration of  15 May,  1963.  The  suit  was  filed  on  11 September, 1963. The 631 appellants  landlords  alleged  that  the  tenants  were  in arrears from  15 March,  1960 to  15 March,  1963, viz., for over six months. In the Bombay appeal the trial Court gave a decree for  possession. The  Appellate Court  confirmed  the judgment of the trial Court. In an application under Article 227 of the Constitution the Bombay High Court held that when the respondent  paid all arrears and costs of the suit on 23 December, 1964  it could not be said that the respondent did not comply  with the provisions of section 12 (3) (b) of the Act. The Bombay High Court took the view that the Full Bench of the  Bombay High  Court in  Dattu  Subhana  Panhalkar  v. Gajanan Vithoba  Bobhate &  Anr. held  that a  tenant  could raise a  dispute as  to standard rent by raising an issue as to standard rent in the written statement.      The provisions contained in sections 12 (3) (a) and (b) of the Act are as follows:           "(3) (a)  Where the  rent is  payable by the month      and  there  is  no  dispute  regarding  the  amount  of      standard rent  of permitted  increases, if such rent or      increases are  in arrears for a period of six months or      more and  the tenant  neglects to  make payment thereof      until the  expiration of  the period of one month after      notice referred  to in sub-section (2), the Court shall      pass a  decree  for  eviction  in  any  such  suit  for      recovery of possession.           (b) In any other case no decree for eviction shall      be passed  in any  such suit  if, on  the first  day of      hearing of  the suit  or on  or before such date as the      Court may  fix the  tenant pays or tenders in Court the      standard rent  and permitted  increases  then  due  and      thereafter  continues   to  pay   or  tender  in  Court      regularly such  rent and  permitted increases  till the      suit is finally decided and also pays costs of the suit      as directed by the Court."      Explanation I to section 12 of the Act is as follows:-           "In any  case where  there is  a dispute as to the      amount  of   standard  rent   or  permitted   increases      recoverable under  this Act  the tenant shall be deemed      to be  ready and  willing to pay such amount if, before      the expiry  of the  period of  one month  after  notice      referred to  in sub-section (2) he makes an application      to the  Court under  sub-section (3)  of section 11 and      thereafter pays  or  tenders  the  amount  of  rent  or      permitted increases  specified in the order made by the      Court."      The following  provisions with  regard to standard rent are found  in section  11 of the Act. The Court may, upon an application made  to it  for that purpose, or in any suit or proceedings, fix  the standard rent, inter alia, where there

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is any dispute between the landlord and the tenant regarding the amount  of standard  rent. If any application for fixing the standard  rent is  made by  a tenant  who has received a notice from  the landlord  under sub-section  (2) of section 12, the  Court shall forthwith specify the amount of rent or permitted 632 increases which  are to  be deposited in Court by the tenant and make  an order  directing the  tenant  to  deposit  such amount in Court or at the option of the tenant make an order to pay  to the landlord such amount thereof as the Court may specify, pending  the final decision of the application. Out of any  amount deposited  in Court,  the Court  may make  an order for  payment of  such reasonable  sum to  the landlord towards payment of rent or increases due to him as it thinks fit. If  the tenant  fails to deposit such amount or, as the case may be, to pay such amount thereof to the landlord, his application shall be dismissed.      Under section  12 of  the Act the landlord shall not be entitled to  the recovery  of possession  of any premises so long as the tenant pays, or is ready and willing to pay, the amount of the standard rent and permitted increases, if any, and observes  and  performs  the  other  conditions  of  the tenancy,  in   so  far  as  they  are  consistent  with  the provisions of  the Act. Sub-section (2) of section 12 of the Act states  that no suit for recovery of possession shall be instituted by a landlord against the tenant on the ground of non-payment of the standard rent or permitted increases due, until the  expiration of  one month  next  after  notice  in writing of  the demand  of the  standard rent  or  permitted increases has  been served  upon the  tenant in  the  manner provided in  section 106  of the  Transfer of  Property Act. Clause (a)  of sub-section  (3) of  section 12  of  the  Act provides for  the passing  of a  decree for  eviction first, where the  rent is payable by the month; second, there is no dispute regarding  the amount  of standard rent or permitted increases; third, the rent or increases are in arrears for a period of  six months;  and fourth,  the tenant  neglects to make payment  thereof until  the expiration of the period of one month  after notice  referred to  in sub-section  (2) of section 12  of the  Act. Clause  (b) of  sub-section (3)  of section 12  of the  Act, states  that in  any other case, no decree for  eviction shall be passed in any such suit if, on the first  day of  hearing of  the suit or on or before such other date as the Court may, fix, the tenant pays or tenders in Court  the standard rent and permitted increases then due and thereafter continues to pay or tender in Court regularly such rent  and permitted  increases till the suit is finally decided and  also pays  costs of the suit as directed by the Court.      Explanation I  to section  12 of  the Act provides that where there  is a  dispute as to the amount of standard rent or permitted increases recoverable under this Act the tenant shall be  deemed to  be ready and willing to pay such amount if, before  the expiry  of the  period of  one  month  after notice  referred   to  in   sub-section  (2),  he  makes  an application to  the Court  under sub-section  (3) of section and thereafter  pays  or  tenders  the  amount  of  rent  or permitted increases  specified in  the  order  made  by  the Court.      Counsel for  the appellant in the Gujarat appeal relied on the  Bombay view  that there  is no  limitation  of  time during which  a dispute  must be  raised  and  none  can  be implied from  the Explanation. The Bombay High Court has not agreed with the view of the Gujarat

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633 High Court  in Ambalal  v. Badaldas. The Bombay view is that the dispute  in section  12(3)(a) is  not limited  only to a dispute  raised   within  one   month  of   the  notice   as contemplated in  section 12(3)  (b) of  the Act.  The Bombay High Court relied on section 11(4) of the Act the provisions whereof are as follows:-           "Where at any stage of a suit for recovery of rent      whether with  or without  a claim for possession of the      premises, the  Court is  satisfied that  the tenant  is      withholding the  rent on  the ground  that the  rent is      excessive and  standard rent should be fixed, the Court      Shall and  in any other case if it appears to the Court      that it  is just  and proper  to make such an order the      Court may make an order directing the tenant to deposit      in Court forthwith such amount of the rent as the Court      considers to  be reasonably  due to the landlord, or at      the option  of the tenant an order directing him to pay      to the  landlord such  amount thereof  as the Court may      specify. The  Court may further make an order directing      the tenant  to  deposit  in  Court  periodically,  such      amount as it considers proper as interim standard rent,      or at  the option  of the tenant an order to pay to the      landlord such amount thereof, as the Court may specify,      during the  pendency of  the suit.  The Court  may also      direct if  the tenant  fails to  comply with  any order      made as  aforesaid, within  such time as may be allowed      by it,  he shall not be entitled to appear in or defend      the suit  except with  leave of  the Court, which leave      may be  granted subject to such terms and conditions as      the Court may specify."      The Bombay  High Court  held that  to limit  raising  a dispute within  one month   from the service of notice would render the  provisions of section 11(4) nugatory. The Bombay High Court held that the effect of sections 11 and 12 of the Act is  to give  the tenant  a right to dispute the standard rent in  the event  of a  suit and  if the  tenant raises  a dispute in answer to a suit for recovery of rent it would be a dispute within the meaning of section 12(3) (a) of the Act and would  take the  suit out of the provisions of that sub- section.      The Gujarat  High Court  in the  decision in  Ambalal’s case (supra)  and in  Chunilal Shivlal v. Chimanlal Nagindas took the  view that  in order  to  avoid  the  operation  of section 12(3)  (a) of  the Act  the  dispute  in  regard  to standard rent  or permitted  increases must be raised at the latest before  the expiry  of one  month from  the  date  of service of  notice under  section 12(2) of the Act and it is not enough  to raise  a dispute  for the  first time  in the written statement.  In Ambalal’s  case (supra)  the question was as  to what  should be  stage at  which the  dispute  in regard to  standard rent  or  permitted  increases  must  be raised in order to take the case out of section 12(3) (a) of the Act. The Gujarat High Court held that the dispute is one which is  in existence  at the  date of the notice or at any rate before the ex- 634 piry of  one month  from the date of its service and not the one raised  subsequently in  a written statement with a view to avoiding the operation of section 12(3) (a) of the Act.      Counsel  for  the  appellants  in  the  Gujarat  appeal contended that  the  decision  in  Vora  Abbasbhai  v.  Haji Gulamnabi has  overruled  Amblal’s  case  (supra).  In  Vora Abbasbhai’s case  the notice  terminating  the  tenancy  was dated  1  December,  1956.  The  tenant  by  reply  dated  7

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December, 1956  contended  that  the  contractual  rent  was excessive. The  tenant made an application on 5 January 1957 for fixation  of standard  rent under  section 11(1)  of the Act. While  the application  was pending  the landlord filed the suit  on 27  January, 1957  for ejectment. The tenant in the written  statement reiterated  the contention  that  the contractual rent  was excessive  and that  the standard rent should be fixed by the Court. On these facts the question in Vora Abbasbhai’s  case (supra)  was whether  the  case  fall within section 12(3) (a) or section 12(3) (b) of the Act.      The only  point in controversy in Vora Abbasbhai’s case (supra) was  whether the  second condition  in section 12(3) (a) of  the Act,  viz., that  there was no dispute regarding the amount  of standard  rent was  fulfilled. The landlord’s contention was  that the dispute concerning standard rent is one which must have been raised before service of the notice and since  there was  admittedly no  dispute  in  regard  to standard rent  or permitted increases at the date of service of the  notice under  section 12  (2) of  the Act the second condition in section 12(3) (a) that there was no dispute was satisfied.  This   Court  did   not  accept  the  landlord’s contention there  and held  that the  defendant in that case raised the  contention by  reply dated 7 December, 1956 that the contractual  rent was  excessive  and  raised  the  same contention in the application filed for fixation of standard rent.      The Gujarat  High Court  in Ambalal’s case (supra) held that in order to attract the applicability of section 12 (3) (a) of the Act there must be non-existence of the dispute at the date  of the notice and such non-existence must continue right up  to the  expiration of  one month  from the date of service of  the notice  so that  if the dispute is raised at any time  prior to  the expiration of the said period on one month, the operation of section 12(3) (a) would be excluded. The latest  point of  time when  according to Ambalal’s case (supra) the  dispute in  regard to the standard rent must be raised in  order to avoid the operation of section 12(3) (a) of the  Act is  the expiry  of one  month from  the date  of service of  the notice.  Ambalal’s case  (supra) did not say that the  dispute concerning  standard rent  must be  raised before  service   of  the  notice  in  order  to  repel  the applicability of  section 12(3)  (a)  of  the  Act.  If  the dispute is  in existence  prior to  the expiry  of one month after service of the notice though subsequent to the date of the notice that would be sufficient to oust the operation of section 12(3)  (a) of the Act. The decision of this Court in Vora Abbasbhai’s case (supra) has not overruled the decision in Ambalal’s  case (supra).  In Ambalal’s  case (supra)  the conclusion is a single 635 one and  it is  that in  order to  exclude the  operation of section 12(3)  (a)  of  the  Act  the  dispute  must  be  in existence latest  within one  month  after  service  of  the notice.      The question  as to when a dispute is to be raised came up for  consideration in  Shah  Dhansukhlal  Chhanganlal  v. Dalichand Virchand  Shroff &  Ors.. The  appellant fell into arrears of  rent in that case. The landlord gave a notice to the tenant  on 18  April, 1955 demanding the arrears of rent and also  terminating the  tenancy  of  the  defendant  with effect from  31 May,  1955. The  notice was  received by the defendant on  21 April,  1955, The  suit for  ejectment  was filed on 15 March, 1956 on the ground that the defendant was in arrears of payment of rent and permitted increases and as such not  entitled to  the protection of the Act. This Court

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held that  section 12  (1) of  the Act  must  be  read  with Explanation and so read it means that the tenant can only be considered to  be ready  and willing  to pay  if, before the expiry of  the period  of one month after notice referred to in sub-section  (2), he  makes an  application to  the Court under sub-section  (3) of  section 11 and thereafter pays or tenders the  amount of rent or permitted increases specified by the  Court. This Court found in Chhaganlal’s case (supra) that the  tenant made  no payment  within the  period of one month of  the notice  of ejectment and further that although in his  written statement  he raised  a  dispute  about  the standard rent  he made  no application  in terms  of section 11(3) of  the Act.  The tenant can claim protection from the operation of section 12(3) (a) of the Act only if the tenant makes an  application within one month of the service of the notice terminating  the tenancy  by raising  a dispute as to standard rent.      The  view  of  the  Bombay  High  Court  overlooks  the limitation of time within which a dispute is to be raised as to standard  rent. The view of the Bombay High Court is that disputing within  one month  of the  service of  the  notice terminating the tenancy is one mode of raising a dispute and there is another mode of raising the dispute at any stage of the suit.  The view  of the  Bombay High Court nullifies the provisions contained  in section  12 and Explanation thereto and confers a right on the tenant where the legislation does not contemplate such a right.      The provisions  in section  11(3) of  the Act deal with orders which  may be passed by the Court during the pendency of the application disputing the rent. Provisions in section 11(4) of  the Act  deal with  orders  which  may  be  passed consequent upon dispute as to rent. It is 636 only when  an application  disputing rent is made within the time contemplated  by Explanation I to section 12 of the Act that the provisions in sub-section (3) and (4) of section 11 are attracted.      For the  foregoing reasons  we uphold  the view  of the Gujarat High  Court and  we do  not accept  the view  of the Bombay High  Court. We  dismiss Civil Appeal No. 282 of 1971 with costs.  We accept Civil Appeal No. 2068 of 1971 and the judgment of  the Bombay  High Court is set aside. The decree passed by  the Civil  Judge on 31 October, 1964 and affirmed by the  Assistant Judge  on 27  September, 1966 is restored. The appellants will be entitled to costs. P.H.P.                      C. A. No. 282 of 1971 dismissed.                              C. A. No. 2068 of 1971 allowed. 637