B.A. Masodkar, J.
1. This is original unsuccessful landlady's petition with regard to her claim against respondent No. 1 tenant on the basis that the said tenant was a defaulter with regard to rental liability. The petitioner-landlord set up entitlement to a decree either under section 12(3)(a) or under section 12(3)(a) of the Bombay Rents, Hotel and lodging House Rates Control Act, 1947 (hereinafter called as 'the Act'). The courts below have held that either of the clauses of sub-section (3) of section 12 of the Act were not available. Those findings are seriously challenged in the present petition.
2. Few facts, which are more or less not in dispute, be stated at the outset. The suit premises, which are flat No. 2, 'F' Building in Vijay Colony, Juhu Lane, Andheri (West), Bombay, are taken on lease by respondent No. 1-tenant on a monthly rent of Rs. 100/-, which did not include water charges, education cess and other charges for the amenities. The petitioner landlady purchased this property on January 7, 1963 and along with it all the liabilities then outstanding. At the time of the initial lease, respondent No. 1 tenant had advanced a construction loan under a duly registered agreement of December 15, 1962. The liability under that agreement was also taken by the petitioner landlady. The agreement provided that out of the amount of Rs. 100/-, Rs. 65/- per month was to be adjusted towards the amount so given in loan and respondent No. 1 tenant was to pay the balance per month in cash towards her rental liability. After the purchase by the petitioner-landlady of this flat and assignment of the agreement, R.A.E. Suit No. 688/7152 of 1965 was filed on various grounds and relief of possession both under section 12 of the Act as well as under section 13 of the Act was sought. By the judgment of August 30, 1971, the suit of the petitioner-plaintiff under section 12 of the Act was dismissed while the suit under section 13 of the Act was decreed, holding that respondent No. 1 tenant had been guilty of sub-letting as well as that the petitioner landlady had established her need. The petitioner landlady did not file any appeal as far as the dismissal of the suit under section 12 of the Act was concerned. However, respondent No. 1 tenant filed an appeal, being Appeal No. 472 of 1971, questioning the decree under section 13 of the Act. Admittedly, that appeal was filed on October 15, 1971. Before this appeal was filed on October 15, 1971, the petitioner landlady purported to give notice (Ex. B) under section 12(2) of the Act. By that notice, it was pointed out that the liability against the permitted increases was Rs. 23,94p. per month and all that liability was not paid right from April 1, 1963 and the demand was made for Rs. 2,364-24p., which would cover the period upto September 30, 1971. It was made clear that the notice was being given under section 12(2) of the Act and if there is a failure action will be taken by filing a suit. During the pendency of the appeal filed by respondent No. 1 tenant, being Appeal No. 472 of 1971, the petitioner landlady, relying on this notice, filed a suit on March 3, 1972. The appeal of respondent No. 1 tenant was, eventually allowed by the judgment rendered by a Bench of the Court of Small Causes, Bombay, on July 12, 1973 and the decree passed in favour of the petitioner-landlady under section 13 of the Act was set aside.
3. Thereafter, the present suit proceeded to hearing. It is not in dispute that for the first time, respondent No. 1 tenant as defendant filed an application seeking permission to deposit the arrears on April 4, 1975. Though order was made, defendant did not comply with the same. It may be mentioned that in the earlier litigation, liability with regard to the permitted increases was, eventually, worked out to be the liability in the sum of Rs. 23,94p. per month, being the permitted increases towards the water charges, energy charges and other charges, respondent No. 1 tenant, thereafter, made another application on June 4, 1976, which was granted ex-parte and deposit was made on June 8, 1976. Thereafter, the deposits had not been regular. On November 15, 1976 respondent No. 1 tenant made a deposit of Rs. 143.70p., on January 7, 1977, she made deposit of Rs. 71-85 i.e. for two month followed by the deposit of Rs. 23.94p. on February 9, 1977. Afterwards, again the deposit came to be made on June 1, 1977 and on August 1, 1977 and November 3, 1977. The deposits, it is submitted, were made with the permission of the Court.
4. Upon these facts, the trial Court held in favour of respondent No. 1 tenant, holding that decree for possession could not be made under section 12 of the Act, but the trial Court made a money decree in the sum of Rs. 2,566.22p., being the arrears of the permitted increases. The decree also directed that if respondent No. 1 tenant failed to pay the said amount by the stated period, she was to vacate the suit premises. The pecuniary liability so directed by the decree was, eventually, satisfied by respondent No. 1 tenant. In the appeal taken by the petitioner-landlady, the appeal Court held that on the facts of the present case, neither section 12(3)(a) nor section 12(3)(b) of the Act would be attracted. Section 12(3)(a) was not applied because, in the view of the Appeal Court, there was a dispute between the parties with regard to the standard rent. Section 12(3)(b) of the Act was not applied because, shortly stated, the amount were deposited as per order of the Court. In para 7 of the Appeal Court judgment the position of the deposits by respondent No. 1 tenant against her liability is set out and that shows that under the order dated April 4, 1975, respondent No. 1 tenant was directed to deposit Rs. 1,755.50 p as arrears till May 1975 within six weeks and further continue to deposit Rs. 23.94 p. every month on the 5th instant commencing from June 1975. Admittedly, respondent No. 1 tenant did not make any deposit in accordance with the order. The Appeal Court thereafter points out that an order was taken on June 4, 1976 to comply with the earlier order and pursuant to the order made on that basis, Rs. 2,082.78p. was deposited on June 4, 1976. Till August 1, 1977, the deposit was of Rs. 2,441.97p. It was further pointed out by the Appeal Court that a sum of Rs. 1, 623.10p was not deposited on the basis that they were beyond the time of limitation and the same were deposited on March 8, 1979, i.e., during the pendency of the appeal, after obtaining order of the Appeal Court on March 7, 1979. Thereafter, Rs. 400.76p. were deposited on July 7, 1979 and Rs. 300/- were deposited on the same day towards costs.
5. Now, this being the position of the payments made by respondent No. 1 tenant, it is crystal clear that respondent No. 1 tenant is the defaulter with regard to the rental liability, at least concerning the permitted increases. Only because orders were obtained from the Court for making deposits, this basic position of respondent No. 1 tenant does not change. Even during the course of the suit having obtained the order on April 4, 1975, respondent No. 1 tenant did not make deposit as per that order, which granted her six weeks time to pay the arrears and continue to pay every month. That deposit in a lumsum was made in June 1977. It is also obvious that every month, respondent No. 1 tenant did not deposit as she was ordered so to do. This position clearly shows that respondent No. 1 tenant was not ready and willing to clear the rental liability.
6. A narrow question that arises is whether respondent No. 1 tenant would be said to have complied with the provisions of section 12(3)(b) of the Act, even assuming section 12(3)(a) of the Act is not available, and therefore, not liable to be evicted under section 12 of the Act. The position under section 12(3)(b) of the Act is that it is a protection that could be afforded to a tenant provided the tenant, being in arrears, satisfies the conditions by depositing the same and continuing to pay every month. Admittedly and as is evident respondent No. 1 tenant had obtained the order on April 4, 1975, but she did not comply with that order till June 4, 1976 and on that day she was clearly in breach of law not having deposited, nor having cleared her rental liability within the time stipulated by the Court and not having cleared her liability every month on the 5th day of each month as was directed by the Court. Under Clause (b) of sub-section (3) of section 12 of the Act, readiness and willingness in this regard has to be found on the basis of such order made by the Court and the tenant satisfying and complying with the terms of that order. In the present case, respondent No. 1 tenant being in clear breach, was not entitled to the protection of section 12(3)(b) of the Act. The courts below were, therefore, wrong in not making a decree under that provision.
7. However, Mr. Dalvi, the learned Counsel appearing for respondent No. 1 tenant, argued that in the present case there cannot be a decree, under section 12(3)(b) of the Act, for the notice (Ex. B) could not be said to be under section 12(2) of the Act. According to the learned Counsel, as the decree was already made under section 13 of the Act in the earlier suit, the relationship of landlord and tenant had come to an end and the only recourse to the petitioner-landlady was to execute the decree under section 13 of the Act. If on the date of the notice, i.e. on October, 13, 1971, there was no relationship of landlord and tenant, there was no question of any notice under section 12 of the Act. If the very foundation is lacking, no decree can be made. Secondly, the learned Counsel submitted that such relief under section 12 of the Act was sought in the earlier suit and rejected by the trial Court and although an appeal was filed by respondent No. 1 tenant, the petitioner-landlady did not appeal nor did she file any cross-objections. That itself shows that the petitioner-landlady had given up her case under section 12 of the Act and was not entitled to issue notice under section 12 of the Act. Thirdly, it was contended that in view of the agreement between the parties under section 18 of the Act, which created a charge on the building with regard to the loan advanced by respondent No. 1 tenant, section 12 of the Act had no operation, because it is implicit in such an agreement that till all the amounts given in loan were duly satisfied, respondent No. 1 tenant will not be liable to be evicted on account of the arrears of rent. At any rate, the learned Counsel submitted that there being amount in the hand of the petitioner-landlady, petitioner-landlady could have appropriated the same towards the rental liability, particularly when such loan for the purpose of construction was permitted under section 18 of the Act.
8. Now, it is indeed difficult to accede to these submissions. As far as the earlier, litigation is concerned, it clearly shows that the decree was made under section 13 of the Act. No doubt, the effect of that decree would be that the petitioner landlady would be entitled to get possession of the property from respondent No. 1 tenant under section 13 of the Act. But, as the facts stand, that decree was, eventually, set aside in appeal on July 12, 1973. The position, therefore, would be that on the date of the notice, which ensued on October 13, 1971 from the petitioner-landlady to respondent No. 1 tenant, the relationship of landlady and tenant had not come to an end. The notice would not, therefore, be ineffective. Reliefs under sections 12 and 13 of the Act are independent reliefs. The cause of action for a suit under section 12 of the Act depends upon a notice being given under sub-section (2) of section 12 of the Act in the manner provided in section 106 of the Transfer of Property Act. That requisite is not necessary for a suit under section 13 of the Act. Therefore, it cannot be said that only because the decree was made under section 13 of the Act, the petitioner-landlady would not be entitled to give a notice under section 12(2) of the Act. As far as the petitioner-landlady not filing an appeal against the reliefs sought in the earlier suit, no grievance can be made because the notice in the present case is clear enough, which states and seeks to serve the notice on the basis of the liability adjudicated upon in that litigation. Furthermore, the rental liability of respondent No. 1 tenant arises every month and each default in that regard furnishes a cause of action to the petitioner-landlady so as to seek relief under the Statute. Sub-section (2) of section 12 of the Act does not speak of any particular period during which a tenant should be in arrears. Even with regard to any arrears, which involve the non-payment of the standard rent and permitted increases, notice can be issued. In the present case, the notice is issued on the basis of the non-payment of the permitted increases which were due and in arrears.
9. The last submission based on section 18 of the Act though appears to have some force, on a careful consideration thereof, it does not assist the respondent No. 1 tenant. Section 18 of the Act does not enact any impediment or prohibition disabling a landlord from filling action under section 12 or section 13 of the Act. That provision concerns itself with unlawful payments and carves out permissible legal field for furthering construction loans. By reason of such a loan coming from a tenant, the character of the monthly tenancy is not changed nor altered. If it be the monthly tenancy, it continues to be so along with all its incidents, including the one that enjoins the tenant to pay the rent every month as per the agreement. It is of course permissible to provide for alternative as to the manner of such payment, but in want of it, liability would arise every month. The terms of the construction loan agreement between the parties in this case do not admit any doubt in this regard, in that respondent No. 1 tenant was to pay a part of the agreed rental liability per month in cash and part of it the petitioner-landlady was to appropriate towards the monthly rent payable. The provisions of sub-section (3) of section 18 of the Act, on which reliance was placed, cannot assist the submission that all the amount in the hand of the petitioner-landlady taken as a loan was liable to be adjusted towards respondent No. 1 tenant's liability towards rent as and when it became payable.
10. The entire section 18 read together goes to show that after declaration what would be unlawful, it carves out specifically an exception by enacting sub-section (3), which permits and provides for a lawful facility. Under it, a needy landlord can take a construction loan in the manner and with the statutory conditions set out therein. Under such an agreement, which is required to be registered, the relationship between the parties, however, continues to remain that of one debtor and creditor and the loan remains nothing but a debt. It does not partake into the character of an advance payment of rent nor can it be treated as a deposit for the purpose of or as such available for appropriation towards the rental liability. Throughout, the legislative scheme is clear and explicit so as to treat it as a permissible loan and nothing more. With this basic position, a further reference to some of the clauses of sub-section (3) of section 18 of the Act clearly goes to show that notwithstanding the agreement that every month a stipulated part of the amount was to be appropriated for partial payment of rent, the character of the loan nonetheless continues to be the same. When under the agreement and to the extent permissible part is appropriated, it becomes rent and not otherwise. This position is furthered by the very object for which section 18 of the Act is enacted, which prohibits payments to landlord treating these as unlawful. It is only a facility that is carved out and that is merely one, that of 'construction loan.' Clause (ii) of sub-section (3) of section 18 of the Act provides that such a loan has to carry interest which shall not be less than 4% per annum. Clause (iii) of sub-section (3) of section 18 of the Act provides that the loan should be payable by the landlord within the period of 10 years from the date of the execution of the agreement or within a period of six months from the date of the termination of the tenancy by the landlord. Clause (iv) of sub- section (3) of section 18 of the Act provides that the amount of the loan shall be a charge on the entire building and upon the entire interest of the landlord on the land on which the building is erected. These clauses of sub-section (3) of section 18 of the Act are explicit as far as the statutory intent is concerned. It is clear herein that the character of such permissive payment, which is not of prohibited category, has to be that of a loan in fact and in law. If it were to be treated otherwise as an advance premium of rent or of a deposit for the purpose of taking tenancy, it would be unlawful. It is significant that Clause (iii) of sub-section (3) of section 18 of the Act stipulates the period during which such a loan is required to be repaid; and it also provides a period of six months from the date of the termination of the tenancy by the landlord. This provision, therefore, significantly fixes a point having reference to termination of tenancy. That goes to show that section 18 of the Act cannot be pressed in aid when the matters relates to termination of tenancy either under section 12 or under section 13 of the Act. At the most, under this clause, liability of the landlord, who is a debtor within the meaning of section 18 of the Act, would arise so as to claim discharge or set off by the tenant within the period of six months upon such termination of the tenancy and when the period of 10 years in not available to the landlord.
11. Further more, sub-section (3) of section 18 of the Act enacts and goes on to provide for a penalty, if the landlord were to contravene any of the provisions of sub-section (3) of section 18 of the Act and any conditions specified therein, such a landlord can be visited with the penalty of imprisonment for a term which may extent to six months or with fine, or with both. Thus, compliance with sub-section (3) of section 18 of the Act and the terms thereof is a must. In the eye of law, therefore, the loans which are governed by sub-section (3) of section 18 of the Act could not but be treated to be the loan and hardly such a defence that such a loan, being with the landlord, should have been appropriated towards the rental dues without any agreement therefore can be upheld. In his view of the matter, the submission of the learned Counsel for respondent No. 1 tenant that the construction loan amount outstanding should have been appropriated or set out against the rental liability and, therefore, there could be no case under section 12(3)(b) of the Act can hardly merit any acceptance. On the other hand, such unilateral appropriation being impermissible, it would be invalid. It follows that merely because a balance of loan is in the hand of the petitioner- landlady, that would not afford by itself a defence to the tenant, who has been served with the notice under section 12(2) of the Act. This is not a case where after receipt of such a notice the tenant, who was also a creditor under under loan agreement, had asked the landlord, who was also a debtor under such an agreement to appropriate the amount in his hand towards the rental liability and the landlord had refused to do so. Had that been the matter, some other considerations would possibly arise, but upon the language of sub-sections (3) and (4) of section 18 of the Act, such unilateral appropriation by the petitioner-landlady of the amount of loan outstanding has to be treated as impermissible.
12. This being the position, this was a case where the conditions of section 12(3)(b) of the Act were clearly established.
13. In the result if has to be adjudged that the impugned orders are erroneous. The same are set aside and instead the suit of the petitioner-landlady-plaintiff is decreed under section 12(3)(b) of the Act, as was prayed for in the plaint, along with a direction for enquiry into the mesne profits. The petition, thus, succeeds. Rule absolute. Respondent No. 1 to pay the costs throughout.