Shah Bhojraj Kuverji Oil Mills And... vs Subbash Chandra Yograj Sinha

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

Court: Supreme Court of India

Case Number: Civil Appeal No. 49 of 1961

Decision Date: 21 April, 1961

Coram: M. Hidayatullah, S.K. Das, J.L. Kapur, J.C. Shah

In this case the parties were Shah Bhojraj Kuverji Oil Mills and Ginning Factory as the petitioner and Subbash Chandra Yograj Sinha as the respondent. The judgment was delivered on 21 April 1961 by the Supreme Court of India. The opinion was authored by Justice M. Hidayatullah and the bench comprised Justice M. Hidayatullah, Justice S.K. Das, Justice J.L. Kapur, Justice J.C. Shah, Justice Aiyy ar and Justice T.L. Venkatarama Das. The report of the decision appears at 1961 AIR 1596 and has been cited in numerous subsequent authorities, including E 1968 SC1109 (9), D 1973 SC1227 (55), R 1985 SC 111 (8), R 1985 SC 582 (32), E 1985 SC 709 (4‑6‑7‑13), R 1987 SC2117 (25), RF 1991 SC1654 (43). The dispute concerned the landlord’s statutory right to recover possession of premises under the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947, particularly sections 6 and 12(1), and whether the operation of those provisions was prospective or retrospective.

According to the headnote, the appellant’s tenancy for the occupied premises had expired, after which the respondent, who was the landlord, instituted a suit for possession. While the suit was pending, a notification issued under section 6 of the Act brought Part XI of the Act into force for the area in which the property was located. The appellants thereafter relied on the protection afforded by section 12, Part XI, which bars a landlord from recovering possession when the tenant is willing to pay the standard rent and comply with the other tenancy conditions. The trial court decided against the appellants, and the High Court held that section 12 was prospective in nature and therefore did not apply to suits already pending.

The Supreme Court, on appeal by special leave, held that sub‑section (1) of section 12 takes effect at the moment when a decree for recovery of possession is to be passed. The Court observed that the language of the sub‑section, which prevents a landlord from recovering possession if the tenant pays or is willing to pay the standard rent and observes the tenancy conditions, applies both to suits pending at the time Part I of the Act becomes operative and to suits filed thereafter. Consequently, the provision is not limited solely to suits filed after the Act comes into force in a particular area. The Court further explained that a statutory provision may be prospective in one part and retrospective in another; sub‑sections (2) and (3) of section 12 were clearly prospective, whereas the wording of sub‑section (1) indicated a retrospective operation. The Court distinguished the decisions in Nilkanth Ram Chandra v. Rasiklal (1949) 51 Bom. L.R. 280 and Chandra Singh Manibhai v. Surjitlal Sudhamal Chhabda [1951] S.C.R. 221, and referred to Rhonda Urban Council v. Taff Vale Railway [1909] A.C. 253, Mullins v. Treasury of Surrey (1880) 5 Q.B.D. 170 and Fitzgerald v. Champneys (1861) 70 E.R. 958 for analogous principles.

The judgment was issued under civil appellate jurisdiction in Civil Appeal No. 49 of 1961. The appeal was taken by special leave from the judgment and order dated 11 August 1960 of the Bombay High Court in Civil Revision Application No.

On 21 April 1961, a judgment was delivered by Justice Hidayatullah in a tenant’s appeal that had been granted special leave to be heard by this Court. The appeal challenged an order dated 11 August 1960 issued by Justice Naik of the High Court of Bombay in Civil Revision Application No 320 of 1959, in which the High Court had dismissed certain pleas raised by the tenants. The landlord was the respondent in the proceedings. The tenants, who were the appellants, had signed a rent note on 11 September 1942, thereby taking possession of the premises that were the subject of the dispute. Their tenancy was agreed to last fifteen years and it terminated automatically on 14 March 1957. Shortly after the tenancy ended, the landlord instituted a suit for possession of the premises on 25 April 1957 before the Joint Civil Judge (Junior Division) at Erandol. During the pendency of that suit, a notification issued under section 6 of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947—referred to in this judgment as “the Act”—extended Part II of the Act to the locality where the property was situated. The tenants asserted that section 12 of Part XI of the Act protected them, thereby depriving the landlord of the right to recover possession under the circumstances of the case. The Civil Judge, after hearing the matter, formulated three preliminary issues: (i) whether the Court had jurisdiction to try the suit; (ii) whether the plaintiff’s claim for possession was maintainable in view of the Government of Bombay’s notification dated 16 August 1958, which applied Part II of the Act, and, if not, what order should be made; and (iii) what specific order the Court should pass. The Judge resolved all three issues against the tenants. The tenants then filed a revision petition before the High Court of Bombay, which was dismissed by the order now under appeal. Justice Naik, while hearing the revision, adhered to a prior Full Bench decision of the Bombay High Court reported in Nilkanth Ramachandra v. Rasiktal (1949) 51 Bom L.R. 280, where Chief Justice Chagla, with Justices Gajendragadkar and Tendolkar concurring, held that section 12 of the Act was prospective and did not apply to cases already pending. Justice Naik also relied on this Court’s judgment in Chandrasingh Manibhai v. Surjit Lal Sadhamal Chhabda ([1951] S.C.R. 221), which affirmed the Full Bench opinion. Two principal questions were presented for determination in the present appeal: first, whether the first proviso to section 50 of the Act expressly excluded the application of all provisions of Part XI, including section 12, to all suits; and second, whether section 12(1) of the Act, having been applied independently through the extension of the Act to the area where the property was located, rendered the suit incompetent and thereby deprived the landlord of his remedy of possession.

In this matter, the Court noted that the landlord’s claim was incompetent and that, as a result, the landlord had been deprived of his remedy of possession. Before addressing those submissions, the Court found it necessary to examine the relevant provisions of the Rent Control Act. The Court observed that the Act in question was not the first legislation dealing with the control of houses and related premises in the State of Bombay. Earlier, two statutes were in force: the Bombay Rent Restriction Act, 1939, and the Bombay Rents, Hotel Rates and Lodging House Rates (Control) Act, 1944. Section 50 of the present Act expressly repealed those earlier statutes. The Court then turned to the first proviso of the Act, omitting the non‑essential words, and read: “Provided that all suits and proceedings between a landlord and a tenant relating to the recovery or fixing of rent or possession of any premises to which the provisions of Part XI apply … which are pending in any Court, shall be transferred to and continued before the Courts which would have jurisdiction to try such suits or proceedings under this Act or shall be continued in such Courts, as the case may be, and all the provisions of this Act and the rules made thereunder shall apply to all such suits and proceedings.” The parties argued that this proviso had retrospective effect and that section 12, which lies in Part II, should therefore apply to every pending case whenever the Act was extended to a new area. The Court reproduced the full text of section 12 for the record. Section 12(1) provides that a landlord is not entitled to recover possession of any premises so long as the tenant pays, or is ready and willing to pay, the amount of the standard rent and any permitted increases, and observes and performs the other conditions of the tenancy to the extent that they are consistent with the provisions of the Act. Section 12(2) states that no suit for recovery of possession may be instituted by a landlord on the ground of non‑payment of the standard rent or permitted increases until one month has expired after a written notice of demand has been served on the tenant in the manner prescribed by section 106 of the Transfer of Property Act, 1882. Section 12(3)(a) deals with cases where rent is payable monthly and there is no dispute as to the amount of the standard rent or permitted increases; if such rent or increases are in arrears for six months or more and the tenant fails to pay even after the one‑month notice period, the Court may pass a decree for eviction in any suit for recovery of possession. Section 12(3)(b) provides that in any other case, no decree for eviction shall be passed if, on the first day of hearing or on any date fixed by the Court, the tenant pays or tenders in Court the standard rent and permitted increases that are then due.

In this matter, the tenant was required to continue paying or tendering in Court the statutory rent and any permitted increases on a regular basis until the final determination of the suit, and the tenant was also required to bear the costs of the suit as ordered by the Court. While the suit remained pending, the Court was empowered to apply any amount that the tenant had paid or tendered to the landlord as partial satisfaction of the rent or permitted increases that were due, to the extent that the Court deemed appropriate. The Act includes an explanation for cases where the amount of standard rent or permitted increase is disputed, stating that a tenant is deemed ready and willing to pay the disputed sum if, before the one‑month period after the notice in sub‑section (2) expires, the tenant files an application under sub‑section (3) of section II and thereafter pays or tenders the amount specified by the Court's order. The direction to pay costs was issued by the Court in accordance with its discretion under the procedural rules governing civil suits, and such payment of costs was required to be made in the manner prescribed by the Court; failure to comply could affect the tenant's position in the proceedings.

The second section of the Act, in its subsections (1) and (2), defined the geographical extent of the legislation. It provided that Parts I and IV would apply throughout the pre‑Reorganisation State of Bombay, except for territories that had been transferred, whereas Parts II and III would apply to the specific areas listed in Schedules I and II and would continue to apply even if those areas later ceased to be described as such. Sub‑section (3) authorized the State Government, by publishing a notification in the Official Gazette, to extend any or all provisions of Part II, Part III, or both, to any other area. From this scheme, it follows that Parts I and IV became operative across all territories of the former State of Bombay, while Part II was brought into force in the concerned area by the Gazette notification. After that extension, the provisions of Parts I, II and IV were applicable during the pendency of the suit. The present appeal does not involve any issues relating to Part III, and the appellants argue that the latter portion of the proviso to section 50, which has been quoted earlier, effectively extended every provision of Part II to the area in question, thereby making all pending suits and proceedings subject to its provisions regardless of when they were filed. They further contend that the Gazette notification extending Part II to the area produced the same effect independently of the first proviso to section 50. Consequently, they submit that sub‑section (1) of section 12, which bars a landlord from recovering possession as long as the tenant pays or is ready and willing to pay the standard rent and any permitted increases and complies with other tenancy conditions that are not inconsistent with the Act, is applicable to the present case and thus protects the tenants.

In this case, the petitioners also argued that if the first proviso to section 50 were understood to apply only to suits that were already pending when the Act was passed, then section 12(1), on its own terms, would still be applicable to the present dispute and, being retrospective, would produce the same effect. The petitioners said that these two arguments had been presented before the Civil Judge and subsequently before the High Court. The High Court, however, held that section 12 was intended to operate only prospectively and therefore did not apply to suits or proceedings that were already underway. The Attorney‑General challenged the High Court’s interpretation of the first proviso to section 50, describing it as erroneous. While he accepted that the proviso must be read as qualifying the substantive part of section 50, he contended that the proviso goes beyond a mere qualification and actually creates a fresh substantive rule. To support this view, he cited the observations of Lord Loreburn, L. C., in Rhondda Urban Council v. Taff Vale Railway, where Lord Loreburn noted that although section 51 was framed as a proviso to earlier sections, the latter part of it, in substance, constituted a new enactment that added to, rather than merely qualified, the preceding provisions. The Attorney‑General argued that the latter portion of the proviso in question, being a substantive enactment, should cover not only the suits pending at the date of repeal but also any cases that fall within the language of that portion whenever the Act is extended to new territories. On the other side, the Solicitor‑General, appearing for the landlord, maintained that the proviso should be interpreted strictly as a proviso to the substantive enactment and merely qualifies the main part of section 50 to the extent that it creates an exception to the repeal; otherwise the repealed Acts would continue to govern. He relied on the commentary of Craies on Statute Law, fifth edition, pages 201‑202, which explains that an excepting or qualifying proviso, according to ordinary rules of construction, serves to exclude from or qualify the preceding portion of the enactment whatever would fall within it but for the proviso, and that such a proviso cannot be construed as expanding the scope of the enactment when it can be fairly understood without giving it that effect. He also cited the remarks of Justice Lush in Mullins v. Treasurer of Surrey, stating that when a proviso is found to a section, the natural presumption is that, but for the proviso, the enacting part of the section would have included the subject‑matter of the proviso. The law relating to provisos is well settled and well understood. As a general rule,

In this case the Court explained that a proviso is attached to a statute in order to qualify, limit or create an exception to the substantive provision. Ordinarily a proviso is not read as a general rule for the whole enactment. Frequently, however, a proviso is used not merely as an exception but as a saving clause; in such instances the proviso is not regarded as being governed by the main section of the enactment. The specific proviso that had been inserted into section 50 of the Act dealt with the consequences of repeal. The operative part of that section had repealed two enactments that were previously in force in the State of Bombay. Absent any further provision, section 7 of the Bombay General Clauses Act would have applied, and all suits and proceedings that were pending at the time of repeal would have continued under the old law as if the repealing Act had never been enacted. The purpose of the proviso, however, was to remove the matter from the operation of section 7 and to create a special saving. The Court stressed that the proviso could not be used to determine whether section 12 of the Act operated retrospectively. As observed by Justice Wood in Fitzgerald v. Champneys, saving clauses are rarely employed to interpret statutes; they are inserted when a repeal would otherwise deprive parties of rights that the legislature wishes to preserve. The proviso in question therefore saved all suits and proceedings that were pending at the time of repeal, mandated their transfer to the courts designated by the Act, and required that they continue under the new Act with all its provisions applying to them. The Solicitor‑General argued that, even if the saving clause were treated as substantive law, it should apply only to those suits and proceedings that were pending at the moment of repeal and that, but for the proviso, would have been governed by the repealed Acts. In contrast, the Attorney‑General submitted that the saving had a broader reach and applied to any case falling within the language of the proviso whenever the Act was extended to new territories. While the Court found these submissions intellectually engaging and noted that the legislature had later amended the proviso, it held that a consideration of those arguments was unnecessary for the present determination because the issue had been settled on the second point of contention.

The second point raised by the Attorney‑General concerned the temporal operation of section 12(1) of the Act. The Attorney‑General contended that section 12(1) became effective from the date on which the Act was extended to the particular area in dispute. The Court found this contention persuasive. Section 12(1) establishes a rule of decision stating that a landlord could not claim possession of premises when the tenant either pays the standard rent or demonstrates readiness and willingness to pay the rent and to comply with the other conditions of the tenancy. The Act expressly defines the term “tenant” to include not only a person who holds a tenancy but also any individual who remains in possession after the lease has terminated, whether or not the landlord has given assent. Accordingly, the statutory tenants in the present proceedings fell within the protective ambit of section 12(1), provided that the subsection could be held applicable to the suit. The Court therefore concluded that, for the purposes of the present appeal, section 12(1) operated prospectively from the moment the Act was extended to the relevant area, and that the statutory tenants were entitled to the protection conferred by that provision.

The Act defines “tenant” not only as a person whose tenancy continues, but also includes any individual who remains in possession of the premises after the lease has terminated, whether or not the landlord has given assent. The appellants in the present matter are statutory tenants and therefore fall within the class of persons protected by section 12(1), provided that this subsection can be said to apply to the suit before the Court. In earlier decisions, both the Bombay High Court and this Court observed that section 12 of the Act was prospective. Those earlier cases dealt exclusively with the interpretation of subsections (2) and (3), which, according to the language then in force, were clearly prospective and applied only to suits that were instituted after the Act had come into force. It is, however, possible for a provision to operate prospectively in some respects and retrospectively in others. The general rule is that substantive rights are not to be taken away unless the statute expressly provides for such a removal or the intention is clearly implied. Numerous statutes that were framed to protect the public from an evil or abuse have been given retrospective effect where the legislative intention is evident, as explained in the treatise on statutory interpretation (see Craies on Statute Law, 5th edition, p. 365). Section 12 states that a landlord shall not be entitled to recover possession of any premises so long as the tenant pays, or is ready and willing to pay, the standard rent and complies with the other conditions of the tenancy. In other words, a decree granting possession to the landlord cannot be issued if the tenant satisfies the conditions listed in the subsection. The Explanation to section 12 clarifies that, in a dispute, a tenant may file an application under subsection (3) of section 11 for fixation of a standard rent and, after the Court’s order, may pay or tender the amount of rent or any permitted increase specified in that order. The tenants in the present case have indicated their readiness and willingness to pay, and it is evident that they satisfy the requirements of subsection (1) of section 12. Consequently, the landlord is not entitled to obtain a decree of possession.

The judgments of the High Court and of this Court cited earlier were not required to interpret subsection (1) of the Act; they concerned appeals arising from decrees that had already been passed. The observations that section 12 was prospective were made with reference to subsections (2) and (3) and did not address subsection (1), which was not mentioned in those decisions. The issue before this Court was not whether section 12, read alone or together with the proviso to section 50, should apply retrospectively to appeals. Rather, the question was whether the language of subsection (1) creates a bar to the landlord’s recovery of possession. Subsection (1) provides that the landlord shall not be entitled to recover possession, not that the landlord is prohibited from instituting a suit for possession. This distinction is crucial for determining the effect of the provision on the present proceedings.

In this matter, the Court explained that the sub‑section in question becomes operative at the moment when a decree for the recovery of possession would have to be issued. Accordingly, the wording of the sub‑section is applicable both to actions that were already pending when Part 11 of the Act came into force and to actions that are filed after that date. The Court rejected the respondent’s argument that the effect of Section 12(1) should be confined only to suits commenced after the Act became applicable in a particular locality. Because that contention was not acceptable, the Court was compelled to hold that the present suit could not be decreed in favour of the respondent. Consequently, the judgments delivered by the High Court and by the Court of First Instance were found to be erroneous and were set aside. The appeal was therefore allowed, and the two preliminary issues were decided in favour of the appellants. By virtue of the present order, the decree previously passed by the Civil Judge was stayed, and the suit will now be determined in accordance with this judgment. Furthermore, the respondent was ordered to pay the costs incurred by this Court as well as the costs of the High Court. The appeal was consequently allowed.