20 November 1964
Supreme Court


Case number: Appeal (civil) 851 of 1964






DATE OF JUDGMENT: 20/11/1964


CITATION:  1965 AIR 1144

ACT: Bombay  Rents, Hotel and Lodging House Rates (Control)  Act, 1947 Rules made under the Act-Rule 8-Whether ultra vires. Code  of  Civil Procedure (Act 5 of 1908),  s.  151-Inherent powers, exercise of.

HEADNOTE: The  appellant  firm  was  the  tenant  and  the  respondent landlord of a flat in Bombay.  The parties were governed  by the  Bombay Rents, Hotel and Lodging House Rates  (Control-) Act, 1947.  Rule 8 under the Act made the procedure in 0. 37 of  the  Civil  Procedure  Code  applicable  to  suits   for Possession   by  the  landlord  against  the  tenant.    The respondent  filed a suit for the ejectment of the  appellant from the suit premises under the procedure prescribed in  r. 2 of 0. 37, as amended by the Bombay High Court.  Under that procedure  the  trial court gave leave to the  appellant  to defend  the  suit on condition that he paid the  arrears  of rent  in fixed insalments.  On the failure of the  appellant to  pay  these the trial court passed a decree  against  him without  giving him leave to defend.  His application  under r. 4 of 0. 37 for setting aside the decree was rejected, for the  special  circumstances required by that  rule  were  he held not to exist.  In appeal, a bench of the Court of Small Causes  set  aside the decree holding that the  trial  court should have considered the use of its inherent powers  under s.  151 of the Code.  On appeal by  the  respondent-landlord the  High Court held that s. 151 was not applicable  to  the case.   The appellant came to the Supreme Court  by  special leave. Apart  from  the applicability of s. 151 of  the  Code,  the contention  of the appellant was that r. 8 which made 0.  37 applicable to suits under the Rents Act was ultra vires  the reason  being that under the provisions of the Rent Act  the court  had to consider the position of the tenant and had  a discretion to pass or not to pass a decree, whereas under r. 2 of 0.37  once  the tenant defaulted the  Court  had  no course open except to pass a decree against him. HELD : (i) Inherent powers are to be exercised by the  Court in  very exceptional circumstances for which the  Code  lays down no special procedure.  Rule 4 of 0. 37 expressly  gives power to a court to set aside a decree under the  provisions



of  that  Order.  Hence if a case does not come  within  the provisions  of that rule there is no scope for resort to  s. 151 for setting aside such a decree. [189 B-C] (ii)The   appeal  was  against  the  order  passed  on   an application  made by the appellant under r. 4 of 0. 37.   If the  contention  of  the  appellant  that  0.  37  was   not applicable were to be accepted then the result would not  be to  set aside the decree; it would only cause the  dismissal of his application as being incompetent.  No relief based on this  contention could therefore be granted in  the  appeal. [190 F-G] (iii)It is not correct to say that when leave to defend has been refused to a defendant, the court is bound to  pass a  decree.  What subrule 2 of r. 2 of 0. 37 contemplates  is that the court will accept the                             187 statements in the plaint as correct and on those  statements pass such decree as the plaintiff may in law be entitled to. If the plaint discloses no cause of action, the court cannot pass  any  decree  in favour of the plaintiff.  If  the  law requires  the  court to exercise a discretion on  the  facts deemed to be admitted, it will have to do so. [191 B-D] (iv)  in the procedure laid down under 0. 37  the  defendant may not  be allowed to place his side of the case for  assisting the  court in the exercise of its discretion, but that  does not  create  any  conflict  with the  Rents  Act.  Rules  of procedure  may  be  framed for the exercise  of  rights  and such rules are not ultra vires only because the right has to be exercised in accordance with them.  Therefore r. 8 is not ultra vires. [191 D-F]

JUDGMENT: CIVIL APPELLATE JURISDICTION : Civil Appeal No. 851 of 1964. Appeal  by special leave from the judgment and  order  dated February  17,  1964,  of  the Bombay  High  Court  in  Civil Revision Application No. 1969 of 1962. D.R. Dhanuka, K. Rajendra Chaudhuri and K. R. Chaudhuri, for the appellant. Purshottam  Trikamdas, S. T. Tajasiwala, J.  B.  Dadachanji, O.C. Mathur and Ravinder Narain, for the respondent. The Judgment of the Court was delivered by Sarkar J. The appellant was the tenant of the respondent  of a  third floor flat in Bombay.  The tenancy was governed  by the  Bombay Rents, Hotel and Lodging House  Rates  (Control) Act, 1947, hereafter referred to as the Rents Act.  We  will refer  to the appellant as the tenant and the respondent  as the landlord. The  landlord  obtained a decree in  ejectment  against  the tenant  in  a suit filed under Or. 37 of the Code  of  Civil Procedure   and  the  present  appeal  arises  out   of   an application  made  by the tenant to set  aside  that  decree under  r.  4  of that Order.  The question  is,  should  the decree be set aside ? There  were various proceedings between the  parties  before the  judgment under appeal came to be passed but it will  be unnecessary to refer to all of them.  The suit was filed  in the  Court of Small Causes, Bombay on November 1,  1960  for ejectment  on two grounds, namely, (1) a certain default  in payment  of rent and (2) unlawful subletting of the  demised premises.  The Rents Act permits ejectment if these  grounds are proved.  The tenant entered an appearance to the suit on December 3, 1960.  On March 23, 1961, the landlord took  out



a  summons  for judgment under Or. 37 r. 2  and  the  tenant opposed  that summons by an affidavit, setting  out  various defences to the claim for ejectment 188 to the details of which it is unnecessary to refer.  On  May 2,  1961,  an order was made by consent of parties  on  that summons  directing the tenant to deposit moneys in Court  by certain  instalments on account of the arrears of  rent  and providing  that if it made a default in making the  payments on  the  dates mentioned, the suit was to be  set  down  for disposal  in accordance with law.  The effect of this  order clearly was to give a conditional leave to defend so that on failure to perform the conditions the tenant would under the provisions  of  Or.  37, r. 2 no longer have  the  right  to defend the action. Now the first instalment under the consent order was payable on  June  1,  1961.  It was not however  paid.   The  tenant thereafter  made  an application for extension of  time  and this  was  rejected on June 22, 1961.  It  filed  an  appeal against  the order refusing extension of time but  this  was rejected.   The  tenant then appealed  against  the  consent order  of May 2, 1961 but this also failed.  Thereafter  the suit was placed on the list on June 28, 1961 and a decree in ejectment  was passed on that date under the  provisions  of Or. 37 on the basis of the statements made in the plaint and without permitting the tenant to appear and oppose.  This is the decree which the tenant sought to set aside.  These  are all  the  proceedings  between  the  parties  that  need  be mentioned for the purpose of this judgment. On  September 12, 1961 the application under r. 4 of Or.  37 to  set  aside the ejectment decree was made  to  the  trial Court.   The trial Court dismissed the  application  holding that  no special ground had been made out by the  tenant  as required by r. 4 Or. 37 to set aside the decree.  The tenant then  appealed  from this Order to a bench of the  Court  of Small  Causes under s. 29 of the Rents Act which is said  to have  treated the appeal as a revision.  That  bench  agreed with  the  trial  Court that  no  special  circumstances  as required  under r. 4 of Or. 37 had been made out to  justify the setting aside of the decree, but it observed that  Court had  not  considered whether relief could be  given  to  the tenant  under  S. 151 of the Code and itself set  aside  the decree acting under that section.  The landlord appealed  to the  High  Court from the judgment of the bench.   The  High Court   agreed  with  the  Courts  below  that  no   special circumstances  justifying  the setting aside of  the  decree existed.   It  however  held that there  was  no  scope  for applying S. 151 to the present case as r. 4 of Or. 37 of the Code  had made special provision for it.  It  also  rejected the other contentions raised by the tenant, to one of  which we 189 will refer later.  In the result the High Court allowed  the appeal and hence the present appeal to this Court. Learned  advocate  for the tenant contended  that  the  High Court  was wrong in its view that s. 151 had no  application to  the  present  case.   We  are  unable  to  accept   this contention.   It has been observed by this Court in  Manohar Lal  v.  Seth  Hiralal(1), "The inherent powers  are  to  be exercised  by the Court in very  exceptional  circumstances, for  which the Code lays down no procedure." This is a  well recognised  principle.   Rule 4 of Or.  37  expressly  gives power  to  a Court to set aside a decree  passed  under  the provisions  of that Order.  Express provision is  thus  made for setting aside a decree passed under Or. 37 and hence  if



a  case  does not come within the provisions of  that  rule, there is no scope to resort to s. 151 for setting aside such a decree.  We, therefore, agree with the High Court that the appellate bench of the Court of Small Causes was in error in setting  aside  the ex parte decree in  exercise  of  powers under s. 151.  Again all the Courts have taken the view, and we  think  rightly,  that no  circumstances  justifying  the setting aside of the decree under r. 4 of Or. 37 existed  in the  present  case.   We did  not  also  understand  learned advocate for the tenant to rely on any such circumstances in this  Court.  No question of setting aside the decree  under that order, therefore, arises. The next point argued by learned advocate for the tenant was that  Or. 37 was not applicable to a decree in ejectment  in view  of the provisions of the Rents Act in terms  of  which alone  such a decree could be passed.  Now s. 49 of the  Act gives the Government power to make rules for the purpose  of giving  effect  to  its  provisions.   The  Government  made certain  rules  under these powers and r. 8 of  these  rules provides  that  suits  under the Act may  be  instituted  in accordance with the procedure laid down in Or. 37.  It is by virtue  of  this rule that the landlord filed his  suit  for ejectment under the procedure laid down in Or. 37.  The High Court   of  Bombay  had  made  certain  amendments  to   the provisions  of Or. 37 as contained in the Code.  Rule  2  of that Order as so amended and so far as relevant, is in these terms :               Rule 2. (1) "Suits in which the landlord seeks               to    recover    possession    of    immovable               property......  may  in  case  the   plaintiff               desires to proceed hereunder, be instituted by               presenting a plaint in the prescribed form but               the summons shall be in form No. 4 in appendix               B,  or in such other form as may be from  time               to time prescribed.               (1)   [1962] Supp.  1 S.C.R. 450.               190               (2)In any case in which the plaint and summons               are in such forms respectively, the  defendant               shall not defend the suit unless he enters  an               appearance  and obtains leave from a Judge  as               hereinafter  provided  so to  defend;  and  in               default  of his entering an appearance and  of               his  obtaining  such  leave  to  defend,   the               allegations  in the plaint shall be deemed  to               be  admitted,  and  the  Plaintiff  shall   be               entitled to a decree for possession.......... It is by virtue of this rule that the decree in the  present case  was passed without permitting the tenant to be  heard. This  was because the tenant had been given leave to  defend on  May 2, 1961 on a condition that it paid the  arrears  of rent by instalments as prescribed in the order.  This  order had  been  made  by consent and the  tenant  had  failed  to perform  that condition, the result of which was to  deprive him of the leave to defend earlier granted; the case  became one  as if no leave to defend had been given to  the  tenant and  upon  which the landlord became entitled  to  a  decree under sub-r. (2) of r. 2 of Or. 37. The  contention of learned advocate for the tenant  is  that under  the  provision of the Rents Act the landlord  is  not entitled to a decree as a matter of right; the Court has  to consider the position of the tenant and has a discretion  to pass or not to pass a decree.  Therefore to a suit  governed by  the Act the provisions of r. 2 of Or. 37 which  make  it incumbent  on  the Court to pass a decree  in  circumstances



coming  within that sub. rule, are inapplicable.  It  is  on this  ground  that it is said that r. 8 of  the  Rules  made under the Rents Act is ultra vires and void. The  first  difficulty that appears to us to arise  on  this line of argument is that even if the contention is right, we cannot  in the present appeal makes order setting aside  the decree.   The  appeal has come to us out of  an  application originally  filed  in  a Court of  Small  Causes  under  the provisions  of  Or. 37 r. 4 by the tenant  itself.   If  the present  contention is right, then the tenant’s  application was  wholly incompetent.  The result of that  however  would not be to set aside the decree; it would only cause the dis- missal of the tenant’s application.  The tenant has to  take other  appropriate proceedings to show that the  decree  was ineffective  in case it wants to contend that the  suit  had not  been brought according to the procedure permissible  in law,  and that it had been illegally deprived of a  hearing. It itself having resorted to Or. 37, it scarcely lies in  it now   to   contend  that  Order  is   wholly   inapplicable. Furthermore,  by consenting to the Order of May 2, 1961,  it had in this case clearly agreed that the suit had been 191 rightly  brought  under  Or. 37.  It cannot  be  allowed  to change  its position in the proceedings arising out of  that very suit.  For that reason alone we think no relief can  be granted   to  it  in  this  appeal  based  on  the   present contention. On  the  merits  too,  we  think  that  the  contention   is fallacious.   It  proceeds on the basis that when  leave  to defend  has been refused to a defendant, the Court is  bound to pass a decree.  It seems to us that what sub-r. (2) of r. 2  of Or. 37 contemplates is that the Court will accept  the statements in the plaint as correct and on those  statements pass such decree as the plaintiff may in law be entitled to. If,  for example, the plaint discloses no cause  of  action, the Court cannot pass any decree in favour of the plaintiff. If  this were not so, the words "allegations in  the  plaint shall be deemed to be admitted" in sub-r. (2) of r. 2 of Or. 37  would  have  been unnecessary.  The Court  in  making  a decree under sub-r. (2), r. 2 of Or. 37 has to keep the  law in  mind.   If  the law requires the  Court  to  exercise  a discretion on the facts deemed to be admitted, it will  have to do so. In  the procedure laid down under Or. 37 the  defendant  may not be allowed at the hearing to place his side of the  case for assisting the Court in the exercise of that  discretion, but that does not create any conflict with the Rents Act.  A rule  can be made quite consistently with the Act  that  the defendant will have to adopt a certain procedure and to  act within  a certain time in order to be heard in that  matter. Suppose a defendant does not put in an appearance in a  suit for ejectment not brought under Or. 37, can he say that  the Act gave him a right to appear at the hearing and place  his case  before the Judge ? We feel no doubt that such a  thing is  not  contemplated by the Act and  cannot  be  permitted. Rules of procedure may be framed for the exercise of  rights and  such rules are not ultra vires only because  the  right has  to be exercised in accordance with them.  Therefore  we do not think that r. 8 is ultra vires. In  what  we have said in the preceding  paragraph  we  have proceeded on the assumption that the Court has a discretion. Certain  provisions  in ss. 12 and 13 of the Rents  Act  had been  read  to  us  and it  had  been  contended  that  they conferred that discretion on the Court.  In the view that we have taken, it is unnecessary to express any opinion on that



contention and we do not do so. In  the  result this appeal fails and it is  dismissed  with costs. Appeal dismissed.