Shah Dhansukhlal Chhaganlal Vs.
Dalichand Virchand Shroff & Ors  INSC 52 (1 March 1968)
01/03/1968 MITTER, G.K.
CITATION: 1968 AIR 1109 1968 SCR (3) 346
CITATOR INFO :
RF 1976 SC2005 (23) RF 1977 SC1707 (12)
E&R 1978 SC 955 (1,4,5,10) C 1980 SC 954 (11)
Bombay Rents Hotel and Loading House Rates
Control Act, 1947-Ss. 12(1) and 12(3) (b)-Conditions for benefit under.
The appellant was a tenant of the respondent.
Having fallen into arrears of rent he was given a notice (a) demanding arrears
of rent and permitted increases under the Bombay Rents. Hotel and Lodging House
Rat-as Control Act, 1947, and (b) terminating his tenancy in terms of s. 106 of
the Transfer of Property Act, Receiving no response to the notice the
respondent filed a suit against the appellant.
On the first day of the Heading of the suit
and during its pendency the appellant deposited part of the arrears in Court
but not the full amount due. The trial Court passed a decree against him which
was confirmed by the appellate Court. The High Court dismissed his revision
With special leave-- he appealed to this
Court and urged that (i) he was entitled to the benefit of s. 12 ( 1 ) of the
Act and that (ii) even if s. 12 (3) (b) was applied he was not liable to be
HElD : (i) Section 12(1) must be read with
the Explanation and so read it means that a tenant can only be considered
"to be ready and willing to pay" if, before the expiry of the period
of one month after notice referred to in sub-s. (2), he makes an application to
the court under sub-s. (3) of section 11 and hereafter pays or tenders the
amount of rent or permitted increases specified by the court. The readiness and
willingness to pay has to be judged in the light of the facts of the case.
Where as in the present case a suit is filed on the ground that the tenant was
in arrears for a period of more than six months and although raising a dispute
as to the standard rent or permitted increases recoverable under the Act, the
tenant makes no application in terms of s. 11(3) he cannot claim the protection
of s. 12(1) by merely offering to pay or even paying aii arrears due from him
when the court is about to pass a decree against him. [351 H-352 B] Shah Bhojraj
Kuverji Oil Mills and Ginning Factory v. Subbash Chandra Yograi Sinha,  2
S.C.R. 159, distinguished.
Vora Abbasbhal Alimahomed v. Haii Gulamnabi
Haii Safibhai,  5 S.C.R. 157, Mrs. Manordma Masurekar v. Mrs. Dhanlaxmi
G. Shah and another.  1 S.C.R. 135, applied.
(ii) The case did not come under s. 12(3)
(b). To be within the protection of that provision, the tenant must not only
pay all the arrears due from him on the first day of the hearing of the suit,
but he must thereafter continue to 'pay or tender in court regularly the rent
and the permitted increase till the suit is finally decided. There was a
failure on the part of the appellant to pay or tender in court all the amounts
which fell due, and he could not therefore get the protection of s. 12(3) (b)
of the Act.
CIVIL APPELLATE JURISDICTION: Civil Appeal
No. 455 of 1965.
Appeal by special leave from the judgment and
order dated September 11, 1962 of the Gujarat High Court in Civil Revision
Application No. 150 of 1960.
347 G. L. Sanghi, and B. R. Agarwala, for the
O. P. Malhotra and Ravinder Narain, for the
respondents Nos. 1 to 4.
The Judgment of the Court was delivered by
Mitter, J. This is an appeal by special leave from a judg- ment of the High
Court of Gujarat passed in a Civil Revision Application arising out of a suit
filed by the plaintiff- respondent against the defendant-appellant to recover
possession of certain premises situate in Surat.
The facts are as follows. The appellant
became a tenant of the respondent under a rent note executed on February 27,
1947 whereby rent was fixed at Rs. 40 per month and the tenancy was to be for a
period of one year from 22nd February, 1947. After the expiry of the said
period, the appellant continued as a monthly tenant on the same terms and
conditions as were to be found in the rent note. He fell into arrears of
payment of rent and the respondent sued him for eviction some time in 1951. The
suit was eventually compromised by a petition put in court bearing date
September 16, 1952. Under the terms of the compromise, the defendant continued
as a tenant from September 1, 1952 on the terms and conditions of the rent note
dated February 27, 1947: the original conditions in respect of rent also
continued excepting that the rate was lowered from Rs. 40/- -to quote the words
of the compromise-to "standard rent of Rs. 27" and "in the
matter of taxes and interest also the defendant was to act in accordance with
the conditions of the aforesaid rent note." Paragraph 2 of the compromise
petition contained an account of payments made by the defendant the final.
result thereof being that it was agreed between the parties that the defendant
had-paid Rs. 104-5-3 "which amount was to be rcmbursed by the plaintiff to
the defendant when accounting the future payment of rent." It should be
noted here that according to the rent note of 1947 the tenant had agreed to pay
the monthly rent of Rs. 40 together with interest at Rs. 0-12-0 per cent per
annum in respect of any balance due for rent. Even after the compromise, the
defendant fell in arrears again. The only payments made thereafter up to the
institution of the second suit out of which the present proceedings have arisen
were a sum of Rs. 250 on July 19, 1954 and Rs. 200 on March 17, 1955. The
defendant did not make any payment to the plaintiff in rcspect of the permitted
increases under the Bombay Rents, Hotel and Lodging House Rates Control Act,
1947 from the 1st of April, 1954; neither did he pay the taxes agreed upon. The
plaintiff gave a notice to the defendant on April 18, 1955 demanding the
arrears of rent and permitted increases in terms of the said Act and also
terminating the tenancy of the defend- 348 ant with effect from May 31, 1955 in
terms of s. 106 of the Transfer of Property Act. The notice was received by the
defeiidant on April 21, 1955. No reply was sent thereto nor was any payment
made to the plaintiff. The suit for ejectment was filed on March 15, 1956 the
ground thereof as laid in the plaint being that the defendant was in arrears of
payment of rent and permitted increases and as such not entitled to the
protection of the Act. In paragraph 6 of the plaint the dues under various
heads were specified showing the arrears of rent, increases permitted thereon,
interest in terms of the rent note and taxes for three years. It was pleaded by
the defendant in the written statement that rent at Rs. 27 had been fixed by
the court without going into the merits of the case and that standard rent or
reasonable rent of the property in suit had to be fixed first and a preliminary
issue in that respect should be framed. The defendant did not admit the claim
to the arrears as laid in paragraph 6 of the plaint.
He also pleaded that the notice of ejectment
was not a valid one as the tenancy was to be reckoned in terms of the Gujarati
calendar and not the Gregorian calendar.
The date fixed for settlement of issues was
September 3, 1956 which can be taken to be the date of the first hearing of the
suit for the purposes of the Act. On that day the defendant deposited in court
a sum of Rs. 1,000. Thereafter the defendant made a deposit of a sum of Rs. 150
on February 25, 1957. The suit was decreed by the trial Judge on March 25,
1957. The trial Judge after considering the evidence on record determined the
standard rent of the premises at Rs.
27, exclusive of the permitted increases and
water tax and sanitary tax, payable by the defendant to the plaintiff.
Holding that the defendant had not complied
with section 12(3)(b) of the Act he passed a decree for eviction. The defendant
went in appeal to the District Judge, Surat. He raised no contention even at
the heart in of the appeal either in regard to the standard rent of the
premises or in regard to interest on arrears of rent or municipal taxes or
permitted increases. The finding of the trial Judge that the standard rent of
the premises exclusive of permitted increases and water tax and sanitary tax
was Rs. 27,1- per month was not challenged by the defendant. Nor was any
question raised as to the finding that the defendant was liable to pay the
plaintiff a sum of Rs. 123-4-0 as and by, way of interest on arrears of rent, a
sum of Rs. 81 as and by way of water tax and sanitary tax for a period of three
years prior to the date of the suit and a sum of Rs. 2-1-9 per month as and by
way of permitted increases from April 1, 1954. The point regarding the validity
of the notice of ejectment was however raised in the appeal. According to the
judgment of the High Court, "the only contention urged 349 before the
learned Assistant Judge was, whether the defendant had or had not complied with
the requirements of section 12(3)(b) of the Rent Act." The Assistant Judge
concluded that there had been no compliance with that section and upheld the
decree for eviction.
In revision three contentions were. raised
before the High Court, namely, (1) as to the validity of the notice of
ejectment; (2) whether s. 12(3)(a) or 12(3)(b) of the Act applied; and(3)
whether the defendant was entitled to protection under s. 12(1) of the Act. The
High Court held that it was not open to the tenant to raise the question of the
validity of the notice in a revision application.
Moreover, there was no substance in it as the
compromise petition expressly recorded that the tenancy in terms of it should
commence on September 1, 1952. With regard to the second question the High
Court held that "it was common ground between the parties before the
Assistant Judge that the case of the defendant fell within section 12(3) (b) of
the Rent Act." The learned Judge of the High Court noted:
(a) The trial Judge turned down the
applicability of s. 12(3) (a) of the Act holding that the defendant had
disputed the municipal taxes and permitted increases;
(b) The, conditions under s. 12(3) (b) of the
Act were not fulfilled;
(c) No contention about the applicability of
12(3) (a) was raised before the Assistant Judge in appeal and he therefore did
not go into the question at all; and (d) The conditions necessary for the
applicability of s. 12(3)(a) were not present, as besides the amount of Rs. 27
mentioned in the compromise petition, the tenant had to pay other sums not due
from him every month.
The High Court further found that after the
first date of hearing of the suit on September 3, 1956 rent of the premises
which fell due on 1st October 1956, 1st November 1956, 1st December 1956, 1st
January 1957, 1st February 1957 and 1st March, 1957 remained unpaid on March
25, 1957 when the suit was disposed of. As the defendant did not pay or deposit
in court regularly the amount of standard rent which became due on the
aforesaid dates barring the 1st of March 1957 (taking into account the deposit
of Rs. 150 on February 25, 1957) there was default on the part of the defendant
attracting the operation of s. 12(3)(b) of the Act.
350 The High Court turned down the contention
based on s. 12(1) of the Act.
At the hearing of the appeal before us,
learned counsel for the appellant raised two points, namely:
(1) The provisions of S. 12(1) of the Act
were applicable throughout the hearing of the suit and down to the date of the
final hearing. If at that stage it was found that the defendant had paid up all
arrears due from him he could not be ejected.
(2) Even applying S. 12(3)(b) there was no
default on the part of the defendant which would render him liable to eviction.
In order to appreciate the first contention
it is necessary to set out section 12 of the Act as it stood at the relevant
"12(1)A landlord shall not be entitled
to the recovery of possession of any premises so long as the tenant pays, or is
ready and willing to pay, the amount of the standard rent and permitted
increases, if any, and observes and performs the other conditions of the
tenancy, in so far as they are consistent with the pro- visions of this Act.
(2) No suit for recovery of possession shall
be instituted by a landlord against a tenant on the ground of non-payment of
the standard rent or permitted increases due until the expiration of one month
next after notice in writing of the demand of the standard rent or permitted
increases has been served upon the tenant in the manner provided in section 106
of the Transfer of Property Act, 1882.
(3) (a) Where the rent is payable by the
month and there is no dispute regarding the amount of 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 may pass a decree for eviction in any such suit for recovery of
(b) In any other case, no decree for eviction
shall be passed in any suit, 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 conti-
351 nues to pay or tender in court regularly such rent and permitted increases
till the suit is finally decided and also pays costs of the suit as directed by
(4) Pending the disposal of any such suit,
the Court may out of any amount paid or tendered by the tenant pay to the
landlord such amount towards payment of rent or permitted increases due to him
as the Court thinks fit.
Explanation.-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." Learned
counsel drew our attention to a judgment of this Court in Shah Bhojraj Kuverji
Oil Mills and Ginning Factory v. Subbash Chandra Yograj Sinha(1). There the
landlord had filed a suit for possession of the premises on April 25, 1957, the
period of tenancy fixed under the rent note having expired on March 14, 1957.
Under s. 6 of the Act a notification was issued applying Part II of the Act to
the area where the property was situate. The appellants claimed protection of
s. 12 of the Act and the main question which engaged the attention of this
Court was, whether by virtue of the first proviso to s. 50 of the Act, all the
provisions in Part 11 including s. 12 were made expressly applicable to all
suits; and secondly, whether by virtue of s. 12(1) of the Act the suit was
rendered incompetent. This Court turned down the contention of the respondent
that the operation of s. 12(1) was limited to suits filed after it came into
force in a particular area and observed that under s. 12(1) the landlord was
not to be entitled to recover possession and the point of time when the
sub-section would operate was when the decree for recovery of possession would
have to be passed, It appears to us that there is no substance in the contention
put forward on behalf of the appellant. Section 12(1) must be read with the
Explanation and so read it means that a tenant can only be considered "to
be ready and willing to pay" 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 s. (3) of section 11 and thereafter pays or tenders the
amount of (1)  2 S.C.R. 159.
352 rent or permitted increases specified by
the court. We have already noted that the tenant made no payment within the
period of one month of the notice of ejectment and although in his written
statement he raised a dispute about the standard rent he made no application in
terms of s. 1 1(3) of the Act. The readiness and willingness to pay has therefore
to be judged in the light of the facts of the case. Whereas here a suit is
filed on the ground that the tenant was in arrears for a period of more than 6
months and although raising a dispute as to the standard rent or per- mitted
increases recoverable under the Act, the tenant makes no application in terms
of s. 11(3) he cannot claim the protection of s. 12(1) by merely offering to
pay or even paying all arrears due from him when the court is about to pass a
decree against him. In Vora Abbasbhai Alimahomed lv.
Hai; Gulamnabi Haji Safibhai(1) it was
pointed out that s.
12(1) of the Act applied to a tenant who
continued to remain in occupation even after the expiry of the contractual
tenancy so long as he paid or was, ready and willing to pay the amount of the
standard rent and permitted increases.
The protection was howsoever available to a
tenant subject to the provisions of s. 13 and to the limitations contained in
s. 12(2) and s. 12(3)(a) of the Act.
In Mrs. Manorama Masurekar v. Mrs. Dhanlaxmi
G. Shah and another ( 2 ) rent was in arrears for a period of more than six
months and the tenant neglected to make payment of the same within one month of
the notice under s. 12(2). There the rent was payable by the month and there
was no dispute regarding the amount of the rent. It was held that if the
conditions of sub-s. (3)(a) of s. 12 were satisfied the tenant could not claim
any protection from eviction by tendering the arrears of rent after the expiry
of one month from the service of notice under sub-s. (2). It was observed :
"It is immaterial whether the tender was
made before or after the institution of the suit.
In a case falling within sub-s. (3)(a), the
tenant must be dealt with under the special provisions of sub-s. (3)(a), and he
cannot claim any protection from eviction under the general provisions of
sub-s. (1)" As already noted, if sub-s. (3)(a) is not attracted, the
tenant, if he is in arrears, cannot sit quiet and offer to pay all the amount
due from him at the time of the hearing of the suit so as to get the protection
of s. 12(1). To be within the protection of subs. (1) where he raises a dispute
about the standard rent payable, he must make an application to the court under
sub-s. (3) of S. 11 and thereafter pay or tender the amount of rent and
permitted (1)  5 S.C.R. 157.
(2)  1 S.C.R. 135.
353 increases, if any, specified in the order
made by the Court.
If he does not approach the court under s. 1
1(3), it is not open to him thereafter to claim the protection of s. 12(1).
The case clearly does not come within s.
12(3)(b). To be within the protection of that provision, the tenant must not
only pay all the arrears due from him on the first day of hearing of the suit,
but he must thereafter continue to pay or tender in court regularly the rent
and the permitted increases till the suit is finally decided. Before the date
of the suit, the appellant was entitled to a credit of Rs.
104-5-3; the total payments up to the date of
the first hearing including the. sum of Rs. 1,000 come to Rs. 1,554-5- 3. The
amounts due from him, up to that date were :
(a) rent at the rate of Rs. 27 per month for
48 months. Rs. 1296-0-0 (b) permitted increases from 1-4-54 to 1-9-56. 61-3-9
(c) taxes. 81-0-0 (d) Interest on arrears at 9% p.a. 123-3-0 ------- making a
total of Rs. 1561-6-9 Moreover, there was failure on the part of the appellant
to pay or tender in court the amounts which fell due from the 1st of October
1956 to the 1st of March, 1957. Thus, leaving out of consideration the question
of costs awarded against him under the decree, the appellant cannot get the
protection under s. 12(3)(b) of the Act. A faint attempt was made to raise the
point about the invalidity of the notice of ejectment on the plea that the same
had to comply with s. 12(2) of the Act. This is clearly fallacious as the said
section merely lays down the manner in which a notice of demand of standard
rent and permitted increases has to be made.
The contentions raised on behalf of the
appellants are therefore without any merits and the appeal is dismissed with
G.C. Appeal dismissed.