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PETITIONER: SHAH DHANSUKHLAL CHHAGANLAL

       Vs.

RESPONDENT: DALICHAND VIRCHAND SHROFF AND OTHERS

DATE OF JUDGMENT: 01/03/1968

BENCH: MITTER, G.K. BENCH: MITTER, G.K. SHAH, J.C. BACHAWAT, R.S.

CITATION:  1968 AIR 1109            1968 SCR  (3) 346  CITATOR INFO :  RF         1976 SC2005  (23)  RF         1977 SC1707  (12)  E&R        1978 SC 955  (1,4,5,10)  C          1980 SC 954  (11)

ACT: Bombay  Rents  Hotel and Loadging House Rates  Control  Act, 1947-Ss. 12(1) and 12(3) (b)-Conditions for benefit under.

HEADNOTE: The appellant was a tenant of the respondent.  Having fallen into  arrears  of rent he was given a notice  (a)  demanding arrears  of  rent and permitted increases under  the  Bombay Rents.   Hotel and Lodging House Rat-as Control  Act,  1947, and  (b) terminating his tenancy in terms of s. 106  of  the Transfer  of  Property  Act, Receiving no  response  to  the notice  the respondent filed a suit against  the  appellant. On  the first day of the Heading of the suit and during  its pendency  the  appellant deposited part of  the  arrears  in Court but not the full amount due.  The trial Court passed a decree  against  him which was confirmed  by  the  appellate Court.   The  High Court dismissed  his  revision  petition. With  special  leave-- he appealed to this Court  and  urged that  (i) he was entitled to the benefit of s. 12 ( 1  )  of the  Act and that (ii) even if s. 12 (3) (b) was applied  he was not liable to be eiected. HElD  : (i) Section 12(1) must be read with the  Explanation and  so read it means that a 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-s. (2),  he makes an application to the court under sub-s.  (3) of  section 11 and hereafter pays or tenders the  amount  of rent  or  permitted increases specified by the  court.   The readiness  and  willingness to pay has to be judged  in  the light  of  the facts of the case.  Where as in  the  present case  a suit is filed on the ground that the tenant  was  in arrears  for a period of more than six months  and  although raising  a  dispute  as to the standard  rent  or  permitted increases  recoverable  under the Act, the tenant  makes  no application  in  terms  of  s. 11(3)  he  cannot  claim  the protection  of  s. 12(1) by merely offering to pay  or  even

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paying  aii arrears due from him when the court is about  to pass a decree against him. [351 H-352 B] Shah  Bhojraj  Kuverji  Oil Mills  and  Ginning  Factory  v. Subbash   Chandra  Yograi  Sinha,  [1962]  2   S.C.R.   159, distinguished. Vora  Abbasbhal Alimahomed v. Haii Gulamnabi Haii  Safibhai, [1964]  5  S.C.R.  157,  Mrs.  Manordma  Masurekar  v.  Mrs. Dhanlaxmi G. Shah and another. [1967] 1 S.C.R. 135, applied. (ii) The case did not come under s. 12(3) (b).  To be within the  protection of that provision, the tenant must not  only pay  all  the arrears due from him on the first day  of  the hearing of the suit, but he must thereafter continue to ’pay or  tender  in court regularly the rent  and  the  permitted increase  till  the suit is finally decided.   There  was  a failure  on  the part of the appellant to pay or  tender  in court  all  the  amounts which fell due, and  he  could  not therefore  get  the protection of s. 12(3) (b) of  the  Act. [353 B-E]

JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeal No. 455 of 1965. Appeal  by special leave from the judgment and  order  dated September  11,  1962  of the Gujarat  High  Court  in  Civil Revision Application No. 150 of 1960. 347 G.   L. Sanghi, and B. R. Agarwala, for the appellant. O.   P. Malhotra and Ravinder Narain, for the respondents Nos.  1 to 4. The Judgment of the Court was delivered by Mitter,  J. This is an appeal by special leave from a  judg- ment of the High Court of Gujarat passed in a Civil Revision Application  arising out of a suit filed by  the  plaintiff- respondent   against  the  defendant-appellant  to   recover possession of certain premises situate in Surat. The facts are as follows.  The appellant became a tenant  of the  respondent under a rent note executed on  February  27, 1947  whereby  rent was fixed at Rs. 40 per  month  and  the tenancy  was  to  be  for a period of  one  year  from  22nd February,  1947.  After the expiry of the said  period,  the appellant  continued as a monthly tenant on the  same  terms and  conditions  as were to be found in the rent  note.   He fell into arrears of payment of rent and the respondent sued him for eviction some time in 1951.  The suit was eventually compromised  by  a  petition  put  in  court  bearing   date September 16, 1952.  Under the terms of the compromise,  the defendant  continued as a tenant from September 1,  1952  on the terms and conditions of the rent note dated February 27, 1947:  the  original  conditions in  respect  of  rent  also continued excepting that the rate was lowered from Rs.  40/- -to  quote the words of the compromise-to "standard rent  of Rs.  27" and "in the matter of taxes and interest  also  the defendant  was to act in accordance with the  conditions  of the  aforesaid  rent note." Paragraph 2  of  the  compromise petition  contained  an  account of  payments  made  by  the defendant the final. result thereof being that it was agreed between the parties that the defendant had-paid Rs.  104-5-3 "which  amount was to be rcmbursed by the plaintiff  to  the defendant  when accounting the future payment of  rent."  It should be noted here that according to the rent note of 1947 the  tenant  had agreed to pay the monthly rent  of  Rs.  40 together  with interest at Rs. 0-12-0 per cent per annum  in respect  of  any  balance  due for  rent.   Even  after  the compromise,  the defendant fell in arrears again.  The  only

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payments made thereafter up to the institution of the second suit out of which the present proceedings have arisen were a sum  of  Rs. 250 on July 19, 1954 and Rs. 200 on  March  17, 1955.   The  defendant  did  not make  any  payment  to  the plaintiff  in rcspect of the permitted increases  under  the Bombay  Rents,  Hotel and Lodging House Rates  Control  Act, 1947  from the 1 st of April, 1954; neither did he  pay  the taxes  agreed  upon.   The plaintiff gave a  notice  to  the defendant  on April 18, 1955 demanding the arrears  of  rent and  permitted increases in terms of the said Act  and  also terminating the tenancy of the defend- 348 ant with effect from May 31, 1955 in terms of s. 106 of  the Transfer  of Property Act.  The notice was received  by  the defeiidant on April 21, 1955.  No reply was sent thereto nor was  any  payment  made  to the  plaintiff.   The  suit  for ejectment was filed on March 15, 1956 the ground thereof  as laid  in the plaint being that the defendant was in  arrears of  payment of rent and permitted increases and as such  not entitled  to the protection of the Act.  In paragraph  6  of the  plaint  the  dues under various  heads  were  specified showing  the arrears of rent, increases  permitted  thereon, interest  in  terms  of the rent note and  taxes  for  three years.   It  was  pleaded by the defendant  in  the  written statement  that rent at Rs. 27 had been fixed by  the  court without going into the merits of the case and that  standard rent  or reasonable rent of the property in suit had  to  be fixed  first and a preliminary issue in that respect  should be  framed.   The defendant did not admit the claim  to  the arrears as laid in paragraph 6 of the plaint. He also pleaded that the notice of ejectment was not a valid one  as  the  tenancy was to be reckoned  in  terms  of  the Gujarati calendar and not the Gregorian calendar. The  date  fixed for settlement of issues was  September  3, 1956 which can be taken to be the date of the first  hearing of  the suit for the purposes of the Act.  On that  day  the defendant deposited in court a sum of Rs. 1,000.  Thereafter the defendant made a deposit of a sum of Rs. 150 on February 25, 1957.  The suit was decreed by the trial Judge on  March 25, 1957.  The trial Judge after considering the evidence on record  determined the standard rent of the premises at  Rs. 27,  exclusive of the permitted increases and water tax  and sanitary  tax,  payable by the defendant to  the  plaintiff. Holding  that  the defendant had not complied  with  section 12(3)(b)  of the Act he passed a decree for  eviction.   The defendant  went in appeal to the District Judge, Surat.   He raised  no  contention  even at the hearin-  of  the  appeal either in regard to the standard rent of the premises or  in regard to interest on arrears of rent or municipal taxes  or permitted  increases.  The finding of the trial  Judge  that the  standard  rent of the premises exclusive  of  permitted increases  and water tax and sanitary tax was Rs. 27,1-  per month  was  not challenged by the defendant.   Nor  was  any question  raised  as to the finding that the  defendant  was liable to pay the plaintiff a sum of Rs. 123-4-0 as and  by, way  of interest on arrears of rent, a sum of Rs. 81 as  and by  way of water tax and sanitary tax for a period of  three years  prior to the date of the suit and a sum of Rs.  2-1-9 per month as and by way of permitted increases from April 1, 1954.   The  point regarding the validity of the  notice  of ejectment  was however raised in the appeal.   According  to the judgment of the High Court, "the only contention urged 349 before   the  learned  Assistant  Judge  was,  whether   the defendant  had or had not complied with the requirements  of

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section  12(3)(b)  of  the Rent Act."  The  Assistant  Judge concluded  that  there  had been  no  compliance  with  that section and upheld the decree for eviction. In  revision three contentions were. raised before the  High Court,  namely,  (1)  as to the validity of  the  notice  of ejectment; (2) whether  s. 12(3)(a) or 12(3)(b) of  the  Act applied; and(3)     whether  the defendant was  entitled  to protection under s. 12(1)  of the Act.  The High Court  held that it was not open to  the tenant to raise the question of the validity of the notice in a    revision     application. Moreover, there was no substance in it  as  the   compromise petition expressly recorded that the tenancy in terms of  it should  commence on September 1, 1952.  With regard  to  the second  question  the High Court held that  "it  was  common ground  between the parties before the Assistant Judge  that the  case of the defendant fell within section 12(3) (b)  of the Rent Act." The learned Judge of the High Court noted:               (a)   The   trial   Judge  turned   down   the               applicability  of  s.  12(3) (a)  of  the  Act               holding  that the defendant had  disputed  the               municipal taxes and permitted increases;               (b)   The,  conditions under s. 12(3)  (b)  of               the Act were not fulfilled;               (c)   No contention about the applicability of               12(3)  (a)  was raised  before  the  Assistant               Judge  in appeal and he therefore did  not  go               into the question at all; and               (d)   The   conditions   necessary   for   the               applicability of s. 12(3)(a) were not present,               as  besides the amount of Rs. 27 mentioned  in               the compromise petition, the tenant had to pay               other sums not due from him every month. The  High Court further found that after the first  date  of hearing  of  the  suit  on September 3,  1956  rent  of  the premises  which fell due on 1st October 1956,  1st  November 1956, 1st December 1956, 1st January 1957, 1st February 1957 and  1st March, 1957 remained unpaid on March 25, 1957  when the  suit was disposed of.  As the defendant did not pay  or deposit in court regularly the amount of standard rent which became  due on the aforesaid dates barring the 1st of  March 1957 (taking into account the deposit of Rs. 150 on February 25,  1957)  there was default on the part of  the  defendant attracting the operation of s. 12(3)(b) of the Act. 350 The High Court turned down the contention based on s.  12(1) of the Act. At the hearing of the appeal before us, learned counsel  for the appellant raised two points, namely:               (1)   The  provisions of S. 12(1) of  the  Act               were applicable throughout the hearing of  the               suit  and  down  to  the  date  of  the  final               hearing.   If at that stage it was found  that               the defendant had paid up all arrears due from               him he could not be ejected.               (2)   Even  applying S. 12(3)(b) there was  no               default  on  the part of the  defendant  which               would render him liable to eviction.               In order to appreciate the first contention it               is necessary to set out section 12 of the  Act               as it stood at the relevant time :               "12(1)A 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

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             permitted increases, if any, and observes  and               performs the other conditions of the  tenancy,               in so far as they are consistent with the pro-               visions of this Act.               (2)   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  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, 1882.               (3)   (a)  Where  the rent is payable  by  the               month  and there is no dispute  regarding  the               amount   of   standard   rent   or   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 may 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 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 conti-               351               nues 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.               (4)   Pending  the disposal of any such  suit,               the  Court  may  out of  any  amount  paid  or               tendered  by  the tenant pay to  the  landlord               such   amount  towards  payment  of  rent   or               permitted  increases due to him as  the  Court               thinks fit.               Explanation.-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." Learned  counsel  drew our attention to a judgment  of  this Court in Shah Bhojraj Kuverji Oil Mills and Ginning  Factory v. Subbash Chandra Yograj Sinha(1).  There the landlord  had filed  a  suit for possession of the premises on  April  25, 1957, the period of tenancy fixed under the rent note having expired  on  March  14,  1957.  Under s.  6  of  the  Act  a notification  was issued applying Part II of the Act to  the area where the property was situate.  The appellants claimed protection  of s. 12 of the Act and the main question  which engaged  the attention of this Court was, whether by  virtue of the first proviso to s. 50 of the Act, all the provisions in Part 11 including s. 12 were made expressly applicable to all  suits; and secondly, whether by virtue of s.  12(1)  of

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the  Act  the  suit was rendered  incompetent.   This  Court turned  down  the  contention of  the  respondent  that  the operation  of s. 12(1) was limited to suits filed  after  it came into force in a particular area and observed that under s.  12(1)  the landlord was not to be  entitled  to  recover possession and the point of time when the sub-section  would operate was when the decree for recovery of possession would have to be passed, It  appears  to  us  that  there  is  no  substance  in  the contention put forward on behalf of the appellant.   Section 12(1) must be read with the Explanation and so read it means that  a  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 s.     (3) of  section 11 and thereafter pays or tenders the amount of (1) [1962] 2 S.C.R. 159. 352 rent or permitted increases specified by the court.  We have already  noted  that the tenant made no payment  within  the period of one month of the notice of ejectment and  although in  his  written  statement he raised a  dispute  about  the standard  rent he made no application in terms of s. 1  1(3) of  the  Act.   The readiness and  willingness  to  pay  has therefore  to  be judged in the light of the  facts  of  the case.  Where as here a suit is filed on the ground that  the tenant was in arrears for a period of more than 6 months and although  raising a dispute as to the standard rent or  per- mitted increases recoverable under the Act, the tenant makes no  application  in terms of s. 11(3) he  cannot  claim  the protection  of  s. 12(1) by merely offering to pay  or  even paying  all arrears due from him when the court is about  to pass a decree against him.  In Vora Abbasbhai Alimahomed lv. Hai;  Gulamnabi Haji Safibhai(1) it was pointed out that  s. 12(1) of the Act applied to a tenant who continued to remain in  occupation  even  after the expiry  of  the  contractual tenancy so long as he paid or was, ready and willing to  pay the  amount  of the standard rent and  permitted  increases. The  protection was howsoever available to a tenant  subject to the provisions of s. 13 and to the limitations  contained in s. 12(2) and s. 12(3)(a) of the Act. In  Mrs.  Manorama Masurekar v. Mrs. Dhanlaxmi G.  Shah  and another ( 2 ) rent was in arrears for a period of more  than six  months and the tenant neglected to make payment of  the same  within one month of the notice under s. 12(2).   There the  rent was payable by the month and there was no  dispute regarding  the amount of the rent.  It was held that if  the conditions  of  sub-s. (3)(a) of s. 12  were  satisfied  the tenant  could  not  claim any protection  from  eviction  by tendering the arrears of rent after the expiry of one  month from the service of notice under sub-s. (2).      It     was observed :               "It is immaterial whether the tender was  made               before  or after the institution of the  suit.               In  a case falling within sub-s.  (3)(a),  the               tenant  must be dealt with under  the  special               provisions  of  sub-s. (3)(a), and  he  cannot               claim  any protection from eviction under  the               general provisions of sub-s. (1)" As  already  noted, if sub-s. (3)(a) is not  attracted,  the tenant,  if he is in arrears, cannot sit quiet and offer  to pay  all the amount due from him at the time of the  hearing of the suit so as to get the protection of s. 12(1).  To  be within the protection of subs. (1) where he raises a dispute about the standard rent payable, he must make an application

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to the court under sub-s. (3) of S. 11 and thereafter pay or tender the amount of rent and permitted (1) [1964] 5 S.C.R. 157. (2) [1967] 1 S.C.R. 135. 353 increases, if any, specified in the order made by the Court. If he does not approach the court under s. 1 1(3), it is not open to him thereafter to claim the protection of s. 12(1). The  case clearly does not come within s. 12(3)(b).   To  be within the protection of that provision, the tenant must not only  pay all the arrears due from him on the first  day  of hearing of the suit, but he must thereafter continue to  pay or  tender  in court regularly the rent  and  the  permitted increases till the suit is finally decided.  Before the date of  the suit, the appellant was entitled to a credit of  Rs. 104-5-3;  the  total payments up to the date  of  the  first hearing including the. sum of Rs. 1,000 come to Rs. 1,554-5- 3.  The amounts due from him, up to that date were : (a)  rent at the rate of Rs. 27 per month for 48 months.              Rs. 1296-0-0 (b)  permitted increases from      1-4-54 to 1-9-56.                     61-3-9 (c)  taxes.                                 81-0-0 (d)  Interest on arrears at 9% p.a.    123-3-0                                         ------- making a total ofRs.                        1561-6-9 Moreover, there was failure on the part of the appellant  to pay  or tender in court the amounts which fell due from  the 1st  of  October  1956 to the 1st  of  March,  1957.   Thus, leaving  out of consideration the question of costs  awarded against  him under the decree, the appellant cannot get  the protection  under s. 12(3)(b) of the Act.  A  faint  attempt was  made  to raise the point about the  invalidity  of  the notice of ejectment on the plea that the same had to  comply with s. 12(2) of the Act.  This is clearly fallacious as the said  section merely lays down the manner in which a  notice of demand of standard rent and permitted increases has to be made. The  contentions  raised  on behalf of  the  appellants  are therefore  without  any merits and the appeal  is  dismissed with costs. G.C.                       Appeal dismissed. 354