Jeshwantrai Mulukchand vs Anandilal Bapalal

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

Court: Supreme Court of India

Case Number: Civil Appeal No. 539 of 1963

Decision Date: 7 December, 1964

Coram: M. Hidayatullah, J.C. Shah, R.S. Bachawat

In the case titled Jeshwantrai Mulukchand versus Anandilal Bapalal, the judgment was delivered on 7 December 1964 by the Supreme Court of India. The opinion was authored by Justice M. Hidayatullah, and the bench comprised Justices M. Hidayatullah, J. C. Shah, and R. S. Bachawat. The matter is reported in the 1965 volume of the All India Reporter at page 1419, and also appears in the 1965 Supplement to the Supreme Court Reports (Second Series) at page 350. Additional citations include R 1966 SC 439 (3), RF 1974 SC 471 (7). The statutory provision that governed the dispute was the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947, specifically clauses (a) and (b) of section 12(3), which relate to the application of standard rent and its fixation.

The appellant, who was the tenant, originally instituted a suit seeking fixation of the standard rent for the premises he occupied. While the suit was pending, he complied with the provisional standard rent that had been fixed by the Court of Small Causes. On 9 November 1956, the Court of Small Causes rendered a final order fixing the standard rent at the sum of one hundred twenty‑five rupees per month. Following this final order, both the tenant and the landlord filed revisions in the District Court; these revisions were disposed of on 25 March 1958, resulting in dismissal after contest. The record later indicates that the landlord pursued an additional revision before the High Court, but the documents do not disclose when or how that revision was dismissed.

Subsequent to the November 1956 order, the landlord demanded that the tenant pay the arrears calculated at the newly fixed rent rate and issued a registered notice to that effect. The tenant failed to make the demanded payment. Consequently, the landlord instituted the present suit, alleging that the tenant was in arrears for a period of six months and had not complied with the notice within one month. The suit was ultimately terminated in favor of the tenant on 28 April 1958 because, by that date, the tenant had settled the back rent calculated at the standard rate and had also paid the costs of the suit. The landlord appealed this decision to the Assistant Judge, contending that after the final fixation of the standard rent on 25 March 1956, the case fell under clause (a) of section 12(3) of the Act, which would permit eviction on the ground of six‑month arrears. The Assistant Judge rejected this contention, holding that the tenant was protected by clause (b) of section 12(3). The landlord then obtained a revision in the High Court, which reversed the Assistant Judge’s decision on the ground that clause (a) of section 12(3) applied to the facts of the case.

The present appeal was filed by special leave. The Supreme Court held that the appeal must be allowed. It observed that eviction under clause (a) is conditioned upon the coexistence of several considerations, one of which is the absence of any dispute concerning the amount of the standard rent. Clause (b) is intended to cover all situations that do not fall within clause (a). Where a dispute over the standard rent exists, the case cannot be placed within clause (a) and must therefore be governed by clause (b). Because the dispute continued—evidenced by the revisions filed by both parties—the tenant remained protected by clause (b) of section 12(3). Accordingly, the Court concluded that the landlord was not entitled to evict the tenant under the circumstances of the case.

In this case the Court observed that the decision reported at 4 S.C.R. 417 was distinguished and that the earlier case Vora Abbasbhai Alimahomed v. Haji Gulamnabi Haji Safibhai, reported in [1964] 5 S.C.R. 157, was referred to for comparative purposes. The matter came before the Civil Appellate Jurisdiction as Civil Appeal No. 539 of 1963, an appeal by special leave from the judgment and order dated 24 October 1961 and the supplementary order dated 16 January 1962 of the Gujarat High Court in Civil Revision Application No. 431 of 1960. Counsel for the appellant, whose name was omitted, represented the appellant, while counsel for the respondent represented the respondent. The judgment of the Court was delivered by Justice Hidayatullah. The appellant, Jeshwantrai Mulukchand, appealed by special leave against the judgment of the High Court of Gujarat dated 24 October 1961. He was a tenant of a shop owned by the respondent, Anandilal Bapalal. By the judgment now under appeal the High Court reversed the concurrent decisions of the two courts below and ordered the eviction of the appellant from the shop on the ground that he was in arrears for a period of six months in the payment of rent. By a supplementary order dated 16 January 1962 the High Court also granted mesne profits to the landlord until delivery of possession of the shop. The High Court differed from the two lower courts in its application of the third sub‑section of section 12 of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947, which governed the present proceedings. While the courts below applied clause (b) of that sub‑section, the High Court held that clause (a) applied. Before analysing that dispute the Court set out the factual background necessary to understand the differing points of view. The tenant had taken the shop on lease starting 1 April 1954 and had executed a rent note for Rs. 1551 per month. From 1 February 1955 the tenant ceased to pay rent. When the landlord demanded payment, the tenant instituted a suit for fixation of the standard rent. During the pendency of those proceedings the Court of Small Causes, Ahmedabad, acting under a provision of the Act, fixed a provisional standard rent of Rs. 80 per month, and the tenant subsequently paid Rs. 1600 by instalments for the period for which he was then in arrears. On 9 November 1956 the Court passed a final order fixing the standard rent at Rs. 125 per month. Both parties filed revisions against that order in the District Court, and those revisions were dismissed after being contested on 25 March 1958. The record indicates that the landlord thereafter filed a further revision in the High Court, although the exact date and manner of its disposal are not shown in the record. After the final order of 9 November 1956 the landlord demanded Rs. 1385 as the balance of rent due at the new rate until the end of January 1957 and sent a registered notice, but the tenant did not make payment. Consequently, on 4 March 1957 the landlord instituted the suit from which the present appeal arose, contending that the tenant was in arrears for six months.

It was observed that the tenant had failed to remit the arrears within one month after the notice was served. Consequently, the suit was concluded in favor of the tenant on 28 April 1958 because, by that date, the tenant had settled the outstanding rent calculated at a rate of Rs 125 per month and had also paid the costs of the suit in full. The landlord then filed an appeal before the Assistant Judge of Ahmedabad, contending that once the standard rent had been definitively fixed on 9 November 1956, the matter should be governed by clause (a) of section 12(3) of the Act. The landlord argued that, given the tenant’s six‑month arrears, the tenant ought to have been evicted under that provision. The Assistant Judge rejected the landlord’s appeal, holding that the tenant was instead protected by clause (b) of section 12(3) of the Act. The landlord subsequently sought revision before the High Court invoking Section 115 of the Code of Civil Procedure. The High Court reversed the earlier decision, holding that clause (a) of the third sub‑section of section 12 applied to the facts of the case. For the purpose of the adjudication, Section 12 of the Act, insofar as it was material, may be read as follows: “12. (1) 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 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 this Act. (2) (3)(a) Where rent is payable by the month and there is no dispute regarding the amount of the standard rent or permitted increases, if such rent or increases are in arrears for a period of six months or more and the tenant neglects to make payment thereof until the expiration of the period of one month after notice referred to in sub‑section (2), the Court shall pass a decree for eviction in any suit for recovery of possession. (b) In any other case, no decree for eviction shall be passed if, on the first day of hearing of the suit or on or before such other date as the Court may fix, the tenant pays or tenders in Court the standard rent and permitted increases then due and thereafter continues to pay or tender in Court regularly such rent and permitted increases until the suit is finally decided and also pays the costs of the suit as directed by the Court. (4) Explanation 1. In any case where there is a dispute as to the amount of standard rent or permitted increases recoverable under this Act, the tenant shall be deemed to be ready and willing to pay such amount if, before the expiry of the period of one month after notice referred to in sub‑section (2), he makes an application to the Court under sub‑section (3) of section 11 and thereafter pays or tenders the amount of rent or permitted increases specified in the order made by the Court.”

Counsel for the appellant submitted that the High Court could not invoke section 115 of the Code of Civil Procedure because no question of jurisdiction arose, and he relied upon Vora Abbasbhai Alimahomed v. Haji Gulamnabi Haji Safibhai (12). He further argued, in the alternative, that because the tenant had paid the provisional standard rent and had discharged all arrears of standard rent and costs before the suit was finally decided, the tenant could not be evicted under clause (a) of the third sub‑section, and he referred again to the same precedent. Counsel for the landlord, on the other hand, contended that after the court fixed the standard rent at Rs 125 per month, there was no longer any dispute concerning the amount of standard rent. He explained that rent was payable monthly, the tenant was in arrears for six months, and the tenant failed to pay the arrears of the standard rent fixed within one month of the notice served to him. Accordingly, the landlord argued that the court was bound to pass a decree of eviction under clause (a). This was the position taken by the High Court, and counsel for the landlord relied upon Vasumatiben Gaurishankar Bhatt v. Naviram Mancharam Vora and Others (2). The Court observed that the decision relied upon by the landlord’s counsel did not apply to the present facts. In the Court’s view, it was unnecessary to decide the first contention raised by counsel for the appellant because the appeal could be disposed of on the basis of the rival contentions concerning the second point. The Court then turned to the two clauses, (a) and (b), of section 12(3). Eviction under clause (a) is conditioned upon several requirements that must coexist, and these requirements were fully set out in the summary of the landlord’s argument. One essential requirement is that there be no dispute as to the amount of standard rent. Clause (b) covers all cases that do not fall within clause (a); consequently, any case in which a dispute about the standard rent exists must be dealt with under clause (b). In the present matter there was indeed a dispute about the standard rent. The tenant had already filed an application for fixation of the standard rent, had paid the arrears of provisional standard rent, and had complied with the requirements of clause (b). Accordingly, the tenant was protected. The Court noted the authorities cited, namely (1) 1964 5 S.C.R. 157 and (2) 1964 4 S.C.R. 417.

The landlord’s counsel further contended that the dispute concerning the standard rent ceased on 9 November 1956, when the court fixed the standard rent at Rs 125 per month, asserting that this would be correct if the parties had accepted the determination. However, neither party accepted the amount; each filed a revision in the District Court. It was striking that the landlord himself repeatedly filed revisions in an attempt to increase the amount, which demonstrated that the dispute continued. Because the dispute persisted, the case could not be governed by clause (a) but fell within clause (b). The High Court, therefore, erred in applying clause (a) and in overturning the decision of the Assistant Judge, Ahmedabad. The Court concluded that the High Court’s judgment must be set aside and that the decision of the Assistant Judge should be restored, with the respondent bearing the costs throughout.

In its reasoning, the Court observed that the previous decisions had been rendered in accordance with the latter provision. On the basis of that observation, the Court concluded that the appeal must succeed. Accordingly, the Court ordered that the judgment delivered by the High Court be set aside. In its place, the Court directed that the judgment originally pronounced by the Assistant Judge of Ahmedabad be restored to the position it occupied before being displaced. The Court further directed that the respondent be required to bear all costs incurred throughout the litigation. By making these orders, the Court affirmed that the appeal was allowed and that the relief sought by the appellant would be granted in full.