Ltd Vs. M/S Parvathy Swaminathan & Sons  Insc 1005 (5 October 2007)
Thakker & P. Sathasivam
APPEAL No. 2805 OF 2005 C.K. THAKKER, J.
This appeal by special leave is filed by the appellant-Carona Ltd. (hereinafter
referred to as 'the tenant') against the judgment and order passed by the High
Court of Judicature at Bombay on November 1, 2004 in Writ Petition No. 8781 of
2004. By the said order, the learned Single Judge of the High Court dismissed
the writ petition filed by the tenant and confirmed the order passed by a Bench
of Small Causes Court at Bombay on August 3, 2004 in Appeal No. 277 of 2003
which in turn confirmed the judgment and decree of eviction dated February 11,
2003, passed by a Judge of Small Causes Court at Bombay in T.E. & R. Suit
No. 226/240 of 2001 in favour of the respondent-partnership firm (hereinafter
referred to as 'the landlord').
appreciate the controversy raised in the present appeal, few relevant facts may
appellant-tenant was the original defendant whereas the respondent-landlord was
the original plaintiff in the suit instituted in the Court of Small Causes at Bombay. The landlord is a partnership firm
registered under the Partnership Act, 1932. It owned a premises, bearing Shop
No. 2, situated at ground floor of Plot No. 3, A.M. Ward, Chembur, Govind Road, Mumbai (hereinafter referred to as
'the suit premises'). According to the landlord, the suit premises was let out
to the tenant. It was alleged that tenant was not paying rent regularly. It
also initiated certain proceedings against the landlord. The landlord did not
want the tenant to continue to occupy the suit premises.
by a notice dated February
23, 2001, the landlord
determined the tenancy with effect from March 31, 2001. In spite of determination of
tenancy, the tenant did not hand over vacant and peaceful possession of the
suit premises to the landlord. The landlord, therefore, filed a suit in the
Small Causes Court, Bombay on April 2, 2001. In a written statement, dated August 1, 2001, the tenant disputed the averments made and allegations levelled
by the landlord and contended that it was not liable to be evicted. The Small
Causes Court, Bombay, however, passed a decree of
eviction against the tenant on December 16, 2002
which was confirmed by a Bench of that Court as also by the High Court. The
said order is challenged in the present appeal.
ORDER BY THIS COURT
4. On February 21, 2005, notice was issued by this Court.
Status quo as regards possession was ordered to be maintained. On April 18, 2005, leave was granted. Pending appeal,
stay of dispossession was continued subject to the tenant depositing a sum of Rs.
twenty four lakhs with the Registry of the Court within eight weeks which was allowed
to be withdrawn by the landlord without furnishing security. The matter was
ordered to be placed for final hearing and that is how the matter is before us.
have heard the learned counsel for the parties.
Gupta, learned counsel for the appellant- tenant contended that all the courts
committed an error of law and of jurisdiction in passing the decree of eviction
against the tenant. He submitted that the suit filed by the landlord was not
maintainable and it ought to have been dismissed by the courts below. He also
submitted that the question as to constitutional validity of clause (b) of
sub-section (1) of Section 3 of the Maharashtra Rent Control Act, 1999
(hereinafter referred to as 'the Rent Act') is pending before this Court and in
view of the said fact, the courts below ought not to have proceeded to decide
the matter. Alternatively, it was argued that even if it is assumed that the
provision is legal, valid and intra vires, it would not apply to the case on
hand inasmuch as tenant's net worth/paid up share capital has been
substantially eroded and it was not rupees one crore or more when the
proceedings were initiated by the landlord. The provisions of the Rent Act,
therefore, applied to the suit premises and unless and until one of the grounds
of eviction specified in the Rent Act had been made out, the landlord was not
entitled to a decree for possession. The learned counsel urged that the fact as
to 'paid up capital' of the Company was a 'jurisdictional fact' and in absence
of such fact, the Court had no power, authority or jurisdiction to consider,
deal with and decide the matter.
was further contended that the proceedings could not have been continued in
view of the fact that the tenant was a 'sick company' within the meaning of the
Sick Industrial Companies Act, 1985 (hereinafter referred to as 'SICA'). In
accordance with Section 22 of that Act, hence, all proceedings against a sick
company stood suspended. No order of eviction, therefore, could have been passed
by the courts below. On all these grounds, it was submitted that all the courts
were wrong in passing a decree of eviction against the tenant and the said
order deserves to be set aside by this Court.
Parekh, learned counsel for the respondent-landlord, on the other hand,
supported the decree passed by the Small Causes Court, confirmed by a Bench of
that Court as also by the High Court. He submitted that as far as
constitutional validity of Section 3(1)(b) of the Rent Act is concerned, the
point is covered by a decision of the Division Bench of the High Court of
Bombay in M/s Crompton Greaves Ltd. v. State of Maharashtra, AIR 2002 Bom 65. The Small Causes Court as well as the
High Court were, therefore, wholly justified in proceeding with the matter and
in deciding it on merits. He submitted that tenancy was terminated in
accordance with law. It was, therefore, obligatory on the tenant to hand over
vacant and peaceful possession of the property to the landlord, but it failed
to do so. The landlord was, therefore, constrained to approach a Court of law
which passed a decree for possession in favour of the landlord holding that
since the paid-up share capital of the Company was more than rupees one crore,
the provisions of the Act were not applicable to it. The counsel urged that
there was no illegality in the said finding and obviously, therefore, the
landlord was entitled to possession of suit-premises and the tenant could not
resist eviction. An appellate Court confirmed the said decree. Before the High
Court it was contended by the tenant that a unanimous resolution was passed by
the Company to decrease the share capital to less than rupees one crore (Rs.41 lakhs
from Rs.8.20 crores).
unilateral action at a subsequent stage, submitted the counsel, would not
deprive the owner of the property to the 'right accrued' in favour of the
landlord. The 'jurisdictional fact' (paid up share capital of more than rupees
one crore) was very much in existence at the time when the proceedings were
initiated against the Company. But even otherwise, considering the factual
situation, the tenant was not entitled to any relief. It was stated that though
the so-called resolution was said to have been passed, it had not been approved
by the Board for Industrial and Financial Reconstruction (BIFR). In the eye of
law, therefore, there was no decrease of share capital. The High Court was,
hence, wholly right in observing that even on that ground, the tenant was not
entitled to any relief. The counsel also submitted that this Court is
exercising discretionary and equitable jurisdiction under Article 136 of the
Constitution. The tenant is not entitled to such equitable relief. It was
submitted that the tenant has not paid rent since several years i.e. from January 1, 1995. According to the counsel, the
amount due and payable by the tenant as on August 31, 2007 comes to Rs. 56,22,000/-
pursuant to interim order passed by this Court on April 18, 2005, an amount of Rs.
24 lakhs was deposited by the appellant in this Court which was withdrawn by
the landlord, but even excluding that amount, the tenant is liable to pay to
the landlord an amount of Rs.32,22,000/-. It was further stated that after
order dated April 18,
2005 i.e. for more
than two years, the tenant has not paid even a pie to the landlord. Such
tenant, urged the counsel, does not deserve sympathy and cannot claim equitable
relief. On all these grounds, the counsel prayed for dismissal of the appeal.
have given anxious and thoughtful consideration to the rival contentions of the
parties. And in our opinion, no case has been made out by the appellant-tenant
for grant of discretionary and equitable relief from this Court.
VALIDITY OF SECTION 3(1)(b)
far as constitutional validity of Section 3(1) (b) of the Rent Act is
concerned, in our opinion, the courts below were right in rejecting the
contention raised by the tenant and in proceeding to decide the matter on
merits in view of the decision in M/s. Crompton Greaves Ltd.
Our attention has been invited by the learned counsel for the parties to the
relevant provisions of the Act. The Act came into force with effect from March 31, 2000. It repealed the Bombay Rents,
Hotel and Lodging House Rates Control Act, 1947. The Preamble of the Act
to unify, consolidate and amend the law relating to the control of rent and
repairs of certain premises and of eviction and for encouraging the
construction of new houses by assuring a fair return on the investment by
landlords and to provide for the matters connected with the purpose aforesaid.
it is expedient to unify, consolidate and amend the laws prevailing in the
different parts of the State relating to the control of rents and repairs of
certain premises and of eviction and for encouraging the construction of new
houses by assuring a fair return and to provide for the matters connected with
the purposes aforesaid.
Section 3 grants exemption and enacts that the Act would not apply to certain
premises. Clause (b) of sub-section (1) of the said section declares that the
Act would not apply "to any premises let or sub-let to Banks, or any
Public Sector Undertakings or any Corporation established by or under any
Central or State Act, or Foreign Missions, International Agencies,
Multinational Companies, and Private Limited Companies and Public Limited
Companies having a paid up share capital of rupees one crore or more". (emphasis
is an admitted fact that the appellant-tenant is a Public Limited Company
having a paid up share capital of rupees more than one crore (Rs.8.20 crores).
Courts below considered the contention as to constitutional validity of clause
(b) of Section 3(1) of the Rent Act and observed that the vires of the provision
was upheld by the High Court in M/s. Crompton Greaves Ltd.
that case, constitutional validity of Section 3(1)(b) was challenged on the
ground that it was arbitrary, discriminatory and unjust. It was contended that
the so- called distinction between the Companies having a paid up share capital
of less than rupees one crore and the Companies having a paid up capital of
more than rupees one crore was arbitrary, discriminatory and unreasonable
neither founded on any intelligible differentia nor the so- called
classification has rational or reasonable nexus to the object sought to be
achieved by the Legislation. It was urged that denial of protection of the Act
to the Companies solely on the basis of 'paid up share capital' was based on
irrational criterion and was hit by Article 14 of the Constitution.
The Court, however, negatived the contention and upheld the validity of the
provision. The Court stated;
We do not see any force in any of these contentions. The Bombay Rent Act was
enacted originally as a temporary measure in order to protect the tenants from
eviction from their premises and also from arbitrary enhancement of rent. The
necessity for the control of rents by special legislation for properties
located within the urban areas was felt during World War II. At that time not
much by way of new construction for civil population was possible. A good
proportion of private accommodation was requisitioned by the authorities for
the war effort. In consequence, rents were beginning to shoot up. Landlords
were trying to get rid of their existing tenants to get better rents. The
legislation was undertaken primarily to save the tenants from harassment of
unscrupulous landlords. To quote the words of Sarkaria J, Nagindas Ramdas v. Dalpatram
Ichharam, (1974) 1 SCC 242 at page 248 : (AIR 1974 SC 471) (at page 474).
"The strain of the last World War, industrial Revolution, the large scale
exodus of the working people to the urban areas and the social and political
changes brought in their wake social problems of considerable magnitude and
complexity and their concomitant evils. The country was faced with spiralling
inflation, soaring cost of living, increasing urban population and scarcity of
accommodation. Rack renting and large scale eviction of tenants under the guise
of the ordinary law, exacerbated those conditions making the economic life of
the community unstable and insecure. To tackle these problems and curb these
evils the Legislatures of the States in India enacted "Rent Control Legislations".
The rent control laws are in force in the State for more than 60 years. As a
result of these legislations a host of problems have cropped up. These problems
have been discussed by various committees appointed by the Central Government
and State Governments. The reports of such committees indicate that freezing of
rentals at old historic levels, the excessive protection of tenancy rights and
the extreme difficulties of recovering possession even for the owner's own use
hit hard the house owners of modest means; rendered investment in housing for
rental unattractive; inhibited the letting out of available accommodation and
thus had aggravated the acute scarcity of accommodation for hire. It was felt
that the laws were being often abused by the rich tenants against the poor or
middle class landlords.
State of Maharashtra appointed a Committee known as Rent
Acts Enquiry Committee (for short Tembe Committee) which observed as under:
result of all this has been that the supply of rental housing in the market is
gradually shrinking. Except in the public sector, the growing tendency is to
dispose off houses on ownership or hire purchase basis. Rental housing has,
therefore, almost come to a halt in cities like Bombay. This has adversely affected the economically weaker
sections of the society";
rent law that was enacted for the benefit of the tenants is thus operating to
the detriment of their interest in that the flow of rental housing is gradually
Committee had recommended exemption of premises of floor area more than 65 sq.
meters for business, trade or storage and 125 sq meters for residential
Court, therefore, concluded;
is already seen from the Statement of Objects and Reasons that the object of
the Act is not merely, to protect tenants but also to provide fair returns to
the landlords and to encourage housing activity so as to augment rental housing
in the form of construction of buildings and letting them out. It is also meant
to legitimise the pagadi or premium system which was prohibited earlier. Thus
the Act has been enacted in order to strike a balance between the interests of
landlords and tenants and for giving a boost to house building activity and in
doing so the legislature in its wisdom has decided and thought it fit not to
extend the protection of the Rent Act to certain class of tenants like
multinationals scheduled banks, public sector undertakings and private and
public limited companies having share capital of more than Rs. 1 crore. This is
essentially a matter of legislative policy. The legislature would have repealed
the Rent Act altogether. It could also withdraw the protection under the Rent
Act on rental basis [see D.C. Bhatiya v. Union of India, (1995) 1 SCC 104] or
on income basis [see Delhi Cloth and General Mills Ltd. v. S. Paramjit Singh,
(1990) 4 SCC 923] or any other understandable basis. In our view it is for the
legislature to decide" what should be the appropriate basis for the
purpose of classification and the legislature as of necessity must have a lot
of latitude in this regard. Whether any particular category of tenants needs to
be protected under the Rent Act is a matter of legislative determination.
is nothing arbitrary if such protection is taken away in case of certain
categories of tenants having regard to their position determined on objective
and reasonable criterion. These are essentially matters of policy. Unless the
provision is shown to be arbitrary, capricious or to bring about grossly unfair
results, judicial policy should be one of judicial restraint. The prescriptions
may be somewhat cumbersome or produce some hardship in their application in
some individual cases; but they cannot be struck down as unreasonable,
capricious or arbitrary".
also appears that as the point was concluded by a decision in M/s. Crompton
Greaves Ltd., the issue as to vires was not pressed by the tenant before the
Trial Court. This is clear from the following observations made by the Court;
the advocate for Defendant not argued on this issue, may be in view of judgment
dated 20.7.2001 of the Hon'ble High Court of Judicature at Bombay. The said judgment is reported in
AIR 2002 Bombay 65 (M/s Crompton Greaves Ltd., v.
State of Maharashtra) (not cited at Bar). In the said
ruling, Hon'ble High Court upheld the constitutional validity of the provisions
of Section 3(1)(b) of the Maharashtra Rent Control Act. Therefore, this issue
does not survive. Accordingly issue No.2 is answered".
The courts below were, therefore, in our opinion, fully justified in proceeding
to decide the matter on merits.
OF THE MATTER
The Trial Court framed necessary issues and held that the defendant-Company was
the tenant; the Rent Act was not applicable; the tenancy was legally and
validly terminated; and defendant was liable to be evicted. A prayer was also
made by the plaintiff for payment of mesne profits. The Court held that the
landlord was entitled to a decree for possession. But since the proceedings
were pending before BIFR, Section 22 of SICA was applicable and the landlord
could recover amount of mesne profits only after taking requisite permission
from BIFR. The Court, in the light of the above findings, issued the following
Defendants shall deliver vacant repossession of the suit premises to the
Plaintiffs within 4 months.
Defendants shall pay mesne profits to the plaintiffs in respect of suit
premises for the period from the date Operating Agency suit till the Plaintiffs
recover possession of the suit premises.
determination of quantum of mesne profits, enquiry under O. 20 R. 12(c) of the
Code of Civil Procedure is directed.
the order to pay mesne profits shall be subject to the Plaintiffs obtain
permission of the BIFR to recover mesne profits against the Defendants.
decree be drawn accordingly".
Bench of Small Causes
Court, Bombay confirmed the above order and
dismissed the appeal.
the High Court, again all the contentions were reiterated by the tenant, but
the High Court negatived them and dismissed the writ petition. The High Court
noted that it was not in dispute between the parties that notice terminating
the tenancy was issued by the landlord on February 23, 2001 and tenancy was determined with
effect from March 31,
2001. On that day,
i.e. March 31, 2001, paid up share capital of the
Company (tenant) was more than rupees one crore. If it were so, observed the
High Court, Small Causes Court was right in proceeding with the matter and in
passing the decree of eviction against the tenant.
The Courts were also right in relying upon Shree Chamundi Mopeds Ltd. v. Church
of South India Trust Association, (1992) 3 SCC 1 and in holding that eviction
proceedings initiated by the landlord against the tenant were maintainable even
if the Company was 'sick' under SICA and Section 22 of that Act would not
operate as bar to such proceedings.
The learned counsel for the appellant- Company submitted that the fact as to
'paid up share capital' of Rs. one crore or more of a Company is a
'jurisdictional fact' and in absence of such fact, the Court has no
jurisdiction to proceed on the basis that the Rent Act is not applicable. The
learned counsel is right. The fact as to 'paid up share capital' of a Company
can be said to be a 'preliminary' or 'jurisdictional fact' and said fact would
confer jurisdiction on the Court to consider the question whether the
provisions of the Rent Act were applicable. The question, however, is whether in
the present case, the learned counsel for the appellant tenant is right in
submitting that the 'jurisdictional fact' did not exist and the Rent Act was,
Stated simply, the fact or facts upon which the jurisdiction of a Court, a
Tribunal or an Authority depends can be said to be a 'jurisdictional fact'. If
the jurisdictional fact exists, a Court, Tribunal or Authority has jurisdiction
to decide other issues. If such fact does not exist, a Court, Tribunal or
Authority cannot act. It is also well settled that a Court or a Tribunal cannot
wrongly assume existence of jurisdictional fact and proceed to decide a matter.
The underlying principle is that by erroneously assuming existence of a
jurisdictional fact, a subordinate Court or an inferior Tribunal cannot confer
upon itself jurisdiction which it otherwise does not posses.
Halsbury's Laws of England, (4th Edn.), Vol.1, para 55, p.61; Reissue, Vol.1(1),
para 68, pp.114- 15, it has been stated:
the jurisdiction of a tribunal is dependent on the existence of a particular
state of affairs, that state of affairs may be described as preliminary to, or
collateral to the merits of the issue. If, at the inception of an inquiry by an
inferior tribunal, a challenge is made to its jurisdiction, the tribunal has to
make up its mind whether to act or not and can give a ruling on the preliminary
or collateral issue; but that ruling is not conclusive".
The existence of a jurisdictional fact is thus a sine qua non or condition precedent
to the assumption of jurisdiction by a Court or Tribunal.
FACT AND ADJUDICATORY FACT
But there is distinction between 'jurisdictional fact' and 'adjudicatory fact'
which cannot be ignored. An 'adjudicatory fact' is a 'fact in issue' and can be
determined by a Court, Tribunal or Authority on 'merits', on the basis of
evidence adduced by the parties. It is no doubt true that it is very difficult
to distinguish 'jurisdictional fact' and 'fact in issue' or 'adjudicatory
fact'. Nonetheless the difference between the two cannot be overlooked.
Halsbury's Laws of England, (4th Edn.), Vol.1, para 55, p.61; Reissue, Vol.1(1),
para 68, pp.114- 15, it is stated:
is often great difficulty in determining whether a matter is collateral to the
merits or goes to the merits. The distinction may still be important; for an
erroneous decision on the merits of the case will be unimpeachable unless an
error of law is apparent on the face of the record of the determination or
unless a right of appeal lies to a court in respect of the matter alleged to
have been erroneously determined. An error of law or fact on an issue
collateral to the merits may be impugned on an application for an order of
certiorari to quash the decision or in any other appropriate form of
proceedings, including indirect or collateral proceedings.
evidence is admissible on a disputed issue of jurisdictional fact, although the
superior courts are reluctant to make an independent determination of an issue
of fact on which there was a conflict of evidence before the inferior tribunal
or which has been found by an inspector after a local inquiry".
R. v. Fulham Rent Tribunal, (1950) 2 All ER 211, it was held that the question
whether premium for renewal of tenancy was or was not paid was a jurisdictional
fact and, therefore, was held to be a condition precedent for the lawful
exercise of jurisdiction by a Rent Tribunal. In Brittain v. Kinnaird, (1819) 1
B&B 432, however, the factum as to possession of a 'boat' with gunpowder on
board was held to be a part of the offence charged and thus a finding of fact
or adjudicatory fact. It was stated: "The logical basis for discriminating
between these cases and other falling on opposite sides of the line, is not
Likewise, the fact whether the petitioner was an 'adult' in adoption
proceedings was not held to be a 'jurisdictional' fact (Eversole v. Smith, 159
SW 2nd 35).
Jagdish Prasad v. Ganga Prasad, 1959 Supp (1) SCR 733, the questin was whether
the landlord was entitled to enhancement of rent. Under the Act, he was not
entitled to such rent unless a 'new construction' had been made after June 30, 1946. It was held by this Court that the
question whether construction was new or not was a 'jurisdictional fact' and if
the court wrongly decided the said fact and thereby conferred jurisdiction not
vested in it, the High Court could interfere with the order. The Court stated
that "once it had the power it could determine whether the question of the
date of construction was rightly or wrongly decided". [See also Arun Kumar
v. Union of India, (2007) 1 SCC 732].
But, in Roshanlal v. Ishwardas, (1962) 2 SCR 947, this Court held that the Rent
Controller had jurisdiction to fix standard rent for new construction made
after March 24, 1947. The question was as to when the construction was made.
The Rent Controller recorded a finding of fact that the construction was put up
after March 24, 1947. The finding was confirmed by the
District Judge. But the High Court interfered in revision.
Setting aside the decision of the High Court, this Court stated:
is clear from the orders of the Rent Controller and of the District Judge in
appeal that the question whether the second floor was newly constructed or not
was really a question of fact, though undoubtedly a jurisdictional fact on
which depended the power of the Rent Controller to take action under s. 7A. If
the Rent Controller had wrongly decided the fact and assumed jurisdiction where
he had none, the matter would be open to reconsideration in revision. The High
Court did not, however, go into the evidence, nor did it say that the finding
was not justified by the evidence on record. The High Court referred merely to
certain submissions made on behalf of the landlord and then expressed the
opinion that what was done to the second floor was mere improvement and not a
new construction. We think that the High Court was in error in interfering with
the finding of fact by the Rent Controller and the District Judge, in support
of which finding there was clear and abundant evidence which had been carefully
considered and accepted by both the Rent Controller and the District
is thus clear that for assumption of jurisdiction by a Court or a Tribunal,
existence of jurisdictional fact is a condition precedent. But once such
jurisdictional fact is found to exist, the Court or Tribunal has power to
decide adjudicatory facts or facts in issue.
already seen earlier, in the case on hand, the appellant Company was having
'paid up share capital' of more than Rs. one crore, not only when the notice
was issued and tenancy was determined but also when the suit for possession was
instituted. What was stated was that a resolution was passed by the Board of
Directors to reduce 'paid up share capital' from Rs.8.20 crores to Rs.41 lakhs
(less than Rs.1 crore). But it was not approved by BIFR. The Small Cause Court considered this aspect and stated;
reasons are that the above suit is filed on 4.4.2001. Whereas undisputed
document Ex.B. annual report of the Defendant Company shows that on 30.9.1999
the paid up shares capital of the Defendant Company was more than Rs.1 crore.
If the Defendants have moved BIFR by reference of 1997, by that time the
Defendant ought to have received favourable orders reducing the paid-up capital
of the Defendants to less than Rs. one crore. But no such evidence is produced
by the Defendants to rebut the annual report Ex.B of the Defendants showing
paid up capital of more than Rs.8 crores as on 30.9.1999. There is nothing
before the court to show that the paid up share capital of the Defendants is
brought down to Rs.41 lacs as per para 1.3(1) of the revised rehabilitation
proposal in BIFR case No.74/1999 (Ex.4). The advocate for Defendants has not
pointed out any order to show that the said proposal is accepted.
absence of such order of the appropriate court or authority accepting the
proposal Ex.1 to reduce share capital to less than 1 crore rupees, I am unable
to accept the case of the Defendants that the said share capital of the
Defendant Company is reduced to less than Rs.1 crore". (emphasis supplied)
The High Court also dealt with this aspect and concluded;
is not in dispute between the parties that the tenancy of the petitioners was
terminated with effect from 31.3.2001 and on that day the paid up share capital
of the petitioners/Company was more than Rupees one crore, no fault can be
found with trial Court taking cognizance of the eviction proceedings initiated
against the petitioners, as the trial Court definitely had jurisdiction to
entertain such proceedings, considering the provisions of law comprised under
Section 3(1)(b) of the said Act, as rightly submitted by the learned advocate
for the respondents. The clause (b) of Section 3(1) of the said Act clearly
provides that "the said Act shall not apply to any premises let or sub-let
to banks, or any Public Sector Undertaking or any Corporation established by or
under any Central or State Act, or foreign missions, international agencies,
multinational companies, and private limited companies and public limited
companies having a paid up share capital of rupees one crore or more".
Undisputedly, the petitioner/Company is a Public Limited Company having share
capital of more than Rupees one crore".
All the Courts were, therefore, in our considered opinion, right in holding
that the provisions of the Rent Act were not applicable to the present case.
The learned counsel for the tenant then submitted that it was obligatory on the
courts below including the High Court to take into consideration subsequent
events. In support of the submission, our attention has been invited by the
counsel to a leading decision of this Court in Pasupuleti Venkateswarlu v.
Motor & General Traders, (1975) 1 SCC 770. In that case, the plaintiff
filed a suit for possession on the ground of personal requirement for starting
business. A decree for possession was passed in his favour which was confirmed
by the Appellate Court. At the stage of Revision, however, due to subsequent
event of acquisition of non-residential building by the plaintiff-landlord, an
application for amendment was made by the defendant- tenant. The High Court
allowed the amendment. The plaintiff challenged the said order by approaching
this Court. It was contended that the High Court committed an error in taking
cognizance of subsequent event which was 'disastrous'. This Court, however,
held that the High Court had not committed any illegality in doing so.
Referring to leading cases on the point, Krishna Iyer, J. stated;
feel the submissions devoid of substance. First about the jurisdiction and
propriety vis-`-vis circumstances which come into being subsequent to the
commencement of the proceedings. It is basic to our processual jurisprudence
that the right to relief must be judged to exist as on the date a suit or
institutes the legal proceeding. Equally clear is the principle that procedure
is the handmaid and not the mistress of the judicial process. If a fact,
arising after the lis has come to court and has a fundamental impact on the
right to relief or the manner of moulding it, is brought diligently to the
notice of the tribunal, it cannot blink at it or be blind to events which
stultify or render inept the decretal remedy.
justifies bending the rules of procedure, where no specific provision or fairplay
is not violated, with a view to promote substantial justicesubject, of course,
to the absence of other disentitling factors or just circumstances. Nor can we
contemplate any limitation on this power to take note of updated facts to
confine it to the trial Court. If the litigation pends, the power exits, absent
other special circumstances repelling resort to that course in law or justice.
Rulings on this point are legion, even as situations for applications of this
equitable rule are myriad.
affirm the proposition that for making the right or remedy claimed by the party
just and meaningful as also legally and factually in accord with the current
realities, the Court can, and in many cases must, take cautious cognizance of
events and developments subsequent to the institution of the proceeding
provided the rules of fairness to both sides are scrupulously obeyed." (emphasis
our judgment, the law is fairly settled. The basic rule is that the rights of
the parties should be determined on the basis of the date of institution of the
suit. Thus, if the plaintiff has no cause of action on the date of the filing
of the suit, ordinarily, he will not be allowed to take advantage of the cause
of action arising subsequent to the filing of the suit. Conversely, no relief
will normally be denied to the plaintiff by reason of any subsequent event if
at the date of the institution of the suit, he has a substantive right to claim
the instant case, in our opinion, the courts below were right in holding that
the date on which tenancy was determined, the right in favour of the landlord
got accrued. Such right could not have been set at naught by the tenant by
unilateral act by passing a resolution to reduce 'paid up share capital' of the
this regard, it may be profitable to refer to a decision of this Court in Gajanan
Dattatraya v. Sherbanu Hosang Patel & Ors., (1975) 2 SCC 668. In Gajanan,
the Court was called upon to consider clause (e) of Section 13(1) of the Bombay
Rents, Hotel and Lodging House Rates Control Act, 1947 which read thus;
That the tenant has, since the coming into operation of this Act, unlawfully
sublet, or after the date of commencement of the Bombay Rents, Hotel and
Lodging House Rates Control (Amendment) Act, 1943, unlawfully given on licence,
the whole or part of the premises or assigned or transferred in any other
manner his interest therein.
The tenant took on lease the premises on January 1, 1960. He, however, sublet a part of the
premises in August, 1965. The landlord issued a notice on April 1, 1967 and terminated the tenancy. The
tenant denied that there was unlawful sub-letting of a part of the premises. It
was further submitted that in any case, the so-called sub-tenant vacated the
premises on April 14,
1967 i.e. before the
suit was instituted by the landlord and hence, cause of action did not survive.
It was contended on behalf of the tenant that Section 13(1)(e) used the
expression "has sub-let", i.e. the present perfect tense which
contemplated the event connected in some way with the present time. Since the
sub-tenant had already vacated and left the premises, at the most it could be
said that the tenant 'had sub-let' the premises but it was not a ground for
eviction under the Act and hence no decree could have been passed.
was also placed on an earlier decision of this Court in Goppulal v. Thakurji Shriji
Shriji Dwarkadheshji, (1969) 3 SCR 989 : (1969) 1 SCC 792.
the contention, upholding the decree of eviction and distinguishing Goppulal,
this Court said;
provisions of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947
indicate that a tenant is disentitled to any protection under the Act if he is
within the mischief of the provisions of Section 13(1)(e), namely, that he has
sublet. The language is that if the tenant has sublet, the protection ceases.
To accede to the contention of the appellant would mean that a tenant would not
be within the mischief of unlawful subletting if after the landlord gives a
notice terminating the tenancy on the ground of unlawful subletting the
sub-tenant vacates. The landlord will not be able to get any relief against the
tenant in spite of unlawful subletting. In that way the tenant can foil the
attempt of landlord to obtain possession of the premises on the ground of
subletting every time by getting the sub-tenant to vacate the premises. The
tenant's liability to eviction arises once the fact of unlawful subletting is
proved. At the date of the notice, if it is proved that there was unlawful subletting,
the tenant is liable to be evicted".
The Court approved the view taken by the High Court of Gujarat in Maganlal Narandas
Thakkar v. Arjan Bhanji Kanbi, (1969) 10 Guj LR 837. In Maganlal, the High
Court of Gujarat had an occasion to consider a pari materia provision under the
Saurashtra Rent Control Act, 1951?.
similar argument was advanced before the Court. However, considering the scheme
of the Act, the Court refuted the contention. The Division Bench observed;
far as the first point is concerned, Mr. Desai laid great stress, and relied
very heavily, on the grammatical meaning of the words 'has sub-let'. His
argument is that the meaning of the words 'has sub-let' include the element
that the subletting must be continuing on the date when the plaintiff filed his
suit. He stated, and there is no dispute on the point, that the words 'has
sub-let' do not use of the verb 'sub- let' in the present perfect tense. He
referred to page 61 of the Handbook of English Grammar by R.W. Zandvoort. In
paragraph 140 of this Book it is stated that when a verb is used in present
perfect tense, it denotes "a completed past action connected, through its
result, with the present moment".
argument of Mr. Desai was that the subletting which started sometime after
1951, that is after the Act came into operation, must be connected with the
present moment through its result; and his argument was that once the
sub-tenancy was created, it must be connected with the present moment-the date
of filing the suit-by its result by the sub-tenant continuing in possession of
the premises upto that date. Mr. Desai thus urged before us that unless a
sub-tenant were in possession of the property sublet on the date of the suit it
cannot be said that the tenant 'has sub-let' the premises, even though a
sub-tenancy was in fact created by the tenant. In our opinion if this
interpretation were to be accepted, the result would be that a tenant can with
impunity put some other person in possession of the premises as a sub- tenant
and avoid an order for delivery of possession against him by seeing to it that
the sub-tenant departs from the property before the plaintiff files a suit.
Having regard to the scheme of the Rent Control Act, particularly the scheme of
Sections 12 and 13 of the Act and the context in which the words 'has sub- let'
are used, it appears to us that that is not the way in which the meaning of the
words 'has sub-let' should be gathered. If the Rent Control Act were not in
force and the parties were left to their ordinary rights under the Transfer of
Property Act, the landlord will have a vested right to recover possession in
him as soon as he terminates the tenancy of the tenant in the manner provided
in the Transfer of Property Act. After terminating the tenancy he can
immediately call upon the tenant to hand over possession to him. By enacting
Section 12 of the Rent Control Act, the landlord's right to terminate the
tenancy is not affected, but the enforcement of his right to recover possession
immediately thereafter from the tenant is affected. The provisions of Section
12 prevent a landlord from recovering possession of the property from a tenant
even after a lawful termination of his tenancy, provided the tenant fulfils the
conditions mentioned in Section 12. Section 12 does not take away the right of
the landlord to recover possession of the premises but merely postpones the
enforcement of this right of the landlord so long as the tenant fulfils the
conditions laid down in that section. Having put this impediment in the
enforcement of the right of possession of the landlord or in other words,
having clothed the tenant with an immunity from dispossession, the Legislature
proceeds in Section 13 to lay down those conditions on the fulfillment of which
the landlord is entitled to recover possession of the premises from the tenant.
Section 13, therefore, provides for those contingencies on proof of which the
tenant loses the immunity from dispossession under Section 12. Some discussion
took place on the question whether the tenant has a right of possession or
whether he has merely an immunity from being dispossessed. Whether it be called
an immunity from dispossession or whether it be called a personal right of
possession, the fact remains that by Section 13, the Legislature has provided
for dispossession of tenant, despite provisions of Section 12, if the Court is
satisfied that any one of the grounds mentioned in Section 13 does exist. One
of such grounds is the subletting of the premises or a part thereof by the
tenant. In view of this scheme of the provisions in Sections 12 and 13 of the
Act, it is necessary for us to construe the meaning of the words 'has sub-let'
keeping in mind that the verb 'sub-let' is used in the present perfect tense.
First, it must be a completed past action, that is the subletting must be
completed. A subletting is complete as soon as the sub-tenant is put in
possession of the premises given to him on sublease. Now, this completed act of
subletting must have a result. What would be that result in the context of
Sections 12 and 13 of the Act? The result of subletting would be removal of the
impediment in the way of the landlord to recover possession of the premises. In
other words, the result of subletting would be to take away that personal right
of possession which the tenant enjoyed under the provisions of the Rent Act.
Now, this result must be connected with the present moment. The present moment
will be the moment when the suit is filed. How is this result connected with
the filing of the suit? The answer is quite obvious. It is this removal of the
impediment in the way of the landlord's recovery of possession which induces
him to go forthwith to the Court and file a suit for possession. Therefore, the
words 'has sub-let' mean that a sub-letting has taken place and as a result of
that subletting the impediment in the way of the landlord to recover possession
has been removed, thus, inducing him to go to Court and ask for recovery of
possession. It is the result of the completed act, i.e. the removal of the
impediment in his way, which permits the landlord to go to the Court and ask
for a decree for possession. It is not necessary, therefore, that subletting
must continue enough if the premises have been sub-let sometime after the
coming into operation of the Act. The provisions of Section 15 of the Saurashtra
Rent Control Act make subletting unlawful. Therefore, any subletting by the
tenant after the Act came into operation immediately removes the impediment in the
way of the landlord to recover possession and entitles him immediately to go to
the Court and ask for recovery of possession. In order to convey the correct
meaning of the words 'has sub-let' it is not necessary to show that the
subletting was in existence on the date of suit.
enough that the subletting has taken place sometime after the Act came into
operation; it does not matter that the subletting came to an end before the
landlord gave notice or before the landlord filed a suit".
our opinion, the ratio laid down in the above cases applies to the present case
as well. Admittedly, on the date the tenancy was terminated, the tenant (Public
Limited Company) was having a paid up share capital of rupees more than one crore.
Under clause (b) of Section 3(1) of the Act, therefore, the provisions of the
Act were not applicable to the suit-premises. It is true that a resolution was
passed by the Company to reduce the paid up share capital to less than rupees
one crore, but the said resolution was never approved by BIFR. But even
otherwise, once it is proved that the tenancy was legally terminated and the
Act would not apply to such premises, a unilateral act of tenant would not take
away the accrued right in favour of the landlord. Unless compelled, a Court of
Law would not interpret a provision which would frustrate the legislative
intent and primary object underlying such provision. We, therefore, see no
infirmity in the conclusions arrived at by the courts below.
The learned counsel for the respondent- landlord is also right in submitting
that the appellant- tenant does not deserve equitable relief under Article 136
of the Constitution. The tenant has not paid 'rent'/'mesne profits' since more
than ten years. Even after approaching this Court, it had made part payment
pursuant to interim order made in April, 2005. But nothing was paid/deposited
thereafter even though two years have passed. These facts have not been
disputed by the appellant. We are, therefore, of the view that even on that
ground, the appellant-tenant cannot ask for discretionary and equitable relief
and we are not inclined to grant such relief.
For the foregoing reasons, the appeal deserves to be dismissed and is,
accordingly, dismissed with costs.