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PETITIONER: MAGANLAL CHHOTALAL DESAI

       Vs.

RESPONDENT: CHANDRAKANT MOTILAL

DATE OF JUDGMENT: 22/04/1968

BENCH: BACHAWAT, R.S. BENCH: BACHAWAT, R.S. SHELAT, J.M. GROVER, A.N.

CITATION:  1969 AIR   37            1969 SCR  (1)  58  CITATOR INFO :  F          1970 SC1221  (5)  F          1985 SC 369  (5)

ACT: Bombay Rents, Hotel and Lodging House Rents Control Act  (57 of 1947), ss. 12(1), 12(3) (b) and 20--Scope of--Overpayment of rent-Adjustment against rent due when permissible. Code of Civil Procedure (Act 5 of 1908), s.  115--Revisional jurisdiction of High Court.

HEADNOTE: The  appellant was a tenant in the respondent’s house  on  a contractual rent of Rs. 300 per month.  The respondent filed a suit claiming possession on the ground of non--payment  of rent  and  claimed arrears of rent and mesne  profits.   The appellant  filed his written statement, asking for  fixation of the standard rent at Rs. 125 per month.  He alleged  that the   respondent   had  recovered  more   than   the,   rent legitimately  due and prayed for the dismissal of the  suit. He; also filed a suit on 14th March 1957 claiming refund  of rent paid between 14th March 1950 and 4th August 1954 at the rate  of Rs. 300 per month, but he did not pay the  standard rent due from him from 4th August 1954 nor was he ready  and willing to pay it.  The trial court decreed the respondent’s suit for eviction.  The appellate court set aside the decree holding that the standard rent was Rs. 125 and directed  the respondent to render an account of the over payments made to him.   In revision, the High Court accepted the  finding  of the  appellate court that the standard rent was Rs. 125  but set aside the decree of the appellate court holding that the rent  was  in arrear from 4th August 1954 and  directed  the appellant to pay mesne profits at Rs. 125 per month. In  appeal to this Court it was contended that (1) the  High Court  had no jurisdiction. to interfere with the decree  of the  appellate Court under s.115, Civil  Procedure  Code;(2) The rent was not in arrear and should be treated as paid  by adjustment  or  deduction of the overpayments; and  (3)  the appellant  was  entitled  to  the  protection  of  s.  12(1) and  s.12  (3) (b) of the Bombay Rents,  Hotel  and  Lodging House Rents Control Act, 1947. HELD  : (1 ) On the pleadings in the respondent’s suit,  the

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appellate  Court  had  acted  illegally  and  with  material irregularity  as it had no power to pass a decree  directing the  respondent  to  render an account  in  respect  of  any overpayment of rent made to him.  Therefore, the High  Court had power to revise the decree. [61D] (2)  Section 20 of the Act gives the tenant a general  right to  recovery of overpaid rent within 6 months from the  date of payment.  He may also adjust the overpayment by deduction from any rent payable by him, But if the amount is incapable of  recovery because of the bar of limitation it  cannot  be recovered  by deduction, that is. the right of  recovery  by deduction  is  barred  at  the same time  as  the  right  of recovery by suit. [62D] In  the  present case, the right of recovery of  the  excess rent paid before 4th August 1954 became barred on and  after 4th February 1955.  As the claim for recovery became barred. the  appellant could not thereafter deduct it from the  rent failing due.  Since he never deducted it from the 59 rent  at  any time, but filed a suit for its  recovery,  the overpayment  could not be deducted from or adjusted  against the  rent falling due after 4th August 1954, and  therefore, the rent was in arrears. [63F--G] Sohrab  Tavaria v. Jafferali, 58 Bom.  L.R. 680, 687-88  and Karamsey  Kanji  v.  Velji Virji, 56 Bom.   L.R.  619,  626, approved. Bayley v-.Walker, [1925] 1 K.B. 447, referred to. (3)  The  appellant  could not claim the  protection  of  s. 12(1)  or s.12(3) (b) of the Act, because, (a) he was  never ready  or  willing  to  pay the  standard  rent  during  the pendency of the suit, (b) he did not at the first hearing of the, suit or on any other date fixed by the trial court  pay or  tender the standard rent and (c) he did  not  thereafter continue to pay or deposit in Court such rent till the  suit was finally decided [63H; 64A B]

JUDGMENT: CIVIL APPELLATE JURISDICTION : Civil Appeal No. 392 of 1965. Appeal  by special leave from the judgment and order,  dated August  29, November 20, 1962 of the Gujarat High  Court  in Civil Revision Application No. 456 of 1960. M. C. Chagla, and B. R. Agarwala, for the appellant. S. T. Desai, P. C. Bhartari, J. B. Dadachanji, O. C. Mathur and Ravinder Narain, for the respondents. The Judgment of the Court was delivered by Bachawat,  J.  This  appeal arises out  of  a  suit  between landlord  and  tenant.  The defendant was a tenant  of  Moti Villa, Bungalow No. 1 in Ahmedabad under the plaintiff.  The contractual rent was Rs. 300/- per month.  Since October  1, 1948  the  defendant stopped payment of rent on  the  ground that  it  was excessive.  The disputes between  the  parties were  referred to the arbitration of one Sankalchand  Parikh who made an award fixing the standard rent at Rs. 300/-  per month  and directing the defendant to deliver possession  of the  premises and to pay arrears of rent and future rent  at that  rate.  A decree was passed according to the  award  on September  21,  1949.   The plaintiff  recovered  moneys  by executing the decree but the defendant continued in  posses- sion.   On April 20, 1950 the defendant made an  application for  fixation  of  standard  rent.   This  application   was withdrawn  by him on November 11, 1950.  On August  1,  1955 the  High Court declared that the award decree was null  and void  on  the  ground that the claim  for  fixation  of  the

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standard  rent  and  recovery of  possession  could  not  be referred to arbitration. On September 5, 1955 the plaintiff served a notice upon  the defendant  demanding payment of arrears of rent  and  asking him  to  vacate the premises on the expiry of the  month  of October next.  On December 26, 1955 the plaintiff instituted Suit  No. 5092 of 1955 claiming possession on the ground  of non-payment  of  rent  and  sub-letting  and  also  claiming arrears of rent and mesne 60 profits.   The defendant filed his written statement on  May 1,  1956  asking for fixation of the standard  rent  at  Rs. 125/-  per month, denying the sub-letting and alleging  that the plaintiff had recovered more than the rent  legitimately due to him.  On March 14, 1957 he filed Suit No. 34 of  1957 against  the  plaintiff  claiming  refund  of  Rs.  15,224/- realised in execution of the void decree.  The first date of the hearing of Suit No. 5092 of 1955 was December 26,  1957. On  June  19,  1958 the Trial Court  decreed  the  suit  and directed  the defendant to give possession of  the  premises and  to pay Rs. 10,750/- on account of arrears of  rent  and mesne  profits at the rate of Rs. 500/- per month  from  the date  of the suit.  The Trial Court held that the  defendant sub-let the premises, that having withdrawn his  application for fixation of the standard rent it was not open to him  to ask  for fixation of the standard rent, that if  the  matter were  still  open the standard rent would be Rs.  125/-  per month,  that a sum of Rs. 14,169/2/- was realised  from  the defendant  in  execution  of  the  award  decree,  that  the defendant  was  liable to pay rent at Rs. 300/-  per  month, that  the  rent was in arrear and that the  notice  to  quit dated  September 5, 1955 was valid.  The defendant filed  an appeal  against  this decree.  During the  pendency  of  the appeal  the  plaintiff  recovered the sum  of  Rs.  10,750/- decreed by the trial Court.  The Assistant Judge,  Ahmedabad allowed the appeal, set aside the decree of the Trial  Court and  directed  the  plaintiff to render an  account  of  the overpayments  made to him.  He held that the  defendant  did not  sub-let  the premises, that the standard rent  was  Rs. 125/-  per month, that it was open to the defendant  to  ask for  fixation  of standard rent, that in  execution  of  the award   decree  since  1950  the  plaintiff  recovered   Rs. 14,169/2/-  before  the  institution of  the  suit  and  Rs. 10,750/-  during the pendency of the appeal and that  taking into account all the recoveries the rent was not in  arrear. The  plaintiff  filed a revision  application  against  this decree.   On  November 20, 1962 the High Court  allowed  the revision application, set aside the decree of the  Assistant Judge, restored the decree for eviction passed by the  Trial Court and directed the defendant to pay mesne profits at Rs. 125/- per month from the date of the suit until recovery  of possession.   The  High Court accepted the findings  of  the court  below that there was no sub-letting of the  premises, that  the standard rent was Rs. 125/per month, that  it  was open  to the defendant to ask for fixation of  the  standard rent  and  that  Rs. 14,160/2/- was recovered  from  him  in execution of the award decree before the institution of  the suit.  The High Court held that the rent was in arrear, that the  defendant  was  not ready and  willing  to  adjust  the overpayment  against the rent falling due, that  the  amount recovered from the defendant was less than the standard rent due  from him and the cost of the suit and that he  was  not entitled  to the protection of sees. 12(1) and 12(3) (b)  of the Bombay Rents, Hotel and Lodg- 61

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ing  House Rents Control Act, 1947 (Bombay Act No.  LVII  of 1947).   The  High Court refused to allow the  defendant  to raise a new contention, viz., that there was no valid notice under  sec.  12(2)  of the Act.  The  defendant  filed  this appeal after obtaining special leave from this Court. Mr.  M.  C.  Chagla contended that the  High  Court  had  no jurisdiction  to interfere with the decree of the  Assistant Judge under sec. 115 of the Code of Civil Procedure.  We are unable to accept this contention.  The decree passed by  the Assistant  Judge was manifestly illegal.  Suit No.  5092  of 1955 was for possession, arrears of rent and mesne  profits. In  his written statement, the defendant asked for  fixation of  standard rent and prayed for dismissal of the suit.   In that suit the court had no power to pass a decree  directing the  plaintiff to render an account in respect of  any  over payment  of rent made to him.  In giving the direction  that "the landlord do render an account of the over payments made to  him",  the  Assistant Judge  acted  illegally  and  with material  irregularity.   The High Court had full  power  to revise this decree under sec. 115 and to give such direction in the matter as it thought fit. Mr.  Chagla  then contended that there was no  valid  notice under  sec. 12(2).  He argued that this point arose  on  the pleadings  and  the issues.  But we find that in  the  Trial Court  the contention was that there was no valid notice  to quit.   It  was not argued that there was  no  valid  notice under  see. 12(2).  The point regarding the validity of  the notice was not raised before the Assistant Judge.  The  High Court  properly refused to allow the point to be  taken  for the first time in revision.  We are of the opinion that  the point about the absence of a proper notice under sec.  12(2) is not now open. The crucial point in the case was whether the defendant paid or  was ready and willing to pay the standard rent due  from him.  According to the defendant he was compelled to pay Rs. 15,224/2/  between March 14, 1950 and August 4,  1954.   The courts below found that between those two dates he paid  Rs. 14,169/2/on  account  of rent from October 1,  1948  at  Rs. 300/- per month.  From the plaint in Suit No. 34 of 19 ’  57 it  appears that until March 14, 1957 the defendant did  not make  any other payment. As the High Court pointed  out,  no further payment was made by the defendant till the  disposal of suit No. 5092 of 1955. Thus upto August 4, 1954 the defendant paid Rs.  14,169/2/on account  of rent due upto that date at Rs. 300/- per  month. The  payments were in excess of the standard rent.   He  did not pay rent falling due after August 4, 1954.  The question is  whether the rent was in arrear or whether it  should  be treated as paid 62 by adjustment or deduction of the over payments.. The  right of  a tenant to recover the over-paid rent is  regulated  by sec.2C That section reads :-               "Any amount paid on account of rent after  the               date of the coming into operation of this  Act               shall, except in so far as payment thereof  is               in accordance with the provisions of this Act,               be recoverable by the tenant from the landlord               to whom it was paid or on whose behalf it  was               received  or from his legal representative  at               any  time within a period of six  months  from               the date of payment and may, without prejudice               to any other remedy for recovery, be  deducted               by such tenant from any rent payable by him to               such landlord."

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The section gives ’the tenant a general right of recovery of the  overpaid  rent  within  six months  from  the  date  of payment.   Without prejudice to any other mode of  recovery, he  may deduct the overpayment from any rent payable by  him to the landlord.  Deduction is one mode of recovery.  If the amount  is  incapable  of recovery because  of  the  bar  of limitation,  it cannot be recovered by deduction.  In  other words,  the right of recovery by deduction is barred at  the same  time as the right of recovery by suit.  If the  tenant seeks recovery of the overpaid amount he must bring the suit or make the deduction within six months. In  Karamesy  Kanji  v. Velji  Virji(1)  the  learned  Chief Justice  of  the  Bombay High Court  repelled  the  tenant’s contention   that  for  deduction  of  rent  no  period   of limitation was provided by sec. 20.  He observed               "It  seems to me clear on a plain and  natural               construction of the section itself ’that if  a               tenant  could  not recover any  excess  amount               paid by him beyond six months from the date of               payment    and   if   such   amounts    became               irrecoverable,  it is difficult to  understand               how  a tenant could deduct what he  could  not               recover  and  what was irrecoverable  in  law.               The  same view of the law has been taken in  a               parallel  piece of legislation in  England  in               Bayley v. Walker(1).  I see no reason to  take               a  view  different  from  that  taken  by  the               appellate  court that ’the interpretation  put               by the English Court on a similar provision of               law is the correct interpretation." In Bayley v. Walker(2) the tenant on discovering that he had overpaid  considerable sums in excess of the  standard  rent stopped pay- (1) 56 Bom.L.R. 619,626. (2) [1925] 1 K.B. 447. 63 ment  of rent retaining the amounts as they fell due by  way of  deduction under the provisions of s. 14, sub-sec. 1,  of the  Increase  of Rent and Mortgage  Interest  (Restriction) Act, 1920.  He continued to deduct his rent after expiry  of the period of limitation prescribed by see. 8, sub-sec. 2 of the Rent and Mortgage Interest Restrictions Act, 1923.   The landlord  contended  that  the tenant had  no  right  to  so continue  to  deduct and that consequently his rent  was  in arrear and on that ground brought an action for  possession. The question was whether the rent was in arrear or not.  The matter  turned  on the construction of s. 14 of the  Act  of 1920,  and  see.  8 of the Act of 1923.   Section  14,  sub- section  1  gave the tenant a general right of  recovery  of overpaid  rent  and  the amount  recoverable  might  without prejudice  to any other mode of recovery be deducted by  the tenant  from any rent payable by him.  Section 8 sub-sec.  2 provided  that any sum which under sub-sec. 1 of sec. 14  of the   principal  Act  (of  1920)  is  recoverable   by   the tenant......  shall  be recoverable at any time  within  six months  from the date of payment, but not afterwards  or  in the  case of a payment made before the passing of this  Act, at  any time within six months from the passing of this  Act but  not  afterwards." Salter, J. held that  the  period  of limitation  prescribed by sec. 8 of the Act of 1923  applied to recovery by deduction as well as recovery by action.   As the,,  amount was incapable of recovery by action, it  could not  be recovered by deduction.  The rent was  therefore  in arrear  and the landlord was entitled to recover  possession on  that  ground.   In  Sohrab  Tavaria  v.  Jafferali(1)  a

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Division  Bench of the Bombay High Court approved  of  these decisions. Now  the  right of recovery of the excess rent  paid  before August 4, 1954 became barred on and after February 4,  1955. Within that period the defendant took no steps for  recovery of  the amount by filing a suit or making a  deduction.   As the  claim  for recovery of the amount became  barred  after February 4, 1955, he could not thereafter deduct it from the rent falling due.  As a matter of fact, he did not deduct it from  rent at any time.  Instead of making any deduction  he filed a suit for its recovery.  The overpayments cannot  now be  deducted from or adjusted against the rent  falling  due since  August  4,  1954.  It follows that the  rent  was  in arrear. In  these  circumstances,  the  defendant  could  not  claim protection of s. 12(1) of the Rent Act.  During the pendency of  the suit he did not pay the standard rent due  from  him from  August 4, 1954 nor was he ready or willing to pay  it. Instead of showing his readiness and willingness to pay  the rent  due  he  claimed that he  was not liable  to  pay  any amount at all. (1)  58 Bom. L.R. 680,687-88. 64 Likewise he could not claim the protection under sec.  12(3) (b).   Before the first hearing of the suit on December  26, 1957  or any other date fixed by the trial court he did  not pay or tender in court the standard rent then due from  him. Nor  did he thereafter continue to pay or deposit  in  court such  rent  till the suit was finally decided.   It  follows that  the  defendant cannot claim protection  from  eviction under  the  Rent  Act.  The  High  Court  therefore  rightly decreed the suit for eviction. In  the  result, the appeal is dismissed.   We  direct  that execution of the decree for eviction be stayed for a  period of  one  year from today.  In all the circumstances  of  the case, we make no order as to costs. V.P.S.                      Appeal dismissed. 65