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Vasant Shankar Oak Vs. Raghunath Devaji Bankar - Court Judgment

LegalCrystal Citation
SubjectTenancy
CourtMumbai High Court
Decided On
Case Number Civil Revision Application Nos. 1936 and 1937 of 1959 and 14 of 1960
Judge
Reported in(1961)63BOMLR404
AppellantVasant Shankar Oak
RespondentRaghunath Devaji Bankar
DispositionAppeal Allowed
Excerpt:
bombay rents, hotel and lodging house rates control act (bom. lvii of 1947), sections 11, 2(10) -- standard rent determined on basis of consent between landlord and previous tenants--application for fixation of standard rent made by successor tenants--maintainability of application--whether decision determining standard rent under section 11 operates as judgment in rem.;under section 11 of the bombay rents, hotel and lodging house rates control act, 1947, any tenant can apply to the court for the determination of the amount of the standard rent irrespective of whether such rent was determined in a previous decision to which he was not a party.;a decision between a landlord and tenant determining the standard rent under section 11 of the act does not operate as a judgment in rem. such a..........133. the only question that arose for consideration in that case was whether there could be different standard rent as between the landlord and the tenant on one hand and the tenant and the sub-tenant on the other and it was held that there could not be different standard rent for the same premises as between the landlord and the tenant on one side and the tenant and the sub-tenant on the other. incidentally, reference was made to the decision of the court of appeal in king v. york (1919) w.n.k.b. 69. it was observed in king v. york that the provisions of the increase of rent and mortgage interest act, 1915,applied to houses, not to persons. the act operated in rem, not in personam. it stereotyped the rent of a house.this observation was cited with approval and setalvad j. observed.....
Judgment:

Naik, J.

1. These three revision applications raise a common point and can, therefore, he disposed of by a common judgment. The petitioners (who will hereafter be called the tenants) made applications to the Small Causes Court, Bombay, for the fixation of the standard rent under Section 11 of the Rent Act in respect of their respective premises. The opponent (who will hereafter be called the landlord), who is common in all these applications, resisted the said applications on the ground that the predecessors of the present tenants had made similar applications before the Civil Judge, Junior Division, Thana, and that there was an order fixing the standard rent based on the consent of the parties. It was contended that the judgment in those cases operated as judgment in rem and, therefore, the applications by the present tenants were barred. That contention was upheld and the applications were dismissed by the trial Judge. Applications, in revision, were filed to the full court of the Small Causes Court, which summarily dismissed the applications. That is why the tenants have now approached this Court in revision.

2. Now, the rent agreed upon between the landlord and the previous tenants was Rs. 50 p.m. for each of the premises. In the applications filed by the previous tenants the rent came to be reduced to Rs. 40 p.m. in respect of each of the premises. This was in 1952. The present tenants entered into the premises in 1954 agreeing to pay a monthly rent of Rs. 40 in respect of each of the premises. It is in the background of these facts that the question as to whether the present applications are barred by virtue of the decision in the previous proceedings is to be determined.

3. The standard rent in. relation to any premises as defined in Section 5(10) of the Rent Act means-

(a) where the standard rent is fixed by the Court,...such standard rent; or

(b) where the standard rent is not so fixed subject to the provisions of Section 11.

Stress is laid upon the expression 'standard rent in relation to any premises' contained in Sub-section (10) of Section 5 of the Bent Act. It is contended that rent has always relation to the premises and not to the persons concerned. It was argued by Mr. Mansawala, for the opponent-landlord, that the tenants may come and go but the rent will be the same, because it has always relation to the premises. Section 11 of the Rent Act provides that the Court may, upon an application, made to it for that purpose.. .fix the standard rent at such amount as having regard to the provisions of the Act and the circumstances of the case, the Court deems just. It will thus be seen that under Section 11 of the Rent Act, the standard rent, is to be fixed having regard to the provisions of the Rent Act and the circumstances of the case, upon an application made to it for that purpose.

4. In the Courts below reliance was placed on the decision of Setalvad J. in Chapsi v. Keshavji (1920) 23 Bom. L.R. 133. The only question that arose for consideration in that case was whether there could be different standard rent as between the landlord and the tenant on one hand and the tenant and the sub-tenant on the other and it was held that there could not be different standard rent for the same premises as between the landlord and the tenant on one side and the tenant and the sub-tenant on the other. Incidentally, reference was made to the decision of the Court of Appeal in King v. York (1919) W.N.K.B. 69. It was observed in King v. York that the provisions of the Increase of Rent and Mortgage Interest Act, 1915,

applied to houses, not to persons. The Act operated in rem, not in personam. It stereotyped the rent of a house.

This observation was cited with approval and Setalvad J. observed that ;

the standard rent is to be fixed in relation to premises and not in relation to persons, and can, therefore, be only one and not varying as between different individuals(p. 138).

I do not think that this case is an authority for the proposition that the decision regarding the standard rent taken in earlier proceedings operates as judgment in rem.

5. What the learned Judges have laid down in King v. York was that the Act operated in rem, not in personam. That does not mean that every decision given under the Act operated as judgment in rem. The observation that the Act operated in rem must be read in the context of the definition of the standard rent as given in Section 2(1) of the Courts (Emergency Powers) Act, 1914. The term 'standard rent' was defined by that sub-section to mean:

the rent at which the dwelling-house was let on the 3rd day of August, 1914, or where the dwelling-house was not let on that date, the rent at which it was last let before that date, or in the case of a dwelling-house which was first let after the said 3rd day of August, the rent at which it was first let.

It will thus be seen that the rent was standardized or to borrow the word used by the learned Judges in King v. York, 'stereotyped'. That is why their Lordships said that the Act operated in rem, not in personam.

6. The decision in King v. York has been explained in a subsequent decision in Lazarus-Barlow v. Regent Estates [1949] 2 All E.R. 118. The facts of that case were as follows:

7. On September 1, 1939, a flat was let by the first defendants to one K. for three years at a rent of 165 a year. In 1944 the first defendants brought proceedings in the High Court against K. for ejectment, and the Court made an order for possession, holding that the value of the services rendered under the lease formed substantial portion of K.'s rent, and, therefore, that K. was not protected by the Rent Acts. By a lease dated May 11, 1945, the first defendants let the flat to the plaintiff for a term of seven years at a rent of 280 a year. By its terms the first defendants covenanted to provide the same services to the plaintiff as had been rendered to K., but it was now conceded that in view of the decision in Palsar v. Grinling [1948] 1 All E.R. 1 the value of the services no longer formed a, substantial portion of the rent, and, therefore, the premises were not excluded from the protection of the Rent Acts. On June 30, 1948, the reversion expectant on the plaintiff's lease was acquired by the second defendants. On an application by the plaintiff for a determination of the standard rent of the flat it was contended that the decision in K. 's case was one to which the plaintiff was not a party and, therefore, it was not binding on her; that the decision in K.'s ease was wrong; and that the standard rent should be based on the rent at which the flat was first let within the meaning of the Rent Acts, viz., 165 and not 280. It was held:

(i) the fact that the Rent Acts might operate in rem, did not mean that judgments under the Acts were conclusive against all persons.

(ii) the decision as to K.'s tenancy was res inter alias acta, and binding only on the parties to those proceedings and their privies, and the present case should, therefore, be remitted to the county court to re-determine whether K.'s tenancy was or was not within the Rent Acts and to fix the standard rent accordingly.

With reference to the expression such as the Acts 'operate in rein', Lord Greene, M. R. observed (p. 120) :

[this expression] cannot be interpreted to mean that judgments under the Acts operate in rem, a quite different conception. If the legislature had intended so radical a departure from the ordinary rule that a judgment not inter partes which does not fall under one of the known heads of judgment in rem is, so far as the third persons, not privies, are concerned, res inter alias acta, it would have said so. In the present case, moreover, the language of Section 11(1) of the Rent and Mortgage Interest Restrictions Act, 1923, seems to make it clear that any tenant can apply to the county court for a determination of the amount of the standard rent, a provision which, in my view, is inconsistent with the idea that an applicant would be conclusively bound by a previous decision to which he was no party.

It may be pointed that the language of Section 11 of the Bombay Rent Control Act is more or less similar to the language of Section 11(1) of the Rent and Mortgage Interest Restrictions Act, 1928. On the basis of the decision of Lord Greene, M.R., we can say that under Section 11 of the Bombay Rent Act, any tenant can apply to the Court for the determination of the amount of the standard rent irrespective of whether such rent was determined in a previous decision to which he was not a party.

8. The question for consideration in Lazarus-Barlow's case was, whether she was entitled to litigate afresh the question whether the lease to Kerner was or was not within the ambit of the Rent Acts and to have that question determined in her favour on the ground that in the light of the House of Lord's decision in Palsar v. Grinling the value to Kerner of the services to which he was entitled was not a substantial portion of the rent. Eversbed, L. J. and Somervell, L. J. in a joint judgment with which Lord Greene, M.R., concurred (although he wrote a separate judgment) observed (p. 122) :

It is clear that the Kerner judgment cannot operate to estop the plaintiff per rem judicatam, but learned Counsel for the defendant companies have contended that, having regard to the policy and general tenor of the Rent Acts, the judgment had the effect of determining at its date the 'status' of the flat as outside the scope of the Acts, and, at any rate to that extent, had the quality of a judgment 'in rem' binding accordingly on all the world, or at least on the plaintiff. The Rent Restriction legislation has, since it was first introduced, given rise to a rich volume of judicial decisions, and judges have from time to time observed it to be a characteristic of the legislation that it operates 'in rem, and not in personam'.. .It is not, we find, necessary for the purposes of the present case to attempt to define what is the precise significance of the phrase that has been used, 'the Acts operate in rem' save to observe that it appears to be used in a somewhat special sense...The words 'the Acts apply in rem' have been used by way perhaps of analogy, to illustrate the point that, given certain facts, the Acts will or may operate not merely in relation to a particular tenancy of some premises and between the parties to that tenancy, but in relation to the premises as such, for example, 'by attaching to a dwelling-house a standard rent which, applies to the whole house, and, where necessary, also applies by apportionment to every part.

Referring to the case of King v. 'York, and as also some other cases, their Lordships observed (p. 123) :.Though we have examined carefully all the cases cited to us in argument it is clear that in none of them was the point raised, still less decided, that a determination of the facts essential to and involving the applicability of the Acts to any premises pronounced by a court of competent jurisdiction operated as conclusive evidence for or against persons not parties or privies to the judgment.

The question, however, in the present case is not whether the Acts operate in rem, but whether determinations by the courts of matters of fact or of mixed law and fact essential to the application, or non-application, of the Acts to particular premises on particular dates operate 'in rem' in the sense of binding not only parties to the proceedings and their privies, but all other persons who may thereafter be interested in the premises. It is clear that, if judgments of the kind stated have so extensive an effect, the result involves a substantial departure from the ordinary rule.

Again, at p. 124, their Lordships have remarked:.As we have already indicated, the proposition that the Acts apply in rem does not involve the further proposition that judgment establishing the conditions for the application, or non-application, of the Acts likewise operate in rem, nor do we think that any sufficient support can be derived from considering the 'general policy' of the Acts.

9. I may now formulate the conclusions, which emerge from a reading' of the definition of the terms 'standard rent' contained in Section 5(10) and the provisions of Section 11 of the Bombay Rent Act and also the decision in Lazarus-Bar-low's case, as follows:

(1) A decision between a landlord and tenant determining the standard rent does not operate as a judgment in rem.

(2) Such a decision is not binding even upon the successor tenant and it is open to the latter to seek to reagitate the issue in a properly constituted proceedings.

(3) Such is the position notwithstanding the fact that the earlier decision was arrived at on merits of the ease.

10. The last proposition apparently may strike as somewhat startling. It may be contended that that may involve inconvenience and hardship upon the landlord. The argument based on inconvenience, obviously, cannot be allowed to overweigh the fundamental principles of law relating to the effect of the judgment on persons who are not parties to the suit. After all, the inconvenience is not likely to be so very great in practice. A new tenant under a new tenancy would in the normal case be at a great disadvantage if he sought in effect to upset a previous determination duly litigated between the parties to an earlier contract. All the relevant facts would be in the possession of the landlord.

11. In the present case, the determination of the standard rent is based on the consent of the parties. There was no decision on merits. It is true that the rent determined on the basis of consent will also be standard rent within the meaning of that expression in. Section 11, but that standard rent will govern only the parties to the compromise. If a decision arrived at on merits is not binding on persons who were not parties to the earlier case, it must follow that the same principle will apply with greater force to a decision based on consent.

12. Reference was then made by Mr. Mansawala to a decision in Popatlal Ratansey v. Kalidas : AIR1958Bom1 . In that case, the tenant had made an application for the fixation of standard rent. The landlord filed a cross-suit. The trial Court fixed the standard rent at Rs. 40 p.m. and decreed the landlord's suit for possession. Appeals were filed by the aggrieved parties and in appeal the parties agreed that reasonable and standard rent of the premises was Rs. 91 p.m. The landlord gave up his claim to recover possession of the premises. The Court considered that it was a fair and just agreement and that it was satisfied that there was nothing unlawful about it. Accordingly, it passed a decree in terms of the agreement. Thereafter, the landlord filed a suit to recover possession of the premises alleging that the tenant had failed to pay rent and was in arrears of it. The tenant contended that he was not in arrears of rent, as the standard rent for the premises was Rs. 40 p.m. as previously fixed by the Court and that he had paid rent at that rate. On the question whether the consent decree, which was passed in the appeals, would operate as a bar to the tenant's contention in this suit that the standard rent for the premises was Rs. 40 p.m. and not Rs. 91 p.m., it was held:

In the circumstances of the case, between the parties, who were also parties to the appeals, the determination of the standard rent as embodied in the consent decree passed in the appeals would constitute a bar of res judicata and would estop the tenant from contending that the standard rent should not be Rs. 91 per month as fixed by the consent decree but it should be Rs. 40 per month.

I am unable to understand how the decision in the aforesaid case assists Mr. Mansawala in the argument that he is advancing before me. In that case, the question was sought to be reopened by the tenant, who was also party to the previous compromise and the learned Judges held that it was not open to the tenant to seek to reopen the question, which was settled in the previous litigation on the basis of the agreement between the parties.

13. It is, therefore, clear that the decision in the previous case does not operate as judgment in rem. It is also clear that in so far as the decision is based on the consent of the parties, it is not binding on the successor tenants of the same premises. It is to be remembered that the tenants, in these applications, have alleged that the rents fixed between them on one side and the landlord on the other are exorbitant. This allegation is in respect of the agreed rent of Rs. 40 p.m. It is, therefore, necessary that the applications are heard on merits.

14. The result is that the applications succeed. The orders passed by the Courts below are set aside. The applications are sent back to the trial Court for proceeding according to law. Costs will be costs in the cause.


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