1. This is a revisional application by the receiver in Insolvency and it has been preferred against the decree passed by the learned District Judge substantially reducing his claim against the Opponents. The Receiver in Insolvency claimed Rs. 3,400/- and odd by way of rent for the premises let out to the Opponents. This claim was resisted by the Opponents on several grounds.
The learned trial Judge rejected all the grounds raised by the Opponents and passed a decree for the full amount claimed by the receiver. When the matter went in appeal, the lower appellate Court has accepted some of the arguments urged before him by the Opponents and has reduced the decretal claim to Rs. 847-6-9. It is this order which has given rise to the present revisional application.
2. The whole of the dispute centres round two points. It is common ground that three premises were let out by the insolvent to the Opponents on 31-3-1948. They were a showroom, an open space and two rooms in the rear; and their monthly rents respectively were Rs. 160/-, Rs. 70A and Rs. 40/-. On 8-4-1948 the tenant deposited Rs. 2,100/- with the insolvent landlord.
The deposit receipt provided, amongst other things, that if the tenants did not pay the rent regularly, the landlord would be entitled to appropriate the requisite amount from the deposit, and, if the tenants vacated the premises, the balance would be returned to him. The first point which has been raised before me by Mr. Joshi is in respect of this appropriation. The lower appellate Court has held that the tenants were entitled to insist upon the appropriation of the whole of the amount due in respect of all the three premises and this plea has substantially been upheld by the lower Appellate Court.
One of the reasons given by the learned JudgeIn accepting this plea was based on the provisionsof Section 18, Sub-section (2) of the Rent Act. Mr. Chandra-chud for the tenants has fairly conceded that thispart of the judgment cannot be supported. It isnow held by this Court that more than six months'rent cannot be appropriated under the provisions of Section 18(2).
3 The lower Appellate Court has then relied upon the deposit receipt itself and he has found that by virtue of this specific contract between the parties the tenants were entitled to call upon the landlord to make adequate appropriations from the amount of the deposit and this plea has also been accepted by the lower appellate Court. Mr. Joshi quarrels with the finding of the lower appellate Court on this point on two grounds.
He contends that the claim made by the tenants in effect is a claim for set-off, and, according to Mr. Joshi, such a claim cannot be made and entertained by the insolvency Court without the proof of the debt. In support of this argument, Mr. Joshi relies upon the provisions of Section 28, Sub-section (2) of the Provincial Insolvency Act. Mr. Chandrachud resists this plea and contends that Section 28, Sub-section (2) cannot apply to the claim for set-off be- , cause, according to him, a claim for set-off made by the tenants in present suit cannot be regarded as a commencement of legal proceedings to recover a debt.
I do not propose to decide this point in the present revisional application because I am disposed to think that the petitioner is not entitled to raise this point for the first time in a revisional application. It is, true, as Mr. Joshi points out, that both the parties were at issue on the question as to whether a claim for set-oil can be made. But the contest centred round Section 18(2) of the Rent Act and the construction of the document.
The additional argument on which Mr. Joshi seeks to challenge the order passed by the lower appellate Court was never put in issue and the Courts below have not been called upon to consider whether the tenants have in fact proved their 'debt or not. There is considerable force in the argument urged before me by Mr. Chandrachud that if this specific point had been taken by the receiver in the trial Court the tenants would have asked for leave to claim a set off on the assumption that Section 28(2) applied to such a claim. Therefore, I do not propose to entertain this new point taken by Mr. Joshi before me.
4. That leaves only the question about the construction of the deposit receipt. Mr. Joshi argues that the deposit receipt also must be read subject to Section 18(2) of the Rent Act and no more than six months' appropriation can be allowed. I am not impressed by this argument The deposit receipt amounts to a specific contract between the parties and it sounds rather unfair on the part of the Receiver that he should insist upon the technicalities as he imagines them to be under Section 18(2) though it is common ground that Rs. 2,100/- had in fact been deposited by the tenants with the insolvent landlord.
Mr. Joshi, however, is right when he argues that on a fair and reasonable construction of the deposit receipt the contract of which the tenants want to take advantage must be confined to the open space. As I have already indicated, three different premises were let out to the tenants under three different rent notes and the deposit receipt refers specifically to the tenancy in respect of the open space and so It would be legitimate to confine the claim for set off made by the tenants to the rent in respect of the open space.
Since the tenants require appropriation to be made in terms of the deposit receipt, it would not be unreasonable to confine their claim to the terms of the receipt itself and the terms of the receipt plainly confined their right to the rent payable in respect of the open space. Therefore, in my opinion, the receiver should and is bound to appropriate an adequate amount in respect of the rent due for the open space for 16 months at the rate of Rs. 70/-. To this extent I would confirm the finding of the lower Appellate Court.
5. That takes me to the next point of controversy between the parties and that is in respect of the rent payable to the auction-purchaser as from the date of the auction-sale. It appears that on 6-12-1950 Mrs. Dandavate has become the auction-purchaser of the suit premises. This sale has been confirmed on 27-3-1852. The tenants alleged that it was the auction-purchaser, and not the receiver, who was entitled to recover rent from the premises as from the date of the auction sale.
The trial Court rejected this plea. In the appellate Court, an application made by Mrs. Pan-davate to be joined to the proceedings was also rejected. Mr. Joshi argues that, having rejected the application made by Mrs. Dandavate, it was wrong for the lower appellate Court to have allowed the request made by the tenants that the receiver should not recover rent as from 6-12-1950 up to the date of the suit.
In my opinion, this is a purely technical contention. Mr. Chandrachud concedes and the receiver does not dispute it that the rent in respect of the period subsequent to 6-12-1950 would be payable to the auction-purchaser, and indeed I am told, by Mr. Chandrachud that the rent in respect of this period has already been paid to the auction-purchaser.
It is true that this fact does not appear in the judgment of the lower appellate Court. But in view of the statement made by Mr. Chandrachud, I feel no difficulty in assuming that the rent; must have been paid by the tenants to the auction purchaser.
6. The result would be that the plaintiff receiver would be entitled to recover from the Opponents-tenants an amount of Rs. 1464-5-3. The learned trial Judge should satisfy himself that the amount of Rs. 486-5-3 which is due to be paid to Mrs. Dandavate has in fact been paid to her. If that amount is not shown to have been paid by the opponents to the auction-purchaser, a decree for an additional amount of Rs. 486-5-3 should be passed in favour of the plaintiff and against the Opponents with a direction to the receiver to hand over this amount to Mrs. Dandavate.
7. There will be no order as to costs throughout.
8. Order accordingly.