Raizada Topandas and Anr vs M/S. Gorakhram Gokalchand
Rewritten Version Notice: This is a rewritten version of the original judgment.
Court: Supreme Court of India
Case Number: Civil Appeal No. 75 of 1962
Decision Date: 22 April 1963
Coram: S.K. Das, A.K. Sarkar, M. Hidayatullah
In the matter of Raizada Topandas and another versus M S Gorakhram Gokalchand, the Supreme Court delivered its judgment on 22 April 1963. The opinion was authored by Justice S K Das and was joined by Justices A K Sarkar and M Hidayatullah. The case was cited as 1964 AIR 1348 and appeared in the 1964 Supreme Court Reporter, volume 3, page 214. Subsequent citators recorded the decision under references R 1978 SC1217, RF 1980 SC1605, RF 1981 SC537, and RF 1991 SC1494. The dispute involved a question of jurisdiction under the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947, specifically sections 28, 29, and 29A. The plaintiff, a partnership firm named M S Gorakhram Gokalchand, instituted a suit in the Bombay City Civil Court asserting that the defendant, Raizada Topandas and another, acted only as a licensee during the term of an agreement and became a trespasser after that agreement expired.
The written contract, as described in the plaint, appointed the defendant as a commission agent for the sale of the plaintiff’s cloth within a shop that the plaintiff occupied. The agreement stipulated a four‑year term, during which the plaintiff, his family members, servants, and agents were permitted to enter the shop solely to supervise the commission agency business. Upon the agreement’s expiration, the plaintiff claimed that the defendants lost any right to enter the premises. Consequently, the plaintiff sought a declaration confirming its lawful possession of the shop, an injunction restraining the defendants and their associates from entering, and the payment of commission owed under the agreement. In the plaintiff’s pleadings, it asserted that the defendants were merely licensees for the duration of the agreement and thereafter became trespassers, expressly denying any landlord‑tenant relationship between the parties. The defendants, in their defence, contended that the plaintiff had sublet the shop to them for a specified monthly rent, but argued that sub‑letting under the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947, required the landlord’s consent; therefore, they claimed the parties entered into a sham agreement intended only to conceal a true landlord‑tenant relationship. Relying on this contention, the defendants maintained that the Small Causes Court of Bombay possessed exclusive jurisdiction to try the suit. The City Civil Court, guided by a prior Supreme Court decision, accepted the defendants’ jurisdictional argument and ordered the plaint to be returned for presentation before the appropriate court. The plaintiff appealed this order to the High Court, which examined the proper construction of section 28 of the Act and ultimately set aside the City Civil Court’s decision, directing that the suit be heard in accordance with law. The present appeal to the Supreme Court arose by way of special leave, raising again the issue of whether the City Civil Court had authority to entertain the suit.
In interpreting section 28 of the Act, the Court concluded that the suit which gave rise to the present appeal did not fall within the exclusive jurisdiction of the Court of Small Causes, Bombay. Consequently, the order of the City Civil Court judge was set aside and the Court directed that the suit should be disposed of in accordance with the law. The appeal before this Court was filed by way of special leave, and it raised the same question as to whether the City Civil Court possessed jurisdiction to entertain the suit.
The Court, speaking for Justices S.K. Das and M. Hidayatullah, held that section 28 unmistakably confers exclusive jurisdiction upon the Court of Small Causes to entertain and try any suit or proceeding between a landlord and a tenant that concerns the recovery of rent or the possession of premises to which any provision of Part II of the Act applies. The section also grants the Court of Small Causes exclusive authority to decide any application filed under the Act and any claim or question that arises out of the Act or any of its provisions. However, section 28 does not give the Court of Small Causes the exclusive power to adjudicate questions of title between a rightful owner and a trespasser or a licensee, because such questions do not arise under the Act.
The Court explained that if the plaintiff, in his plaint, does not acknowledge a relationship that would attract any of the Act’s provisions on which the exclusive jurisdiction under section 28 is based, the defendant, by his plea, cannot compel the plaintiff to proceed to a forum where, according to the plaintiff’s own averments, he cannot go. Only when the suit is framed by a landlord or a tenant and the relief sought is of a nature that arises out of the Act or its provisions will section 28 apply. Accordingly, the City Civil Court did possess jurisdiction to entertain the suit, and the High Court was correct in reaching that conclusion. The Court cited the authorities Ananti v. Ghhannu (1929) I.L.R. 52 All. 501, Govindram Salamatrai v. Dharampal (1951) 53 Bom. L.R. 386, Jaswantlal v. Western Company, India (1959) 61 Bom. L.R. 1087, and Babulal Bhuramal v. Nandram Shivram [1959] S.C.R. 367 for support.
Justice Sarkar, speaking separately, observed that the suit was not a dispute between a landlord and a tenant for the recovery of possession of premises; therefore it did not fall within the first category of matters listed in section 28(1). The suit also did not fall within the second category, which deals only with certain applications. Section 28 further provides that no court other than a Court of Small Causes shall have jurisdiction to deal with any claim or question arising under the Act concerning properties in Greater Bombay. This portion of the section does not intend to affect a court’s general jurisdiction to entertain and try a suit; it merely prevents a court from dealing with specific claims or questions that arise under the Act. Consequently, a court may try a suit provided that it does not involve a claim or question that the section reserves exclusively for the Court of Small Causes.
The Court observed that the case did not require an enquiry into whether the dispute fell within the scope of the Bombay Rents, Hotel and Lodging House Rates Control Act, because the defence raised by the appellants did not assert any claim or question that arose under that Act. The defence simply contended that the appellants were not licencees of the premises. Consequently, the only issue for determination was whether the appellants were licencees of the shop in question. The Court held that this issue was neither a claim nor a question that originated under the Act, and that the question of whether the appellants were sub‑tenants likewise did not arise under the Act, since the Act contained no provision concerning the creation of a tenancy. Accordingly, the Court concluded that no discussion of any claim or question arising under the Act was necessary for the resolution of the suit.
The judgment formed part of Civil Appeal No. 75 of 1962, filed by special leave against the decree dated 19 October 1959 pronounced by the Bombay High Court in Appeal No. 152 of 1959. Counsel for the appellants included representatives of N. C. Chatterjee, J. B. Dadachanji, O. C. Mathur and Ravinder Narain, while the respondents were represented by counsel A. V. Viswanatha Sastri and D. D. Sharma. The appeal was heard on 22 April 1963, and the judgment of Justices S. K. Das and Hidayatullah was delivered by Justice Das, with Justice Sarkar delivering a separate opinion.
Justice S. K. Das identified the sole question of the appeal as whether, on a proper construction of section 28 of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947 (Bombay Act LVII of 1947), the Court of Small Causes, Bombay possessed exclusive jurisdiction to try the suit that gave rise to this appeal. The respondent was a partnership firm that occupied shop No. 582/638 in Mulji Jetha Market, Bombay, as a tenant. It instituted a suit in the Bombay City Civil Court, distinct from the Court of Small Causes, seeking (i) a declaration that it held lawful possession of the shop and that the appellants, their families, servants or agents had no right to enter or remain therein; (ii) an injunction restraining the appellants, their families, servants and agents from entering the shop; and (iii) a sum of commission due under an agreement dated 23 June 1955. The plaint alleged that, under that agreement, defendant No. 1, the appellant, had appointed the respondent as his commission agent for the sale of the appellant’s cloth in the shop, with the agreement to remain in force for four years, expiring on 30 June 1959. According to the terms, the appellants, their families, servants and agents were permitted to visit the shop solely for purposes related to the commission agency.
In the suit, the respondent asserted that the appellants were allowed by the respondent to visit the shop solely for the purpose of looking after the business of the commission agency. The respondent maintained that, once the agreement expired, the appellants no longer possessed any right to enter the shop. In paragraphs ten and eleven of the plaint the respondent alleged that some commission remained due to it and further requested that the appellants not disturb the respondent’s possession and peaceful enjoyment of the shop. Nevertheless, the appellants, together with their servants and agents, continued to visit the shop daily, thereby preventing the respondent from accessing its various articles such as stock‑in‑trade, books of account, furniture, fixtures and other items. On the basis of these averments the respondent sought the reliefs previously referred to. The plaint proceeded on the footing that, during the period of the agreement, the appellants were merely licensees and that, after the expiry of the agreement, they became trespassers with no right to remain in the shop. The plaint expressly denied any landlord‑tenant relationship between the parties. The substantial defence of the appellants was that the respondent had sublet the shop to the appellants for a monthly rent of Rs. 500, but that, because a sub‑tenancy could not be legally created at that time without the landlord’s consent under the provisions of the Act, the respondent required the appellants to enter into a sham agreement in the form of a letter dated 30 June 1952 to safeguard its position with respect to the penal provisions of the Act. The appellants claimed that the agreement was never acted upon and was intended only as a cloak to conceal the true nature of the transaction. The appellants further alleged that the agreement dated 23 June 1955 was also not operative between the parties and that the true relationship between them was that of landlord and tenant. On these averments, in their written statement, the appellants pleaded that the question involved in the suit related to possession of premises between a landlord and his tenant, and that only the Court of Small Causes, Bombay, had jurisdiction to try the suit. Accordingly, a preliminary issue of jurisdiction was framed by the City Civil Court, Bombay, phrased as “Whether this court has jurisdiction to entertain and try this suit?” The learned judge of the City Civil Court, relying on the Supreme Court’s decision in Babulal Bhuramal v. Nandram Shivram, decided the preliminary issue in favour of the appellants. He held that, in view of the Supreme Court’s observations, an earlier Bombay High Court decision in Govindram Salamatrai v. Dharampal, which had taken a different view, was of no assistance to the respondent and must be deemed to have been over‑ruled by the Supreme Court’s decision. The judgment noted that the decision in Govindram Salamatrai…
In earlier jurisprudence the Bombay High Court, through its decision in Ebrahim Saleji v. Abdulla Ali Raza (3), had set aside a prior ruling of the same court in Govindram Salamatrai (2). In the earlier decision Gajendragadkar J., then a judge of the High Court, had interpreted section 28 of the Bombay Rents, Hotel and Lodging Houses Rates Control Act to give the tribunal jurisdiction over all suits and proceedings in which the trial court must consider any claim or question arising out of the Act, irrespective of whether the claim or question originated in the plaint or in the written statement. The later judgment in Govindram Salamatrai (2) therefore over‑ruled Ebrahim Saleji (3) and adopted a different approach, holding that section 28 does not create a blanket jurisdictional exception. Accordingly, the learned judge of the City Civil Court ordered that the plaint be returned to the respondent for presentation before the appropriate court. The respondent appealed this order to the High Court of Bombay. The High Court, in its judgment dated 19 October 1959, observed that the ratio of the Supreme Court’s decision in Babulal Bhuramal v. Nandram Shivram (1) had been correctly explained in a subsequent Bombay High Court decision in Jaswantlal v. “Western Company, India” (2). On a proper construction of section 28 of the Bombay Rents, Hotel and Lodging Houses Rates Control Act, the High Court concluded that the suit from which the present appeal arose was not one that fell within the exclusive jurisdiction of the Court of Small Causes, Bombay. The High Court further held that the ruling in Babulal Bhuramal (1) did not, in effect, alter the general principle governing jurisdiction, namely that jurisdiction at the commencement of a suit depends on the allegations made in the plaint and is not defeated by defenses raised by the defendant. Accordingly, the High Court preferred the view expressed by Chief Justice Chagla in Govindram Salamatrai (3) and rejected Gajendragadkar J.’s interpretation in Ebrahim Saleji (4). Consequently the High Court found that the City Civil Court possessed jurisdiction to try the suit, set aside the order of the City Civil judge, and directed that the suit be dealt with according to law. The appellants then applied for special leave to appeal to this Court from the High Court’s judgment and decree, obtained special leave, and filed the present appeal.
The Act contains several provisions in Part II that address matters such as rent that exceeds the standard rent, the permissible increase of rent, the circumstances under which a landlord may recover possession, the point at which a sub‑tenant becomes a tenant, and unlawful charges imposed by a landlord. All of these provisions operate on the assumption that, at the beginning, a landlord‑tenant relationship existed between the parties. Within the same part are sections 28, 29 and 29‑A. Section 28 deals with the jurisdiction of courts; section 29 deals with appeals; and section 29‑A preserves the right to sue for title. The provision that is in dispute before the Court is section 28, and the Court will consider only sub‑section (1) of that section to the extent it is relevant. Sub‑section (1) reads as follows: “(1) Notwithstanding anything contained in any law and notwithstanding that by reason of the amount of the claim or for any other reason, the suit or proceeding would not, but for this provision, be within its jurisdiction. (a) in Greater Bombay, the Court of Small Causes, Bombay, (aa) xx xx xx (b) xx xx xx......... shall have jurisdiction to entertain and try any suit or proceeding between a landlord and a tenant relating to the recovery of rent or possession of any premises to which any of the provisions of this Part apply and to decide any application made under this Act and to deal with any claim or question arising out of this Act or any of its provisions and subject to the provisions of sub‑section (2), no other court shall have jurisdiction to entertain any suit, proceeding or application or to deal with such claim or question.” Section 29‑A is also of some relevance and states: “Nothing contained in section 28 or 29 shall be deemed to bar a party to a suit, proceeding or appeal mentioned therein in which a question of title to premises arises and is determined, from suing in a competent court to establish his title to such premises.” By omitting material that does not affect the purpose of the analysis, sub‑section (1) of section 28 essentially provides that, despite any other law or consideration of the claim’s monetary value, the Court of Small Causes in Greater Bombay alone has authority to entertain and try any suit or proceeding between a landlord and a tenant concerning the recovery of rent or possession of premises covered by Part II, to decide any application made under the Act, and to deal with any claim or question arising from the Act or its provisions; no other court may entertain such matters.
The operative portion of the subsection is understood to address two distinct categories. First, it covers any suit or proceeding that arises between a landlord and a tenant where the dispute concerns the recovery of rent or the possession of premises, provided that the premises fall within the ambit of any of the provisions contained in Part II of the Act. Second, it extends to any application filed under the Act as well as to any claim or question that originates out of the Act or any of its provisions. The Court was required to ascertain the precise effect of sub‑section (I) of section 28 with respect to these two categories. Specifically, the question was whether the mere raising of a claim or a question by the defendant regarding the existence of a landlord‑tenant relationship would automatically deprive the City Civil Court of jurisdiction, even in a situation where the plaintiff expressly denied such a relationship and contended that the suit should be heard elsewhere. In other words, the issue before the Court was whether the exclusive jurisdiction granted to the Court of Small Causes, Bombay, would be triggered solely by the defendant’s allegation, thereby ousting the City Civil Court despite the pleadings of the plaintiff.
In order to resolve this issue, the Court found it necessary to refer to the general principle that governs jurisdiction at the very inception of a suit. This principle has been thoroughly articulated in a Full Bench decision of the Allahabad High Court in Ananti v. Chhannu (1929) I.L.R. 52 All 501, a ruling that has not been contested before this Court. The Allahabad High Court observed that the plaintiff has the freedom to select the forum in which to commence his suit. If, after a full trial on the merits, the plaintiff succeeds in establishing that the facts he alleged are correct, he will obtain the relief he seeks from the forum he originally chose. Conversely, if the plaintiff frames his suit in a manner that is not substantiated by the factual matrix and proceeds to seek relief from a court that is incapable of granting such relief on the true facts, the suit will be dismissed. In such a circumstance, there is no scope for sending back the plaint for re‑filing in another court, because the plaint, as drafted, does not furnish a basis for the other court to entertain the relief claimed.
The Allahabad High Court further explained the consequences when, after a trial on the merits, the court determines that the plaintiff’s allegations are false and that the defendant’s version of the facts is true, and consequently that the case does not fall within the jurisdiction of the court hearing it. Two distinct orders may then be passed. If the jurisdictional defect pertains only to territorial limits or pecuniary limits, the court will order the plaint to be returned so that it may be presented before the proper court having the appropriate jurisdiction. However, if the defect is of a different nature—namely, that the nature of the suit itself renders it beyond the cognizance of the class of court that is hearing it—then the plaintiff’s suit must be dismissed in its entirety. This distinction is crucial because it separates jurisdictional deficiencies that are merely quantitative from those that are qualitative, the latter requiring outright dismissal rather than remand.
Applying the aforesaid general principle to the matter before us, the Court is of the opinion that the view adopted by the High Court is correct. Section 28 unmistakably confers exclusive jurisdiction on the Court of Small Causes to entertain and try any suit or proceeding between a landlord and a tenant that concerns the recovery of rent or the possession of premises to which any provision of Part II applies. The exclusive jurisdiction is not contingent upon the defendant’s pleading alone; rather, it is anchored in the statutory scheme that designates the Court of Small Causes as the sole forum for such disputes, irrespective of the stage at which the issue of landlord‑tenant relationship is raised.
In regard to premises falling within Part II, the provision confers exclusive jurisdiction upon certain courts to entertain any application under the Act and to resolve any claim or question that arises out of the Act or its provisions, irrespective of any other law. Counsel for the appellants argued that the section, by its terms, declares that, notwithstanding any general principle, every claim or question founded on the Act must be tried solely by the courts specified in the section, for example the Court of Small Causes in Greater Bombay, and that it is irrelevant whether the claim is initiated by the plaintiff or the defendant. The Court found this argument plausible at first glance, but after careful examination concluded that it could not be sustained. The Court observed that the language of the section does not intend to make the defendant’s pleading a factor that alters the appropriate forum. Rather, the section operates on the premise that exclusive jurisdiction is assigned to particular courts to determine all questions or claims that arise under the Act, provided the parties involved are or have been in a landlord‑tenant relationship. The provision does not give those courts the exclusive power to hear questions of title, such as disputes between a rightful owner and a trespasser or a licensee, because such questions do not arise under the Act. Consequently, if the plaintiff, in his pleading, does not acknowledge a landlord‑tenant relationship that would bring the matter within any provision of the Act on which the exclusive jurisdiction of section 28 depends, the Court reasoned that the defendant cannot, by his defence, compel the plaintiff to litigate in a forum where, according to the plaintiff’s own allegations, jurisdiction does not lie. The Court further noted that adopting the appellants’ interpretation would produce anomalous outcomes. For instance, the defendant could invariably force the plaintiff to proceed before the Court of Small Causes, and if that Court were to reject the defendant’s defence, the plaint would then have to be sent back to the appropriate court for a second presentation. Counsel for the appellants, in an alternative submission, contended that the Court of Small Causes need not return the plaint a second time, maintaining that the Court’s “exclusive” jurisdiction applies even when the claim is ultimately found to be false at trial. The Court rejected this contention, explaining that accepting it would imply that the Court of Small Causes possesses exclusive jurisdiction over questions of title, a position expressly denied by section 29‑A. Although the possibility of anomalous results is not, by itself, a decisive argument, the Court, after considering the provisions of Part II, concluded that the exclusive jurisdiction conferred by section 28 is conditioned upon an existing or former landlord‑tenant relationship and upon claims that arise under the Act between such parties. Thus, the Court clarified that the jurisdictional rule cannot be applied in a manner that disregards the substance of the parties’ relationship or extends to matters beyond the scope of the Act.
In the decision of Govindram Salamatrai, Chief Justice Chagla observed that a suit in which a plaintiff alleged the defendant to be his licensee could not be tried by the Small Causes Court because the suit was not between a landlord and a tenant, and the plaint revealed no issue that fell within the Rent Control Act or any of its provisions. He further explained that a plaintiff could not be expected to anticipate a defence in which the defendant might claim to be a tenant, nor could the initial jurisdiction of the Court be altered by any subsequent contentions raised by the defendant. According to the Chief Justice, the jurisdiction of a Court is ordinarily determined at the moment a suit is initiated; therefore, when a plaint is placed on the court’s record, the Court must at that time decide whether it possesses the authority to entertain and try the suit. The argument that, although the Court might have had jurisdiction when the suit was first filed, its jurisdiction would disappear as soon as the defendant asserted that he was a tenant, was rejected. Such a contention, the Court held, could not be disposed of under section 28 of the Rent Act, because the question of whether the defendant is a tenant or a licensee does not arise out of the Act or any of its provisions. Instead, that question is collateral and must be resolved before the Act can be said to apply at all.
The Court agreed with these observations and stated that section 28, when given its true scope and effect, does not depart from the general principle previously articulated. Likewise, the right of appeal provided in section 29 does not alter the position, for an appeal under section 29 is available only in certain circumstances following a decision rendered by a Court exercising jurisdiction under section 28. This does not mean that section 28 has the effect contended for by the appellants. The Court further noted that the earlier decision of this Court in Babulal Bhuramal does not aid the appellants, and that the Bombay High Court had correctly understood the issue in Jaswantlal v. Western Company, India. The Court then briefly recalled the facts of Babulal Bhuramal’s case, indicating that a landlord, after giving a notice to quit to his tenant on 6 December 1947, filed a suit in the Small Causes Court, Bombay, joining two other persons who were alleged to be sub‑tenants of the tenant.
In the earlier proceeding, a landlord served a notice to quit on his tenant on 6 December 1947 and then instituted a suit in the Court of Small Causes, Bombay. In that suit the landlord included two additional defendants, alleging that they were sub‑tenants of his tenant. The landlord contended that his tenancy had lawfully ended, that he was therefore entitled to evict the tenant, and that the alleged sub‑tenants were trespassers without any right to remain on the premises. The Court of Small Causes accepted the landlord’s version that the tenancy had been terminated and held that the alleged sub‑tenants were not lawful sub‑tenants because the tenant’s sub‑letting was contrary to law. Consequently, that court issued a decree against the plaintiff‑landlord and also against the alleged sub‑tenants.
Subsequently the tenant, designated as plaintiff No. I, together with the two alleged sub‑tenants, designated as plaintiffs Nos. 2 and 3, filed a separate suit in the City Civil Court seeking a declaration that plaintiff No. I was a tenant of the defendant‑landlord and was therefore entitled to the protection afforded by the Bombay Rent Act. They also sought a declaration that the two alleged sub‑tenants were lawful sub‑tenants of plaintiff No. I and thus were entitled to possession and occupation of the premises as such. The City Civil Court was asked to consider whether it possessed jurisdiction to entertain the suit. After hearing the matter, the City Civil Court concluded that it did have jurisdiction, but it dismissed the suit on its merits.
When the case was appealed to the High Court, the High Court held that the City Civil Court lacked jurisdiction to entertain the suit and therefore ruled that the suit filed by plaintiffs Nos. 1, 2 and 3 was not maintainable. From that decision an appeal was taken to the Supreme Court. The central question before the Supreme Court was whether the second suit filed by the tenant and the alleged sub‑tenants fell within the jurisdiction of the City Civil Court. The appellant argued that the suit was maintainable under section 29‑A of the Bombay Rent Act, which provides that nothing in sections 28 or 29 should prevent a party to a suit, proceeding or appeal dealing with a question of title to premises from suing in a competent Court to establish that title. The Supreme Court examined this contention and held that a suit permitted by section 29‑A is a suit to establish title “de hors” the Bombay Rent Act, meaning a suit that is independent of the substantive provisions of the Rent Act itself. It observed that, in the earlier suit before the Court of Small Causes, the tenant could have claimed protection under the Rent Act, and that section 28 barred any other Court from trying that claim. Accordingly, the Supreme Court concluded that the second suit could not be rescued by section 29‑A because the first suit had already fallen within the exclusive jurisdiction conferred by section 28.
In this case the Court observed that section 28 of the Bombay Rents, Hotel and Lodging Rates Control Act barred the second suit, and that section 29‑A did not rescue it because that provision only preserved a suit that sought to establish title outside the Act. The Court referred to the earlier decision on which the present appellants relied, which had asked whether the provisions of section 28 covered a situation where, in a suit, one party claimed to be the landlord and denied that the other was his tenant, or vice‑versa, and where the relief pleaded was a claim arising out of the Act or any of its provisions. The earlier decision answered in the affirmative on a reasonable interpretation of section 28. The Court agreed with the High Court that those observations simply indicated that, to determine whether a suit falls within the scope of section 28, one must examine the substance of the suit as framed and the nature of the relief claimed. If the suit is brought by a landlord or a tenant and the relief sought is a claim that originates in the Act or any of its provisions, then and only then will the suit be covered by section 28. The High Court had correctly stated that a suit essentially between landlord and tenant does not lose that character merely because the defendant denies the plaintiff’s claim. Conversely, a suit that is not between landlord and tenant and, based on the plaint, raises no claim or question arising under the Rent Act does not become covered by section 28 simply because the defendant later alleges that he is a tenant.
Consequently the Court held that the City Civil Court possessed jurisdiction to entertain the suit and that the High Court’s conclusion was proper. The appeal therefore failed and was dismissed with costs. Justice Sarkar concurred that the appeal must fail. The record showed that the City Civil Court, Bombay, had earlier held that, in view of section 28, it lacked jurisdiction to try the suit filed by the respondent against the appellants and had ordered the plaint to be returned so that it could be filed in the Court of Small Causes, Bombay, the court designated by the statute. The City Civil Court had considered the jurisdictional question as a preliminary issue. An appeal against that decision was taken to the High Court of Bombay, which adopted a contrary view, holding that section 28 did not remove the City Civil Court’s jurisdiction to try the suit. The matter then came before this Court on further appeal. The suit sought a declaration that the appellants were not entitled to enter into or remain in possession of a certain shop in Greater Bombay and also sought a permanent injunction restraining them from entering the shop.
In this case, the plaintiff asked the court to declare that the defendants had no right to enter or remain in possession of a particular shop located in Greater Bombay and further sought a permanent injunction to restrain the defendants from entering the shop. The plaintiff alleged that the defendants had originally been granted a licence to use the shop, which the plaintiff occupied as a tenant under the owner, and that the defendants continued to occupy the premises after the licence had been terminated, thereby preventing the plaintiff from carrying on its business there. Accordingly, the plaintiff framed the proceeding as a suit by a licensor against a licensee for reliefs that arose from the alleged termination of the licence. The defendants, on the other hand, contended that the factual relationship between the parties was not that of licensor and licensee; they asserted that the shop had in fact been sub‑let to the first defendant and that the document describing the arrangement was fashioned as a licence merely as a device to protect the plaintiff from being ejected under the Bombay Rents, Hotel and Lodging Rates Control Act by the landlord on the ground of unlawful sub‑letting. The defendants maintained that, because they were in reality tenants, the plaintiff, as their landlord, could not lawfully remove them from possession under the provisions of the Act.
The principal issue for determination was the extent to which the suit was affected by section 28 of the Bombay Rents, Hotel and Lodging Rates Control Act, 1947. Section 28(1) provides that, notwithstanding any other law, the Court of Small Causes, Bombay, alone shall have jurisdiction to entertain and try any suit or proceeding between a landlord and a tenant that relates to the recovery of rent or the recovery of possession of premises to which any provision of the Part applies, and also to decide any application made under the Act and to deal with any claim or question arising out of the Act or any of its provisions, and that no other court shall have jurisdiction to entertain any such suit, proceeding, application, claim, or question. The section therefore identifies three distinct categories of matters: (i) suits or proceedings between a landlord and a tenant concerning the recovery of rent or possession, (ii) applications made under the Act, and (iii) any claim or question arising out of the Act or its provisions. It further stipulates that, for properties situated in Greater Bombay, only the Court of Small Causes may entertain or try such suits, consider such applications, or determine such claims or questions. Upon reviewing the plaint, the court concluded that the plaintiff’s suit did not fall within the first two categories enumerated in section 28. The suit was not an application under the Act, and it did not seek recovery of rent; consequently, it could not be characterised as a suit for rent or a suit for recovery of possession within the meaning of the first category. Therefore, the court held that the suit was outside the jurisdictional sweep of section 28 as it was framed.
The Court observed that the appellant’s argument that the suit fell within the second category of matters was untenable, because the second category is limited to applications filed under the Act, and a suit is clearly not an “application.” Turning to the first category, the Court noted that this category concerns only two types of suits between a landlord and a tenant: a suit for the recovery of rent and a suit for the recovery of possession of premises. The Court found that the respondent’s suit could not be characterised as a rent suit, since the plaint made no claim for any rent. Likewise, the Court held that the suit could not be described as a possession suit, because there was no indication that the parties were landlord and tenant, nor was there any claim for the recovery of possession of premises. The Court explained that the proper way to determine whether a suit belongs to this first category is by examining the pleadings, that is, the plaint filed by the plaintiff. The plaint submitted by the respondent does not disclose a landlord‑tenant relationship and does not contain a demand for possession, and therefore the suit does not fall within the first category.
Having excluded the first two categories, the Court proceeded to the third category, which comprises “claims and questions arising out of the Act.” The statutory provision states that, with respect to properties situated in Greater Bombay, only a Court of Small Causes has jurisdiction to deal with any claim or question that arises under the Act. The Court emphasised that this sub‑section does not seek to affect a court’s power to entertain and try a suit in general; rather, it merely bars a court from adjudicating any claim or question that falls within the scope of the Act. Consequently, a court may entertain a suit so long as the adjudication of that suit does not require it to decide a claim or question that arises under the Act. If the resolution of the suit inevitably involves such a claim or question, the practical effect would be to deprive the court of jurisdiction to try the suit at all.
The Court therefore identified the principal issue in the present dispute: whether the City Civil Court possessed jurisdiction, either in whole or in part, to try the respondent’s suit, given that doing so might compel the court to consider a claim or question arising under the Act. The Court asked whether the determination of the suit necessarily entails addressing any claim or question under the Act. If the answer is negative, the City Civil Court would retain full authority to proceed with the suit. Upon a plain reading of the plaint, the Court found that the present suit raises no claim or question that falls within the ambit of the Act. Nonetheless, the appellants contended that the defence, i.e., the written statement, introduced such a claim or question. The respondent, on the other hand, argued that the statutory provision is concerned solely with claims or questions presented in the plaint, and therefore the defence cannot be used to create jurisdictional limitations under the Act.
For the purpose of determining the jurisdiction of a court to entertain and try a suit, the relevant provision must be applied at the time the suit is instituted; consequently, it is irrelevant to consider the questions raised by the defence. The Court found it unnecessary to decide the dispute concerning whether the provision permits examination of the defence in order to ascertain whether a claim or question under the Act arises in the suit. The Court also clarified that it does not intend to be interpreted as accepting the proposition that reference to the written statement is altogether impermissible for deciding whether a court has jurisdiction under the provision to deal with a particular class of claims or questions. The central issue, the Court explained, is whether the court possesses jurisdiction to deal with a claim or question, not merely whether it has jurisdiction to entertain the suit itself. In the Court’s view, even the defence in the present case does not raise any claim or question under the Act, and therefore deciding that dispute is unnecessary. The defence simply contends that the appellants are not licencees. Although the appellants assert that they are sub‑tenants, they do so only to demonstrate why they are not licencees; the Court finds it irrelevant to inquire whether they are sub‑tenants. Accordingly, the defence amounts to a straightforward denial that the appellants are licencees as alleged in the plaint. This makes the sole issue of the suit the determination of whether the appellants are licencees of the shop. If the Court finds that they are not licencees, the suit must fail, and no other question falls for decision. Clearly, a question as to whether a defendant is a licencee is neither a claim nor a question that arises under the Act. Even if the defence, by claiming that the appellants are sub‑tenants rather than licencees, also raises the question of sub‑tenancy, the Court holds that such a question does not arise under the Act because the Act does not create tenancy; tenancy must be created by a contract. The inquiry into whether the appellants are sub‑tenants is essentially an inquiry into whether a tenancy contract exists between the appellants and the respondent, a matter outside the scope of the Act, which only regulates the relationship between landlord and tenant once a tenancy already exists. The appellants allege that the respondent cannot evict them because, as tenants, their right to possession is protected by the Act, and they therefore assert that a question arises as to whether they are entitled to remain in possession as sub‑tenants by virtue of the Act.
The Court observed that the suit could not be decided only by applying the provisions of the Act if a particular question remained unsettled, but it found no basis for concluding that such a question was essential to the determination of the respondent’s claim. The Court said that if the appellants were held to be licensees, the suit would necessarily be decreed in favour of the respondent, because that finding would also imply that the appellants were not tenants and therefore no issue concerning tenant rights under the Act would remain for consideration. Conversely, the Court held that if the appellants were found to be tenants rather than licensees, the suit would have to be dismissed, since the plaintiff’s claim rested solely on the allegation that the appellants were licensees whose licence had expired. In that alternative, the Court explained, it would be unnecessary to examine whether the appellants‑as‑tenants were entitled to protection from eviction under the Act, because the suit did not contain any claim for ejectment of the appellants in their capacity as tenants. Accordingly, the Court concluded that no question could arise in the present proceedings regarding the appellants’ entitlement to possession as tenants based on rights created by the Act. The Court further stated that, from any perspective, it was unable to find any necessity for deciding a question or claim arising out of the Act in order to resolve the suit. Counsel for the appellants relied on the decision in Babulal Bhuramal v. Nandram Shivram (1959) S.C.R. 367 to argue that a claim or question under the Act might arise only from a defence. The Court found it unnecessary to discuss the applicability of that precedent, because even the defence raised by the appellants did not present any such claim or question. Before concluding, the Court referred to section 51 of the Act, which provides that references to suits and proceedings under the Act include proceedings under Chapter VII of the Presidency Small Causes Court Act, 1882. Chapter VII of that Act contemplates actions for recovery of possession of premises from licensees after termination of licences in certain circumstances. The Court noted that it was not clear whether the present case fell within that category; if it did, jurisdiction might lie with the Small Causes Court rather than the City Civil Court under section 28. However, because no argument was advanced by counsel for the appellants on the basis of section 51 and because the facts necessary to invoke that provision were absent from the record, the Court declined to express any opinion on the matter.
In addressing the point raised, the judge indicated that his reference to the issue was intended solely to demonstrate that, should the question ever arise, it has neither been argued by the parties nor decided in the present proceedings. The judge further observed that it is appropriate to remark that the controversy might be considered moot because the appellants, according to their own statements, had entered into an agreement that was intended to defraud the superior landlord of the rights that the landlord derived under the statute. The alleged agreement was described as an unlawful sub‑letting arrangement, and the appellants sought to characterize the genuine relationship between themselves and the respondent as a simple sub‑tenancy despite the purported fraudulent scheme. On the basis of these considerations, the judge expressed concurrence with the order that had been proposed by his brother, Justice Das. Consequently, the appeal was dismissed.