Chandrasingh Manibhai and Others vs Surjit Lal Ladhamal Chhabdaand Others

Rewritten Version Notice: This is a rewritten version of the original judgment.

Court: Supreme Court of India

Case Number: Civil Appeal No. 57 of 1950

Decision Date: 23 February 1951

Coram: Mehr Chand Mahajan, B.K. Mukherjea

In the matter titled Chandrasingh Manibhai and Others versus Surjit Lal Ladhamal Chhabdaand Others, the Supreme Court of India delivered its judgment on 23 February 1951. The opinion was authored by Justice Mehr Chand Mahajan, who sat with Justice B.K. Mukherjea. The parties are identified in the record as the petitioners, Chandrasingh Manibhai and several others, and the respondents, Surjit Lal Ladhamal Chhabdaand and others. The case citation appears as 1951 AIR 199 and 1951 SCR 221, with subsequent citator references recorded as RF 1961 SC1596 (3) E and 1985 SC 709 (4,12). The statutory provision under consideration is the Bombay Rents, Hotel and Lodging House Rates Control Act (LVII of 1947), specifically sections 12 and 50, and the Court was asked to determine the application of the Act to appeals that were pending when the Act became operative, to assess the retrospective operation of the Act, and to interpret the construction of the two sections. The headnote of the judgment summarises the Court’s finding that the Act, which came into force on 13 February 1948, does not apply to appeals that were already pending at that date. Its retrospective effect is confined to matters described in section 50, namely suits and proceedings that were transferred under that provision to courts vested with jurisdiction under the Act. Section 12, the Court held, operates prospectively and is not retrospective; its sub-section (2) concerns suits that may be instituted after the Act’s commencement and sub-section (3) likewise applies only to such suits. The earlier decision in Nilkanth v. Rasiklal (A.I.R. 1949 Bom. 210) was endorsed. The judgment proceeds under civil appellate jurisdiction as Civil Appeal No. 57 of 1950, arising from a decree of the High Court of Judicature at Bombay dated 1 April 1948 in Appeal No. 365 of 1947, which had reversed a judgment of the Joint Civil Judge at Ahmedabad dated 14 October 1947 in Suit No. 174 of 1945. Counsel for the appellants consisted of B. Somayya with Jindra Lal, while counsel for the respondents comprised C.K. Daphtary with Sri Narain Andley. Delivered on 23 February 1951 by Justice Mahajan, the judgment recounts that the appellants owned a property known as “Bharat Bhuvan Theatre” situated in Ahmedabad, and that the respondents were the lessees of that theatre. The lease stipulated that it would terminate on 2 December 1945 unless the lessees gave the landlords a written notice of their intention to renew, three months prior to that date, thereby exercising an option to extend the lease for an additional two years. On 13 December 1945, the appellants instituted suit-for-ejectment against the respondents, also seeking recovery of certain sums. The trial court rendered its decree on 14 October 1947, finding first, that the respondents had failed to exercise the renewal option in the manner required by the lease; second, that the respondents had committed breaches of the lease terms; and third, that the respondents were not protected by the Rent Restriction Act. The decree, therefore, ordered the respondents’ removal and the payment of the claimed amounts.

The Court observed that the decree of the Joint Civil Judge had invited an enquiry into the amount of mesne profits, and that the respondents had filed an appeal in the High Court against that decree on 10 November 1947. The appeal was heard by a two-judge Bench of the High Court comprising Justices Weston and Dixit on 26 February 1948, and the judgment was delivered on 1 April 1948. In that judgment the High Court reversed both the judgment and the decree of the Joint Civil Judge and dismissed the plaintiff’s suit. While affirming the trial court’s finding on the first issue, the High Court concurred that the respondents had failed to produce proof that they had given the appellants three months’ prior written notice of their intention to renew the lease, as required by clause 4(2) of the lease agreement. Conversely, the High Court reversed the trial judge’s finding that the respondents had breached the lease terms stipulated in clause 2(20). The High Court then concluded that, although the decree under appeal had been correct at the time it was made, the subsequent operation of Act LVII of 1947 had created altered circumstances that precluded the appellants from recovering possession of the premises in question. Dissatisfied with the High Court’s judgment, the appellants obtained a certificate of appeal and filed an appeal before this Court on 7 March 1949, which now lies for determination.

During the proceedings before the High Court, counsel argued that the appeal constituted a rehearing and therefore should be decided pursuant to the provisions of Act LVII of 1947, which had come into force on 13 February 1948, rather than according to the law that was in force when the trial court’s decree was rendered. The argument was essentially that a statutory change occurring after the trial decree but before the hearing of the appeal should govern the parties’ rights at the time of the appeal. The High Court accepted this contention and consequently set aside the decree that ordered the ejectment of the respondents. On review before this Court, counsel for the appellants challenged the High Court’s decision on three grounds. First, assuming that the appeal was to be decided under Act LVII of 1947, it was contended that the provisions of that Act did not apply to pending appeals, which were expressly excluded from its scope. Second, it was submitted that Act LVII of 1947 had been amended by Bombay Act III of 1949, and that the appeal now pending before this Court should be decided according to the amended statute, which likewise excluded pending appeals from its application. Third, counsel argued that the High Court had erred in its reversal of the trial court’s finding regarding the respondents’ breach of the lease terms contained in clause 2(20). The matter now required this Court to interpret the relevant sections of Act LVII of 1947 and to determine the correct legal position.

The Court observed that the appellate tribunal had incorrectly set aside the trial judge’s conclusion that the respondents had violated the provisions of clause 2 (20) of the lease. Counsel for the respondents, while refuting the submissions made on behalf of the appellants, argued that both the trial court and the appellate court had erred in concluding that the respondents had failed to demonstrate that they had exercised the lease’s renewal option in accordance with its stipulated terms. The Court further held that the resolution of the present appeal hinged exclusively on the interpretation of sections 12 and 50 of the Bombay Rents, Hotel and Lodging House Rates Control Act, LVII of 1947. The pivotal issue for determination was whether this Act, which received legislative assent on 19 January 1948 and became operative on 13 February 1948, applied to appeals that were already pending at the time of its commencement, or whether its retrospective operation was confined solely to the categories of cases enumerated in section 50 of the Act.

The Court noted that the question of whether the renewal option had been exercised in compliance with the lease covenants had already been settled by a concurrent finding of fact, and that nothing said by Mr. Daphthary in support of his position undermined that determination. Consequently, the matter had to be decided on the premise that the respondents had not exercised the renewal option granted to them under the lease. While the Court was not persuaded by the appellants’ contention that the High Court had mistakenly overturned the trial judge’s finding regarding the respondents’ breach of lease terms, it also clarified that it would not adopt every rationale presented by the High Court for that reversal. The decisive question, therefore, was whether the provisions of the 1947 Act were applicable to appeals pending when the Act came into force. The answer required construing sections 12 and 50 of the Act. Section 12 was reproduced in full: “(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 performs 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 a 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) No decree for eviction shall be passed in any such suit if, at the hearing …

In the legislation, a tenant who pays or tenders in court the standard rent or any permitted increase that is then due, together with the costs of the suit, is protected from eviction. The provision includes an explanatory note stating that when there is a dispute about the amount of standard rent or permitted increase recoverable under the Act, the tenant will be considered ready and willing to pay that amount if, before the expiry of the one-month period following the notice required by sub-section (2), the tenant applies to the court under sub-section (3) of section 11 and subsequently pays or tenders the amount of rent or permitted increase specified in the court’s order. This clause constitutes the substantive protection granted to tenants against ejectment. Section 50, found in Part IV dealing with miscellaneous matters, is a repeal section that abolishes the Acts of 1939 and 1944, and while doing so it contains a proviso that all suits and proceedings—except execution proceedings and appeals—between a landlord and a tenant concerning the recovery or fixing of rent or possession of premises to which Part II applies, as well as all suits and proceedings brought by a hotel manager or a lodging-house owner against a lodger for recovery of charges or possession of accommodation situated in an area to which Part III applies, and which are pending in any court, shall be transferred to and continued before the courts that have jurisdiction to try such matters under the new Act. On such transfer, all provisions of the new Act and the rules made thereunder shall apply to those suits and proceedings. The provision further states that every order or act made by the Controllers under Part IV of the Bombay Rents, Hotel Rates and Lodging House Rates (Control) Act, 1944, and every order or act deemed to have been made under that part, shall be treated as having been made under the new Act; and that all proceedings pending before the Controllers under Part IV of that earlier Act shall be transferred to and continued before the Controllers appointed under the new Act as if those proceedings had originally been instituted before the Controllers under the new Act. The High Court interpreted section 50 to mean that it merely mandates the transfer of pending suits and proceedings to courts with appropriate jurisdiction under the new Act, and that execution proceedings and appeals are expressly excluded because there is no possibility of transferring such matters from one court to another. Moreover, the Court held that an appeal, being a continuation of the original suit and essentially a rehearing, should be subject to the provisions of section 12 with regard to pending appeals. The view expressed by the Division Bench on the construction of sections 12 and 50 was subsequently questioned in Nilkanth v. Rasiklal.

In this case the matter was referred to a Full Bench after a Division Bench had ruled on the construction of section 50 of the Act. The Full Bench overruled the Division Bench’s decision, holding that the language of the new Act and its rules was intended to apply only to those suits and proceedings that were transferred in accordance with section 50, and that any retrospective effect of the Act was limited to what is expressly provided in that section. The Court concurs with the Full Bench’s view. A straightforward reading of sections 12 and 50 shows that the Act was given only a narrow retrospective operation, expressly excluding execution proceedings and appeals, which were to remain governed by the law in force at the time the decrees were issued. The concluding words of section 50—“and thereafter all the provisions of this Act and the rules made thereunder shall apply to all such suits and proceedings”—support this interpretation.

The counsel for the appellant argued that the purpose of section 50 was solely to provide for the transfer of pending cases to courts that now have jurisdiction under the Act, and that the section did not address the extent of the Act’s retrospective operation. He further contended that section 12, which protects tenants, should be given retrospective effect. The Court finds this argument untenable. Section 50 cannot be described merely as a mechanism for transferring pending cases; rather, it functions as a repeal provision, superseding two earlier statutes while expressly preserving “executions and appeals.” It also provides that the Act’s provisions apply to all pending suits that are transferred to courts with jurisdiction under section 28.

The Court also agrees with the Full Bench that section 12 operates prospectively, not retrospectively. Sub-section (2) refers to suits that may be instituted after the Act comes into force and therefore cannot apply to suits already pending when the Act was enacted. Sub-section (3) grants tenants the right to pay or tender rent at the hearing of a suit, but it is limited to suits that may be instituted after the Act’s commencement, as indicated by the phrase “in such suit” rather than “in any suit.” The expression “such suit” can only refer to suits covered by sub-sections (2) and (3) of section 12. Consequently, the Court concludes that the provisions of section 12 do not have retrospective effect on suits pending before the Act became law.

In the present matter, the Court observed that the High Court had applied the provisions of Act LVII of 1947 to the present appeal in a manner that was incorrect, and that the High Court’s decision to allow the appeal on that erroneous basis was therefore untenable. Because the Court concluded that the application of Act LVII of 1947 was mistaken, it deemed it unnecessary to consider the alternative contentions raised by counsel, which suggested that the appeal ought to be decided pursuant to the provisions of Act III of 1949. Consequently, the Court set aside the decree issued by the High Court which had dismissed the plaintiff’s suit. In place of that decree, the Court restored the decree originally pronounced by the trial Judge, which had granted the plaintiff’s suit together with an award of costs. By these steps, the Court allowed the appeal. The representation for the appellants was made by an agent named Naunit Lal, while the representation for the respondents was made by an agent named Rajinder Narain.