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PETITIONER: PARADISE INDUSTRIAL CORPN BOMBAY

       Vs.

RESPONDENT: KILN PLASTICS PRODUCTS

DATE OF JUDGMENT29/09/1975

BENCH: ALAGIRISWAMI, A. BENCH: ALAGIRISWAMI, A. GOSWAMI, P.K. UNTWALIA, N.L.

CITATION:  1976 AIR  309            1976 SCR  (2)  32  1976 SCC  (1)  91  CITATOR INFO :  RF         1989 SC 162  (8,12)

ACT:      Bombay Rents,  Hotel and  Lodging House  Rates  Control Act, 1947  Section 11(4)  Failure of  defendants to  deposit arrears of  rent  after  fixation  of  fair  rent-Court.  if competent to  make order  that  defences  of  defendants  be struck on failure to deposit arrears of rent.

HEADNOTE:      The appellants  plaintiffs filed  a  suit  against  the defendants respondents  for recovery  of possession  of  the property leased  to them  as also  rent and mesne profits in March, 1968.  It was  alleged that  the defendants  were  in arrears of  rent from  1st March, 1966 and that the rent was Rs. 385/-  a month.  On 30th January, 1968, a notice to quit was given to the defendants and the notice was served on 1st February,  1968.  On  20th  February,  1968  they  filed  an application under  s.11  of  the  Bombay  Rents,  Hotel  and Lodging  House  Rates  Control  Act  1947  for  fixation  of standard rent.  It was thereafter that the suit was filed in March, 1968. On 23rd November. 1968, the suit came up before a Judge  of the  Small Causes  Court and  after hearing  the parties he made an order requiring the defendants to deposit Rs. 13,000/-  as rent due up to the end of December 1968 and interim standard  rent of  Rs. 308/-  per month  to be  paid beginning from,  February 15,  1969. It  was further ordered that in  default of the defendants depositing the amount the plaintiffs were  at  liberty  to  follow  the  consequential remedy under  s.11 (4)  of the  Act. The  defendants did not deposit the amount ordered by the Court and on 24th February 1969 the  plaintiffs applied  to the  Court  praying  for  a notice to be issued to the defendants to show cause why they should not deposit the aggregate amount of’ rent and further rent of  Rs. 385/-  per month from 1st August, 1969 till the disposal of  the suit.  There was  a further  prayer that in default of  the deposit  of the  amount the  defences of the defendants may  be ordered  to  be  struck  off.  Upon  this application a notice was issued to the defendants and on 2nd June, 1969,  an order  was made  requiring the defendants to deposit Rs.  14,007/- within  one month  and to  continue to

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deposit Rs.  385/- per  month in accordance with the earlier order. It was further ordered that in default of the deposit the defences  of the  defendants there  to be  struck of and that the  suit should  be placed for ex parte orders on 15th July 1969.  The defendants  were absent. On that day and the suit was  adjourned to  5th August,  1969. On the 5th August the suit  was again  adjourned to 6th and on that day an ex- parte decree  for possession, recovery of arears of rent and costs was  passed. However,  on the 5th August he defendants had made  an application  stating that on proper calculation the amount  of arrears  of rent would come to Rs. 7065/- and praying for  extension of  time for  deposit of this amount. The defendants  were allowed  to deposit  the amount without prejudice to  the rights  and contentions of the partied and notice was  ordered to  be issued  to  the  plaintiffs.  The defendants deposited  the amount  but did  not take  out and serve the  notice on  the  plaintiffs  and  the  notice  was ultimately  discharged  for  want  of  prosecution  on  19th September, 1969.  An appeal filed before the Appellate Bench of the  Small Causes Court against the exparte decree and it was dismissed.  The High Court on an application made by the defendants under  Art. 227 of the Constitution set aside the decree passed  by the Small Causes Court on 6th August, 1969 as also  the decree  passed by  the Appellate Bench and also dismissed the suit.      The High  Court held that the order passed by the Small Causes Court  on  June  2,  1969  was  illegal  and  without jurisdiction and  every step  that was  taken by  the  Court subsequently was  without jurisdiction  and, therefore,  was illegal. The  High Court further held that as the defendants had deposited 33 all  mounts as ordered by the Court previous to the order of June 2, 1969 and also deposited the monthly rent at the rate of Rs.  308/- per  month the  matter  would  fall  under  s. 12(3)(b) and the suit should be dismissed.      Allowing the appeal by special leave, ^      HELD:(1) The  Judge of. the Small Causes used the words "defences to  be struck  off" and  did not use the words the shall not be entitled to appear in or defend the suit except with the  leave of  the Court,  which leave  may be  granted subject to  such terms  and  conditions  as  the  Court  may specify" The  words  "striking  out  the  defence  are  very commonly used by lawyers The use of the words defence struck off does  not in  any way  affect the substance of the order and the  High Court  was wholly  in error  in  holding  that because of  the form  of the order passed on June 2 1969 the order  was  illegal  and  without  jurisdiction.  The  order squarely falls  within s.11(4)  What the law contemplates is not adoption or use of a formula. it looks at the substance. It is  not possible  to bring the case within the provisions of s. 12(3)(b) of he Act. [35 EF. 36 BC, H].

JUDGMENT:      CIVIL APPELLATE  JURISDICTION : Civil Appeal No. 411 of 1973.      Appeal by  special leave  from the  Judgment and decree dated the  August 1972  of the  High Court  of Judicature at Bombay in Special Civil Application No. 2778 of 1969.      F. S. Nariman and B. R. Agarwala for the Appellant.      Mrs. Urmila  Kapoor and Miss Kamlesh, for Respondents 1 and

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    The Judgment of the Court was delivered by      ALAGIRISWAMI, J. This is an appeal against the judgment of the  High Court of Bombay in an application under article 227 of  the Constitution  by which it not only set aside the ex-parte decrees passed by the Court of Small Causes, Bombay in a  suit for  eviction and  rent but  dismissed  the  suit itself. The facts are as Follows:      The appellants-plaintiffs  filed  a  suit  against  the defendants-respondents for  recovery of  possession  of  the property leased  to them  as also  rent and mesne profits in March 1968.  It was  alleged  that  the  defendant  were  in arrears of  rent from  1st March  1966 and that the rent was Rs. 385/- a month. On 30th January 1968 a notice to quit was given to  the defendants  and the  notice was  served on 1st February  1968.   On  20th   February  1968  they  filed  an application under  s.11  of  the  Bombay  Rents,  Hotel  and Lodging House  Rates  Control  Act,  1947  for  fixation  of standard rent.  It was thereafter that the suit was filed in March 1965.  On 23rd November 1968 the suit came up before a Judge of  the Small  Causes  Court  and  after  hearing  the parties he made an order requiring the defendants to deposit Rs. 13,090/-  as rent due up to the end of December 1968 and interim standard  rent of  Rs.  308/per  month  to  be  paid beginning from  February 15,  1969. It  was further  ordered that in  default of the defendants depositing the amount the plaintiffs were  at  liberty  to  follow  the  consequential remedy under  s.11(4) of  the Act.  The  defendant  did  not deposit the amount ordered by the Court and on 24th February 1969 the  plaintiffs applied  to the  Court  praying  for  a notice to be issued to the defendants to show cause why they should not deposit the aggregate amount of rent and further 34 rent of  Rs. 385/-  per month  from 1st August 1969 till the disposal of  the suit.  There was  a further  prayer that in default of  the deposit  of the  amount the  defences of the defendants may  be ordered  to  be  struck  off.  Upon  this application a notice was issued to the defendants and on 2nd June 1969  an order  was made  requiring the  defendants  to deposit Rs.  14,607/- within  one month  and to  continue to deposit Rs.  308/- per  month in accordance with the earlier order. It was further ordered that in default of the deposit the defences  of the  defendants were  to be  struck off and that the  suit should  be placed for ex-parte orders on 15th July, 1969. the defendants failed to deposit arrears of rent and the  suit came  up for  orders on  15th July  1969.  The defendants  were  absent  on  that  day  and  the  suit  was adjourned to 5th August 1969. On the 5th August the suit was again adjourned  to 6th  and on  that day an ex-parte decree for possession,  recovery of  arrears of  rent and costs was passed. However,  on the  4th August the defendants had made an application stating that on proper calculation the amount of arrears  of rent would come to Rs. 7065/- and praying for extension of time for deposit of this amount. The defendants were allowed  to deposit the amount without prejudice to the rights and contentions of the parties and notice was ordered to be  issued to the plaintiffs The defendants deposited the amount but  did not  take out  and serve  the notice  on the plaintiffs and the notice was ultimately discharged for want of prosecution  on 19th September, 1969. An appeal was filed before the Appellate Bench of the Small Causes Court against the ex-parte  decree and it was dismissed. On an application filed before the High Court a learned single Judge set aside the decree  passed by  the Small  Causes Court on 6th August 1969 as  also . the decree passed by the Appellate Bench and also dismissed the suit.

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    As far  as we  are able  to see  the only  reason which persuaded the  learned Judge  to come  to this extraordinary conclusion was  that under s.11(4) of the Act the only order that could  be passed  was an  order directing, after fixing the  interim   standard  rent   to  be  deposited  within  a particular time,  ’that if  the tenant  fails to comply with any order  made as  aforesaid, within  such time  as may  be allowed by  it, he  shall not  be entitled  to appear  in or defend the  suit except with leave of the Court, which leave may be  granted subject  to such terms and conditions as the Court may  specify’, and  the section  did not authorise the Court to  strike of  the Defences  straightway. The  learned Judge found  it difficult  to understand how the Court could pass an order on June 2, 1969 as follows:      "The defendant  No. 2  to deposit the balance amount of      Rs. 14,607/-  in Court  within a  month and continue to      deposit  Rs.308  per  month  as  per  order  passed  by      scrutiny Court  in default Notice absolute and defences      to be struck off and suit b fixed for ex parte hearing,      on 15th  July 1969.  Defendant No.  2 to pay Rs 30/- to      the plaintiffs." He therefore  thought the  order passed by the Court on June 2, 1969  was illegal and without jurisdiction and every step that was  taken by the Court subsequently must be considered to by without jurisdiction 35 and illegal.  However, considering  the question  as to what was the  proper order  to be  passed in  the  petition,  the learned Judge  thought as  the  defendants  had,  admittedly deposited by  then all  amounts  as  ordered  by  the  Court previous to the order of June 2, 1969 and also deposited the monthly rent  at the  rate of Rs. 308/- per month the matter would  fall   under  s.12(3)(h)   and  the  suit  should  be dismissed.      We may  in order  to facilitate  the discussion set out the provisions of s. 11(4) of the Act:      "(4) Where at any stage or a suit for recovery of rent,      whether with  or without  a claim for possession of the      premises, the  Court is  satisfied that  the tenant  is      withholding the  rent on  the ground  that the  rent is      excessive and  standard rent should be fixed, the Court      shall, and in any other case if it appears to the Court      that it  is just  and proper  to make such an order the      Court may,  make  an  order  directing  the  tenant  to      deposit in  Court forthwith  such amount of the rent as      the Court  considers to  be reasonably  due to the land      lord, or at the option of the tenant an order directing      him to  pay to  the landlord such amount thereof as the      Court may  specify. The Court may further make an order      directing the  tenant to deposit in Court periodically,      such amount  as it considers proper as interim standard      rent, or at the option of the tenant an order to pay to      the landlord  such amount  thereof  as  the  Court  may      specify, during the pendency of the suit. The Court may      also direct that if the tenant fails to comply with any      order made  as aforesaid,  within such  time as  may be      allowed by it, he shall not be entitled to appear in or      defend the  suit except  with leave of the Court, which      leave  may   be  granted  subject  to  such  terms  and      conditions as the Court may specify." The learned  Judge of  the Small Causes Court used the words "defences to  be struck  of and  did not  use the  words "he shall not be entitled to appear in or defend the suit except with leave  of the Court, which leave may be granted subject to such  terms and  conditions as the Court may specify". We

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are afraid  the learned  Judge of  the High Court has missed the substance and chased the shadow. The words "sticking out the defence"  are very  commonly used by lawyers. Indeed the application made on 24th February 1969 by the plaintiffs was for a  direction. to order the defences of the defendants to be struck  off in  default of  the non-payment of the amount ordered by  the Court.  The phrase  "defence struck  off" or "defence struck  but" is  not unknown  in the  sphere of law Indeed it  finds a place in order XI, rule 21 of the Code of Civil Procedure:           "21. Where  any party  fails to  comply  with  any      order to  answer interrogatories,  or for  discovery of      inspection of  documents, he  shall, if a plaintiff, be      liable  to   have  his   suit  dismissed  for  want  of      prosecution, and,  if a defendant, to have his defence,      if any,  struck out,  and to  be  placed  in  the  same      position as  if he  had not  defended,  and  the  party      interrogating or  seeking discovery  or inspection  may      apply to the Court for an. Order to that effect, and an      order may be made accordingly." 36 In effect,  both mean  the same  thing.  Nobody  could  have misunderstood what  was meant. Indeed, one may even say that the phrase  ‘’the defence  to be struck off" or "struck out" is  more   advantageous  from  the  point  of  view  of  the defendents. Even  when a defence is struck off the defendant is  entitled   to  appear,   cross-examine  the  plaintiff’s witnesses and  submit that even on the basis of the evidence on behalf of the plaintiff a decree cannot be passed against him, whereas  if it  is ordered in accordance with s. 11 (4) that he  shall not  be entitled  to appear  in or defend the suit except  with the  leave of  the Court he is placed at a greater disadvantage.  The use  of the words ’defence struck off’ does  not in  any way affect the substance of the order and the  learned Judge of the High Court was wholly in error in holding  that because  of the form of the order passed on June 2, 1960 the order was illegal and without jurisdiction. The order  squarely falls  within s.  11(4).  What  the  law contemplates is not adoption or use of a formula it looks at the substance.  The  order  is  not  therefore  one  without jurisdiction. It  is one  which the  Judge was  competent to make. Be  it noted that the learned Judge does not hold that the amount  ordered to  deposited by  the defendants  by the order dated June 2, 1969 was wrong or that it could not have been ordered  at all.  That order  also  fired  the  interim standard rent  as contemplated by that section. That section itself con templates that the Court may order the deposit of such amount  of the  rent  as  the  Court  considers  to  be reasonably due  to the  landlord. Therefore, the order dated June 2,  1969 could  not be held to be invalid on any ground whatsoever; nor  has it  been held  to be illegal any ground other than  that the words used were not the proper ones. It is to  be further  noted that the order itself did not order the defenes  be struck off, it only fixed the 15th July 1969 as the  date for  striking out  the defences  and to fix the suit for  ex-part hearing.  So, till  the expiry  of a month given by that order for the deposit of money the question of striking out  the defence  did not  arise nor was it in fact struck out.  On the date fixed for striking out defences and fixing the date, for ex-parte hearing the defendants did not appear nor did they appear on the 5th and 6th of August when the suit  was fixed for hearing. ’Though they were permitted to deposit Rs. 7,000/- on their application dated 4th August 1969 they  did not  take any further steps and so the notice was dismissed.  The deposit of Rs. 7,000/- does not make any

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difference to  the decision  in this  case  because  it  was allowed to  be deposited without prejudice to the rights and contentions of  the parties.  The defendants  did  not  even apply for  setting aside  the ex-parte  decree giving proper reasons for  their non-appearance on the 5th and 6th August. They  went  on  appeal  against  the  ex-parte  decree.  The Appellate Bench  of   the  Small  Causes  Court  could  have decided the  appeal only on the basis of the material before it and the learned Judge of the High Court did not rely upon any material whatsoever except the form of the order made on the 2nd  June 1969  for not  merely setting aside the decree but even  dismissing the  suit itself.  The deposit  of  the money after  the  ex-parte  decree  was  passed  was  wholly irrelevant in considering whether the ex-parte decree passed was a  proper one  and much  more so whether the suit itself could be dismissed.      We are unable to understand how the learned Judge found it possible  to bring  the case  within the provisions of s. 12(3) of the 37 Act. The  tenants did  not pay  either on the 1st day of the hearing of   the  suit or  on or  before the  date the Court fixed. Indeed  on proper  construction of law it is s. 11(4) that will  apply. Section 12(3)(b) does not deal with a case like the present.      The appeal  is, therefore, allowed. The judgment of the High Court is set aside and the decree of the Court of Small Causes dated  August 6, 1969 as well as the appellate decree passed by  the Court  of  small  Causes  are  restored.  The respondents will pay the appellants’ costs. V.M.K                                        Appeal allowed. 38