Ramkarandas Radhavallabh vs Bhagwandas Dwarkadas
Rewritten Version Notice: This is a rewritten version of the original judgment.
Court: Supreme Court of India
Case Number: Civil Appeal No. 851 of 1964
Decision Date: 20 November 1964
Coram: A.K. Sarkar, R.S. Bachawat
In the matter of Ramkarandas Radhavallabh versus Bhagwandas Dwarkadas, decided on 20 November 1964, the Supreme Court of India heard a petition filed by Ramkarandas Radhavallabh (the appellant) against Bhagwandas Dwarkadas (the respondent). The judgment was authored by Justice A K Sarkar, with Justice R S Bachawat also sitting on the bench. The case was cited as 1965 AIR 1144 and involved the Bombay Rents, Hotel and Lodging House Rates (Control) Act, 1947, specifically the rules framed under the Act, notably Rule 8, together with the question of whether the Code of Civil Procedure, 1908, section 151 on inherent powers could be exercised. The appellant was a tenant of a flat in Bombay and the respondent was the landlord. Both parties were governed by the Bombay Rents, Hotel and Lodging House Rates (Control) Act, 1947. Under that Act, Rule 8 incorporated the provisions of Order 37 of the Civil Procedure Code into suits for possession brought by a landlord against a tenant. The landlord initiated an ejectment suit against the tenant in accordance with the procedure specified in Rule 2 of Order 37, as amended by the Bombay High Court. The trial court, applying that procedure, granted the tenant leave to defend the suit provided that he paid the arrears of rent in fixed installments. The tenant failed to make those payments, and the trial court consequently passed a decree for possession without again granting him leave to defend. The tenant then applied under Rule 4 of Order 37 to have that decree set aside, arguing that the special circumstances required for invoking Rule 4 were absent. The trial court rejected the application, holding that the requisite special circumstances did not exist. On appeal, the Court of Small Causes overturned the decree, observing that the trial court should have considered whether its inherent powers under section 151 of the Code could be invoked. The landlord appealed that decision, and the High Court held that section 151 was not applicable to the facts of the case. The tenant obtained special leave to approach the Supreme Court. In addition to the question of the applicability of section 151, the tenant contended that Rule 8, which made Order 37 applicable to suits arising under the Rents Act, was ultra vires. He argued that the Rents Act required the court to consider the tenant’s position and to exercise discretion in deciding whether to pass a decree, whereas Rule 2 of Order 37, once a tenant defaulted, left the court with no alternative but to pass a decree against the tenant. The Supreme Court held that inherent powers are to be exercised only in very exceptional circumstances for which the Code provides no specific procedure. It observed that Rule 4 of Order 37 expressly confers on a court the power to set aside a decree under that Order, and therefore, if a case does not fall within the ambit of Rule 4, there is no scope to resort to section 151 to set aside such a decree. The Court further noted that the appeal was directed against the order passed on an application made by the tenant under Rule 4 of Order 37.
Rule four of Order Thirty‑seven was the basis of the tenant’s application to set aside the decree. The Court explained that even if the tenant’s contention that Order Thirty‑seven did not apply were accepted, the legal effect would not be the setting aside of the decree. Instead, the application would simply be dismissed as incompetent because it rested on a premise the Court would not recognize. Consequently, no relief could be granted in the appeal on the ground that Order Thirty‑seven was inapplicable.
The Court also clarified a common misconception that a refusal to grant leave to defend automatically obliges the court to pass a decree against the defendant. The Court observed that sub‑rule two of rule two of Order Thirty‑seven requires the court to accept the statements made in the plaint as correct and to pass a decree only to the extent that the plaintiff is legally entitled to obtain one based on those statements. If the plaint fails to disclose any cause of action, the court lacks authority to issue a decree in the plaintiff’s favour. Moreover, when the law mandates that the court must exercise discretion on facts that are deemed admitted, the court is required to undertake that discretionary exercise.
Regarding the procedural scheme of Order Thirty‑seven, the Court noted that the defendant might not be permitted to present his side of the case for the purpose of assisting the court in exercising its discretion. However, the Court held that this limitation does not create any conflict with the Bombay Rents, Hotel and Lodging House Rates (Control) Act, 1947. The Court explained that procedural rules may be framed to guide the exercise of rights, and such rules are not ultra vires merely because the right must be exercised in accordance with them. Accordingly, rule eight of the same order was not ultra vires.
The judgment concerned a civil appeal numbered 851 of 1964, which was filed by special leave against a February 17, 1964 judgment and order of the Bombay High Court in Civil Revision Application 1969 of 1962. The appellant, who was the tenant of a third‑floor flat in Bombay, had his tenancy governed by the Bombay Rents, Hotel and Lodging House Rates (Control) Act, 1947, hereinafter referred to as the Rents Act. The respondent, identified as the landlord, obtained an ejectment decree against the tenant in a suit instituted under Order Thirty‑seven of the Code of Civil Procedure. The present appeal arose from the tenant’s application under rule four of that order seeking to set aside the decree. The central question before the Court was whether that decree should be set aside. Although a number of procedural steps occurred between the parties before the impugned judgment was delivered, the Court deemed it unnecessary to discuss each of those steps in detail. The original suit had been filed in the Court of Small Causes, Bombay, on November 1, 1960, seeking ejectment on two grounds: first, the tenant’s default in paying rent; and second, alleged unlawful sub‑letting of the demised premises.
In the present matter, the landlord relied on the Bombay Rents, Hotel and Lodging House Rates (Control) Act, 1947, which authorises an ejectment decree when the statutory grounds of rent arrears and unlawful sub‑letting are proved. The tenant entered an appearance in the suit on 3 December 1960. Subsequently, on 23 March 1961, the landlord issued a summons for judgment under Order 37 rule 2. The tenant opposed that summons by filing an affidavit in which a number of defences to the ejectment claim were set out, although the specific content of those defences was not required for the present narration. On 2 May 1961, the parties jointly obtained an order on the summons. That consent order directed the tenant to deposit money with the court in instalments to cover the arrears of rent and provided that if the tenant defaulted on any of the stipulated dates, the suit would be set down for disposal in accordance with law. The effect of the consent order was to give the tenant a conditional liberty to defend the action; a failure to satisfy the payment conditions would, under Order 37 rule 2, deprive the tenant of the right to continue the defence. The first instalment was due on 1 June 1961, but the tenant failed to make the payment. The tenant then applied for an extension of time, an application that was rejected on 22 June 1961. An appeal against the refusal of extension was filed but was dismissed. The tenant also appealed the May 2 consent order, and that appeal likewise failed. After these procedural steps, the suit was placed on the court’s list on 28 June 1961, and on that same day a decree of ejectment was pronounced under Order 37, based solely on the statements in the plaint and without allowing the tenant any opportunity to appear or to oppose the decree. The decree that was thus passed is the decree that the tenant later sought to have set aside. The foregoing sequence of proceedings constitutes the material procedural history relevant to this judgment.
On 12 September 1961 the tenant filed an application under rule 4 of Order 37 seeking to set aside the ejectment decree. The trial court dismissed the application, holding that the tenant had not established any special ground required by rule 4 of Order 37 to justify setting aside the decree. Dissatisfied, the tenant appealed the trial‑court order to a bench of the Court of Small Causes under section 29 of the Rents Act, which treated the appeal as a revision. The bench of the Small Causes Court affirmed the trial‑court’s finding that the tenant had not shown the special circumstances contemplated in rule 4 of Order 37. However, the bench observed that it had not examined whether relief could be granted to the tenant under section 151 of the Code of Civil Procedure. Relying on that provision, the bench set aside the ejectment decree. The landlord then appealed this judgment to the High Court. The High Court upheld the findings of the lower courts that no special circumstances existed which would warrant setting aside the decree, and it further held that section 151 of the Code could not be invoked in the present case because rule 4 of Order 37 already provided a specific mechanism for set‑aside of such decrees.
In this matter, the High Court observed that no special circumstances existed that would permit the decree to be set aside. It held that Section 151 of the Code of Civil Procedure could not be applied because Rule 4 of Order 37 of the Code contains a specific provision for setting aside a decree passed under that order. The High Court therefore concluded that the special provision in Rule 4 barred any reliance on the inherent powers of Section 151. In addition to this finding, the High Court rejected the other submissions advanced by the tenant; one of those submissions will be referred to later in this judgment. Consequently, the High Court allowed the landlord’s appeal, and the present appeal before this Court arose from that decision. The counsel for the tenant argued that the High Court was incorrect in holding that Section 151 had no application to the present facts. This Court was unable to accept that contention. The Court cited its earlier observation in Manohar Lal v. Seth Hiralal, wherein it was stated that “The inherent powers are to be exercised by the Court in very exceptional circumstances, for which the Code lays down no procedure.” This well‑recognised principle underscores that the inherent powers are to be used only in rare situations not covered by the procedural code. Rule 4 of Order 37 expressly authorises a Court to set aside a decree that has been passed under the provisions of that Order, providing an express mechanism for such relief. Because a specific provision exists for setting aside a decree under Order 37, the Court cannot resort to Section 151 when the case does not fall within the scope of Rule 4. Accordingly, this Court agreed with the High Court that the appellate bench of the Court of Small Causes erred when it set aside the ex parte decree by invoking Section 151. All courts have consistently held, and this Court concurs, that no circumstances justified the setting aside of the decree under Rule 4 of Order 37 in the present case. The tenant’s counsel did not rely on any such special circumstances before this Court, and therefore no question of setting aside the decree under that rule arose. The tenant’s next argument was that Order 37 should not apply to an ejectment decree because the Rents Act alone governs such decrees. Section 49 of the Rents Act empowers the Government to make rules to give effect to its provisions. Under that authority, the Government issued rules, and Rule 8 of those rules provides that suits filed under the Act may be instituted in accordance with the procedure laid down in Order 37. By virtue of Rule 8, the landlord instituted his ejectment suit following the procedure specified in Order 37. The High Court of Bombay subsequently amended certain provisions of Order 37 as contained in the Code. The amended Rule 2, as it is relevant here, reads: “Suits in which the landlord seeks to recover possession of immovable property… may, if the plaintiff desires to proceed hereunder, be instituted by presenting a plaint in the prescribed form but the”
The rule stipulated that the summons had to be issued in form number four contained in appendix B, or in any other form that might be prescribed from time to time. The same rule further provided that when both the plaint and the summons were in the prescribed forms, the defendant was prohibited from defending the suit unless he first entered an appearance and subsequently obtained leave from a Judge as provided later in the rule. In the event that the defendant failed to make such an appearance and to secure the requisite leave, the allegations set out in the plaint would be deemed admitted, and the plaintiff would consequently be entitled to a decree for possession. The judgment cited the authority “[1962] Supp. 1 S.C.R. 450” in support of this procedural requirement.
According to the Court, the decree in the present case had been passed without giving the tenant an opportunity to be heard because the tenant had been granted leave to defend on 2 May 1961 on the condition that he pay the arrears of rent in instalments as prescribed in the order. That order had been made by consent, and the tenant subsequently failed to fulfil the condition of payment. As a result, the earlier leave to defend was withdrawn, and the case was treated as though no leave to defend had ever been granted. Under sub‑rule (2) of rule 2 of Order 37, this circumstance entitled the landlord to obtain a decree for possession.
The tenant’s counsel argued that, under the provisions of the Rents Act, the landlord was not automatically entitled to a decree as a matter of right. The counsel maintained that the Court was required to consider the tenant’s position and possessed a discretion either to pass or to refrain from passing a decree. Consequently, the counsel submitted that the provisions of rule 2 of Order 37, which compelled the Court to pass a decree in situations covered by that sub‑rule, should be regarded as inapplicable to a suit governed by the Rents Act. On this basis, the counsel further contended that rule 8 of the Rules made under the Rents Act was ultra‑vires and void.
The Court identified a preliminary difficulty with this line of argument. Even assuming the contention were correct, the Court could not, on the present appeal, make an order setting aside the decree. The appeal arose from an application originally filed in a Court of Small Causes under rule 4 of Order 37 by the tenant itself. If the tenant’s contention were valid, that application would have been wholly incompetent, but the appropriate consequence would have been only the dismissal of the tenant’s application, not the overturning of the decree already issued. The tenant would have to pursue separate appropriate proceedings to demonstrate that the decree was ineffective, should it wish to argue that the suit had not been instituted in accordance with the lawful procedure and that it had been unlawfully denied a hearing. Having already relied on Order 37, the tenant could not now maintain that the Order was entirely inapplicable.
The Court observed that the order in question was entirely inapplicable to the present dispute. Further, by consenting to the Order dated May 2, 1961, the party had clearly accepted that the suit had been properly instituted under Order 37. Consequently, the party could not now reverse its stance in the proceedings that originated from that very suit. For that reason alone, the Court concluded that no relief could be granted to the party on appeal based on the present contention. On the merits, the Court held that the contention was fundamentally flawed. The contention assumed that once leave to defend was denied, the Court was compelled to pass a decree. The Court explained that sub‑rule (2) of rule 2 of Order 37 merely requires the Court to accept the statements in the plaint as true and to pass a decree that the plaintiff may be entitled to under law. If the plaint fails to disclose any cause of action, the Court lacks authority to issue a decree in the plaintiff’s favor. Had this not been the case, the phrase “allegations in the plaint shall be deemed to be admitted” in sub‑rule (2) of rule 2 would be unnecessary. When making a decree under sub‑rule (2), rule 2, the Court must still consider applicable law. If the law mandates that the Court exercise discretion based on the admitted facts, the Court must do so. Although the procedural scheme of Order 37 does not permit the defendant to present his case at the hearing to aid the Court’s discretion, this limitation does not create any conflict with the Rents Act. A rule may consistently require the defendant to follow a specific procedure and to act within a prescribed time to be heard. For example, a defendant who fails to appear in an ejectment suit not filed under Order 37 cannot claim that the Act grants him a right to appear and present his case before the Judge. The Court affirmed that the Act does not contemplate such a right and that it cannot be allowed. Procedural rules may be framed to regulate the exercise of rights, and such rules are not ultra vires merely because they prescribe the manner of exercising those rights. Accordingly, the Court did not consider rule 8 to be ultra vires. In the preceding discussion the Court proceeded on the premise that the Court possessed discretion. Certain provisions of sections 12 and 13 of the Rents Act had been read to confer that discretion on the Court. The Court deemed it unnecessary to express an opinion on that specific contention and therefore refrained from doing so.
In this case the Court concluded that the appeal did not succeed. Consequently the Court ordered that the appeal be dismissed. The dismissal was accompanied by an order that the costs of the proceedings be awarded against the party who had brought the appeal. Thus the final determination was that the appeal was to be thrown out and that the appellant was required to pay the costs incurred. No further relief was granted, and the matter was closed on that basis. The decision therefore amounted to a complete refusal of the appellant’s request for relief, with the additional consequence that the appellant must bear the expenses of the litigation. The order to dismiss the appeal together with the costs represents the total relief granted by the Court in these proceedings.