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PETITIONER: MODERN HOTEL, GUDUR REPRESENTED BYM.N. NARAYANAN

       Vs.

RESPONDENT: K. RADHAKRISHNAIAH & ORS.

DATE OF JUDGMENT26/04/1989

BENCH: MISRA RANGNATH BENCH: MISRA RANGNATH VENKATACHALLIAH, M.N. (J)

CITATION:  1989 AIR 1510            1989 SCR  (2) 725  1989 SCC  (2) 686        JT 1989  Supl.    143  1989 SCALE  (1)1125

ACT:     Andhra  Pradesh  Buildings (Lease,  Rent  and  Eviction) Control  Act,  1960: s. 7--Advance rent  refundable  at  the expiry  of  lease--Stipulation-Validity  of--Amount  whether adjustable--Tenant whether a defaulter.

HEADNOTE:     The  proviso to s. 7(2)(a) of the Andhra Pradesh  Build- ings (Lease, Rent and Eviction) Control Act, 1960  prohibits payment  of  any sum exceeding one month’s rent  by  way  of advance, clause (b) thereto makes any such sum refundable or at the option of the tenant otherwise adjustable, and sub-s. (3) declares the stipulation for payment of rent in  advance beyond that of one month as null and void.     The  appellant-tenant  took the demised  premises  on  a thirty year lease beginning from September 9, 1969 and  paid a large amount as advance, only a part of which was  adjust- able  towards the stipulated rent in the  subsequent  months and  the balance was to be paid back under a  valid  receipt after the expiry of the lease period. The lease deed did not have a forfeiture clause. The respondent land lord initiated action  for  eviction in October 1973 on the plea  that  the tenant  had  failed  to pay rent for  a  certain  subsequent period.  The tenant advanced the plea of payment. The  land- lord  placed the account books of the appellant and  claimed the  benefit  of s. 34 of the Evidence Act. All  the  courts below found that the payment as claimed had not been  estab- lished.     In  this appeal by special leave, it was contended  that the  balance  of advance which lay in the hands of  the  re- spondent-landlord  was  either refundable to the  tenant  or adjustable against rent under s. 7 of the Act, and if out of that  sum  the  arrears were available to  be  adjusted  the tenant  was  not at all in default; that the lease  of  1969 being for a term of thirty years certain, eviction could not be claimed against a contractual tenant during the  subsist- ence of the lease, and that the lease did not have a forfei- ture  clause so as to bring the matter within the  ambit  of section 111(g) of the Transfer of Property Act. 726 Allowing the appeal by special leave,

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   HELD:  1.  The stipulation in the  lease-deed  that  the amount  of  advance would be refundable at the  end  of  the tenancy was null and void under s. 7(3) of the Act. The said amount became payable to the tenant immediately. It was thus held by the landlord on account of the tenant on the date of filing  of the petition for eviction. The tenant could  not, therefore, be considered a defaulter for a smaller amount by not paying the rent for some months. [730D, 729BC, 730E]     Mohd.  Salimuddin v. Misri Lal & Anr., [1986] 1 SCR  622 and M/s. Sarwan Kumar Onkar Nath v. Subhas Kumar  Agarwalla, [1987] 4 SCC 546 referred to.     2.  The  lease being for a term of thirty years  was  to expire  in  September, 1999. The deed did  not  stipulate  a forfeiture  clause.  In  the absence of such  a  clause  the contractual  tenancy was subsisting under the provisions  of the Transfer of Property Act. There could not, therefore, be any eviction from such a tenancy. [730F]

JUDGMENT:     CIVIL  APPELLATE JURISDICTION: Civil Appeal No. 4108  of 1982.     From  the  Judgment and Order dated 23.12. 1981  of  the Andhra Pradesh High Court in C.R.P. No. 3547 of 1981.     P.P.  Rao,  R. Venkataramani, V.G.  Pragasam  and  Satya Mitra Garg for the Appellant.     P. Krishna Rao, B. Krishna Prasad and K.K. Gupta for the Respondents. The Judgment of the Court was delivered by     RANGANATH MISRA, J. This is a tenant’s appeal by special leave against the order of eviction from a commercial  prem- ises at Gudur in Andhra Pradesh. The Controller, the  Appel- late  Authority and the High Court have  concurrently  found that  the  appellant  was a wilful defaulter  liable  to  be evicted.     Under  document  No. 1327 of 1969, a  thirty-year  lease with an annual stipulated rent was granted in favour of  one Narayanan,  a partner of the hotel, for a term of  30  years beginning from 9th of 727 September, 1961. For the first 15 years rent was  stipulated at the rate of Rs. 150 per month and for the second span  of 15  years rent was to be escalated to Rs.200 per month,  and the  tenant  undertook to pay the rent by the 9th  of  every succeeding month.         The lease-deed further stipulated:               "Out  of the advance of Rs.6,500,  the  second               party shall deduct every month Rs.75 from  the               stipulated rent upto Rs. 1,500 and the balance               of  Rs.5,000 shall be paid back to the  second               party  by the first party under valid  receipt               after the expiry of the lease period." Thus, by March 1971 the amount of Rs. 1,500 had been adjust- ed and the landlord held Rs.5,000 refundable to the tenant.     Action  for eviction was initiated on the plea that  the tenant  had failed to pay the rent for a certain  subsequent period.   Courts   below  debated  the   main--perhaps   the only--contention as to whether the plea of payment which the tenant  advanced  had  been established. On  behalf  of  the landlord the account books of the Hotel were placed and  the benefit  of  s. 34 of the Evidence Act was claimed.  Lot  of attention  was bestowed in the Courts below on the  question as  to whether the oral evidence along with the  presumption arising under s. 34 of the Evidence Act had not  established

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the  position that no payment as claimed had been  made.  On the finding that payment had not been established,  eviction was ordered.     Two  contentions  have  been advanced by  Mr.  P.P.  Rao appearing  for the appellant to maintain that the  order  of eviction was contrary to law and cannot be sustained.  Reli- ance  is  placed  on s. 7 of the  Andhra  Pradesh  Buildings (Lease,  Rent  &  Eviction) Control  Act,  1960,  (hereafter ’Act’)  in  support of the stand that the  sum  of  Rs.5,000 which lay as advance in the hands of the respondent-landlord was  either refundable to the tenant or  adjustable  against rent  and  if out of the sum of Rs.5,000  the  arrears  were available  to  be adjusted, the tenant was not  at  all  in’ default.  It has next been contended that the lease of  1969 was  for  a term of 30 years certain and eviction  has  been claimed against a contractual tenant during the  subsistence of the lease. Admittedly, the lease does not have a  forfei- ture clause so as to bring the matter within the ambit of s. 111(g) of the Transfer of Property Act. The application  for eviction, a copy of which is available on the record (at  p. 10  of the second paper-book), refers to a notice  in  para- graph 7 in the following terms: 728               "The  petitioners caused a  registered  notice               through their counsel dated 28.10.1973 to  the               respondent demanding the rent due and also for               the  eviction  from  the  schedule   mentioned               premises  since  the respondent has  become  a               wilful defaulter. The respondent received  the               notice and has not chosen to give any reply."               It,  therefore, follows,  appellant’s  counsel               has contended, that the lease remained  unter-               minated and the right created under the  lease               cannot be taken away by filing an  application               for eviction on the plea of wilful default  in               the matter of payment of rent.               Section  7  of  the Act as  far  as  relevant,               provides:               "7  (2) Where the fair rent of a building  has               not been so fixed--                         (a)  the landlord shall  not,  after               the commencement of this Act 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  commencement  of               this  Act,  in  consideration  of  the  grant,               continuance  or renewal of the tenancy of  the               building  after  such commencement,  shall  be               refunded by the landlord to the person by whom               it was paid or, at the option of such  person,               shall be otherwise adjusted by the landlord.                         (3) Any stipulation in contravention               of sub-section (1) or sub-section (2) shall be               null and void."     The  lease-deed  described  the amount  of  Rs.6,500  as advance at four places and stipulates adjustment of a sum of Rs. 1,500 out of it and the balance amount of Rs.5,000 to be paid back to the tenant after the expiry of the lease  peri- od.  The provio to s. 7(2)(a) prohibits payment of  any  sum

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exceeding one month’s rent by way of advance and sub-s.  (3) declares  the  stipulation for payment of  rent  in  advance beyond that of one month as null and void. 729     The receipt of Rs.6,500 by the landlord was,  therefore, contrary  to law and opposed to public policy. A sum of  Rs. 1,500  has already been adjusted in the manner indicated  in the  petition  for  eviction  and the fact  that  a  sum  of Rs.5,000 was still held by the landlord was admitted  there- in.  On the facts appearing on the record it is  thus  clear that the landlord held a higher amount than the rent due  on the  date  when the petition for eviction was filed  on  the plea  of wilful default of payment of rent. The  stipulation of holding the excess amount of RS.5,000 free of interest to be  refunded under a valid receipt after the expiry  of  the lease period is the null and void stipulation and the amount of Rs.5,000 in the hands of the landlord was an amount  held by  the  landlord on account of the tenant on  the  date  of filing of the petition for eviction.     This  Court  in Mohd. Salimuddin v. Misri  Lal  &  Anr., [1986]  1 SCR 622 had occasion to deal with a more  or  less similar situation arising under the Bihar Buildings  (Lease, Rent & Eviction) Control Act, 1947. There, a sum of Rs.2,000 had been advanced by the tenant to the landlord  stipulating adjustment of the loan amount_against the rent which accrued subsequently. The landlord asked for eviction on the  ground of  arrears  of rent by filing a suit. The trial  court  had decreed the suit but the lower appellate court reversed  the decree by holding that the tenant was not in arrears of rent since  the amount advanced by the tenant was  sufficient  to cover  the  landlord’s  claim of arrears.  The  High  Court, however, vacated the appellate judgment and restored that of the  trial court holding that the loan amount by the  tenant was in violation of the prohibition contained in s. 3 of the Bihar  Act and the tenant was in arrears of rent and  liable to be evicted. This Court set aside the judgment of the High Court by saying:               "The  view taken by the High Court  is  unsus-               tainable  inasmuch as the High Court has  lost               sight  of  the fact that the  parties  to  the               contract  were unequal. The tenant was  acting               under  compulsion  of  circumstances  and  was               obliged  to succumb to the will of  the  land-               lord, who was in a dominating position. If the               tenant  had not agreed to advance the loan  he               would not have been able to secure the  tenan-               cy." The Court referred to the doctrine of pari-delicto and  held that the same was not applicable against the tenant.In  M/s. Sarwan Kumar Onkar Nath v. Subhas Kumar Agarwalla, 730 [1987] 4 SCC 546, Salimuddin’s case came for  consideration. This  was  also  a dispute under the  Bihar  Act  where  two months’  rent had been paid in advance by the tenant to  the landlord on the stipulation that the advance amount would be liable  to  be adjusted towards arrears  of  rent,  whenever necessary or required. The Court held that the tenant  could not  be evicted on the ground of default in the  payment  of rent  for  two months even if the tenant failed to  ask  the landlord  to  make adjustment of the advance amount  in  the absence of any agreement requiring the tenant to inform  the landlord  as  to when such adjustment is to  be  made.  This Court said that when the Rent Act prohibited the landlord to claim such advance payment, the tenant could not be  consid- ered to be a defaulter and the doctrine of pari-delicto  was

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not attracted to such a fact-situation.     Mr.  Rao building upon the ratio of these two  decisions rightly  contended  before  us that when  the  landlord  had Rs.5,000  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 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 s. 7(3) of the Act, the amount became payable to the  tenant immediately  and  the landlord with Rs.5,000 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.     The  second  contention advanced before  us  is  equally weighty. The lease being for a term of 30 years is to expire in  September, 1999. As we have already said, the lease  did not  stipulate a forfeiture clause and in the absence  of  a forfeiture  clause  in the lease leading to  termination  by forfeiture, the contractual tenancy was subsisting under the provisions  of the Transfer of Property Act and there  could not be any eviction from such a tenancy.     We are somewhat surprised to find that these  irresisti- ble  defences were not advanced in the Courts below and  the course of the litigation was confined to a consideration  of s. 34 of the Evidence Act.     The  appeal is allowed, the concurrent decision  of  all the  three Courts below directing the tenant to  be  evicted are set aside and the application for eviction is  dismissed with costs throughout. Hearing fee in this Court is assessed at Rs.3,000. P.S.S.                                    Appeal allowed. 731