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CASE NO.: Appeal (civil)  3322 of 1998

PETITIONER: Achal Misra                                                              

RESPONDENT: Rama Shanker Singh & Ors.

DATE OF JUDGMENT: 11/04/2005

BENCH: CJI R.C. LAHOTI,D.M. DHARMADHIKARI & P.K. BALASUBRAMANYAN

JUDGMENT: J U D G M E N T  

P.K. BALASUBRAMANYAN, J.

        1.              Dr. C.P. Tandon, had a house in Lucknow.  It was two  storeyed.  It had a plinth area of 3500 square feet.  It was situate on a plot  of land admeasuring 8892 square feet.  Dr. C.P. Tandon died on  24.08.1977.  The house devolved  on his son K.K. Tandon.  K.K. Tandon  died in London on 10.06.1978 while having treatment for his illness.   The  building was inherited by his wife, Asha Tandon.  Asha Tandon thus  became the owner of the building.

2.      On 28.08.1978, respondent  No.1 before us, made an application for  declaration of vacancy and allotment of the suit building to him as a tenant  under Section 12, read with Section 16 of the Uttar Pradesh Urban  Buildings (Regulation of Letting, Rent and Eviction) Act, 1972  (hereinafter called ’the Act’).  The Inspector, an officer under the Act  submitted a report on 11.09.1978 to the effect that the first floor of the  building may be considered to be vacant under Section 12 of the Act,  though a person claiming to be a caretaker was found therein.  It is seen  that the Inspector, while making the report, did not comply with the  requirements of Rule 8(2) of the U.P. Urban Buildings (Regulation of  Letting, Rent and Eviction) Rules, 1972 (hereinafter called ’the Rules’).   On 15.9.1978, the Additional District Magistrate, the Authority under the  Act, on the basis of the report issued a notice inviting objections for  allotment of the first floor.  On 09.10.1978, the father of Asha Tandon, the  inheritor of the house, filed objections.  He contended that no part of the  building was vacant and the owner, Asha Tandon, was entitled to notice in  terms of the Act and the Rules and no notice had been issued to her.  On  23.10.1978, the Additional District Magistrate, declared vacancy not only  in respect of the first floor but also in respect of the ground floor in terms  of Section 12 of the Act.  This order under Section 12 of the Act was not  challenged then and there by Asha Tandon, the owner.  The father of Asha  Tandon filed an application seeking time to file objections against the  proposed allotment of the building on the ground that at the relevant time,  the landlord, Asha Tandon, was in London and there was no notice to her  as mandated by the Act and the Rules.  On 08.11.1978, the Additional  District Magistrate rejected the application for time filed by the father of  Asha Tandon.  He also proceeded to pass another order allotting the  ground floor to respondent No.1, but without fixing the presumptive rent  as required by the Act.  Two days later, he passed another order allotting  the first floor in favour of respondent No.2, who had come to the town as a  Munsif Magistrate, in view of that officer’s urgent need as a Government  official for accommodation, but again, without fixing the presumptive rent  as required by Section 16(9) of the Act.  These orders of allotment were  challenged by Asha Tandon and her father in revisions filed under Section

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18 of the Act.  On 23.03.1979, the Additional District Judge allowed the  revisions holding that the order of the Additional District Magistrate  declaring vacancy was patently erroneous since as per the report of the  Inspector, the ground floor of the building was not vacant.  That, even as  regards the first floor, it could not be deemed that there was a vacancy in  the face of the report and hence no question of allotment arose.   The  Additional District Judge also found that there was no compliance of Rule  8(2) and Rule 9(3) of the Rules and that the orders of allotment were liable  to be set aside.  He thus set aside those orders.  Respondent Nos. 1 and 2  herein, the allottees, filed a Writ Petition in the High Court of Allahabad  challenging the order of the Additional District Judge.  On 16.05.1991,  while the Writ Petition was pending, Asha Tandon sold the building to the  present appellant.  The appellant moved for vacating the interim stay  granted by the Allahabad High Court on the ground that respondent No.2,  the Magistrate, who was the allottee of the first floor, had been transferred  from Lucknow to Deoria and was no more entitled to continue as an  allottee.  A further ground was that respondent Nos.1 and 2 had not paid  any rent and were defaulters and not having paid a single pie to the  landlord all these years, were not entitled to have the benefit of a stay of  eviction from the High Court.  Meanwhile, on 04.05.1994, the Additional  District Magistrate taking note of the fact that respondent No.2, the  Magistrate, to whom the allotment was made in his capacity as an official,  was transferred to Deoria and had been staying in Deoria in a Government  allotted quarters, cancelled the allotment of the first floor to him.   Thus,  though the vacancy of the first floor was declared no further step was  taken regarding that floor.  The appellant, therefore, approached the High  Court seeking a clarification that the interim order would not stand in the  way of considering the claim for release of the first floor by the appellant.   By order dated 20.07.1995, the High Court clarified that its interim order  dated 10.04.1979 would not stand in the way of considering the release of  the first floor to the appellant.    According to the appellant, in spite of this  clarification, no steps were taken regarding the first floor allegedly  because of the improper influence exercised by respondents.   

3.              Ultimately, the High Court allowed the Writ Petition and set  aside the order of the Additional District Judge on the sole ground that the  order declaring vacancy dated 23.10.1978 not having been challenged by  the Asha Tandon, the owner of the building, then and there, that order had  attained finality and that order could not be challenged in the subsequent  revision against the order of allotment.  Even if this were the position,  the  High Court failed to see that at least as regards respondent No.2 herein, the  effect of the subsequent cancellation of the allotment ought to be  considered, in the context of the claim of the owner of the building for  release of the building. Thus, clearly the judgment of the High Court  suffers from non application of mind. 4.      Aggrieved by the setting aside of the order of the Additional District  Judge cancelling the allotment in favour of respondents 1 and 2 herein, the  appellant, the assignee landlord, has filed this appeal.  In view of Section  109 of the Transfer of Property Act, there cannot be any doubt that the  landlord being an assignee of the owner, was entitled to enforce his rights  in respect of the property even if it were to be taken that respondent Nos.1  and 2 were to be treated as tenants of the building under him.  This Court  granted special leave.  By order dated 17.08.2000, a Bench of two learned  Judges after noticing the decision in Ganpat Roy and others  v.  Additional District Magistrate and Others (1985) 2 SCC 307 and  doubting the correctness of the approach made therein, ordered that this  appeal be heard by a larger Bench.  That is how, this appeal has come up  before this Bench of three Judges.  

5.      In this appeal, I.A. 4 of 2004 was filed by the appellant seeking  directions to the respondents to pay the rent in arrears at the rate of  Rs.10,000/- per month for the ground floor and Rs. 8,000/- per month for  the first floor from the dates of the respective allotments till date.  Certain  amounts, which according to the appellant were paltry, were deposited by  the respondents and the said application was also directed to be heard

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along with the appeal.   I.A. No.5 of 2004 was filed complaining that  Respondent No.2 had not vacated in spite of declaration of vacancy of the  premises originally allotted to him.  This was also directed to be listed  with the appeal.

6.      The Act, by Section 11, prohibits the letting of a building without an  order of allotment in terms of the Act. A building from which a landlord or  a tenant had substantially removed his effects, or had allowed it to be  occupied by a person who is not a member of his family, or in the case of a  residential building, where the landlord and the members of his family  have taken up residence elsewhere, the residence being not temporary, it  was to be deemed under Section 12 of the Act, that a vacancy had arisen in  respect of that building.  Sub-Section (3-A) of Section 12, which has  obvious application in the case of respondent No.2 herein, provides that if  the tenant of a residential building holding a transferable post under the  Government has been transferred to some other city, then, such tenant  shall be deemed to have ceased to occupy such building with effect from  the thirtieth day of June following the date of such transfer or from the  date of allotment to him of any residential accommodation in the city to  which he has been so transferred.  Under Rule 8 of the Rules, for  ascertaining the vacancy, the District Magistrate had to get the building  inspected as far as possible in the presence of the landlord and the tenant  or any other occupant and after eliciting from at least two respectable  persons in the locality, information regarding the vacancy and thereafter  put up on the notice board, for information of the general public, the  information regarding vacancy.  An objection filed within three days from  the date of putting up of such a notice, had to be considered and decided  after considering the evidence adduced by the objector and an allotment  had to be made only in the event of the objection to declaring the vacancy,  being rejected.   Rule 10 provides the procedure for allotment.  An allottee  in terms of Section 16 of the Act was deemed to be the tenant of the  building under the landlord from the date of the allotment.  Under Section  16(9), the District Magistrate had to make an order requiring the allottee to  pay to the landlord one half of the yearly presumptive rent, or one month’s  presumptive rent, the presumptive rent being an amount of rent which the  District Magistrate, prima facie, considers reasonable having regard to  Section 9 of the Act.

7.      The reference of this appeal to a larger Bench was necessitated by  the following sequence of events.

       In M/s Tirlok Singh and Co. v. District Magistrate, Lucknow  and others, (1976) 3 SCC 726, two learned Judges of this Court held that  under the scheme of the Act, an order notifying a vacancy by itself does no  injury and causes no prejudice to the interests of any party.  A notification  of the vacancy under Section 12 of the Act, was only a step-in-aid of an  order of allotment or release and only when such orders are passed, the  landlord or the tenant, as the case may be, can have a grievance.  Orders of  allotment and release are, in the first instance, reviewable by the District  Magistrate himself and an order passed by the District Magistrate under  Section 16 of the Act, was appealable under Section 18 of the Act.  So, a  person aggrieved by an order of allotment or release has at least a twofold  opportunity to challenge an order affecting his interest.  Therefore, a Writ  Petition filed against an order declaring a vacancy only, was premature, as  the order did not affect the rights of the person who challenges that order.   Of course, this decision was based on the provisions of the Act and the  Rules then existing.  

8.              The decision in M/s Tirlok Singh and Co. (supra) came to be  considered by a Bench of three learned Judges in Ganpat Roy and others   v. Additional District Magistrate and Others (supra).  That  consideration was during the pendency of the Writ Petition filed by the  tenants before the High Court in the present case.  In Ganpat Roy’ s  case,  the Bench disagreed with the position adopted in M/s Tirlok Singh and  Co. , that rights of the landlord or the tenant are not affected merely by the

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notification of a vacancy.  Of course, by the time, Ganpat Roy’ s  case  came to be decided, the Act had undergone an amendment and an appeal  against the final order of allotment had been replaced by a revision under  more restricted conditions.  The Bench in Ganpat Roy’ s  case observed  that the observations in M/s Tirlok Singh and Co.  that it was  unnecessary for the District Magistrate to hear the parties before notifying  the vacancy did not appear to be correct.  It also did not appear to be  correct to hold that an order notifying the vacancy did no injury and  caused no prejudice to the interests of any party because an order notifying  the vacancy could be objected to and if any objections were filed, they  would have to be decided after considering the evidence that the objector  or any other person concerned might adduce.  The further remedies  provided to an aggrieved person after an allotment was made, also  supported this position.  The learned Judges thus held that the correctness  of the decision in M/s Tirlok Singh and Co.’s was open to doubt.  Their  Lordships ended up by saying that the scheme of the Act would show that  a tenant of a premises in whose case it was found that there was a deemed  vacancy had no efficacious or adequate remedy under the Act to challenge  that finding.  A petition under Article 226 or 227 of the Constitution of  India filed by such a tenant in order to challenge that finding could not,  therefore, be said to be premature.  In that view, the Bench set aside the  decision of the Allahabad High Court and remanded the Writ Petition  involved therein to be heard by the High Court on merits.   Thus, the  subsequent decision of three learned Judges of this Court indicated that an  order notifying the vacancy in terms of the Act was capable of affecting  the rights of the landlord or the tenant and hence the challenge offered to it  then and there, could not be said to be either not maintainable or  premature.

9.              It was in the context of this decision that the High Court  allowed the Writ Petitions filed by the allottees on the ground that the  landlord not having challenged the original order notifying the vacancy  then and there, was precluded from challenging the notifying of vacancy in  revision against the final order or in further challenges to it in the High  Court.  The Court also noticed the decision in Smt. Kunj Lata v. Xth   Additional District Judge, Kanpur Nagar and others , 1991 (2) RCJ  658, holding that if an order declaring a vacancy was not challenged and  allowed to become final, it could not be set aside by the Revisional Court  in a revision against the final order of allotment.   The High Court  proceeded to say that the law declared by this Court in Ganpat Roy’ s   case has to be taken to be the law as it always was, and even though at the  time of the declaration of vacancy in this case, the landlord might have  been misled by the ratio of the decision in M/s Tirlok Singh and Co.’s  case in not challenging that order then and there, the challenge of the  landlord in the revision to the final order of allotment had to be rejected on  the ground that the order declaring a vacancy had become final.  It was  thus that the Writ Petitions filled by the allottees was allowed by the High  Court.

10.             In the order of reference to a larger Bench dated 17.8.2000,  the learned Judges noticed that it could not be said that the question of  vacancy if not challenged by a separate Writ Petition on its notification,  could not be questioned in the revision filed under Section 18 of the Act.   The question of vacancy pertained to a jurisdictional fact and can be  challenged in the revision filed against the allotment order passed by the  District Magistrate.  In case it was found that there was no vacancy, the  order of allotment had to be set aside.  The Bench, therefore, felt that the  decision in Ganpat Roy’ s  case holding that the validity of declaration of  vacancy cannot be agitated in the revision under Section 18 of the Act  challenging the allotment could not be accepted as correct.  It was in that  context that the case was referred to a larger Bench for decision, since the  decision in Ganpat Roy’ s  case was rendered by three learned Judges of  this Court.

11.             On the scheme of the Act, it is clear that the preliminary step

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is to declare a vacancy.  At this stage, an enquiry has to be made including  an enquiry involving at least two respectable neighbours.  It is thereafter  that the vacancy has to be notified and objections invited.  This is followed  by either dropping of the proceedings on the objections being upheld that  there was no vacancy or by allotment to a tenant on finding the vacancy or  in ordering a release of the building, in case a landlord was found entitled  to have such a release under the Act.  Therefore, the notifying of a vacancy  is only a step in the process of making an allotment of the building to a  tenant.  The Act contemplates that no building should be let out by a  landlord except through the process of allotment by the Rent Control  Authority.   Since the order notifying a vacancy is only a step in passing  the final order in a proceeding under the Act regarding allotment, it is clear  that the same could be challenged while challenging the final order, unless  there is anything in the Act precluding such a challenge or conferring a  finality to the order notifying a vacancy.  It was held long ago by the Privy  Council in Moheshur Singh v. The Bengal Government, (1859) 7 Moo  Ind App 283 (302):

"We are not aware of any law or Regulation prevailing in  India which renders it imperative upon the suitor to appeal  from every interlocutory order by which he may conceive  himself aggrieved, under the penalty, if he does not do so, of  forfeiting forever the benefit of the consideration of the  Appellate Court.  No authority or precedent has been cited in  support of such a proposition, and we cannot conceive that  anything would be more detrimental to the expeditious  administration of justice than the establishment of a rule  which would impose upon the suitor the necessity of so  appealing, whereby on the one hand he might be harassed  with endless expense and delay, and on the other inflict upon  his opponent similar calamities."

               In Sheonath vs. Ramnath (10 MIA 413) the Privy Council  reiterated that a party is not bound to appeal from every interlocutory order  which is a step in the procedure that leads to a final decree.   It is open on  appeal from such final decree to question an interlocutory order.     

12.             This principle is recognized  by Section 105(1) of the Code of  Civil Procedure and reaffirmed by Order XLIII Rule (1A) of the code.   The two exceptions to this Rule are found in Section 97 of the Code of  Civil Procedure, 1908, which provides that a preliminary decree passed in  a suit could not be challenged in an appeal against the final decree based  on that preliminary decree and Section 105(2) of the Code of Civil  Procedure, 1908 which precludes a challenge to an order of remand at a  subsequent stage while filing an appeal against the decree passed  subsequent to the order of remand.  All these aspects came to be  considered by this Court in Satyadhan Ghosal and others v. Smt.  Deorajin Debi and another,  (1960) 3 SCR 590 wherein, after referring  to the decisions of the Privy Council, it was held that an interlocutory  order which had not been appealed from either because no appeal lay or  even though an appeal lay an appeal was not taken, can be challenged in  an appeal from a final decree or order.  It was further held that a special  provision was made in Section 105(2) of the Code of Civil Procedure as  regards orders of remand where the order of remand itself was made  appealable.  Since Section 105 (2) did not apply to the Privy Council and  can have no application to appeals to the Supreme Court, the Privy  Council and the Supreme Court could examine even the correctness of an  original order of remand while considering the correctness of the decree  passed subsequent to the order of remand.  The same principle was  reiterated in Amar Chand Butail v. Union of India and others., AIR  1964 SC 1658 and in other subsequent decisions.

13.             It is thus clear that an order notifying a vacancy which leads  to the final order of allotment can be challenged in a proceeding taken to  challenge the final order, as being an order which is a preliminary step in

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the process of decision making in passing the final order.  Hence, in a  revision against the final order of allotment which is provided for by the  Act, the order notifying the vacancy could be challenged.  The decision in  Ganpat Roy’ s  case, which has disapproved the ratio of the decision in  M/s Tirlok Singh and Co., cannot be understood as laying down that the  failure to challenge the order notifying the vacancy then and there, would  result in the loss of right to the aggrieved person of challenging the  notifying of vacancy itself, in a revision against the final order of  allotment.  It has only clarified that even the order notifying the vacancy  could be immediately and independently challenged.  The High Court, in  our view, has misunderstood the effect of the decision of this Court in  Ganpat Roy’ s  case and has not kept in mind the general principles of  law governing such a question as expounded by the Privy Council  and by  this Court.  It is nobody’s case that there is anything in the Act  corresponding either to Section 97 or to Section 105(2) of the Code of  Civil Procedure, 1908 precluding a challenge in respect of an order which  ultimately leads to the final order.  We overrule the view taken by the  Allahabad High Court in the present case and in Smt.  Kunj Lata vs. Xth  Additional District Judge, Kanpur Nagar and others (supra) that in a  revision against the final order, the order notifying the vacancy could not  be challenged and that the failure to independently challenge the order  notifying the vacancy would preclude a successful challenge to the  allotment order itself.  In fact, the person aggrieved by the order notifying  the vacancy can be said to have two options available.  Either to challenge  the order notifying the vacancy then and there by way of a writ petition or  to make the statutory challenge after a final order of allotment has been  made and if he is aggrieved even thereafter, to approach the High Court.  It  would really be a case of election of remedies.

14.             We are, therefore, satisfied that the High Court was in error in  allowing the Writ Petition solely on the ground that the landlord had not  challenged the original order notifying the vacancies then and there.  The  decision of the High Court in the Writ Petition, therefore, requires to be set  aside and the Writ Petition remanded to that Court for a fresh hearing and  disposal in accordance with law, including the question whether the order  notifying the vacancy was proper.  It would also be necessary for the High  Court to consider the effect of the cancellation of the order in favour of  Respondent No.2 considering the nature of the allotment made in his  favour, even assuming that the High Court does not find any reason to  interfere with the order notifying the vacancy or with the order making the  allotment.  The appeal is hence allowed.  The judgment of the High Court  in the Writ Petition filed by the allottees is set aside and the Writ Petition  is remanded to the High Court for a fresh disposal in accordance with law  and in the light of the observations contained in this judgment.  The High  Court, it is hoped, will expeditiously dispose of the Writ Petition afresh  pursuant to this order of remand, in the circumstances of the case  preferably within a period of six months of the receipt of a copy of this  Judgment.

I.A. NOS. 4 AND 5 of 2004 15.             It appears that the respondents who are in occupation of the  two floors in the suit premises, have not paid rent since the beginning.    They seem to be taking advantage of the pendency of litigation, also of the  landlord being not resident in India or in the city.

16.             I.A. No.4 of 2004 is filed by the landlord seeking direction to  the respondent-tenants to pay the rent of the premises during the pendency  of litigation.  I.A. No.5 of 2004 is filed for a direction to the respondents to  vacate the premises.  Notice on the applications was issued to the  respondents.  On 5.4.2004, this Court directed respondent-tenants to pay  the entire arrears of rent/damages within a period of two months from the  date of the order and to continue to pay monthly rent/damages as and when  it falls due.   On 5.7.2004, the Court directed that any amount tendered by  the respondent-tenant would be accepted by the landlord without  prejudice.

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17.             On 5.7.2004, respondent No.2-Raj Singh filed an affidavit-in- response stating that on 2.6.2004 he tendered a crossed cheque of  Rs.1,45,860/- as rent for 26 years calculated on the basis of the annual  value as stated in the assessment list of 1976, of the first floor of the  premises in question which is Rs.5,100/-, water tax Rs.408/- and drainage  tax Rs.102/- making a total of Rs.5,610/- per annum.   However, the  cheque was received back by respondent No.1 as addressee-landlord was  not available at the address given by him.

18.             Respondent No.1-Rama Shanker Singh has stated that he is a  tenant on the ground floor assessed at Rs.6,120/- per annum whereas water  tax is Rs.489.60 and drainage tax is Rs.122.40 making a total of Rs.6,732/-  per annum.   According to him he is a tenant since 14.11.1978 and with his  letter dated 15th May, 2004 he tendered a pay order in an amount of  Rs.1,75,032/- to the landlord.   The pay order sent through registered post  has been received back by him as undelivered to the addressee-landlord.

19.             According to the landlord, the property is a valuable property  situated in a prime locality of Lucknow city.  The landlord has got the  property valued through Snow Fountain Consultants, Architects and  Valuers.   The valuation report dated 17.7.2004 has been filed in the court,  according to which the total rent of the property would come to  Rs.28,496/- per month.

20.             This litigation is more than 25 years old.  To allow the tenants  to contest the case without payment of arrears and occupation charges  falling due month by month would be travesty of justice.   There are two  proceedings pending between the parties: one is the present proceedings  and the other is a suit for recovery of rent filed by the landlord against the  tenants.

21.             We direct as under:- (i)     Within a period of two months from today respondent No.1- Rama Shanker Singh, in occupation of the ground floor, shall  tender an amount of Rs.3,50,000/- through demand draft  drawn on a scheduled bank in the name of the landlord and  hand over the same to the counsel for the landlord.   With  effect from 1.5.2005, month by month, or on or before the  15th day of that month, Rama Shanker Singh-respondent No.1  shall pay an amount of Rs.1200/- per month plus the amount  of water tax and drainage tax through bank draft drawn in the  name of the landlord and tendered either to the landlord or to  her counsel. (ii)    Within a period of two months from today respondent No.2- Raj Singh, in occupation of the first floor, shall tender an  amount of Rs.3,00,000/- by way of demand draft drawn on a  schedule bank in the name of the landlord and hand over the  same to the counsel for the landlord.   With effect from  1.5.2005, month by month, on or before the 15th day of that  month, Raj Singh-respondent No.2 shall pay an amount of  Rs.1000/- per month, plus the amount of water tax and  drainage tax through bank draft drawn in the name of the  landlord and tendered either to the landlord or to her counsel.    (iii)   This amount shall be treated as a provisional payment but a  condition precedent to their entitlement to contest the present  proceedings.   The amount so paid shall be liable to be  adjusted consistently with the decree that may be passed by  the competent Court for the recovery of the rent. (iv)    Any respondent who does not comply with the above-said  order, shall not be entitled to contest in the proceedings and  shall not be entitled to be heard.

22.             From the material available on record it does not appear that  any rate of rent was appointed at which rent would be payable by the

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respondents to the landlord.  The respondents also do not seem to have  taken any steps for fixation of rent of the premises in their occupation.    They have been happy to have got the premises in a prime locality,  occupying and enjoying the same for no payment.   We make it clear that  the respondents shall be liable to pay the rent equivalent to mesne profits  with effect from the date with which they are found to have ceased to be  entitled to retain possession of the premises as tenant and for such period  the landlord’s entitlement cannot be held pegged to the standard rent.    Reference may be had to the law laid down by this Court in Atma Ram  Properties (P) Ltd. vs.  Federal Motors (P) Ltd.  (2005 (1) SCC 705).

23.             The appeal is allowed.  I.A. Nos.4 and 5 are disposed of in the  terms above said.   The parties through their respective counsel are  directed to appear in the High Court on 2nd May, 2005.  As it is long  pending litigation, we request the High Court to give this matter a priority  in hearing and decide the same as far as possible within a period of six  months from 2.5.2005, the date on which the parties would appear in the  High Court.