Writ Petition No.3845 of 1983

26th June, 1998

Petitioner Counsel: Mr.G. S. GODBOLE
Respondent Counsel: Mrs.ANITA A. AGARWAL

Cases Cited:
1980(2) ALL IRCJ 570 [Para 4]
1982 Mh LJ 512 [Para 5]
AIR 1976 SC 2005 [Para 5]
70 Bom LR 714 [Para 5]
1983 Mh LJ 254 [Para 5]
AIR 1994 SC 1609 [Para 6]
1978 Mh LJ 611 [Para 10]
1982 Mh LJ 512 [Para 11]
1983 Mh LJ 251 [Para 12]

JUDGMENT

JUDGMENT :- A room bearing No.2 in Chawl No.2 situated at Jawahar Nagar, Khar (East), Bombay, is tenanted by the respondent in this petition and the petitioner is the owner of the said room and therefore, landlord of the respondent. The monthly rent of the said room, which will hereinafter be referred to suit premises, is Rs.13.56 ps. It was the case of the petitioner that the respondent was in arrears of rent from April 1967. A composite notice terminating the tenancy of the respondent as well as calling upon him to pay arrears of rent due from him was sent on 22nd March 1968. However, the respondent did not pay the arrears and hence became a defaulter within the meaning of section 12(3)(a) of the Bombay Rents Hotel and Lodging House Rates Control Act (hereinafter referred to as "Rent Act"). The other two grounds urged against the respondent were that he had changed the user of the premises from residential to business and secondly, it was alleged that he had carried out unauthorised constructions and caused damage to the suit premises.

2. The respondent in his defence filed on 13th February 1969 challenged the notice terminating his tenancy as it was invalid. He also contended that the contractual rent was not Rs.13.56 ps. as alleged but it was Rs.12/- only. According to him he was not in arrears of rent from April 1967 as alleged. He denied having changed the user of the premises. He also denied having constructed any unauthorised structure as alleged. According to him the contractual rent of Rs.12/- charged by the petitioner was in excess of the standard rent. He pleaded protection of the Rent Act and contended that the suit be dismissed with costs.

3. On these pleadings the learned trial Judge framed relevant issues. On the examination of the evidence of the parties both oral and documentary, the learned trial Judge came to the conclusion that the tenancy of the respondent was duly terminated by legal and valid notice. On the question of standard rent the learned trial Judge came to the conclusion that the standard rent in respect of the suit premises was Rs.12/- per month. The learned trial Judge held that the respondent was in arrears of rent from April 1967 and he failed and neglected to pay the arrears within time inspite of receipt of notice of demand. On the question of change of user the learned Judge found that the respondent has changed user of the suit premises from residence to business. As regards the third ground, the learned Judge found that the respondent had not carried out any unauthorised construction of permanent nature as alleged by the petitioner. In view of these findings, the petitioner was held to have become entitled to recover possession of the suit premises and therefore, a decree in eviction was passed against the respondent.

4. Against the decree passed by the trial Court, the respondent preferred Civil Appeal No.470 of 1976 which came to be allowed by the appellate bench of the Small Causes Court on 22nd December 1981. The Appellate Court held that there is no convincing evidence brought on record to suggest that the suit premises was used for commercial purpose and therefore, the ground of change of user was negatived. As regards the ground of default the Appellate Court noted that the respondent had raised dispute of standard rent by reply notice and therefore relying upon a decision of Jahagirdar J. in Gulabchand Ramchand Jain v/s. Noorbeg Umbarbeg Mirza, reported in All India Rent Control Journal 1980(2), page 570, the Appellate Court held that the tenant must not necessarily make an application under section 11(3) of the Act and even when he does not make an application under sec.11(3) of the Act his case will be governed by the provisions of section 11(3)(b) of the Act if the evidence otherwise shows that a dispute about the standard rent is raised within one month after the receipt of the notice. The petitioner has now challenged the decree passed by the appellate Court by this petition under Article 227 of the Constitution.

5. Mr.Godbole on behalf of the petitioner has assailed the judgment on two grounds. Mr.Godbole submitted that the only mode of raising standard rent dispute under section 12 of the Rent Act is by way of filing an application for fixation of standard rent under section 11(4) of the Act and since this application not having filed within one month, the case of the defendant will be governed by section 12(3)(a) of the Act. Mr.Godbole brought to my notice that the judgment of Jahagirdar J. in the case of Gulabchand Ramchand Jain (supra) is over ruled by a Division Bench of this Court in Jaypal Bandu Adake & another v/s. Basavali Gurulingappa Mhalank & another, reported 1982 Mah.L.J. page 512. Mr.Godbole also placed reliance on the decision of the Supreme Court in Harbanslal Jagmohandas & another v/s. Prabhudas Shivlal, reported in AIR 1976 Supreme Court page 2005 and Shah Dhansukhlal Chhaganlal v/s. Dalichand Virchand, reported in 70 Bom L.R. page 714. Secondly, Mr.Godbole contended that if it was the case of the respondent that the demand made by the landlord is not for the standard rent and permitted increases, any mistake in respect of quantum of rent could not make the notice bad and in such a case, the tenant will have an option to pay undisputed amount of rent and give a reply that the rest of the claim was false. If the tenant fails to tender the admitted amount or file an application for fixation of standard rent within one month, his case will be covered by section 12(3)(a). Mr.Godbole urged that the notice exchanged between the landlord and tenant must be considered liberally and not for finding any fault. In this behalf Mr.Godbole placed heavy reliance on the decision of the Division Bench of this Court in Chhaganlal Mulchand Jain v/s. Narayan Jagannath Bangh, reported in 1983 Mah L.J. page 254.

June 18, 1998.

6. In reply, Mrs.Agarwal appearing for respondent submitted that it is not obligatory for the tenant to file standard rent application within one month. According to Mrs.Agarwal it is sufficient if the tenant has disputed the standard rent within one month by reply to the notice. She relied upon a recent judgment of the Supreme Court in I.A. Shaikh v/s. K.S. Agarwal, reported in A.I.R. 1994 S.C. 1609. She also submitted that the landlord has not demanded standard rent in the demand notice. By the said notice landlord demanded rent of Rs.13.56 ps. per month whereas the standard rent was Rs.12/- per month. Therefore, Mrs.Agarwal submitted that the notice is bad-in-law.

7. The admitted facts are that the respondent was in arrears of rent from April, 1967. A notice of demand dated 22nd March 1968 (Exh.A) was issued to him. In this notice there is an allegation that the respondent was in arrears of rent from 1st April 1967 upto February 1968 amounting to Rs.149.60 ps. It is an admitted position that within one month of receipt of this notice, the arrears were not paid nor application for fixation of standard rent was filed. Respondent by his reply dated 14th November 1969 had challenged rent of Rs.13.56 ps. per month as excessive and not the standard rent. According to him the contractual rent was Rs.12/- per month. He has raised a dispute of standard rent in the written statement. Both the Courts have fixed the standard rent at Rs.12/- per month. The short question which falls for my consideration is whether the case of the respondent falls under section 12(3)(a) or 12(3)(b) of the Rent Act.

8. In Dhansukhlal v/s. Dalichand (supra), the Supreme Court held that to be within the protection of section 12(1) of the Act where a tenant raises a dispute about the standard rent payable, he must make, an application to the Court under section 11(3) of the Act and thereafter pay or tender the amount of rent and permitted increases, if any, specified in the order made by the Court. If he does not approach the Court under section 11(3) it is not open to him thereafter to claim protection of section 12(1) and therefore, where a suit was filed on the ground that the tenant was in arrears for a period of more than six months and although a dispute was raised by the tenant as to the standard rent or permissible increased recoverable under the Act, the tenant made no application in terms of section 11(3), he cannot claim protection of section 12(1) by merely offering to pay or even paying all arrears due from him when the Court is about to pass a decree against him.

9. In Harbanslal's case (supra) the Supreme Court held that in order to avoid the operation of section 12(3)(a) of the Act, the dispute in regard to standard rent or permitted increases must be raised at the latest before the expiry of one month from the date of service of notice under section 12(2) of the Act and it is not enough to raise a dispute for the first time in written statement.

10. The appellate Court has relied upon the judgment of Jahagirdar J. in Gulabchand v/s. Noorbag, (supra). In that case the learned Judge relying upon his earlier judgment in Mohanlal v/s. Khemraj, 1978 Mah.L.J. page 611, held that in order to establish that there is dispute about standard rent it is not necessary for the tenant to make application under section 11(3) read with Explanation I of section 12 of the Rent Act within one month of the notice under section 12(2). Such a dispute could be raised in a manner other than by the filing of an application for fixation of standard rent. It was held that by the reply to the notice if the tenant has raised dispute as regards standard rent within one month, it is sufficient compliance with the provisions of the Act.

11. It is required to be noted at this stage that the decision of Justice Jahagirdar in Gulabchand's case (supra) was overruled by the Division Bench of this Court in the case of Jaypal Bandu Adake & Anr. v/s. Basavali Gurulingappa Mhalank & anr. 1982 Mah L.J. page 512. The Division Bench observed :

"The only way to prevent a decree for eviction being passed under the provisions of section 12(3)(a) of the Bombay Rents, Hotel and Lodging House, Rates Control Act is that the tenant must make an application raising a dispute regarding rent and must ask for fixation of standard rent under section 11(3) of the Bombay Rents, Hotel and Lodging House Rates Control Act as required by Explanation 1 to section 12. There is no other mode permissible for raising a dispute as to standard rent for the purposes of section 12 of the Bombay Rent Act. By raising a dispute with regard to standard rent by the tenant in a reply to the demand notice before the expiry of one month without making an application under section 11(3) read with Explanation I to section 12, the Court will not be prevented from passing a decree for eviction under the provisions of section 12(3)(a)."

12. Similar view was expressed by the Division Bench in Chaganlal v/s. Narayan Jagannath, 1983 Mah L.J. page 251. It was held that whenever a Court has to consider a case under section 12(3) of the Rent Act, the question of standard rent cannot be gone into unless the tenant has made an application for that purpose within one month from the receipt of the notice. Inasmuch as a tenant precluded from raising a dispute about the standard rent in a suit if he has not filed any application within one month from the receipt of the notice, it is clear that he cannot raise such a contention about the standard rent for the purpose of urging that he was all the while ready and willing to pay the standard rent and that he could not pay because the standard rent was not fixed. No dispute about standard rent is permissible to be raised in a suit if the tenant has not made any application within one month from the receipt of the notice. The finding of fixation of standard rent was uncalled for and was without jurisdiction. Inasmuch as the tenant was not entitled to raise a dispute about the standard rent the landlord had rightly been given a decree for possession on the basis that the case was covered by section 12(3)(a) of the Rent Act. As regards the issue of validity of notice the Division Bench observed:

"The normal rule is that a notice exchanged between the landlord and the tenant should be construed liberally and not for the purpose of finding any fault. A notice under section 12(2) of the Bombay Rent Act is a communication between the landlord and the tenant and both the parties know the rights and liabilities about the payment of rent. Hence any mistake in making a demand for the larger amount would not render the notice invalid. Any mistake as regards quantum of rent would not make the notice bad. It is possible that in a particular case the landlord may make a false and untenable demand of a certain amount along with a claim about which there would be no dispute. In such a case the tenant will have an option to pay the undisputed amount of rent and to give a reply that the rest of the claim was a false one. If in due course of time when the suit is decided the claim is proved to be false the tenant obviously would be protected as he had made the payment of the amount that was actually due but he will not be able to resist the same if within one month from the notice, he had not paid even the amount to which the landlord was entitled. Even in such a case the tenant is under an obligation to remit within the prescribed time the permissible amount payable by him. Of course he will have to take the risk if ultimately the Court finds that such payment would not cover all the arrears. In case of such a finding the landlord would be entitled for a decree for possession. There would not be such a decree if the payment was sufficient to clear of all the arrears which were payable to the landlord. Everything, thus, will depend upon the facts of each case but primarily one has to proceed on the basis that the notice should be construed liberally and not with a view to find fault with it."

13. Mrs.Agarwal however contended that in I.A. Shaikh v/s. K.S. Agarwal (supra), the Supreme Court has held that the Act does not prescribe the period of limitation under section 11(3) to file application for fixation of standard rent or permitted increases, and therefore, in view of the judgment of the Supreme Court it is permissible to raise plea for fixation of standard rent in the written statement. In I.A. Shaikh's case, the landlord filed appeal before the Supreme Court. He had issued two notices one of 8th January 1955 and the other of 9th February 1959. For both the notices the respondent gave reply on 31st January 1955 and 30th February 1959 respectively, wherein the tenant had specifically disputed the standard rent and also stated that there was no permitted increases of the rent. Immediately after filing of the application and receipt of the notices, the tenant had deposited all the arrears including permitted increases as claimed by the respondent and thereafter an application under section 11 of the Act was filed for fixation of the standard rent and also permitted increases. All the three courts found as a fact that the respondent had paid all the permitted increases to the Municipal Corporation, Ahmedabad. The question before the Supreme Court was whether in the facts of that case, the case falls under section 12(3)(a) or (b). After referring to its earlier judgments, in Harbanslal v/s. Prabhudas and Dhansukhlal v/s. Dalichand, the Supreme Court observed in para 3 as follows :

"The Act is a welfare legislation interposing into the contractual rights of the landlord and tenant and regulating the letting of the buildings and determination of the standard rent and permitted increases in accordance with the Act. The tenant is obliged to pay the rent to the landlord every month unless the landlord refuses to receive it. In the latter event recourse can be had to deposit the rent. Some statues provide the procedure for deposit in the Court of the Rent Controller after following the procedure prescribed therein. If the tenant commits default in the payment of the rent the Act provides that the landlord is entitled to file an application for eviction if the arrears of rent continues for six months and more. The Act also prescribes issuance of a notice determining the tenancy for failure on the part of the tenant to pay the arrears of standard rent or permitted increases for six months and more and for delivery of possession. In case the tenant disputes the standard rent or permitted increases claimed in the notice, the tenant is enjoined under S.12(3)(a) to dispute the correctness thereof and to plead prevailing one by issuing reply notice within one month from the date of its receipt. In that situation it is manifest that the landlord elected his statutory right to determine the tenancy on account of arrears for a period of six months or more. The landlord put the tenant on notice of his negligence and to make payment thereof within one month from the date of the receipt of the notice and on disputation is enjoined to seek remedy under S.11(3) for determination of the standard rent or permitted increases. If he fails to dispute and omits to pay the arrears within one month from the date of the receipt of the notice, he became liable to be evicted under section 12(3)(a) of the Act. Admittedly the statute did not prescribe any period of limitation u/s.11(3) to lay the application for fixation of standard rent or permitted increases. Therefore, by necessary construction of Ss.11 and 12, what this Court appears to have intended was that the tenant should dispute the standard rent or permitted increases within one month from the date of the receipt of the notice and then file the application under S.11(3). It would not appear to have been meant that the application under S.11(3) should also be filed within one month from the date of the receipt of the notice. But expeditious action is called for to prove the bona fides of the tenants disputing the right of the landlord in the claim of standard rent or permitted increases. The Act appears to have intended to quench thirst of the avaricious landlord to claim the rent in excess of the standard rent or permitted increases under the Act and at the same time obligated the tenant, in case of his dispute or disagreement, to have the statutory recourse for determining standard rent or permitted increases. Therefore, expeditious action had to be had before the receipt of the notice from the court which would indicate not only bonafides on the part of the tenant in resisting the claim for excess standard rent or permitted increases but also to have his right to pay the standard rent or permitted increases determined according to law."

14. It is thus seen that in I.A. Shaikh's case the Supreme Court considered its previous judgments in Harbanslal v/s. Prabhudas, and Dhansukhlal v/s. Dalichand, but it was only in the context of the question posed before the Supreme Court whether the case was covered under section 13(1)(b) of the Act or not. In this context it was observed by the Supreme Court that in case the tenant disputes standard rent or permitted increases in the notice, the tenant is enjoined under section 12(3)(a) of the Act to dispute the correctness thereof and to plead prevailing one by issuing a reply notice within one month from the date of its receipt. If he fails to dispute and omits to pay arrears within one month from the date of receipt of the notice, he becomes liable to be evicted under section 12(3)(a) of the Act. It was noticed by the Supreme Court that the statute did not prescribe any period of limitation under section 11(3) to file the application for fixation of standard rent and therefore, it was observed that even though application under section 11(3) is not filed within one month expeditious action is called for to prove the bonafides of the tenant disputing the right of the landlord in the claim of standard rent or permitted increases. In I.A. Shaikh's case the Supreme Court was not concerned with the question whether the tenant can take up a plea of standard rent in the written statement or not and therefore, the observations made in that case are of no help to Mrs.Agarwal. The case in hand is clearly covered by the decision of the Supreme Court in Harbanslal v/s. Prabhudas and Dhansukhlal v/s.Dalichand. In the instant case, the tenant has not filed the standard rent application. He has merely raised the dispute in the written statement. Thus applying the ratio in Harbanslal's case, the present case is clearly governed by section 12(3)(a) of the Act.

15. Coming then to the argument of Mrs.Agarwal about the validity of the notice, it is seen that both the lower Courts have committed an error in deciding the issue of standard rent in the absence of a standard rent application filed by tenant under section 11 of the Act. No dispute about standard rent is permissible to be raised in a suit if the tenant has not made any application under section 11 of the Act. The finding of fixation of standard rent was thus uncalled for and was without jurisdiction. Even assuming that the standard rent is Rs.12/- the notice making demand at the rate of Rs.13.56 ps. cannot be said to be bad in law. The respondent had an option to pay the undisputed amount of rent i.e. at the rate of Rs.12/- per month and raise dispute as regards the rest of the claim as made by the landlord, which he has not done so, and instead he has raised the dispute in the reply to the notice. As held by the Division Bench in Chhaganlal v/s. Narayan Jagannath, any mistake in making demand for short amount would not render the notice invalid. Same view is reiterated by another Division Bench in Purushottam Bhanudas Palse v/s. Shakuntalabai Vishwanath Ayyaswami (Writ Petition No.3650 of 1981). Therefore, the contention about validity of notice must be rejected.

26th June, 1998.

16. Lastly, Mrs.Agarwal submitted that the property is declared as slum and therefore, the suit is barred under section 22(a) of the Slum Clearance Act. She relied upon a letter dated 11th November, 1994 written by the Deputy Collector and Competent Authority, Andheri, to the Petitioner. The argument is devoid of any merit. This letter refers to a declaration dated 29th September 1977. It is an admitted position that the said declaration was set aside by the Tribunal by order dated 14th December 1977 in Appeal No.624 of 1977. Secondly, the suit was instituted much prior to the issuance of notification under section 4 of the Slum Act and therefore, the bar under section 22(a) of the Act is not attracted. In any event, since the declaration is already set aside, the provisions of Slum Clearance Act are inapplicable to the suit premises.

17. In the result, the petition succeeds. The judgment of the Appellate Bench of the Small Causes Court dated 22nd December 1981 is set aside and that of the Small Causes Court is restored. Rule is accordingly made absolute. The Respondent is given time to vacate the suit premises till 31st December, 1998 subject to filing usual undertaking within four weeks from today. In case the undertaking is not filed, the petitioner is at liberty to execute the decree.

Petition allowed