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CASE NO.: Appeal (civil)  5658-5659 of 1998

PETITIONER: Ramji Purshottam (D) by Lrs. & Ors.

RESPONDENT: Laxmanbhai D, Kurlawala (D) by Lrs. & Anr.

DATE OF JUDGMENT: 23/04/2004

BENCH: R.C. LAHOTI & ASHOK BHAN.

JUDGMENT: J U D G M E N T  

R.C. Lahoti, J.

       The suit premises are part of the property known as Eaglewadi,  situated at New Mill Road, Kurla, Mumbai.  It is a Chawl consisting of  several rooms which are single-storeyed and numbered.  Ramji  Purshottam and Jagjivan Ram Purshottam, the two appellants before  us, both of whom have expired during the pendency of the  proceedings and are represented by their heirs, are brothers and in  occupation of two rooms ___ Room No. 12 and Room No.13  respectively ___ in the Chawl.  For the sake of convenience, we refer  the two tenants before us as ’tenants’ and the respondents as  ’landlords’ who are undisputedly the owner-landlords of the Chawl.   The facts are common and lie in a narrow compass to the extent they  are relevant for the purpose of highlighting the issues surviving for  decision in these appeals.   

       The monthly rent of the tenants-appellants is Rs.6.37 paise  each.  They were in arrears of rent in respect of their respective  premises for the period 1.6.1969 to 31.1.1970.  They were served with  demand-cum-quit notices dated 20th February, 1970.  The mode of  service was personal on the tenants as also by sending copies thereof  under certificate of posting.  In spite of the service of notice they did  not pay or tender the rent in arrears.  The service of notices in person  had taken place on 20.2.1970 itself.   Notices under certificate of  posting were sent on 6.3.1970 and were delivered.  As the two tenants  failed to respond to the notices, proceedings for eviction were initiated  against the  appellants under Section 12 of the Bombay Rents Hotel  and Lodging House Control Act, 1947, hereinafter the Act, for short.   The tenants did not also pay or tender the rent in the court on the first  day of hearing of the suit as required by Section 12(3)(b) of the Act.   In the written statement filed by the tenants they disputed the receipt  of any notice and also raised a dispute about water charges payable in  respect of the premises.   

       On trial, the learned Judge of the Court of Small Causes vide the  judgment dated 31.8.1983 directed the tenants to deliver vacant  possession of the suit premises to the landlord-respondents after two  months from the date of the decree.   The material findings of fact  arrived at by the Trial Court are : (i) that the tenants were duly served  with the demand-cum-quit notice; (ii) that the tenants were in arrears  of the rent for more than six months and they neither paid the rent  nor raised a dispute as to the standard rent within the statutory period  of one month from the receipt of the notice by them; and (iii) that  they were liable to be evicted from the suit premises under Section  12(3)(a) of the Act. These findings have been upheld in appeal and  also by the High Court where the judgments of the courts below were  sought to be impugned in exercise of writ jurisdiction of the High

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Court.  The first two findings are pure of facts and they have achieved  a finality.  It may be stated that before this Court also in these appeals  the learned counsel for the appellants has in all fairness not laid  challenge to the said findings of fact.  The only issue arising for  decision is as to the liability of the appellants to be evicted from the  suit premises, in the light of the law as amended during the pendency  of the proceedings as will be noticed shortly hereinafter.

       The two appellants were also alleged to have committed acts of  waste and carried out permanent additions and alterations in the suit  premises and, their eviction was claimed on those grounds also. The  Trial Court has rendered a finding of ’not proved’ on this issue and the  landlord-respondents have not pursued that plea further.

       Now, the facts relevant to the controversy which has emerged  for decision before this Court.

       Section 12 of the Act under which the proceedings for eviction  were initiated in the year 1970 and as it stood at that time reads as  under___         "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 permitted  increases, if any, and observes and perform the  other conditions of the tenancy, in so far as they  are consistent with the provisions of this Act.

       (2)  No suit for recovery of possession shall  be instituted by a landlord against 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 shall 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 such 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 continues 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.

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       Explanation I. ___ 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.

       Explanation II. ___ For the purposes of sub- section (2), reference to ’standard rent’ and to  ’permitted increase’ shall include reference to  ’interim standard rent’ and ’interim permitted  increase’ specified under sub-section (3) or (4) of  section 11."

       The Bombay Municipal Corporation and Bombay Rent Hotel and  Lodging House Rates Control (Amendment) Act, 1975 (Maharashtra  Act LI of 1975) was assented to by the President of India on the 17th  October, 1975.  The assent was published in Maharashtra Government  Gazette dated October 30, 1975.  Vide Notification No. BMC  1074/65962-MC-1 published in Maharashtra Government Gazette  dated November 13, 1975, the Amendment Act came into force on  first day of November, 1975.  Sections 10 and 21 which are relevant  for our purpose are extracted and reproduced hereunder :    "10.  After section 173BB of the principal  Act*, the following section shall be  inserted, namely:-

"173C. If, under the terms of  the tenancy, the rent for any  premises is inclusive of water taxes  or water charges for supply of water  by measurement and the person in  actual occupation of the premises  has, on behalf of the owner thereof,  paid to the Commissioner any water  taxes or water charges in respect of  the premises, such person shall be  entitled to recover from the owner  the amount so paid and may deduct  the amount from the rent which  from time to time becomes due to  the owner."

[*Principal Act means the Bombay Municipal Corporation Act]

   21. In section 12 of the Bombay Rents,  Hotel and Lodging House Rates Control Act,  1947 (hereinafter referred to as "the  Bombay Rent Control Act"), at the end,  after Explanation II, the following  Explanation shall be added, namely:-          "Explanation III. \026 For the  purposes of this section, where a  tenant has deducted any amount  from the rent due to the landlord  under section 173C of the Bombay  Municipal Corporation Act for  recovery of any water tax or charges  paid by him to the Commissioner,  the tenant shall be deemed to have

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paid the rent to the extent of  deductions so made by him".

       It is not disputed that the Chawl has a water tap installed within  its precincts through which the water supply by the Bombay Municipal  Corporation is made available to the tenants.  The tenants do not pay  any water charges other than the rent to the landlords.  In other  words, the facility for use of water is available to the tenants by virtue  of tenancy and the charges for supply of water are included in the  rent.  The water taxes or water charges for supply of water by the  Municipal Corporation are payable by the landlords to the Municipal  Corporation.  With effect from coming into force of the Amendment Act  a statutory right was conferred on the tenants whereunder the tenants  could pay water taxes or water charges to the Municipal Corporation  and the tenants became entitled to recover the amount of charges so  paid from the owner or to deduct from the rent  or, in the alternative,  to the extent of the amount so paid by the tenant to the landlord the  same was deemed to be the payment of rent by the tenant to the  landlord.

       The tenants residing in the Chawl had formed a Tenants’  Association led by Raghubir Singh Thakur, one of the tenants who was  also sought to be evicted by filing a suit against him and who  contested the landlords’ case upto the stage of appeal.  Thereafter, he  has given up the contest and vacated the room in his occupation. It  seems that the Tenants’ Association had paid the amount of water  charges.  The exact details of payment are not clearly available from  the records.  However, during the course of hearing before this Court  an affidavit sworn in by Vilas Prajapati S/o Late Ramji Puroshttam  Dass has been filed containing the details of payments made by the  Tenants’ Association, consisting of 26 tenants as members, to the  Bombay Municipal Corporation which are set out as under :

In September 1969                       Rs.   608.00 On 15.11.71                             Rs.1,060.00 On 30.6.75                              Rs.4,297.77 On 30.6.75                              Rs.  304.41 On 30.6.75                              Rs.2,542.40                                         -------------                                         Rs.8,813.16                                         -------------

       When the litigation was initiated in the Trial Court in the year  1970 the plea of adjustment was not available to the tenants which  became available to be raised for the first time under Amendment Act  No. LI of 1975 on its coming into force on 1.11.1975.  Accordingly, the  plea was not raised in the written-statement. However, the Tenants’  Association had filed suits for recovery of the water charges paid by  them to the Municipal Corporation and the suits were decreed against  the landlords.  The landlords did not dispute the right of the Tenants’  Association to have the water charges paid by them to the Municipal  Corporation being adjusted against the rent due and payable to them  and they have willingly allowed such adjustment.  The plea of  adjustment in the light of the provisions introduced by Act No. LI of  1975 was pressed before the Appellate Court by bringing to its notice  the decrees passed in the summary suits filed by the Tenants’  Association against the landlords and the same was dealt with and  disposed of by the Appellate Court in the following manner :

       "They (tenants) filed summary suit against  the respondents to recover the water  charges which were paid by them for and on  behalf of the landlords.  That suit was

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compromised and water charges were  adjusted in the rental amount that was due  and payable by the appellants to the  respondents for the year 1969.  It will thus  be seen that the payment of water charges  and the recovery thereof would be a matter  which would have no bearing on the demand  of arrears of rent by the respondents on the  appellants.  In any case the appellants have  been recovering these water charges by  instituting appropriate proceedings against  the respondents. Besides the respondents  have been making suitable adjustments  towards water charges from time to time in  consultation with the tenants’ association in  this property. That being the position there  was absolutely no justification for the  appellants’ for withholding the payment of  arrears of rent which were justly due to the  respondents.  If there was any dispute about  the water charges the appellants ought to  have paid those charges and thereafter  deducted that amount from the arrears  demanded vide the impugned notice.  No  steps in that regard were taken by the  appellants but instead payment of arrears of  rent was un-necessarily withheld."

       The learned counsel for the tenant-appellants submitted that the  benefit of the amended provisions of  law which were brought in force  and became available for the benefit of the tenants during the  pendency of the cases before the Trial Court should not have been  denied to the tenants.  And, if only the payments made by the  Tenants’ Association to the Municipal Corporation and available in  remission of rent (by way of adjustment) would have been taken into  account by the Trial Court, then the appellants would not have been  held defaulters and there would have been no occasion to pass the  decree of eviction.  On the other hand, the learned counsel for the  landlord-respondents submitted that the substantive rights of the  parties would stand crystallized on the date of institution of the suits  and once the tenants were proved to be defaulters on the date of the  suit, they had incurred liability for eviction and that right having  accrued to the landlord-respondents could not have been taken away  by Amending Act No. LI of 1975; more so when the amendment has  not been given a retrospective operation.  From the submissions so  made, two questions arise for consideration: firstly, whether the  amendments introduced by Act No. LI of 1975 are applicable to the  pending eviction proceedings; and if yes, then secondly, whether the  appellants can be held to be defaulters in the light of the payment of  water charges made by them on behalf of landlords to Municipal  Corporation.

       Whether Act No. LI of 1975 insofar as it amends Section 12 of  Act No.57 of 1947 can be said to be retrospective in operation is the  first question.  A perusal of Section 12 shows that sub-Section (1)  speaks of the landlord’s entitlement to the recovery of possession of  premises from the tenant.  Sub-Section (2) speaks of the institution of  suit.  The fulfillment of conditions prescribed by sub-Section (2) is a  condition precedent to enable a landlord to institute a suit for recovery  of possession. On the date of passing of the decree for recovery of  possession the Court shall have to record findings by reference to  Section 3(a) of the Act that the tenant has been  in arrears for a  period of six months prior to the institution of the suit, that a period of

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one month has expired from the date of the service of notice in writing  demanding the rent in arrears from the tenant and that the tenant  neglected to make payment of such arrears for the abovesaid period of  one month.  It has always open for the tenant to show that though he  was alleged to be in arrears but that was not so. On the date of the  institution of the suit the tenant did not have a right to claim  adjustment of the amount of water charges paid by him against the  amount of rent in arrears.  However, he could have paid such water  charges to protect himself against discontinuance of water supply, an  essential service.  Section 21 of Act No.LI of 1975 introduced  Explanation III in Section 12 of Act No.57 of 1957 which is declaratory  in nature and creates a fiction for holding the tenant deemed to have  paid the rent to the extent of payment of water charges and creating a  statutory right in the tenant to make adjustment of the amount of  water charges paid to the Municipal Corporation from out of the  amount of rent due by him to the landlord.  So long as the amount of  water charges paid by the tenant has not been actually returned or  reimbursed by the landlord to the tenant, the tenant would be justified  in treating the amount of water charges paid by him to the Municipal  Corporation as the amount  of rent paid by him to the landlord.  In  other words, to the extent of water charges paid by tenant he cannot  be deemed to be in arrears  outstanding against him.   

       Strictly speaking, in the present case, the application of the  amendment brought in by the statute to the pending proceedings does  not have the effect of retrospectivity.  The rent is alleged to have  fallen in arrears for the period 1.6.1969 to 31.1.1970.  Some payment  of water charges is said to have been made referrable to the same  period.  Thus, both the events are referrable to a period anterior to the  coming into force of Act No. LI of 1975.  The law coming into force  during the pendency of the proceedings  is being applied on the date  of judgment to the pre-existing facts for the purpose of giving benefit  to the tenant in the pending proceedings.  This is  not retro-activity.  

       Justice G.P. Singh states in Principles of Statutory Interpretation  (Ninth Edition, 2004, at page 462) ___ "the fact that a prospective  benefit under a statutory  provision is in certain cases to be measured  by or depends on antecedent facts does not necessarily make the  provision retrospective.  The rule against retrospective construction is  not always applicable to a statute merely because a part of the  requisites for its action is drawn from time antecedent to its passing."   In Shah Bhojraj Kuverji Oil Mills and Ginning Factory Vs.  Subhash Chandra Yograj Sinha \026 AIR 1961 SC 1596 the  Constitution Bench held that the Bombay Act No.57 of 1947 is a piece  of legislation passed to protect the tenants against the evil of eviction.   And the benefit of the provisions of the Act ought to be extended to  the tenants against whom the proceedings are pending on the date of  coming into force of the legislation.

       In the present appeal, once the provisions of Act No. LI of 1975  became applicable the tenants became entitled to take benefit of the  amended provisions.  However, it shall have to be borne in mind that  the cause of action on which the landlord’s action was founded was  referable to the period from 1.7.1969 to 31.1.1970 for which the  tenants were alleged to be in arrears.  The tenants could  have shown,  and the Court could have entered into the question, if the tenants had  made any such payment on account of water charges as would have  exonerated them of their liability to make the payment of the rent  claimed in the plaint as arrears by claiming adjustment so as to hold  that on the date of the institution  of the suit they were not in arrears  for a period of six months or more and that such arrears did not  continue to remain so for the period of one month after the date of  service of the notice.

       The position of law stands clarified as above.  However, still the

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question remains how the law has to be applied to the facts and that  cannot be done without ascertaining the precise facts.  It appears that  the tenant-appellants before us have not themselves paid any water  charges due and payable by those two alone to the Municipal  Corporation.  It also appears that all the tenants contributed towards  the payment of water charges which were collected by the Tenants’  Association and  then paid.  Of course they would be entitled to  adjustment proportionate with their share in the contribution. Answers  to a few questions are not clear: (i) what was the exact amount of  water charges paid, (ii) when, (iii) to which period they are relatable,  and (iv) what was the exact or deemed share of the tenant-appellants  before us in the contribution.  These are the questions purely of fact  for the determination whereof the cases shall have to be remanded to  the Court of facts.

       The appeals are allowed.  The judgments and decrees of the  Appellate Court as upheld by the High Court are set aside.  The cases  of the two tenants, i.e. Ramji Purshottam and Jagjivan Ram  Purshottam (both now represented by their legal representatives) shall  stand restored on the file of the Appellate Court.  The Appellate Court  shall, on the basis of the material available on record and by eliciting  such further relevant facts as it may deem necessary, proceed to hear  and decide the cases afresh consistently with the law as explained  hereinabove.  The Appellate Court would examine, after ascertaining  the relevant facts with particulars as to payment of water charges and  giving effect to the provisions as amended by Act No. LI of 1975  whether a ground for eviction under Section 12(2) was available to  landlords on the date of the suits.  If so, decree for eviction shall  follow.  If not, the suits shall stand dismissed.  So also, if the tenants  had collected the amount of water charges paid by them in cash from  the landlord, the question of adjustment would not arise.  

       The costs shall abide the result.

       The parties through their respective counsel are directed to  appear before the Trial Court on 21st June, 2004.  The records received  here shall be returned forthwith.