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PETITIONER: SARWAN KUMAR ONKAR NATH

       Vs.

RESPONDENT: SUBHAS KUMAR AGARWALLA

DATE OF JUDGMENT09/10/1987

BENCH: VENKATARAMIAH, E.S. (J) BENCH: VENKATARAMIAH, E.S. (J) SINGH, K.N. (J) RANGNATHAN, S.

CITATION:  1987 AIR 2302            1988 SCR  (1) 414  1987 SCC  (4) 546        JT 1987 (4)    64  1987 SCALE  (2)723  CITATOR INFO :  D          1988 SC1821  (7)  F          1989 SC1510  (9)

ACT:      Bihar Building  (Lease, Rent and Eviction) Control Act, 1947-S. 11(1)(d)-Eviction  of tenant  for default in payment of rent-In  the absence  of any  agreement to  the contrary, tenant can  claim set  off against  advance payment  of rent accepted by landlord in violation of s. 3 of the Act and the Court cannot  order eviction  by invoking the doctrine of in pari delicto.

HEADNOTE:      When the  appellant did  not pay rent for September and October, 1972,  the respondent  filed  a  petition  for  its eviction from  the premises in question under s. ll(l)(d) of the Bihar  Building (Lease,  Rent and  Eviction)  Act,  1947 which provided  that on  failure to  pay two  months’ rent a tenant was  liable to  be evicted from the premises taken on lease. The  appellant’s defence  was that  it had  paid  two months’ rent in advance at the inception of the tenancy with an understanding  that it  could be set off against the rent whenever necessary  or required  and,  further,  that  since under s.  3 of the Act it was not lawful for the landlord to have received any sum exceeding one month’s rent in advance, it could not be considered as a defaulter in payment of rent for purposes  of s.  ll(l)(d) as,  at least one month’s rent which had been paid in excess of what was permitted under s. 3 was  liable to  be adjusted towards the arrears. The Trial Court dismissed  the suit,  and his  appeal against the same having been  rejected by  the Additional  Subordinate Judge, the respondent approached the High Court by a Second Appeal. Although it  accepted the  plea that  the appellant had paid two months’ rent in advance at the inception of the tenancy, the High Court arrived at the finding that the appellant had failed to  pay the  rent for  the months  of  September  and October, 1972,  on the  ground that  the appellant  had  not requested the  respondent to  adjust it towards the rent due for the  aforesaid two months. Observing that the rule of in pari delicto  did not  help the  appellant in this case, the

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High Court  set aside  the concurrent  judgments of  the two courts below and directed eviction.      Allowing the appeal by special leave, 415 ^      HELD: The appellant could not be treated as a defaulter who had A failed to pay rent for two months. [418E]      (i) The  High Court  approached the  entire case  in  a technical  fashion.  The  respondent  was  not  entitled  to receive more  than one  month’s rent by way of advance. Yet, the respondent  had received  in advance  the rent  for  two months.  The  receipt  under  which  the  said  advance  was received does  not state that the amount received was liable to be  adjusted towards  the arrears  of rent  only  on  the appellant informing the respondent orally or in writing that such adjustment  is to  be made.  In the  written statement, however, the  appellant pleaded  that the amount paid by way of advance  could  be  set  off  by  way  of  rent  whenever necessary or  required. This  is not  a case where there was any agreement  to the  effect that  such adjustment could be made only  on the  tenant asking  the landlord  to make such adjustment. Nor  is this  a case where the tenant was liable to the  landlord on  any other account. The only transaction between them  was the  lease in  question and  the amount in question had been paid as rent in advance. There was also no agreement that  the amount  was liable to be adjusted at the termination of  the lease.  It was,  therefore, open  to the respondent to  appropriate the  said sum towards the arrears even without  any option  being exercised  as  regards  such adjustment by the appellant. [418A-D]      (ii) The  High Court  was also  wrong in  coming to the conclusion  that   the  appellant  could  not  rely  on  the provisions of  s. 3  of the  Act on  the ground  that if the parties were in pari delicto the court would not come to the rescue of either. [418E]      Mohd. Salimuddin  v. Misri  Lal & Anr., [1986] 1 S.C.R. 622, relied on.      Gulab Chand Prasad v. Budwanti & Anr., A.I.R. 1985 Pat. 327, referred to.      Budhwanti & Anr. v. Gulab Chand Prasad., [1987] 1 Scale 501, distinguished.

JUDGMENT:      CIVIL APPELLATE  JURISDICTION: Civil Appeal No. 2607 of 1987.      From the Judgment and order dated 6.1.1986 of the Patna High Court in Appeal Decree No. 75 of 1978. 416      Avadh Behari and Y.K. Jain for the Appellant.      Shanker Ghosh and M. P. Jha for the Respondent.      The Judgment of the Court was delivered by      VENKATARAMIAH, J.  The appellant  is a firm carrying on business at Jharia. It took on lease a room bearing No. 1 in a building  belonging to the respondent on a monthly rent of Rs.70 on  7.11.1960 and  paid in  advance two  months’ rent, i.e., Rs.140. The appellant paid rents regularly but did not pay the  rent for the months of September and October, 1972. Taking advantage  of the  non-payment of the rent in respect of the  said two  months the respondent filed a petition for eviction against the appellant contending that the appellant had become  liable  to  be  evicted  from  the  premises  in question under  clause (d)  of sub-section (1) of section 11 of the  Bihar Building  (Lease, Rent  and Eviction)  Control

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Act, 1947  (hereinafter referred  to  as  ’the  Act’)  which provided that  on failure  to pay  two months’ rent a tenant was liable  to be  evicted from the premises taken on lease. The appellant  pleaded inter  alia in  his written statement that at the time of the inception of the tenancy it had paid the respondent  a sum  of Rs.140  as advance  rent  with  an understanding that  the amount  of advance  could be set off against the  rent whenever  necessary or  required and  that since under  section 3  of the  Act it  was not lawful for a landlord to claim or receive, in consideration of the grant, renewal or  continuance of  a tenancy  of any  building, the payment of  any premium,  salami, fine or any other like sum in addition  to the rent or payment of any sum exceeding one month’s rent  of such  building as  rent,  in  advance,  the appellant could  not be considered as a defaulter in payment of rent  for purposes  of clause (d) of section 11(1) of the Act as  atleast one  month’s rent  which had  been  paid  in excess of  what was permitted under section 3 of the Act was liable to  be adjusted  towards the  arrears. The appellant, therefore, contended that in any view of the matter it could not be  treated as a defaulter liable to be ejected from the premises. Agreeing with the pleas of the appellant the trial court dismissed  the  suit  and  the  appeal  filed  by  the respondent before  the  {[;  Additional  Subordinate  Judge, Dhanbad against  the judgment  of the  trial court  was also dismissed. The  respondent filed  a second appeal before the High  Court   against  the   judgment  of   the   Additional Subordinate Judge.  The High  Court found that the appellant had failed  to pay  the rent for the months of September and October, 1972 although it accepted the plea of the appellant that he had paid the sum of Rs.140 as rent in advance on the ground that the appellant had not requested 417 the respondent  to adjust  the rent  which he  had  paid  in advance A  towards the  rent due for the months of September and October,  1972. The relevant part of the judgment of the High Court reads thus:      "6. In  paragraph  9  of  the  written  statement,  the      respondent stated  that  Rs.140  was  advanced  to  the      appellant, with  an understanding  that it could be set      off against the rent whenever necessary or required. It      will,  therefore,   appear  that   the  respondent  was      entitled to  claim adjustment  if it  was necessary  or      required. The  respondent neither orally nor in writing      informed that  it was  exercising its  option under the      agreement for  adjusting the  amount  paid  in  advance      towards the  rent  of  September  and  October,  197,..      Accordingly  to   the  respondent’s   own  showing,  it      remitted the  rent for  these two months also alongwith      rent of  November and  December, 1972 in January, 1973.      If it  had exercised  its option  under the  agreement,      there was no necessity for it to remit the rent for the      months of September and October because that amount was      not due  as it  had been  paid by adjustment. Mr. Sinha      submitted that  the pleading should not be construed in      a pedantic  manner. There  is no question of construing      the pleadings in this case in a pedantic manner because      according to  its own case, the respondent was entitled      to adjust  the amount  if necessary or required and for      that it  was necessary for it to intimate the appellant      that it  was exercising  his option.  Further,  in  the      written statement  no where  it is asserted that it may      be allowed  to adjust  the amount  against the  rent of      September and  October, 1972.  Since the option was not      exercised at  any stage,  the respondent cannot get the

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    benefit of  the amount  paid by  it in  advance to  the      appellant. Mr.  Merathia tried to make out that section      3 of  the Act prohibits the landlord to accept the rent      for more  than one month and as the advance was for two      months, no  benefit can  be given  to the respondent as      the contract  was against  the statute. It is true that      if the  parties are in pari delicto court will not come      in rescue  of either.  However. that  does not help the      appellant." Accordingly  the   High  Court   set  aside  the  concurrent judgments of the two courts below and directed the eviction. This appeal  by special  leave is  filed  by  the  appellant against the judgment of the High Court. H 418      It is  unfortunate that  the High  Court has approached the entire  case in  a technical fashion. It is not disputed that the  respondent was  not entitled  to receive more than one month’s  rent by way of advance. Yet, the respondent had received in  advance the  rent for  two months.  The receipt under which  the said  advance was  received does  not state that the  amount received  was liable to be adjusted towards the arrears  of rent  only on  the appellant  informing  the respondent orally  or in  writing that such adjustment is to be made.  In the  written statement,  however, the appellant pleaded that  the amount paid by way of advance could be set off by  way of  rent whenever necessary or required. This is not a  case where there was any agreement to the effect that such adjustment  could be made only on the tenant asking the landlord to  make such  adjustment. Nor is this a case where the tenant  was liable to the landlord on any other account. The only  transaction between them was the lease in question and the amount in question had been paid as rent in advance. There was also no agreement that the amount was liable to be adjusted at the termination of the lease. It was, therefore, open to  the respondent  to appropriate the said sum towards the arrears  even without  any  option  being  exercised  as regards such  adjustment by  the appellant.  The High  Court erred in  observing that  the appellant  had not asserted in its written.  statement that it may be allowed to adjust the advance amount  towards the  rent  due  for  the  months  of September and  October, 1972.  In substance the plea set out in para  9 of  the written  statement, amounts  to  such  an assertion. In any case the appellant could not be treated as a defaulter  who had  failed to pay rent for two months. The High Court  was also  wrong in coming to the conclusion that the appellant  could not rely on the provisions of section 3 of the  Act on  the ground  that if the parties were in pari delicto the court would not come to the rescue of either.      In Mohd.  Salimuddin v. Misri Lal and another, [19861 1 S.C.R. 622  this Court  has held  that where  in a  suit  by landlord for  eviction of  tenant  it  was  found  that  the tenant, in  order to  secure the  tenancy  advanced  certain amount to the landlord (although in violation of prohibition to do  so as  embodied in  section 3  of the  Act) under  an agreement containing  a stipulation that the loan amount was to be  adjusted against  the rent  which  accrued,  and  the amount so  advanced was  sufficient to  cover the landlord’s claim of  arrears of  rent for the relevant period, it could not be  said that  the tenant  was  not  entitled  to  claim adjustment of  the loan  amount so advanced against the rent which accrued subsequently, simply because the loan advanced was in  violation of  the prohibition  contained in the Act. Accordingly, this  Court held  that as the tenant was not in arrears of rent after the 419

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adjustment of  loan amount  towards the  rent,  he  was  not liable to  be evicted  from the  premises in  question. This Court further  observed that the doctrine of in pari delicto was  not  attracted  to  such  a  situation.  The  principle enunciated in  the above  case is  equally applicable to the case before us.      The learned counsel for the respondent, however, relied upon a  Full Bench  decision of  the High  Court of Patna in Galab Chand  Prasad v.  Budhwanti and  another, A.I.R.  1985 Pat. 327 in which it had been held that any excess rent paid by a  tenant to  his landlord  in pursuance  of  a  mutually agreed enhancement  of rent  which was  illegal did  not get automatically adjusted  against all  the subsequent defaults in the payment of the monthly rent under the Act. The decree for eviction  passed by the High Court of Patna in the above case has no doubt been affirmed by this Court in Budhwanti & Anr. v.  Gulab Chand  Prasad., [1987] 1 SCALE 501. But, this Court affirmed  the judgment  of the  High Court  not on the ground that  the tenant  in that  case was  a  defaulter  in payment of rent but on the ground that the landlord required the premises  for his  bona fide  use and  occupation.  This Court in  its judgment observed that "in the view we propose to take  .................. we  do not think it necessary to go into  the question  whether the  appellants had committed default in  payment of  rent and  secondly even  if they had committed default,  they are  entitled to  adjust the excess rent paid  by them over a span of 30 years without reference to  the  rule  of  in  pari  delicto.  The  reason  for  our refraining to go into these questions is because we find the decree for  eviction passed  against the  appellants can  be sustained on  the second ground, viz., bona fide requirement of the  shop for the business requirements of the members of the joint  family." It  is  not  now  necessary  for  us  to consider the correctness of the observation made by the Full Bench of Patna High Court on the question of default and the right of  the tenant  to claim  adjustment because  what was claimed by  way of adjustment in the said case was a certain excess amount  paid over  a  long  period  of  30  years  as enhanced rent  under a  mutual agreement though such payment was contrary to law. But in the case before us the amount of Rs.140 had  not been  paid as  enhanced rent  under any such agreement. It was, in fact, an amount which had been paid in advance which  was liable  to be  adjusted whenever  it  was necessary or required.      On the  facts and  in the  circumstances of the case we are satisfied  that the  appellant was not in arrears of two months’ rent.  We are  of opinion that the High Court was in error in  holding that the appellant was a defaulter who was liable to be evicted under clause (d) of sub- 420 section (1)  of section  11 of  the Act. The judgment of the High Court  is,therefore, liable  to be  set  aside  and  we accordingly set  it aside.  The judgment  of the trial court which has  been affirmed  by the  first appellate  court  is restored. The appeal is accordingly allowed with costs. H.L.C.                                       Appeal allowed. 421