.\-IAGANLAL CHHOTALAL DESAI v. ClfAJ'ljlJRAKANT MOTILAL April 22, 1968 '[R. S. BACllAWAT, J. M. SliELAT AND A. N. GROVIoR. JJ.] IJ0111hny Rent.\', Jlotrl and Lodging Hous.~ Rents Control Act (57 of 1947), ~\". 12(1), 12(3) (b) and 20-Scope of-Overpnyme111 of re111- ~dju.\'f1JL'.:n1 agoinst rcnl due \Vltcn pennissible.
Cod(' of ('il·il Procedure (Act 5 of 1908), s. 115-Rc,•i.\ional jurisdic- Jio11 of l/igli Court. 'fhe appcll:-int \\'as a tci1ant in the respondent's house on ~1 cnntractu;1I rent of Rs . .100 per n1onth.
The respondent filed a suit cl;1iniing: possc-.- sion on the ground of non-payn1cnt of rent and cl;,iin1cd arrc:irs of rent and mcsnc profits. ·1bc appellant filed his \vritten statcn1cnt, asking for
fixation of the ~:andarcl rent at Rs. 125 per month. He nllcµ:cd that the respondent had recovered more than the rent legitimately dtl\: ;:1nd pra;:c<l for the dismissal of the suit.
He also filed a suit on 14th March 1957 claiming refund of rent paid between 14:h March 1950 and 4th Auw1st 1954 al the rate of Rs. 300 per month, hut he did not pay 1he standard rent due from him from 4th August J954 nor was he ready and v.·illir..g,to pay it.
'The trial court decreed the n:spoodent's suit for eviction. The appell~ltc coun set aside the decree holding that the stantL:.ird rent v.·a' Rs. 125 and directed the rc~pondcnt to render an account of the over pay1nenls made to hin1.
Jn revi'\ion. the Hi,!!h Court accepted the findinf! of the appellate court that the st;1nd:trd rent \\l:tS Rs. 125 hut set a10.idc the ·decree of the appellate court holdin_e that the rent \Vas in arrc:i.r from 4th August J954 ;ind directed the appellant to pav nlcsnc profits :11 Rs. 125 per month.
In appeal to this Court it was contended that ( 1) the High Court had no jurisd1ctil)fl. to intcrferi.:: \\'ith the decree of the appellate Court under ~. 115, Civil ProccJure Code; (2) ·n1e rent ~\las not in arrear and should he treated 01-; paid hy adjustment or deduction of the ovcrpayrncn:s; and <J)
the appellant was entitled to the protection of s. J".!(1) :ind s. 12(3)(h) of the Bombov Rent<, Hotc! anti 1.od.c~n~ House RcnLs Con· trol Act, 1947. HEIJJ : ( 1) On the plead in.gs in the respondent's suit. the appellate Court had acted illegally and \Vith n1aterial irregularity "as it had no Jr.'\ver 10 p;1ss a decree directing the rc.:;pondcnt to rendl!r an account in respect .of any overpayment of rcn1 made to him.
Therefore. the High C-.ourt had po\\·er to revi5c the decree. [61DJ (2) Scclion 20 of the Act ,e.ivcs the tenant a general right to rccoverv of O\'Crpai<l rent ,~·i.~hin 6 months from the date of payml'11f. Ifc mav
:il'\o adjust the overpayment by deduction from any rent payahle hy hin1. Rut if the amount is incar>ahlc of recovery hec:iusc of the b;1r of Jin1il:1tion. it cannot be recovered hv deduction, .1hat is. the right of rceovefv hv
(led11ction is barred at the ·,;in1c tin1e ;is the rir!lll of recovcrv hy suit. f62Dl ln ~he prc,cn1 C;p.,c. lh~ riµht of recovery of the exCCS'\ rcJ): pai<l !~fore 4th Auwsi 1954 become barred on and after 4th Fehmarv 1955. As
the clai'm for reco\'crv hccamc harrcd. the :1ppell:lnt could n.ot thereafter odcducr ir frorn rhc renr f!lling due. Since he never dccluct~<l ir fron1 the c MAGANLAL v. CHANDRAKANT (Bachawat, !.)
rent at any time, but filed 'a suit for its recovery, the overpayment could not be deducted fron1 or adjusted against the, rent falling due after 4th August 19'54. and therefore, the rent was in arrears. [63F-G] Sohrab Tavaria v. Ja[ierali, 58 Born, L.R. 680, 687-88 and Karamsey Kanji v. Velji Virji, 56 Born. L.R. 619, 626, approved.
Bayley v, Walker, [1925] l KB. 447, referred to. (3) The appellant c'Ould not claim the protection of s. 12(1) or s. 12(3) (h) of the Act, because, (a) he was never ready or willing to pay the standard rent during the pendency of the suit, (b) he did not at the first hearing of the, suit or on any other date fixed by the trial court pay or tender the standard rent and (c) he did not
thereafter continue to pay or deposit in Court such, rent till the suit was finally decided [63H; 64A-B] Civ1L APPELLATE JURISDICTION : Civil Appeal No. 392 of 1965. Appeal by special leave from the judgment and order, dated August 29, November 20, 1962 of the Gujarat High Court in
Civil Revision Application No. 456 of 1960. M. C. Chagla, and B. R. Agarwala, for the appellant. S. T. Desai, P. C. Bhartari, !. B. Dadachanji, 0. C. Mathur and Ravinder Narain, for the respondents.
The Judgment of the Court was delivered by Rachawat, J. This appeal arises out of a suit between landlord 'md tenant. The defendant was a tenant of Moti Villa, Bungalow No. 1 in Ahmedabad under the plaintiff.
The contractual rent was Rs. 300/- per month. Since October 1, 1948 the defendant stopped payment of rent on the ground that it was_ excessive. The disputes between the parties were referred to the arbitration of one Sankalchand Parikh who made an award fixing the standard rent at Rs. 300/- per month and directing the defendant to deli- ver possession of the premises and to pay arrears of rent and future rent at that rate.
A decree was passed according to the award on September 21, 1949. The plaintiff recovered moneys by executing the decree but the defendant continued in posses: sion. On April 20, 1950 the defendant made an application for fixation of standafd rent.
This applicafron was withdrawn by him on November 1 L 1950. On August 1, 1955 the High Court declared that t11e award decree was null and void on the ground that the claim for fixirtion of the standard rent and recovery of possession could not be referred to arbitration.
On September S, 1955 the plaintiff served a notice upon the defendant demanding payment of arrears of rent and asking him to vacate the premises 'on the expiry of the month of October next.
On December 26, 1955 the plaintiff instituted Suit No. 5092 of 1955 claiming possession on the ground of non-payment of rent and sub-letting and also claiming arrea"rs of rent and mesne (1969 J I S.C.R.
profits. The defendant filed his written statement on May 1 1956 a'king for fixation of the standard rent at Rs. 125 /- per i'nont11, denying the sub-letting and alleging -that tl1e plaintiff had recover- ed more than the rent legitimately due to him.
On March 14. 1957 he filed Suit No. 34 of 1957 agaimt the plaintiff ·claiming refund of Rs. 15,224/- realised in execution of the void decree. The first da1e of the hearing of Suit No. 5092 of 1955 was De- cember 26, 1957. On June 19, 1958 the Trial Court decreed
the suit and directed Ihe defendant to give possession of the pre- mises and to pay Rs. 10, 750/- on account of arrears of rent and mesne profits at the ra1e of Rs. 500/- per mtJnth from the date of the suit The Trial Court held that the defendant sub-let the premises, that having withdrawn his application for fixa1ion of the standard rent it wa' not open to him to ask for fixation of the standard rent, that if 1he matter were still open the standard rent would be Rs. 125/- per month, that a sum of Rs. 14,169/2/- was realised from the defendant in execution of the award decree, that the defendant was liable to pay rent at Rs. 300/- per month, that the rent was in arrear and that the notice to quit dated Septem- ber 5, 1955 was valid.
The defendant tiled an appeal against this decree. During -the pendency of the appeal the plaintiff recovered the sum of Rs. I 0, 7 50/- decrcc<l by the trial Court. The Assistant Judge, Ahmedabad allowed the appeal, set aside the decree of the Trial Court and directed the plaintiff to render an account of the overpayments made to him.
He held that the defendant did not sub-let the premises, that the standard rent was Rs. 125/- per month, that it was open to the defendam to ask for fixation of standard rent, that in execution of the award decree since 1950 the plaintiff recovered Rs. 14, 169/2/- bfiore the insti- tution of the suit and R<. 10,750/- during the pcndcncy of the appeal and that taking into account all the recoveries the rent was not in arrear. The plaintiff filed a revision application against this decree.
On November 20, 1962 the High Court allowed the revision application, sct aside the decree of the Assistant Judge, restored the decree for evic·tion passed by the Trial Court and directed the defendant to pay mesnc profits at Rs. 125/- per month from the date of the suit until recovery of possession.
The High Court accepted the findings of the court below that there was no sub-letting of the premises, that -the standard rent was Rs. 125/- per month, that it was open to the defendant to ask for fixation of the standard rent and that Rs. 14,160/2/- wa' recovered from him in execution of the award decree before the institution of the suit. The High Court held that the rent was in arrear, that the defendant was not ready and willing to adjust the overpayment against the rent falling due, that the amount recovered from the defendant was less than the standard rent due from him and the cost of the suit and that he was not entrtled to t)!e protection of secs. 12(1) and 12(31{b) of the Bombay Rent•. Hotel and Lodg- c
MAGANLAL V. CHANDRAKANT (Bachmvat, J.) ing House Rents Control Act, 1947 (Bombay Act No. LVII of 194 7). The High Court refused to allow the defendant to raise a new contention, viz., that there was no valid notice under sec. 12(2) of the Act. The defendant filed this appeal after obtain- ing special leave from this Court.
Mr. M. C. Chagla contended that the High Court had no jurisdiction to interfere with the decree of the Assistant Judge under sec. 115 of the Code of Civil Procedure. We are unable
to acce]J'I this contention. The decree passed by the Assistant Judge was manifestly illegal. Suit No. 5092 of 1955 was for possession, arrears of rent and mesne profits. In his written state-
ment, the defendant asked for fixation of standard rent and prayed for dismissal of the suit. In that suit the court had no power to pass a decree directing the plaintiff to render an account in res- pect of any over payment of rent made to him.
In giving the direction that "the landlord do render an account of the over payments made to him'', the Assistant Judge acted jllegally and with material irregularity. The High Court had full power to
revise this decree under sec. 115 and to give such direction in the matter as it thought fit. Mr. Chagla then contended that there was no valid notice under sec. 12 (2). He argued that this point arose on the plead- ings and the issues.
But we find that in the Trial Court the con tention was that there was no valid notice to quit. It was not argued that there was no valid notice under sec. 12(2). The point regarding the validity of the notice was not raised before the Assistant Judge. The High Court properly refused to allow the point to be taken for the first time in revision.
We are of the opinion that the point about the absence pf a proper notice under sec. 12(2) is not now open. The crucial point in the case was whether the defendant paid or was ready and willing to pay the standard rent due from him. According to the defendant he was compelled to pay Rs. 15,224/2/ between March 14, 1950 and August 4, 1954. The courts below found that between those two dates he paid Rs. 14,169/2/-
on account of rent from October 1, 1948 at Rs. 300/- per month. From the plaint in Suit No. 34 of 1957 it appears that until March 14, 1957 the defendant did not make any other payment. As the High Court pointed out, no further payment was made by the defendant till the disposal of suit No. 5092 of 1955. Thus upto August 4, 1954 the defendant paid Rs. 14,169/2/- on account of rent due upto that date at Rs. 300/- per month. The payments were in excess of the standard rent.
He did not pay rent falling due after August 4, 1 ~54 .• The question is wh~ ther the rent was in arrear or whether it should be treated as paid [1969] I S.C.R. by adjustment or deduction o[ the over payments.
The right of a tenant to recover the over-paid rent is regulated by sec. 20. That sect ion reads :- "Any amount paid on account of rent after the date of the coming into operation of this Act shall,
except in so for as payment 1hereof is in accordance with the provisions of lhis Act. he recoverable by the tenant from tlie landlord to whom it was paid or on whose behalf it was received or from his legal repre-
sentative at any lime within a period of six months from the date of payment and rnay, without prejudice to any other remedy for recovery, . be deducted by such tenant from any rent payable by him to such
landlord." The section gives ·the knant a general right of recovery of the overpaid rent within six months f1om the date of payment. With- out prejudice to any other mode of recovery, he may deduct tl1e overpayment from any rent payable by him io the landlord. De- duction is one mode of recovery. lf the amount is incapable of recovery because of the bar of limitation. it cannot be recovered by deduction.
In other words. the right of recovery by deduc- tion is barred at the same time as the riµht of recovery by suit. If the tenant seeks recovery of the overpaid amount he must bring the suit or make the deduction within six months.
In Karamesy Kanji v. Velji Virji(1) the learned Chief Justice of the Bombay High Court repelled the tenanrs c01rtention that for deduction of rent no period of limitation was provided by sec. 20. He observed :-
"It seems to me clear on a plain and na-tural con- struction of the section itself that if a tenant could not recover any excess amount paid by him beyond six months from the date of payment and if such amounts
became irrecoverable_ it is difiicult to understand how ii tenant could deduct what he could not recover am! what was irrecoverable in law. The same view of the law has been taken in a parallel piece of legislation in
England in Bayley v. Walker('). I sec no reason 10 take a view different from that taken by the appellate court that the interpretation put by the English Court on a similar provision of law is the correct interpreta-
tion." Jn Bayley v. Walker(') the tenant on discovering that he had over- paid considerable SU111S in excess of the standard rent stopped pay- __ … ____ _ (I) .16U0m.1..ll.1,19. 616.
(2) [1915] I K.B.447 . IJ. c c MAGANLAL V, CHANDRAKANT (Bachaivat, !.) 6J. ment of rent retaining the amounts as they .fell due by way of deduction under the provisions of s. 14, sub-sec. 1, of the Increase of Rent and Mortgage Interest (Restriction) Act, 1920. He
continued to deduct his rent after expiry of the period of limita- tion prescribed by sec. 8, sub-sec. 2 of the Rent and Mortgage Interest Restrictions Act, 1923. The landlord contend-
ed that the tenant had no right to so continue to deduct and that consequently his rent was in arrear and on that ground brought an action for possession. The question was whether the rent was
in arrear or not. The matter turned on the construction of s. 14 of the Act of 1920, and sec. 8 of the Act of 1923. Section 14, sub-section 1 gave the tenant a general right of recovery of over- paid rent and the amount recoverable might without prejudice to any other mode of recovery be deducted by the tenant from any rent payable by him. Section 8 sub-sec. 2 provided that any sum which under sub-sec. 1 of sec. 14 of the principal Act (of J 920) is recoverable by the tenant. . . . . . shall be recoverable at any tin1e within six months from the date of payment, but not afterwards or in the case of a payment made before the passing of this Act, at any time within six months from the passing of this Act but not afterwards." Salter, J. held that the period of linlita- tion prescribed by sec. 8 of the Act of 1923 applied to recovery by deduction as well as recovery by action. As the_ amount was incapable of recovery by ac.tion, it could not be recovered by deduction.
The rent was therefore in arrear and the landlord was entitled to recover possession on that ground. In Sohrab Tavaria v. Jafferali(') a Division Bench of the Bombay High Court approved of these decisions.
Now the right of recovery of the excess rent paid before August 4, 1954 became barred on and after February 4, 1955. Within that period the defendant took no steps for recovery of the amount by filing a suit or making a deduction.
As 1he claim for recove1y of the amount became barred after February 4, 1955, he could not thereafter deduct it from the rent falling due. As a matter of fact, he did not deduct it from rent at any time. In-
stead of making any deduction he filed a suit for its recovery. The overpayments callllot now be deducted from or adjusted against the rent falling due since August 4, 1954. It follows that . the rent was in arrear.
In these circumstances, the defendant could not claim protec- tion of s. 12 (1) of the Rent Act. During the pendency of the suit he did not pay the standard rent due from him from August 4, 1954 nor was he ready or willing to pay it. Instead of showing his readiness and willingness to pay the ren~ due he claimed iliat he was not liable to pay any amount at all.
(I) 58 Boni. L.R. 680, 687-88. Likewise he could not claim the protection under sec. 12 ( 3 )( b). Before the first hearing of the suit on December 26, 1957 or any other date fixed by lhe trial court he did not pay or tender in court the standard rent then due from him.
Nor did he thereafter continue to pay or deposit in court such rent till '!he suit was finally decided. It follows that the defendant cannot claim protection from eviction under the Rent Act.
The High CoUrt therefore rightly decreed the suit for eviction. In the result, the appeal is dismissed. We direct !hat execu- tion of the decree for eviction be stayed for a period of one year from today.
In all the circumstances of the case, we make no Qrder as to cost~. V.P.S. Appeal di.,missed . c