PETITIONER: CHASE BRIGHT STEEL LTD. Vs. RESPONDENT: SHANTARAMSHANKAR SAWANT DATE OF JUDGMENT02/03/1994 BENCH: MOHAN, S. (J) BENCH: MOHAN, S. (J) MUKHERJEE M.K. (J) CITATION: 1994 AIR 2114 1994 SCC (4) 89 JT 1994 (2) 192 1994 SCALE (1)832 ACT: HEADNOTE: JUDGMENT:
The Judgment of the Court was delivered by
S. MOHAN, J.- The short facts leading to this civil appeal
are as under.
2. The original owner of suit property situate at
Ramamaruti Road,
Thane (Maharashtra) was one Omji Mulji. He leased out three
small flats having two rooms and a kitchen in favour of the
appellant company in 1963. The rent was fixed at Rs 300
plus Rs 20 municipal taxes and Rs 15 water charges.
3. In 1968, Omji Mulji sold away the property to one
Gavand. Thereafter, the appellant tendered the rent
including the taxes to the said Gavand from 1968. In the
same year of 1968, the municipal taxes were increased. The
appellant paid a lump sum of Rs 338.58 as rent. Due to
further increase in the taxes, the appellant tendered Rs
358.29 including taxes to the owner.
4. In the year 1975, the respondents came to purchase the
suit property. Since then, the appellant had been paying
regularly rent and taxes at the rate of Rs 358.29 p.m.
5. The Advocate for the respondents issued a notice dated
July 27, 1977 to the appellant terminating their tenancy and
called upon the appellant to hand over vacant possession
since the appellant was in arrears of permitted
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increases amounting to Rs 5650 from February 1976. The
notice also stated two of the grounds for eviction, in that
the appellant had altered the premises and causing nuisance
to the neighbours.
6. On receipt of the above notice, the appellant filed an
application under Section 11(3) of the Bombay Rents, Hotel
and Lodging House Rates Control Act, 1947 (hereinafter
referred to as ‘the Act’) for fixation of standard rent. On
August 30, 1977, an interim order fixing the rent at Rs 358
was passed. It was directed to be deposited in the court on
or before 10th of every month. For the months of August and
September, the appellant paid the interim rent to the
respondents. The same had been accepted. However, since
October 1977 the appellant was depositing the interim rent
in the Court of Civil Judge, Junior Division, Thane.
7. On April 26, 1979, the respondents filed Civil Suit No.
384 of 1979 in the Court of Civil Judge, Junior Division,
Thane for arrears of permitted increases, rent and for
possession. The ground urged was that the appellant was in
arrears of permitted increases amounting to Rs 56.50 per
month since October 1976. This was on the basis of
calculation at 7% as education cess on the rent of Rs
358.29, Rs 30 water charges, 1/4% as unemployment charges
and 1/4% as tree cess. Further grounds for eviction namely
unauthorised alteration and creating nuisance were also
urged. In September 1981 the application for fixation of
standard rent was dismissed in default for non-appearance.
This dismissal came to be noted by the Advocate only in the
year 1985. However, the appellant had been depositing the
interim standard rent all along.
8. In defence to the Regular Civil Suit No. 384 of 1979,
it was urged that the payment of standard rent had been made
without fail throughout and, therefore, he was not in
arrears. The other grounds namely, unauthorised
construction and causing nuisance were also denied. The
trial court decreed the suit for eviction on account of
arrears of rent but not permitted increases.
9. Aggrieved by the said order, appellant filed Civil
Appeal No. 452 of 1983 before the District Judge, Thane.
The said appeal was dismissed. Thereafter, the appellant
preferred Writ Petition No. 5035 of 1985 before the High
Court. That was dismissed on February 19, 1987 on the
ground that the tenant was not in arrears of rent but had
defaulted in payment of permitted increases. Thus, the
present civil appeal.
10. Mr Soli J. Sorabjee, learned Senior Counsel for the
appellant raised the following points for our consideration.
(i) A valid notice of demand is a condition
precedent for the maintainability of suit for
arrears of rent or permitted increase. In the
absence of requisite demand, there can be no
question of noncompliance. In such a case,
the consequences mentioned under Section 12(3)
sub-section (3)(a) or (b) will not be
attracted. In support of this submission,
reliance is placed on Chimanlal v. Mishrilall.
1 (1985) 1 SCC 14: (1985) 2 SCR 39
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(ii) In the present case, the notice of
demand dated July 27, 1977 does not mention
the period of alleged arrears or the permitted
increase. The demand is only for the payment
of entire arrears of rent and not permitted
increases.
(iii)Permitted increase, though part of rent,
is not payable monthly. It is well settled
that education cess being payable on a year to
year basis, the rent ceases to be payable
every month within Section 12(3)(a) of the Act
as laid down in Raju Kakara Shetty v. R. P.
Shirole2.
(iv) The landlord can have no cause of action
to recover permitted increase until he had
paid the permitted increases. Therefore, he
must plead and prove payment of permitted
increase. There is no such pleading in this
case. In spite of this point having been
urged before the lower appellate court as well
as the High Court it has not been dealt with.
The High Court has gone wrong in misreading
the provisions of Section 12 of the Act. It
has read into it obligations and conditions
which are not statutorily prescribed. It
should have taken note of the following facts
:
(a) That the application for standard rent
was made in time;
(b) That the interim rent as fixed by the
court has been paid regularly throughout the
pendency of the suit and the appeal;
(c) That the interim rent fixed was the same
as the contractual rent.
11. Mr A.M. Khanwilkar, learned counsel for the respondents
in answering these submissions would urge that it is not
correct to state that there is no valid demand. The notice
specifically states as to what exactly the tenant was liable
to pay namely; the rent at Rs 358.29, 7% education cess, Rs
30 for water charges, 1/4% as unemployment charges, 1/4% as
tree cess. All these total up to Rs 56.50 per month as
permitted increases. When the notice called upon the tenant
to pay the entire arrears of rent, all these which are part
of rent were required to be paid. As a matter of fact, the
plaint clearly discloses as to what exactly was the demand.
Therefore, on facts the ruling of Chimanlal case’ has no
application.
12. There is no demur to the proposition that the permitted
increases, though part of rent, are not payable monthly.
But, in this case, the plaint clearly states that the
permitted increases were from February 1, 1976 till the date
of filing of suit in 1979. Hence this proposition does not
in any way affect either the claim or the recovery thereof.
13. The landlord never disputed that the tenant had not
paid the municipal taxes. As a matter of fact, the
municipal demands had been produced in evidence. The High
Court had appropriately appreciated the matter and it
warrants no interference.
2 (1991) 1 SCC 570
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14. As a proposition of law, it cannot be disputed that
there must be a valid demand for maintainability of suit for
arrears of rent or permitted increases. It has been so laid
down in Chimanlal case’ (at SCR pp. 43-44).
15. In this case, the notice dated July 27, 1977 is as
follows :
“You have been ]eased out the entire second
floor. You are in occupation of the entire
second floor. The month of tenancy is
according to British Calendar Month. You have
accommodated your three officers in the three
blocks on the second floor. The net rent in
respect of the said second floor is Rs 358.29.
Over and above the said rent you require to
pay to my client 7% as education cess, Rs 30
for water charges and 1/4% as unemployment
charges and 1/4% as the tree cess. Thus you
are supposed to pay to my client Rs 56.50 per
month as permitted increases. You are at
present in arrears of rent from February 1976.
My client has demanded the same but you have
neglected and failed to pay the same. You are
thus a defaulter. You are not ready and
willing to pay the rent as and when it becomes
due.
You are also called upon to pay the entire
arrears of rent on receipt hereof. Failing
compliance of which, my clients will be
compelled to go to the court of law for
getting their grievances redressed entirely at
your risk as to the costs and consequences
which please note.
16. No doubt, the word ‘supposed’ in paragraph 3 has been
incorrectly used. But that does not in any way affect the
validity of the notice. Besides, merely because it is
stated ‘arrears of rent’, it does not mean that there is no
demand for permitted increases since those permitted
increases are part of rent. The plaint in no mistakable
terms says as follows :
“The month of the tenancy of the defendant was
according to British Calendar Month. The net
rent in respect of the said second floor was
Rs 358.29 over and above the said rent the
defendant was required to pay to these
defendant 7% as education cess, Rs 30 for
water charges, 1/4% as unemployment charges
and 1/4% as tree cess. These plaintiffs
submit that thus the defendant was required to
pay the permitted increases per month
amounting to Rs 56.90. The defendant was in
arrears of permitted increases since February
1976. These plaintiffs demanded the same time
and again but the defendant has failed to pay
the same. The defendant is, thereby a
defaulter.”
17. Therefore, this contention of Mr Soli J. Sorabjee
cannot be accepted. Factually, the ruling stated as
Chimanlal case’ is distinguishable. In R.K. Shetty case2
it is stated at p. 581 as under : (SCC para 13)
“In Maheshwari Mills Ltd.3 under the terms of
the tenancy the tenant was obliged to pay the
municipal taxes and property taxes in respect
of the demised premises. The court took the
view that such payment was by way of rent and
since the municipal taxes and property taxes
were payable on year to year basis, a part of
the rent was admittedly not
3 Panchal Mohanlal lshwardas v. Maheshwari
Mills Ltd.,(1962) 3 Guj LR574
94
payable by the month and, therefore, Section
12(3)(a) was not attracted. In Prakash Surya 4
the tenant had agreed to pay the municipal tax
and education cess. The amount payable
towards these taxes constituted rent and since
the same was payable at the end of the year
the court held that the rent had ceased to be
payable by the month and hence Section
12(3)(a) had no application.”
18. As rightly urged by Mr Khanwilkar, learned counsel for
the respondent the permitted increase may not be payable
monthly; but in the instant case, the period, for which the
permitted increases are claimed, is between February 1, 1976
till April 27, 1979. This is evident from paragraph 6 of
the plaint as under :
“The cause of action for the purpose of filing
of this suit first arose on or about March 1,
1976, for arrears of permitted increases and
for possession on September 1, 1977 and is
being continued respectively from time to time
till the filing of this suit.”
Therefore, R.K. Shetty case 2 cannot be
pressed into service.
19.At no point of time, the tenant disputed
the payment of municipal taxes by the
landlord. In fact, the evidence is to the
following effect
“Permittedincrease was amounting to Rs 56.50
since February
1976. I have produced the xerox copy of the
notices issued by Municipality at Ex. 13. We
demanded the permitted increase to the
defendant. But they failed to pay the same.”
20. On September 14, 1983, the standard rent was fixed at
Rs 358 per month and the permitted increases were fixed at
Rs 56 per month. The appellant continued to pay Rs 358 per
month being the standard rent. He did not pay the permitted
increases. The fact that he was depositing throughout Rs
358 and even during the stage of writ petition, can hardly
relieve him from such an obligation. Under Section 12(3)(b)
of the Act, there is an obligation to deposit the permitted
increases not only during the pendency of the standard rent
application which in this case has come to be dismissed for
default but even during the pendency of suit for eviction.
As rightly held by the High Court, if this were not to be
so, the tenant could claim protection on its showing that he
had within a period of one month from the date of service of
notice of demand under Section 12(2) filed an application
for standard rent and that he had obeyed that order; in this
case the interim standard rent.
21. Accordingly, we hold that there are no merits in this
civil appeal which stands dismissed. The tenant shall hand
over vacant possession of the said premises within six
months on condition that he files the usual undertaking
within four weeks from the date of this order.
4 Prakash Surya v. Rasiklal Ishverlal Mehta, (1978) 1 RCR
10
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