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PETITIONER: K. NARASIMHA RAO

       Vs.

RESPONDENT: T.M. NASIMUDDIN AHMED

DATE OF JUDGMENT:       23/02/1996

BENCH: VERMA, JAGDISH SARAN (J) BENCH: VERMA, JAGDISH SARAN (J) SINGH N.P. (J) VENKATASWAMI K. (J)

CITATION:  1996 AIR 1214            1996 SCC  (3)  45  JT 1996 (3)   181        1996 SCALE  (2)570

ACT:

HEADNOTE:

JUDGMENT:                       J U D G M E N T J.S. VERMA. J.      Leave granted.      Respondent is  a tenant  of the appellant in a premises at Chengalpattu in Tamilnadu. The appellant filed a petition for eviction  of the  respondent-tenant  on  the  ground  of willful default  in payment of rent for the period July 1990 to November  1990 in spite of a notice dated 16.11.1990. The monthly rent  is Rs.150/-.  The respondent denied that there was any  wilful default.  He contended  that certain repairs had been made in the premises by him with the consent of the landlord for  which Rs.1000/-  was spent by him; that amount had to be adjusted towards the rent due for the said period; on receipt of the notice from the landlord, he sent a demand draft for  Rs.750/- as  the rent  for five months, which was received by  the landlord; and the amount of Rs.2,850/- paid as excess  advance was  also available with the landlord for adjustment towards the rent due.      The  Rent   Controller  rejected   the   respondent-the tenant’s contention  and held  that there was wilful default committed by  the tenant  in the  payment of  rent for  that period. An order of eviction was made against the respondent tenant.  The   appellate  authority  rejected  the  tenant’s appeal. The  tenant then preferred a Civil Revision Petition in the  High Court  which has  been allowed  by the impugned order dated  9.2.1993 taking  the view  that on  these facts there was  no wilful  default in  payment of the rent by the respondent.      It was admitted that a sum of Rs.3000/- was paid by the respondent to the appellant as advance even though according to Section  7(2) of the Tamil Nadu Buildings (Lease and Rent Control) Act,  1960, (hereinafter  referred to as "the Tamil Nadu Act")  the landlord could receive only one month’s rent in advance. Accordingly, the excess amount of Rs.2850/- paid

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as advance  by the tenant to the landlord was required to be refunded  by  the  landlord.  The  question,  therefore,  is whether the  said excess  amount paid  by the  tenant to the landlord being  available with  the landlord, the tenant can be held  to have committed wilful default in payment of rent even though  he had  not expressly  asked  the  landlord  to adjust that amount towards the arrears of rent.      The High  Court, on  a construction  of section 7(2) of the Tamil  Nadu Act,  held that the tenant could not be held to have  committed willful  default in  payment of  rent  on these facts.  The High Court also took the view that Section 7 of  the Tamil Nadu Buildings (Lease and Rent and Eviction) Control Act,1960. For this reason, it held that the decision on  this   Court  in   Modern  Hotel,Gudur,  Represented  by M.N.Narayanan Vs. K.Radhakrishnaiah and Others (1989 [2] SCC 686) is applicable to hold that the tenant has not committed any wilful  default  in  payment  of  the  rent.  The  other decisions under provisions of the corresponding Act in Bihar were  distinguished   on  the   different  language  of  the provisions in the Bihar Buildings (Lease, Rent and Eviction) Control Act  (hereinafter referred  to as  "the Bihar Act"). Aggrieved by  the decision  of the  High Court  allowing the tenant’s Civil  Revision  Petition,this  appeal  by  special leave has been filed by the landlord.      It is clear from the narration of facts that the ground of wilful  default in  payment of rent by the tenant for the period July  1990 to  November 1990  @  Rs.150/-  per  month amounting to  Rs.750/- was  nonexistent if the excess amount of Rs.2850/-  available with  the landlord  in the  form  of excess advance  required adjustment  towards the  arrears of rent. The  nature of  this excess  amount of advance and its availability for  adjustment towards  the  arrears  of  rent without an  express request  by the  tenant to  this  effect would determine  the decision on this point. The language of the relevant provision in the statute is of significance for this purpose.      Section 7  of Tamil  Nadu  Buildings  (Lease  and  Rent Control) Act, 1960 reads as under :-      "7.  Landlord   not  to   claim  or      receive anything  in excess of fair      rent or  agreed rent.  - (l)  Where      the Controller has fixed or refixed      the fair rent of a building -           (a)  the  landlord  shall  not      claim, receive,  or  stipulate  for      the payment  of (i)  any premium or      other like  sum in addition to such      fair rent, or (ii) save as provided      in Section 5 or Section 6, anything      in excess of such fair rent:           Provided that the landlord may      receive,  or   stipulate  for   the      payment of, an amount not exceeding      one month’s rent by way of advance;           (b) Save as Provided in clause      (a), any  Premium or other like sum      or any rent Paid in addition to, or      in  excess   of,  such  fair  rent,      whether before or after the date of      the commencement  of this  Act,  in      consideration   of    the    grant,      continuance  or   renewal  of   the      tenancy of  the building  after the      date of such commencement, shall be      refunded by  the  landlord  to  the

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    person by  whom it  was paid  or at      the option of such person, shall be      other   wise    adjusted   by   the      landlord:           Provided that where before the      fixation or  refixation of the fair      rent, rent  has been paid in excess      thereof, the  refund or  adjustment      shall be limited to the amount paid      in excess for the period commencing      on the  date of  the application by      the tenant  or landlord  under sub-      section (1)  of Section  4 of  sub-      section (3)  of Section  5, as  the      case may  be, and  ending with  the      date   of    such    fixation    or      refixation.           (2) Where  the fair  rent of a      building has not been so fixed-           (a)  the  landlord  shall  not      claim, receive or stipulate for the      payment of,  any premium  or  other      like sum  in addition to the agreed      rent :           Provided that the landlord may      receive,  or   stipulate  for   the      payment of, an amount not exceeding      one month’s rent by way of advance;           (b) Save as Provided in clause      (a), any  sum Paid in excess of the      agreed  ,rent,  whether  before  or      after the  date of the commencement      of this  Act, in  consideration  of      the grant,  continuance or  renewal      of  the  tenancy  of  the  building      after    the     date    of    such      commencement, shall  be refunded by      the landlord  to the Person by whom      it was  Paid or,  at the  option of      such person,  shall be  other- wise      adjusted by the landlord.           (3)   Any    stipulation    in      contravention of sub-section (1) or      sub-section (2)  shall be  null and      void."                      (emphasis supplied)      The provisions in sub-sections (1) and (2) are similar and provide  for cases where fair rent has been fixed or not fixed, as  the case  may be.  Sub-section (3)  declares  any stipulation in  contravention of  sub-section  (1)  or  sub- section (2)  to be  null and  void.  In  this  case,  it  is admitted that  fair rent  of the building had not been fixed and, therefore,  sub-section (2) applies. Clause (a) of sub- section (2)  enacts that a landlord is entitled to claim and receive only  the agreed  rent, which was Rs.150/- per month in this case. The proviso to clause (a) permits the landlord to receive  by way  of advance  an amount  not exceeding one month’s rent  only i.e. Rs.150/- in the present case. Clause (b) provides  for the situation where any sum is paid by the tenant to  the landlord in excess of the agreed rent save as provided in  clause (a), i.e., any sum paid in excess of the agreed rent  and an amount net exceeding one month’s rent by way of  advance. Clause (b) enacts that the amount in excess of the  Sum which  the landlord  is permitted  to take under clause (a)  shall be  refunded by the landlord to the person

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by whom  it was  paid, i.e., the tenant, or at the option of the tenant,  shall be otherwise adjusted by the landlord. In other words, clause (b) requires that the excess amount paid to the  landlord has  to be  refunded by the landlord to the tenant unless  the tenant  exercises the option of requiring the landlord  tc otherwise  adjust the  excess amount. It is clear that this excess amount available with the landlord is only for  the benefit of the tenant, the liability to refund the amount  to the  tenant being immediate unless the tenant exercises the  option to  get  it  adjusted  otherwise.  The character or the excess amount undoubtedly is that it is the tenant’s money  in the  hands of  the landlord for return to the tenant  or  for  adjustment  towards  the  dues  of  the tenant’s at  the tenant’s  option. Any  other stipulation in contravention to it has no legal effect being null and void.      The provision  clearly enacts  the course to be adopted in the case of any excess amount being paid by the tenant to the landlord, taking into account the factor that the tenant in certain circumstances may be compelled to make payment as advance of  an amount  in excess of that required to be paid to the  landlord according  to law.  For that  situation the provision imposes  the legal  obligation on  the landlord to immediately refund  the excess  amount to  the tenant unless the tenant exercises the option of requiring the landlord to adjust that  amount towards any dues of the tenant or in any other manner indicated by the tenant. This provision has the effect of  creating a corresponding enforceable right in the tenant to  recover the excess amount from the landlord or to have it  adjusted for his benefit in case the landlord fails to discharge  his obligation  of refunding  that amount. The provision of  adjustment of  the excess amount at the option of the  tenant clearly visualizes its adjustment towards the rent due  from  the  tenant  since  the  jural  relationship envisages payment only of rent by the tenant to the landlord towards which it can be adjusted.      There is  no illegality attaching to the payment of the excess amount  by the  tenant to  the landlord and a legally enforceable right  clearly flows  from the  provision to the tenant. The  pari delicto  principle is,  therefore, clearly excluded for  the purpose  of envisaging the consequences of an excess amount being taken by the landlord from the tenant because the  provision requires  the landlord to refund that excess amount. The corresponding provisions in the Bihar Act are different  which import the pari delicto principle. This difference in  the language  of the  provisions of  the  two enactments distinguishes the cases under the Bihar Act.      Modern Hotel.  Gudur. Represented by M.N. Narayanan Vs. K. Radhakrishnaiah and Others (1989 [2] SCC 686), was a case under Section  7(2) of  the Andhra Pradesh Buildings (Lease, Rent and Eviction) Control Act which is in pari materia with the corresponding  provision in  the Tamil Nadu Act. In that case the  amount of  arrears of  rent was  smaller than  the amount of  advance held  by the  landlord on  account of the tenant and  it was held that there was no default of rent to permit a  decree for  eviction on  the ground  of arrears of rent. While  dealing with the effect of sub-sections (2) and (3) of Section 7,it was held as under :      "Mr. Rao building upon the ratio of      these   two    decisions    rightly      contended before  us that  when the      landlord had  Rs.5000/- on tenant’s      account  with   him  which  he  was      holding for  years  without  paying      interest  and   against  the  clear      statutory bar,  there could  be  no

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    justification for granting a decree      of eviction  on the plea of arrears      of rent.  In view  of the fact that      the  stipulation  that  the  amount      would be  refundable at  the end of      the tenancy  is null and void under      Section 7(3) of the Act, the amount      became  payable   to   the   tenant      immediately and  the landlord  with      Rs.5000/- of  the tenant  with  him      could not  contend that  the tenant      was in default for a smaller amount      by not  paying the  rent  for  some      months." With respect  we are  of  the  opinion  that  this  decision squarely applies  in the  present case  under the Tamil Nadu Act and was rightly relied on by the High Court.      The cases  relating to  the provisions in the Bihar Act from which  some support  was sought  by learned counsel for the appellant  to overcome  the effect  of the  decision  in Modern Hotel. Gudur (supra) are Budhwanti and Anr. vs. Gulab Chand Prasad [1987 (2) SCC 153], M/s.Sarwan Kumar Onkar Nath vs. Subhas  Kumar Agarwalla  [1987 (4)  SCC 546],  Nand  Lal Agarwal vs. Ganesh Prasad Sah and Others [1988 (4) SCC 215], and Bhoia  alias Bhoja  Ram Gupta  vs.Rameshwar Agarwala and Others [1993(2)SCC 443].      For the  purpose of  this case, it is sufficient for us to say  that there  are provisions  in the  Bihar Act, which clearly make  it illegal  to claim or receive any payment in excess of  the amount  in addition  to the  rent or  any sum exceeding one  month’s rent  in advance and there is a clear declaration that  any excess  amount received  would not  be lawful. There is no provision in the Bihar Act corresponding to that in sub-section (1) and (2) of Section 7 in the Tamil Nadu  and   Andhra  Pradesh  Acts,  which  creates  a  legal obligation in  the landlord  to refund  the excess amount to the tenant  creating a  corresponding right in the tenant to recover that amount from the landlord. The absence of such a provision  in   the  Bihar  Act  making  the  excess  amount refundable and  imposing an  obligation on  the landlord  to make that  refund  immediately  or  to  adjust  it,  is  the distinguishing feature  in the  Bihar Act.  However, on  the clear provision  of the  Tamil Nadu Act which applies in the present case,  there is  no ambiguity.  Further reference to the  decisions  under  the  Bihar  Act  is.  therefore,  not necessary.      In the  present case,  excluding from consideration the tenant’s claim  for adjustment  of the  amount of  Rs.1000/- spent on  repairs and  the amount of Rs.750/- sent by demand draft on receipt of the notice, the amount of Rs.2850/- with the landlord  as the  excess amount  of advance  paid by the tenant to the landlord, was alone sufficient to negative the landlord’s claim of ejectment. The arrears of rent from July to November 1990 was only Rs.750/- , while the excess amount of advance  was Rs.2850/-, far in excess of the arrears. The landlord was  bound to immediately refund that excess amount even before  the arrears accrued, and he not having made the refund was  bound to adjust it towards the rent due from the tenant. On  these facts,  the tenant  could certainly not be held to  be a  willful defaulter in the payment of rent. The High Court  is, therefore,  right in  deciding  against  the landlord.      Consequently, the appeal is dismissed with costs.

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