State of
Maharashtra & ANR. Vs. M/S Super Max International P. Ltd. & Ors.
[2009] INSC 1498 (27 August 2009)
Judgment
REPORTABLE
IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO.
5835 OF 2009 (Arising out of S.L.P. (Civil) No. 31047 of 2008) The State of
Maharashtra & Anr. ....Appellants Versus M/s. Super Max International Pvt.
Ltd. & Ors. ....Respondents
AFTAB
ALAM, J.
1.
Leave granted.
2.
The Government of Maharashtra, the appellant before us, is in
occupation of an area of 9000 sq. ft. (11,050 sq. ft. as per the affidavit-in-
2 reply filed by the appellant) comprising the sixth floor of a building on a
monthly rental of Rs. 5236.58/-, besides water charges at the rate of Rs. 515.35/-
per month. The suit premises, used for housing the office of the Registrar
Co-operative Societies is situate at Fort, opposite GPO, (near C.S.T. Railway
Station) in the heart of the city of Mumbai. The appellant is in occupation of
the suit premises since 1966. At that time the building belonged to the
Maharaja of Travancore. Respondents 1 to 3 purchased it under a deed of
assignment dated May 5, 1982 and stepped into the shoes of the landlord.
3.
The appellant suffered a decree of ejectment passed by the Court
of Small Causes on June 30, 2003 in RAE & R Suit No. 1233/3730 of 1986 on
grounds of (i) default in payment of taxes and water charges as stipulated under
section 13(3)(a) and (ii) reasonable and bona fide need of the landlords,
respondents 1 to 3 for their own use and occupation in terms of section
13(1)(g) of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947
(`the Bombay Rent Act' or `the Act' hereinafter). Its appeal (No.752/2003)
against the decree was dismissed by the Division Bench of the Small Causes
Court by judgment and order dated April 28, 2005.
4.
The appellant initially filed a writ petition [W.P. (C) No.7361 of
3 2005] seeking to challenge the orders of ejectment. The Bombay High Court
declined to entertain it on the ground that the appellant had a remedy
available to it under the Act itself. It, accordingly, disposed of the writ
petition by order dated March 15, 2007 leaving it open to the appellant to file
a civil revision application as provided under section 35F(2) of the Act.
The
appellant then moved the High Court in Civil Revision Application No.78 of 2007
challenging the orders of its ejectment. The High Court admitted the Civil
Revision on December 10, 2007 and issued rule on interim relief regarding stay
of execution of the decree. Later on, after hearing the parties the Court
stayed the execution of the decree by order dated October 14, 2008 subject,
however, to the condition that the appellant would deposit a sum of Rs.
5,40,000/- every month commencing from the date of the decree passed by the
trial court. The Court directed that the amount in arrears should be deposited
by January 10, 2009 and from that date the future deposits for every month
should be made by the tenth of the next succeeding month. The Court, however,
did not allow the landlords to take away the money but further directed that
the deposits would be ad-hoc and subject to further order in the revision or in
any other appropriate proceeding. It also directed the office to invest the
amount(s), in case deposited by the appellant, in a nationalized bank,
initially for a period of 4 one year and then for further periods of one year
each. The appellant finds the condition on which stay is granted highly
onerous. But the respondents maintain that the Court has been very liberal with
the appellant and the amount of monthly deposit fixed by the court is far less
than the current market rent in that area.
5.
Of late, orders are coming to this Court where, in cases arising
from ejectment proceedings, the High Courts, with a view to strike a balance
between the competing interests of the landlord and the tenant, pass interim
orders asking the tenant to pay to the landlord or deposit in court, as monthly
rent, certain sum fixed by it (that, according to the High Court, should be the
reasonable market rent for the tenanted premises), far in excess of the
existing monthly rent. In this case, while it was at the threshold, it was
stated before this Court that two of its Division Bench decisions, one in Atma
Ram Properties (P) Ltd. vs. Federal Motors (P) Ltd, (2005) 1 SCC 705 and the
other in Niyas Ahmad Khan vs. Mahmood Rahmat Ullah Khan, (2008) 7 SCC 539 had
taken conflicting views on the correctness of such orders passed by the High
Court. The case was, accordingly, directed to be placed before a three-Judge
Bench and that is how it came to be heard before us.
6.
It may be stated at the outset that just a little scrutiny
revealed that there was no conflict between Atma Ram Properties and Niyas Ahmad
Khan.
5 In Atma
Ram Properties the tenant, having lost before the Rent Controller preferred an
appeal before the Rent Control Tribunal. The Tribunal stayed the tenant's eviction
but subject to the condition that he would deposit in Court Rs.15,000/- per
month, in addition to the contractual rent that might be paid directly to the
landlord. The deposits made in the Court were not permitted to be withdrawn by
any of the parties until the appeal was finally decided. The tenant challenged
the condition attached to the stay order before the High Court in a petition
filed under Article 227 of the Constitution of India. The High Court allowed
the writ petition and set aside the condition imposed by the Tribunal. The
effect of the order of the High Court was that during the pendency of the
appeal before the Tribunal the tenant would continue to remain in occupation of
the suit premises "on payment of an amount equivalent to the contractual
rate of rent". Against the High Court order the landlord came to this
Court in appeal. This Court allowed the appeal, set aside the High Court order
and restored the order passed by the Tribunal.
7.
In Niyas Ahmed Khan, the position was quite different. The
landlord's application for eviction of the tenant on grounds of personal
necessity was turned down by the prescribed authority. The order of the
prescribed authority was confirmed by the appellate authority. The landlord
challenged 6 the orders passed by the two authorities under the Rent Control
Act in a writ petition filed before the Allahabad High Court and while
admitting the writ petition the Court gave an interim direction to the tenant
to pay rent at the rate of Rs. 12,050/- per month (in place of the contractual
monthly rent of Rs. 150/-). The Court further directed that if the rent fixed
by it was not paid for two consecutive months the landlord could evict the
tenant by coercive means taking the aid of police. In appeal by the tenant, this
Court naturally frowned upon the interim order passed by the High Court and in
paragraph 10 of the decision observed as follows:
"10.
To sum up, in writ petitions by landlords against rejection of eviction
petitions, there is no scope for issue of any interim direction to the tenant
to pay higher rent. But in writ petitions by tenants against grant of eviction,
the High Court may, as a condition of stay, direct the tenant to pay higher
rent during the pendency of the writ petition. This again is subject to two
limitations. First, the condition should be reasonable. Second, there should
not be any bar in the respective State rent control legislation in regard to
such increases in rent. Be that as it may."
8.
We, thus, find no inconsistency, much less any conflict in the
decisions of this Court in Atma Ram Properties and Niyas Ahmed Khan. The
decision in Niyas Ahmad Khan has no application to the facts of the present
case and it seems to be covered by the decision of the Atma Ram Properties.
9.
However, Mr. U. U. Lalit, Senior Advocate appearing for the
appellant, submitted that the decision in Atma Ram Properties would apply 7
only to cases under the Delhi Rent Control Act and shall have no application to
tenancies governed by the provisions of the Bombay Rent Act. Mr. Lalit
submitted that the Delhi Rent Control Act defined `tenant' in a way as to
exclude a person against whom a decree of eviction was passed. Section 2(l) of
the Delhi Rent Control Act, 1958 defined tenant as:
"2(l)
"tenant" means............but does not include, --- (A) any person
against whom an order or decree for eviction has been made, except where such
decree or order for eviction is liable to be reopened under the proviso to
section 3 of the Delhi Rent Control (Amendment) Act, 1976 (18 of 1976)."
10.
Mr. Lalit submitted that under the Delhi Rent Control Act a tenant
suffering a decree or order of eviction lost the status of `tenant' and was
consequently stripped of all the protection (including, against increase in
rent) provided by the Rent Control Act and in such a case it would be open to
the appellate or the revisional authority to enhance the monthly rent payable
by him as a condition for granting stay of execution of the decree or order as
held in Atma Ram Properties. This exclusionary clause in the definition of
tenant was a special feature of the Delhi Rent Act and the Rent Acts of some
other States, e.g. Madhya Pradesh, Rajasthan, etc. But the position under the
Bombay Rent Act was materially different. In the definition of "tenant"
in the Bombay Act there was no exclusionary clause.
Moreover,
in the Bombay Rent Act there were a number of provisions 8 creating an express
bar against any enhancement of rent.
11.
Learned counsel then took us through various provisions of the Bombay
Rent Act. He referred to section 5(11) defining "tenant" and
emphasised that this definition did not have any exclusionary clause as in
section 2(1) of the Delhi Act. Section 5(11) of the Bombay Rent Act reads as
follows:
"5(11).
"tenant" means any person by whom or on whose account rent is payable
for any premises and includes,- (a) such sub-tenants and other persons as have
derived title under a tenant before the 1st day of February 1973;
(aa) any
person to whom interest in premises, has been assigned or transferred as
permitted or deemed to be permitted, under section 15;
(b) any
person remaining after the determination of the lease, in possession, with or
without the assent of the landlord, of the premises leased to such person or
his predecessor who has derived title before the first day of February 1973;
(bb) such
licensees as share deemed to be tenants for the purposes of this Act by Section
15A (bba) the State Government, or as the case may be, the Government allottee,
referred to in sub-clause (b) of clause (1A), deemed to be a tenant, for the
purposes of this Act by Section 15B;
(c) (i)
in relation to any premises let for residence, when the tenant dies, whether
the death has occurred before or after the commencement of the Bombay Rents,
Hotel and Lodging House Rates Control (Amendment) Act, 1978, any member of the
tenant's family residing with the tenant 9 at the time of his death or, in the
absence of such member, any heir of the deceased tenant, as may be decided in
default of agreement by the Court;
(ii) in
relation to any permission let for the purposes of education, business, trade
or storage, when the tenant dies, whether the death as occurred before or after
the commencement of the said Act, any member of the tenant's family using the
premises for the purposes of education of carrying on business, trade or
storage in the premises, with the tenant at the time of his death, or, in the
absence of such member, any heir of the deceased tenant, as may be decided in
default of agreement by the court.
Explanation-
The provisions of this clause for transmission of tenancy, shall not be
restricted to the death of the original tenant, but shall apply, and shall be
deemed always to have applied, even on the death of any subsequent tenant, who
becomes tenant under these provisions on the death of the last preceding
tenant."
(emphasis
added)
12.
He then referred to the definition of "standard rent" as
contained in section 5(10) of the Act. The provision is as under:
"5(10).
"standard rent" in relation to any premises means,- (a) where the
standard rent is fixed by the Court and the Controller respectively under the
Bombay Rent Restriction Act, 1939, or the Bombay Rents, Hotel Rates and Lodging
House Rates (Control) Act, 1944, such standard rent; or (b) when the standard
rent is not so fixed,- subject to the provisions of section 11, (i) the rent at
which the premises were let on the first day of September 1940, or 10 (ii)
where they were not let on the first day of September 1940, the rent at which
they were last let before that day, or (iii) where they were first let after
the first day of September 1940, the rent at which they were first let, or
(iii-a) notwithstanding anything contained in paragraph (iii), the rent of the
premises referred to in sub-section (1-A) of section 4 shall, on expiry of the
period of five years mentioned in that sub-section, not exceed the amount
equivalent to the amount of net return of fifteen percent, on the investment in
the land and building and all the outgoings in respect of such premises; or
(iv) on any of the cases specified in section 11, the rent fixed by the
Court."
13.
Mr. Lalit submitted that by virtue of section 5(10)(b) the
standard rent under the Bombay Rent Act was attached to the premises. It was,
therefore, constant and not subject to any revision on change in tenancy. In
other words even if the appellant ceased to be a tenant and is thrown out, the
respondents can induct another tenant only on the same "standard
rent", that is, Rs.5236.58/- besides water charges at the rate of
Rs.515.35/- per month.
He
further submitted that except in circumstances as provided under sections 10
(increase in rent on account of payment of rates, etc); 10A (increase in rent
in respect of premises that were let out on or before September 1, 1940), 10B
(saving increase in rent under the previous provisions from the bar of 11
section 7), and 11 (increase in rent resulting from `standard rent' fixed by
the court in certain cases) any increment of rent was expressly barred under
section 7 of the Act.
14.
Mr. Lalit submitted that in view of section 5(11) of the Act the
appellant continued to be a tenant within the meaning of the Act
notwithstanding the decrees of ejectment passed by the Small Causes Court.
It,
therefore, followed that the appellant enjoyed all the protections provided
under the Act and in light of the provisions referred to above any direction to
pay, as monthly rent, any amount in excess of the standard rent was contrary to
law and unsustainable.
15.
Before proceeding to examine Mr. Lalit's submissions we may
observe that earlier a three-Judge Bench of this Court in Malpe Vishwanath
Acharya & Ors. vs. State of Maharashtra & Anr., (1998) 2 SCC 1, found
and held that the provisions of the Bombay Rent Act relating to the
determination and fixation of `standard rent' can no longer be considered to be
reasonable. The only reason why, despite the finding, the Court did not strike
down those provisions was that the Bombay Rent Act was to come to an end on
March 31, 1998 and the Court was informed that the State was in the process of
enacting a new Rent Control Act that would be just and fair and would follow
the National Model Law that was circulated by the Central 12 Government in
1992. After the decision of the Court in Malpe Vishwanath Acharya the Bombay
Rent Act was indeed replaced by the Maharashtra Rent Control Act, 1999 that
came into force with effect from March 31, 2000.
But Mr.
Rohatgi, learned Senior counsel appearing for the respondents, strongly
contended that the Maharashtra Rent Control Act completely belied the hopes
expressed by the Court under which it had refrained from striking down the
offending provisions in the Bombay Rent Act. Mr. Rohatgi submitted that the
Maharashtra Rent Control Act merely brought about some cosmetic changes but
retained the substance of the earlier Bombay Rent Act.
Referring
to the definition of "standard rent" in section 7(14) of the
Maharashtra Rent Control Act, Mr. Rohatgi submitted that it merely shifted the
date from September 1, 1940 to October 1, 1987 for pegging the standard rent
which continued to be attached to the premises and was not amenable to any
revision on change of tenancy.
16.
The issue of reasonableness of the provisions of the Maharashtra
Rent Control Act, 1999 or the Bombay Rent Act do not arise in this case and,
therefore, we refrain from making any observations in that regard but we do
feel that the reasonableness or otherwise of the provisions of the Maharashtra
Rent Control Act may have to be seriously examined by this Court in an
appropriate case.
17.
Coming back to the case in hand, Mr. Lalit argued that in spite of
the decrees of eviction passed by competent courts, the appellant continued to
be a "tenant" within the meaning of the Bombay Rent Act until, in
execution of the decree it was physically evicted from the suit premises. The tenancy
did not come to end on the passing of the decree but would continue as long as
the appellant was in actual physical possession of the suit premises; a priori
it enjoyed all the protection under the Bombay Rent Act and specially those
laying down the bar against any increase in rent. In support of the contention
he relied upon two sets of decisions, one on the issue of heritability of
tenancy under the Rent Acts and the other on the question whether a tenant
could be evicted on the basis of a decree made under the general law in case
after the decree was passed the rented premises came to be covered by the Rent
Act. The first set comprises three decisions of this Court in (i) Damadilal
& Ors. vs. Parashram & Ors., (1976) 4 SCC 855, (ii) Ganpat Ladha vs.
Shashi Kant Vishnu Shinde, (1978) 2 SCC 573 and (iii) Gian Devi Anand vs.
Jeevan Kumar (1985) 2 SCC 683. The second set also has three decisions. Those
are (i) Mani Subrat Jain vs. Raja Ram Vohra, (1980) 1 SCC 1, (ii) H. Shiva Rao
vs. Cecilia Pereira (1987) 1 SCC 258 and (iii) Dilip vs. Mohd. Azizul Haq &
Anr., (2000) 3 SCC 607.
18.
Dealing with the three decisions in the first set, Mr. Lalit
submitted 14 that Damadilal fully supported his contention. The decision in
Ganpat Ladha took a contrary view but later in Gian Devi Anand a Constitution
Bench overruled Ganpat Ladha and approved Damadilal thus, reinforcing the
submission made on behalf of the appellant.
19.
The case of Damadilal arose under the Madhya Pradesh Accommodation
Control Act, 1961. The suit premise was a house in a bazar that was let out to
the two defendants (the tenants) for business purposes.
The
question that arose in the case was whether on the death of the two tenants
during the pendency of their second appeal before the High Court, their
respective heirs and legal representatives had the right to get themselves
substituted in place of the original appellants-tenants and pursue the reliefs
sought for by them. The High Court permitted substitution and eventually
allowed the second appeal, setting aside the eviction decrees passed by the
courts below. The High Court judgment was challenged before this Court in
appeal. One of the grounds on which the High Court judgment was assailed by the
appellants-landlords was that after their contractual tenancy was determined
the two original tenants were reduced to the status of statutory tenants having
no heritable interest in the demised premises and on their death the right to
prosecute their appeal did not survive for their heirs and legal representatives.
In support of the contention reliance was 15 placed on two earlier decisions of
the Court in Anand Nivas (Private) Ltd. vs. Anandji Kalyanji Pedhi (1964) 4 SCR
892 (arising under Bombay Rents, Hotel and Lodging House Rates Control Act,
1947) and Jagdish Chander Chatterjee vs. Sri Kishan (1973) 1 SCR 850 [arising
under the Rajasthan Premises (Control of Rent and Eviction) Act, 1950]. A
three-Judge Bench of this Court rejected the contention raised on behalf of the
appellants. The decision in Damadilal pointed out that the term `statutory
tenancy' was borrowed from the English Rent Acts and along with the expression
certain legal notions, peculiar to the English Common Law, had also found their
way in some Indian decisions though those concepts had no basis in the Rent
Acts of this country. The Court observed that the courts in England had held
that a statutory tenant had no estate or property in the occupied premises
since he retained possession by virtue of the Rent Act(s) and not as being entitled
to tenancy. It was said that he had only a personal right to remain in
occupation, the statutory right of "irremovability and nothing more".
The position in this country, however, was quite different. In paragraph 11 of
the decision it was observed as follows:
"We
find it difficult to appreciate how in this country we can proceed on the basis
that a tenant whose contractual tenancy has determined but who is protected
against eviction by the statute, has no right of property but only a personal
right to remain in occupation, without ascertaining what his rights are under
the statute. The concept of a statutory tenant having no 16 estate or property
in the premises which he occupies is derived from the provisions of the English
Rent Acts. But it is not clear how it can be assumed that the position is the
same in this country without any reference to the provisions of the relevant
statute. Tenancy has its origin in contract. There is no dispute that a
contractual tenant has an estate or property in the subject- matter of the
tenancy, and heritability is an incident of the tenancy. It cannot be assumed,
however, that with the determination of the tenancy the estate must necessarily
disappear and the statute can only preserve his status of irremovability and not
the estate he had in the premises in his occupation. It is not possible to
claim that the `sanctity' of contract cannot be touched by legislation. It is
therefore necessary to examine the provisions of the Madhya Pradesh
Accommodation Control Act, 1961 to find out whether the respondents'
predecessors-in-interest retained a heritable interest in the disputed premises
even after the termination of their tenancy"
20.
The decision then went on to examine section 2(i) of the Madhya
Pradesh Accommodation Control Act that defined `tenant' and section 14 that
provided for restrictions on subletting and held that those provisions
supported the view taken by the Court that the statutory tenant retained as
much interest in the demised premises as a contractual tenant.
21.
The case of Ganpat Ladha arose under the Bombay Rents, Hotel and
Lodging House Rates Control Act, 1947 and the premises from which the tenant
was sought to be evicted was a shop let out to him for business purpose. The
trial court and the appellate court decreed the suit on the findings that the
tenant had failed to make payment of the arrears of rent 17 even after a valid
notice of demand was given to him by the landlord and further that he was not
entitled to the protection of section 12(3)(b) of the Act. The tenant
challenged the decrees passed by the courts below before the High Court in an
application under Article 227 of the Constitution. During the pendency of the
writ petition before the High Court the tenant died and her son was impleaded in
her place to pursue the reliefs prayed for in the writ petition. The High Court
eventually allowed the writ petition on the ground that despite the default in
payment of arrears of rent, the trial court could exercise its discretion in
favour of the tenant and decline to pass a decree of eviction. The matter
finally came to this Court in appeal preferred by landlord. A three-Judge Bench
of the Court allowed the appeal inter alia holding that after the death of the
original tenant her son could not claim to be a tenant within the meaning of
the Act. The decision in Ganpat Ladha is based entirely on interpretation of
the definition of `tenant' under the Bombay Rent Act. The Court noticed section
5(11) defining tenant and reproduced the section insofar as it was relevant to
the case as follows:
"5.
(11) `tenant' means any person by whom or on whose account rent is payable for
any premises and includes- (a) . . . . .
(b) . . .
. .
(c) any
member of the tenant's family residing with him at the time of his death as may
be decided in default of agreement by the Court"
22.
The Court held that section 5(11)(c) restricted the heritability
of tenancy only to a member of the tenant's family who might be residing with
him at the time of his death. This in turn implied that heritability of tenancy
was confined only to residential premises and the benefit could not be extended
to business premises. The Court held as follows:
"This
principle underlying the enactment of Section 5(11)(c) also goes to indicate
that it is in respect of residential premises that the protection of that
section is intended to be given. We can appreciate a provision being made in
respect of business premises that on the death of a tenant in respect of such
premises, any member of the tenant's family carrying on business with the
tenant in such premises at the time of his death shall be a tenant and the
protection of the Rent Act shall be available to him. But we fail to see what
purpose the legislature could have had in view in according protection in
respect of business premises to a member of the tenant's family residing with
him at the time of his death. The basic postulate of protection under the Rent
Act is that the person who is sought to be protected must be in possession of
the premises and his possession is protected by the legislation. But in case of
business premises, a member of the family of tenants residing with him at the
time of his death may not be in possession of the business premises"
23.
In Ganpat Ladha this Court approved the decision of the Gujarat
High Court in Parubai Manilal Brahmin vs. Baldevdas Zaverbhai Tapodhan (1964) 5
Guj LR 563 and in support of the view taken by it also cited the amendment
introduced by the Gujarat Legislature in section 5(11)(c) of the Bombay Rent
Act. It needs to be stated here that in Ganpat Ladha the earlier 19 decision in
Damadilal was not brought to the notice of the Court and the Court did not go into
the question whether a tenant on his death left behind any heritable estate or
interest in the tenanted premises.
24.
Gian Devi is a decision by a Constitution Bench of five Judges.
The case arose under the Delhi Rent Control Act, 1958 and the tenanted premises
was once again a shop. The question that the Court framed for its consideration
was as under:
"To
state it more precisely, the question is whether the heirs of a deceased tenant
whose contractual tenancy in respect of commercial premises has been
determined, are entitled to the same protection against eviction afforded by
the Act of the tenant"
25.
In this case, the Constitution Bench considered both the earlier
decisions in Damadilal and in Ganpat Ladha. It also considered the earlier
seven-Judge Bench decision in V. Dhanapal Chettiar vs. Yesodai Ammal (1980) 1
SCR 334 besides several other decision of the Court. In Gian Devi, as in
Damadilal, the Court observed that the expression statutory tenant was used in
English Rent Acts and the concept that a statutory tenant had no estate or
interest in the demised premises was peculiar to the English Law. It had no
basis in the provisions of the Rent Acts of the different States of this
country. Referring to the earlier decision in Damadilal in paragraph 25 of the
judgment the Court observed as follows:
20
"This Court has very aptly observed in Damadilal case that it cannot be
assumed that with the determination of the tenancy, the estate must necessarily
disappear and the statute can only preserve the status of irremovability and
not the estate he has in the premises in his occupation"
In the
same paragraph, the decision reproduced Section 2(l) of the Delhi Rent Control
Act that defined tenant both as it stood prior to and after its amendment by
Act 18 of 1976 and observed as follows:
"It
is, therefore, clear from the definition of tenant, whether in the original Act
or in the amended Act, that the tenant within the meaning of the definition of
the term in the Act includes any person continuing in possession after the
termination of his tenancy. It will be seen that the definition of tenant in
Madhya Pradesh Accommodation Control Act, 1961 on which the decision in
Damadilal case mainly turns, is similar to the definition of tenant as given in
the Delhi Act in the sense that the tenant under both the Acts includes for the
purpose of Rent Act any person continuing in possession after the termination
of tenancy."
(emphasis
added) In this regard in paragraph 31 of the decision, it observed as follows:
"The
very premise, on the basis of which the argument is advanced, is, in our
opinion, unsound. The termination of the contractual tenancy in view of the
definition of tenant in the Act does not bring about any change in the status
and legal position of the tenant, unless there are contrary provisions in the
Act;
and, the
tenant notwithstanding the termination of tenancy does enjoy an estate or
interest in the tenanted premises. This interest or estate which the tenant
under the Act despite termination of the contractual tenancy continues to enjoy
creates a heritable interest in the absence of any provision to the contrary.
We have earlier noticed the decision of this Court in Damadilal case. This view
has been taken by this Court in Damadilal case 21 and in our opinion this
decision represents the correct position in law. The observations of this Court
in the decision of the seven-Judge Bench in the case of V. Dhanapal Chettiar
vs. Yesodai Ammal which we have earlier quoted appear to conclude the
question."
In
paragraph 33 of the decision the Court expressed its inability to agree with
the observations made by the three-Judge bench in Ganpat Ladha and in paragraph
35 it stated more explicitly that the view expressed by the Court in Ganpat
Ladha and the observations made therein do not lay down the correct law.
26.
In conclusion the Constitution Bench, in paragraph 36 of the
decision, held and observed as follows:
"Accordingly,
we hold that the Rent Act in question defines a tenant in substance to mean `a
tenant who continues to remain in possession even after the termination of the
contractual tenancy till a decree for eviction against him is passed', the
tenant even after the determination of the tenancy continues to have an estate
or interest in the tenanted premises and the tenancy rights both in respect of
residential premises and commercial premises are heritable. The heirs of the
deceased tenant in the absence of any provision in the Rent Act to the contrary
will step into the position of the deceased tenant and all the rights and
obligations of the deceased tenant including the protection afforded to the
deceased tenant under the Act will devolve on the heirs of the deceased tenant.
As the protection afforded by the Rent Act to a tenant after determination of
the tenancy and to his heirs on the death of such tenant is a creation of the
Act for the benefit of the tenants, it is open to the Legislature which
provides for such protection to make appropriate provisions in the Act with
regard to the nature and extent of the benefit and protection to be enjoyed and
the manner in which the same is to be enjoyed. If the 22 Legislature makes any
provision in the Act limiting or restricting the benefit and the nature of the
protection to be enjoyed in a specified manner by any particular class of heirs
of the deceased tenant on any condition laid down being fulfilled, the benefit
of the protection has necessarily to be enjoyed on the fulfillment of the
condition in the manner and to the extent stipulated in the Act. The
Legislature which by the Rent Act seeks to confer the benefit on the tenants
and to afford protection against eviction, is perfectly competent to make
appropriate provision regulating the nature of protection and the manner and
extent of enjoyment of such tenancy rights after the termination of contractual
tenancy of the tenant including the rights and the nature of protection of the
heirs on the death of the tenant. Such appropriate provision maybe made by the
Legislature both with regard to the residential tenancy and commercial tenancy.
It is, however, entirely for the Legislature to decide whether the Legislature
will make such provision or not. In the absence of any provision regulating the
right of inheritance, and the manner and the extent thereof and in the absence
of any condition being stipulated with regard to the devolution of tenancy
rights on the heirs on the death of the tenant, the devolution of tenancy
rights must necessarily be in accordance with the ordinary law of
succession."
27.
On the basis of the decisions in Damadilal and Gian Devi Anand Mr.
Lalit strongly contended that when a tenant, having suffered a decree of
eviction, on his death left behind sufficient protection under the law for his
heirs and legal representatives to step into his shoes and resist the eviction
sought for by the landlord how can it be that a tenant suffering a decree of
eviction would himself lose the statutory protection against increase in rent.
The
submission is indeed attractive but a little scrutiny would show that it is
quite misconceived. It may be recalled that the decision in Damidilal was 23
under the Madhya Pradesh Accommodation Control Act, 1961 and Gian Devi Anand
under the Delhi Rent Control Act, 1958. In both the Acts the definition of "tenant"
had the qualification that Mr. Lalit termed as the exclusionary clause:
"
"tenant" means............but does not include, --- (A) any person
against whom an order or decree for eviction has been made"
In both
the decisions, the definition of "tenant" as appearing in the Madhya
Pradesh and the Delhi Acts respectively were reproduced. But for some reason,
in those two decisions, the Court did not take any notice of that part of the
definition. In the Constitution Bench decision in Gian Devi Anand, after reproducing
in full the definition of tenant as contained in section 2(l) of the Delhi Rent
Control Act, the Court observed (at the end of paragraph 25):
"It
is therefore, clear from the definition of tenant, whether in the original Act
or in the amended Act, that the tenant within the meaning of the definition of
the term in the Act includes any person continuing in possession after the
termination of his tenancy."
It is,
thus, to be seen that the Court noticed that a person who continued to be in
possession after termination of his (contractual) tenancy was covered by the
definition of tenant but did not pay any attention to the latter part of the
definition that excluded any person against whom an order or decree of 24
eviction had been made.
28.
Here, it may further be recalled that the decision in Atma Ram
Properties was also under the Delhi Rent Control Act. Hence, if the submissions
of Mr. Lalit are to be accepted then it would follow that Atma Ram Properties
was wrongly decided. But Mr. Lalit himself did not take that position (and he
could not have taken that position!). He only tried to distinguish the decision
in Atma Ram Properties by contending that it would not apply to a case under
the Bombay Rent Act because in that Act the definition of "tenant"
was materially different. The distinction sought to be made by the learned
counsel, thus, appears to be unfounded and the submission seems to be
inconsistent.
29.
But the basic flaw in the submission is that it overlooks that the
decisions in Damadilal and Gian Devi Anand were rendered in a totally different
context. In those two decisions the Court proceeded on the basis that the
determination of contractual tenancy did not extinguish the rights of the
tenant. Under the Rent Act the tenant continued to retain his estate and
interests in the demised premises that, after his death, devolved upon his
heirs and legal representatives. Further, in both Damadilal and Gian Devi Anand
the underlying concern of the Court was to save the heirs and legal representatives
of the deceased tenants from two misfortunes befalling them 25 at the same
time; one, the death of the bread winner and the other, the loss of the bread
altogether as a consequence of the closure of business resulting from ejectment
from the tenanted business premises. In Ganpat Ladha a three-Judge Bench of the
Court had held that (under the Bombay Rent Act) the devolution of tenancy could
take place only in case of residential premises and not in case of business
premises. Disagreeing with that view the Constitution Bench in Gian Devi Anand
(in paragraph 34 of the decision) observed as follows:
"The
death of the person who happens to be the tenant of the commercial premises and
who was running the business out of the income of which the family used to be
maintained, is itself a great loss to the members of the family to whom the
death, naturally, comes as a great blow. Usually, on the death of the person
who runs the business and maintains his family out of the income of the
business, the other members of the family who suffer the bereavement have
necessarily to carry on the business for the maintenance and support of the
family. A running business is indeed a very valuable asset and often a great
source of comfort to the family as the business keeps the family
going............. The Legislature could never have possibly intended that with
the death of a tenant of the commercial premises, the business carried on by
the tenant, however flourishing it may be and even if the same constituted the
source of livelihood of the members of the family, must necessarily come to an
end on the death of the tenant, only because the tenant died after the
contractual tenancy had been terminated. It could never have been the intention
of the Legislature that the entire family of a tenant depending upon the
business carried on by the tenant will be completely stranded and the business
carried on for years in the premises which had been let out to the tenant must
stop functioning at the premises which the heirs of the deceased tenant must 26
necessarily vacate, as they are afforded no protection under the Act."
30.
In light of the discussion above we are of the considered view
that the appellant in this case cannot derive any support from the decisions of
this Court in Damadilal and Gian Devi Anand.
31.
Coming now to the second set of decisions, the case of Mani Subrat
Jain arose from an order of the appellant's eviction in execution of a decree
made against him. The appellant was an advocate and thus belonged to a `scheduled'
class of tenants whose dwellings enjoyed special protection under the East
Punjab Rent Restriction Act, 1949. In a suit filed by the respondent-landlord
for recovery of possession of the demised premises the appellant entered into a
compromise and agreed to vacate the premises by a certain date on certain terms
regarding rent etc. The Court passed a consent decree on the basis of the
agreement entered into by the parties. The decree was passed on October 9,
1972. Shortly thereafter the area of application of the East Punjab Rent
Restriction Act, 1949 was extended and with effect from November4, 1992 it came
to apply to Chandigarh (where the rented property was situated). The appellant
did not vacate the premises as agreed and the decree was put to execution. The
execution court ordered eviction and the order was affirmed by all the superior
courts till the matter finally reached this Court. Before this Court, the
appellant took the stand that the 27 rented premises having come under the Rent
Control Act he could not be ejected on the basis of a decree passed earlier.
The Court found that the decision of the case would turn on the question
whether or not the appellant was covered by the definition of tenant under the
Rent Act and observed as follows:
"The
salvation of the appellant is certain if he be a `tenant' within the meaning of
the Act. His eviction is certain if the definition `tenant' does not ensconce
him in its amplitude."
32.
The Court then, brushing aside the precedents cited by the two
sides, proceeded to examine the question in light of section 2(i) (containing
the definition of `tenant') and section 13 (laying down the grounds on which
alone a tenant could be evicted) and reproduced the two provisions as follows:
"2
(i) `tenant' means any person by whom or on whose account rent is payable for a
building or rented land and includes a tenant continuing in possession after
the termination of the tenancy in his favour, but does not include a person
placed in occupation of a building or rented land by its tenant, unless with
the consent in writing of the landlord, or a person to whom the collection of
rent or fees in a public market, cart-stand or slaughter house or of rents for
shops has been framed out or leased by a municipal, town or notified area
committee.
13.
Eviction of tenants- (1) A tenant in possession of a building or rented land
shall not be evicted therefrom in execution of a decree passed before or after
the commencement of this Act or otherwise and whether before or after the
termination of the tenancy, except in accordance 28 with the provisions of this
section, or in pursuance of an order made under Section 13 of the Punjab Urban
Rent Restriction Act, 1947, as subsequently amended."
(emphasis
in the original)
33.
Having thus taken note of the two provisions, the Court arrived at
the inevitable conclusion as follows:
"The
expression `tenant' includes `a tenant continuing in possession after the
termination of the tenancy in his favour'. It thus includes, by express
provision, a quondam tenant whose nexus with the property is continuance in
possession. The fact that a decree or any other process extinguishes the
tenancy under the general law of real property does not terminate the status of
a tenant under the Act having regard to the carefully drawn inclusive
clause."
It,
however, appears that the parties entered into yet another agreement while the
matter was pending before this Court and hence, the operative order in the
judgment reads as follows:
"Krishna
Iyer, J.- The judgment having been delivered counsel for the respondent
represented that the Agreement, which has been made and appendixed to the
judgment, be treated as an undertaking mutually between the parties to the
Court. Counsel on both sides have no objection to this course and so we record
the Agreement incorporated in the judgment as an undertaking to the Court made
by the parties in regard to their respective obligations."
34.
Interestingly in Mani Subrat Jain the very first sentence of the
judgment gives sufficient indication how the decision is going to end up.
Krishna
Iyer, J. writing for the Court in his inimitably grandiloquent style 29 started
the judgment by referring to the "Holmesian homily" and thereby
making it clear that the Court would bestow its "humane attention" on
the matter not through logic but on the basis of "experience". From
the start to the end the Court made clear its intent to stand firmly by the
side of the tenant. We may concede that the tenant who was also an advocate was
entitled to be doubly protected by the law. We may also try to comprehend the
legalese of the debate as reflected in the judgment. But we have real problem
in following the message the decision in Mani Subrat Jain gave to the ordinary
man. That to go back on one's solemn word given to the other side before a
Court of law is no sin. On the contrary one may derive rich dividend before the
highest Court of the land, provided one is a tenant. To, sometimes, divorce
logic from the law is one thing but to divorce morality altogether from the law
is something quite different.
35.
The case of H. Shiva Rao v. Cecilia Pereira arose on facts very
similar to the case of Mani Subrat Jain (except that in this case the decree of
eviction was passed on contest and not on the basis of any agreement between
the parties). Following the earlier decision in Mani Subrat Jain this Court
allowed the tenant's appeal and held that he could not be evicted in execution
of the decree since after the decree was made the rented premises came under
the Karnataka Rent Control Act as a result of the territorial 30 extension in
regard to the application of the Act. In H. Shiva Rao too the Court's strong
sympathy for the tenant is evident from paragraphs 5 and 7 of the judgment.
36.
Dilip vs. Mohd. Azizul Haq is the third and the last decision in
the second set of decisions cited by Mr. Lalit. In this case the High Court had
taken the view that an appeal preferred by the tenant against a decree of
eviction passed by the trial court was not covered by the expression "in a
suit or proceeding filed and pending against the tenant in any court or before
any authority" as occurring in clause 13-A of the C.P. and Berar Letting
of Houses Rent Control order, 1949. Clause 13-A of the order was as follows:
"No
decree for eviction shall be passed in a suit or proceeding filed and pending
against the tenant in any court or before any authority unless the landlord
produces a written permission of the Controller as required by sub-clause (1)
of clause 13"
This
Court reversed the High Court decision relying on some earlier decisions and
holding that an appeal, even though filed by the tenant, was a continuation of
the suit and hence, covered by the expression used in clause 13-A. The decision
in Dilip also referred to the earlier decision in H. Shiva Rao but this
decision does not seem to have any relevance to the case in hand.
37.
It is not difficult to distinguish the decisions in Mani Subrat
Jain and H. Shiva Rao from the case in hand. Once the tenanted premises came
under 31 the Rent Act the tenant could only be evicted on the basis of a decree
passed under the Rent Act. But unlike the present appellant, the tenants in
Mani Subrat Jain and H. Shiva Rao had not suffered any decree under the
respective Rent Acts.
38.
It needs to be stated here that the decisions relied upon by Mr.
Lalit are undoubtedly binding precedents for the respective issues decided in
those cases but it is not possible to stretch those decisions in support of the
point canvassed by him. We must also state here that on the basis of the
aforementioned decisions Mr. Lalit was able to build up a persuasive argument.
But in the larger perspective and with the change in times we find the submissions
quite inacceptable. Here it is important to bear in mind that all the decisions
relied upon by Mr. Lalit, from Damadilal to H. Shiva Rao were rendered between
1976 to 1986 during the period when, to put it mildly, the Court used to be
overly protective of the tenant and for good reasons too because that is the
apparent thrust of the Rent Act. The Rent Act was the socio-legal response to
certain historical developments, namely, the acute shortage of housing in the
aftermath of the World War, the great influx of refugees in a number of States
of the Union following the partition of the country and the massive migration
inside the country from rural areas to the urban centres as a result of rapid
urbanisation. All these developments that 32 took place almost at the same time
skewed the law of supply and demand totally in favour of the landlord. The need
of the hour, therefore, was to protect the tenant, who would have otherwise
been left completely at the mercy of the landlord. The legislature intervened
and brought in the Rent Act, severely restricting the grounds for enhancement
of rent and for eviction of the tenant from the rented premises, thus
regulating the relationship between the landlord and the tenant beyond the
general law under the Transfer
of Property Act, 1882. In this regard the Court
responded in equal, if not greater measures. But after about three quarters of
a century and three generations later when things are no longer the same and
the urban centres are faced with newer problems, some of those having their
origin in the Rent Act itself, there is the need to take a re-look on the
Court's attitude towards the relationship between the landlord and the tenant
and to provide for a more level ground in the judicial arena.
39.
The way this Court has been looking at the relationship between
the Landlord and the Tenant in the past and the shift in the Court's approach
in recent times have been examined in some detail in the decision in Satyawati
Sharma vs. Union of India & Anr., (2008) 5 SCC 287. In that decision one of
us (Singhvi, J.) speaking for the Court referred to a number of earlier
decisions of the Court and (in paragraph 12 of the judgment) observed as 33 follows:
"Before
proceeding further we consider it necessary to observe that there has been
definite shift in the Court's approach while interpreting the rent control
legislations. An analysis of the judgments of 1950s to early 1990s would
indicate that in majority of cases the courts heavily leaned in favour of an
interpretation which would benefit the tenant- Mohinder Kumar vs. State of
Haryana1, Prabhakaran Nair vs. State of T.N.2, D.C. Bhatia vs. Union of India3
and C.N. Rudramurthy vs. K. Barkathulla Khan4. In these and other cases, the
Court consistently held that the paramount object of every rent control
legislation is to provide safeguards for tenants against exploitation by
landlords who seek to take undue advantage of the pressing need for
accommodation of a large number of people looking for a house on rent for
residence or business in the background of acute scarcity thereof. However, a
different trend is clearly discernible in the later judgments."
40.
He then referred to some later decisions and (in paragraph 14 of
the judgment) quoted a passage from the decision in Joginder Pal vs. Naval
Kishore Behal (2002) 5 SCC 397, to the following effect:
"...
The courts have to adopt a reasonable and balanced approach while interpreting
rent control legislations starting with an assumption that an equal treatment
has been meted out to both the sections of the society. In spite of the overall
balance tilting in favour of the tenants, while interpreting such of the
provisions as take care of the interest of the landlord the court should not
hesitate in leaning in favour of the landlords.
Such
provisions are engrafted in rent control legislations to take care of those
situations where the landlords too are weak and feeble and feel humble."
(emphasis
in original) 1 (1985) 4 SCC 221 2 (1987) 4 SCC 238 3 (1995) 1 SCC 104 4 (1998)
8 SCC 275 34
41.
Commenting upon the Full Bench decision of the Delhi High Court
that had upheld the Constitutional validity of section 14(1)(e) of the Delhi
Rent Control Act and that came under challenge in Satyawati Sharma, Singhvi, J.
(in paragraph 29 of the judgment) observed as follows:
"...
It is significant to note that the Full Bench did not, at all, advert to the
question whether the reason/cause which supplied rationale to the classification
continued to subsist even after lapse of 44 years and whether the tenants of
premises let for non-residential purposes should continue to avail the benefit
of implicit exemption from eviction in the case of bona fide requirement of the
landlord despite see-saw change in the housing scenario in Delhi and
substantial increase in the availability of buildings and premises which could
be let for non -residential or commercial purposes."
42.
The decision in Satyawati Sharma then referred to the doctrine of
temporal reasonableness and in paragraph 32 observed as follows:
"It
is trite to say that legislation which may be quite reasonable and rational at
the time of its enactment may with the lapse of time and/or due to change of
circumstances become arbitrary, unreasonable and violative of the doctrine of
equality and even if the validity of such legislation may have been upheld at a
given point of time, the Court may, in subsequent litigation, strike down the
same if it is found that the rationale of classification has become
non-existent."
43.
We reaffirm the views expressed in Satyawati Sharma and emphasise
35 the need for a more balanced and objective approach to the relationship
between the landlord and tenant. This is not to say that the Court should lean
in favour of the landlord but merely that there is no longer any room for the
assumption that all tenants, as a class, are in dire circumstances and in
desperate need of the Court's protection under all circumstances. (The case of
the present appellant who is in occupation of an area of 9000 sq. ft. in a
building, situate at Fort, Mumbai on a rental of Rs. 5236.58/-, plus water
charges at the rate of Rs. 515.35/- per month more than amply highlights the
point) 44. With the perspective thus adjusted all the submissions made by Mr. Lalit
on behalf of the appellant have a simple answer. The interim order of the High
Court asking the appellant to deposit Rs.5, 40,000/- from the date of the
decree as condition for stay of the execution of the decree of ejectment has to
be seen as one single package. The appellant may or may not accept the order as
a whole. But it is not open to it to accept the order in so far as it stays the
execution of the decree and to question the condition attached to it.
44.
In an appeal or revision, stay of execution of the decree(s)
passed by the court(s) below cannot be asked for as of right. While admitting
the appeal or revision, it is perfectly open to the court, to decline to grant
any stay or to grant stay subject to some reasonable condition. In case stay is
not 36 granted or in case the order of stay remains inoperative for failure to
satisfy the condition subject to which it is granted, the tenant-in-revision
will not have the protection of any of the provisions under the Rent Act relied
upon by Mr. Lalit and in all likelihood would be evicted before the revision is
finally decided. In the event the revision is allowed later on, the tenant's
remedy would be only by way of restitution.
45.
In Atma Ram Properties the Court viewed the issue exactly in the
same way (See paragraphs 6, 8 & 9 of the decision). Further, the decision
also answers Mr. Lalit's submission that the tenancy did not come to end on the
passing of the decree but would continue until the tenant was actually
physically evicted from the premises in execution of the decree. In Atma Ram
Properties the Court framed two issues arising for consideration as follows:
"This
submission raises the following two issues: (i) in respect of premises enjoying
the protection of rent control legislation, when does the tenancy terminate;
and (ii) up to what point of time is the tenant liable to pay rent at the
contractual rate and when does he become liable to pay compensation for use and
occupation of the tenancy premises unbound by the contractual rate of rent to
the landlord?"
The Court
answered the first issue as follows:
"We
are, therefore, of the opinion that the tenant having suffered a decree or
order for eviction may continue his fight before the superior forum but, on the
termination of the proceedings and the decree or order of eviction first passed
37 having been maintained, the tenancy would stand terminated with effect from
the date of the decree passed by the lower forum. In the case of premises
governed by rent control legislation, the decree of eviction on being affirmed,
would be determinative of the date of termination of tenancy and the decree of
affirmation passed by the superior forum at any subsequent stage or date, would
not, by reference to the doctrine of merger have the effect of postponing the
date of termination of tenancy."
The
second issue was answered as follows:
"With
effect from that date (the passing of the decree of eviction), the tenant is
liable to pay mesne profits or compensation for use and occupation of the
premises at the same rate at which the landlord would have been able to let out
the premises and earn rent if the tenant would have vacated the premises. The
landlord is not bound by the contractual rate of rent effective for the period
preceding the date of the decree."
(words in
parenthesis added) We are in respectful agreement with the decision of the
Court in Atma Ram Properties.
46.
In light of the discussions made above we hold that in an appeal
or revision preferred by a tenant against a order or decree of an eviction
passed under the Rent Act it is open to the appellate or the revisional Court
to stay the execution of the order or the decree on terms, including a
direction to pay monthly rent at a rate higher than the contractual rent.
Needless to say that in fixing the amount subject to payment of which the
execution of the order/ decree is stayed, the Court would exercise restraint
and would not fix 38 any excessive, fanciful or punitive amount.
47.
In the case in hand, the High Court has fixed the amount of Rs. 5,40,000/-
per month with reference to the Stamp Duty Ready Reckoner and hence, its
reasonableness cannot be doubted. In fairness to Mr. Lalit he did not challenge
the fixation of the amount on that ground.
48.
Before concluding the decision one more question needs to be
addressed: what would be the position if the tenant's appeal/revision is
allowed and the eviction decree is set aside? In that event, naturally, the
status quo ante would be restored and the tenant would be entitled to get back
all the amounts that he was made to pay in excess of the contractual rent. That
being the position, the amount fixed by the court over and above the
contractual monthly rent, ordinarily, should not be directed to be paid to the
landlord during the pendency of the appeal/revision. The deposited amount,
along with the accrued interest, should only be paid after the final disposal
to either side depending upon the result of the case. In case for some reason
the Court finds it just and expedient that the amount fixed by it should go to
the landlord even while the matter is pending, it must be careful to direct
payment to the landlord on terms so that in case the final decision goes in
favour of the tenant the payment should be made to him without any undue delay
or complications.
49.
In light of the discussions made above, we find the order of the
High Court just and proper, calling for no interference by this Court. We find
no merit in the appeal. It is, accordingly, dismissed with costs.
..........................................J. [B.N. AGRAWAL]
..........................................J. [G.S. SINGHVI]
..........................................J. [AFTAB ALAM]
New Delhi,
August 27, 2009.
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