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L.M. Chakradeo Vs. Goolabanubai Yoosuf Lalji - Court Judgment

LegalCrystal Citation
SubjectTenancy
CourtMumbai High Court
Decided On
Case NumberCivil Revision Application No. 1471 of 1954
Judge
Reported in(1956)58BOMLR454
AppellantL.M. Chakradeo
RespondentGoolabanubai Yoosuf Lalji
Excerpt:
.....hotel and lodging house rates control act (bom. lv1i of 1947), sections 11 (3), 20, 12-interim rent paid under order of court under section 11(3)-rent so paid in excess of standard rent ultimately fixed by court-excess rent paid whether could be refunded in proceedings under section 11 or adjusted against future rent-whether necessary for tenant to file suit to recover such excess payment made by him-section 20 whether applies to payments made under order of court under section 11(3)-payment made in pursuance of order under section 11(3) whether payment 'made in accordance with the provisions of the act within section 20.; if the rent paid under an order made under section 11(3) of the bombay rents, hotel and lodging house rates control act, 1947, is in excess of the standard rent..........that the standard rent of the premises be fixed at rs. 90. the petitioner had in the meanwhile paid rent pursuant to the order dated october 12, 1950, at the rate of rs. 206 per month. the payment was made by the petitioner for the period between november 5, 1949, and april 3, 1952. standard rent having been fixed by consent at rs. 90 it is evident that the petitioner had paid rent in excess of the rent lawfully due by him. but the petitioner made no attempt to claim refund of the excess amount paid by him. on february 18, 1954, the respondents obtained an order in application no. 473 of 1953 from the court of small causes for a distress warrant and attached moveable property belonging to the petitioner for recovery of rs. 1,194-11-0 alleging that the amount was due as arrears of.....
Judgment:

Shah, J.

1. The petitioner is a tenant of certain premises in a building at 320, Charni Road, Bombay. On November 5, 1949, the petitioner applied by Application No. 1235 of 1949 for an order under Section 11 of Bombay Act LVII of 1947 fixing standard rent of the premises. On October 12, 1950, the Court of Small Causes, Bombay, passed an order under Section 11(3) of Bombay Act LVII of 1947 that the petitioner do pay interim rent at the rate of Rs. 206 per month. The application for standard rent was decided by the Court of first instance on July 30, 1952, and standard rent was fixed at Rs. 20-9-4. An appeal was preferred against that order to the appellate bench of the Court of Small Causes. In that appeal the parties arrived at a compromise and it was agreed that the standard rent of the premises be fixed at Rs. 90. The petitioner had in the meanwhile paid rent pursuant to the order dated October 12, 1950, at the rate of Rs. 206 per month. The payment was made by the petitioner for the period between November 5, 1949, and April 3, 1952. Standard rent having been fixed by consent at Rs. 90 it is evident that the petitioner had paid rent in excess of the rent lawfully due by him. But the petitioner made no attempt to claim refund of the excess amount paid by him. On February 18, 1954, the respondents obtained an order in Application No. 473 of 1953 from the Court of Small Causes for a distress warrant and attached moveable property belonging to the petitioner for recovery of Rs. 1,194-11-0 alleging that the amount was due as arrears of rent for the period between February 1, 1953, and January 31, 1954. The arrears of rent were calculated at the rate of Rs. 92 per month. The petitioner resisted the levy of distress and applied for removal of attachment. The learned Judge of the Court of Small Causes by order, dated March 10, 1954, held that distress levied by the respondents was liable to be set aside. He was of the view that whereas standard rent was fixed by consent of parties at Rs. 90, distress was sought to be levied at the rate of Rs. 92 and that was 'bad' and liable to be set aside. The learned Judge, therefore, proceeded to set aside distress. He then directed:

Monies in Court to plaintiff towards arrears on account and without prejudice to the rights and contentions of the defendant with regard to refund of excess amount due to him from the plaintiff.

The learned Judge, it appears, took the view that even though distress was 'bad,' as the respondent was entitled to recover rent at the rate of Rs. 90 per month for one year ending January 31, 1954, the entire amount deposited by the petitioners should be paid over to the respondent. It was, however, the ease of the petitioner that distress levied upon his property was illegal because nothing was due by him, he having the right to adjust the amounts overpaid under the order passed in Application No. 1235 of 1949 against the rent claimed in the distress proceeding. Against the order refusing to make the adjustment claimed by the petitioner and directing that the amount deposited in the distress proceeding be paid over to the respondents, the petitioner preferred appeal No. 188 of 1954 to the appellate bench of the Court of Small Causes. The appeal was summarily dismissed by the Court of Small Causes. In the view of the learned Judges 'the rent for the period in question, i.e. February 1, 1953, to January 31, 1954, at the rate of Rs. 90 was due' and the trial Court 'could have ordered that the rent at the rate of Rs. 90 for the period in question should be handed over to the respondent.'' But they observed that instead of passing that order as the trial Judge had passed an order 'without prejudice to the rights and the contentions of the defendant with regard to the refund of excess amount, if any, paid by him to the respondent', they saw no reason 'to interfere with the discretionary order' passed by the trial Court. The learned appellate Judges thought that the order being one within the discretion of the trial Court and as the petitioner had another remedy for recovering the amount which the petitioner claimed, they did not think it expedient to interfere with the order passed by the trial. Court. The petitioner has applied to this Court and challenged the order passed by the Court of Small Causes in its appellate jurisdiction.

2. On first impression it appears that when the Court of first instance held that the distress was illegal, the amount paid in Court to remove attachment should have been ordered to be refunded to the party depositing the same. But the Courts below did not think it expedient to do so, because they held that the petitioner was liable to pay rent at the rate of Rs. 90 per month and an order directing refund of the entire amount deposited by the petitioner and leaving the opponents to sue for the rent due would involve the parties in multiplicity of proceedings. If the view of the Courts below that the petitioner was liable to pay rent at the rate of Rs. 90 per month be correct, this Court will not, in the exercise of its revisional jurisdiction, interfere with the order, even if the order is not strictly justifiable in law. It is, however, contended by the petitioner that ho amount at all was due by him and in refusing to order refund of the amount paid by him, the Courts below acted illegally and with material irregularity in the exercise of their jurisdiction. The petitioner contends that in Application No. 1235 of 1949 he had under order of the Court paid interim rent at a rate in excess of the rate at which rent was lawfully recoverable from him and the respondents having been overpaid they were bound to adjust the excess amount against rent accruing due after April 30, 1952, till the excess amount was exhausted. As observed hereinbefore, the standard rent was Rs. 90 only and the order assessing the same became operative from November 5, 1949, whereas the rent paid by the petitioner was at the rate of Rs. 206 per month. There was therefore an excess payment at the rate of Rs. 116 per month for the period between November 5, 1949, and April 30, 1952. The amount was evidently paid in pursuance of an interim order of the Court and in my judgment it is implicit in the order that if the Court finally assessed standard rent at a rate lower than the rate at whichinterim rent was paid, the excess payment must be adjusted under order of the Court which passed the interim order. It was, however, contended in the Courts below on behalf of the respondents that whatever amount has been paid pursuant to the order passed under Sub-section (3) of Section 11 of Bombay Act LVII of 1947 can be retained by the landlord and if any refund can at all be claimed from the landlord where excess payment has been made, such refund must be claimed in separate proceedings instituted in that behalf and within the period prescribed by Section 20 of the Act.

3. Now Section 11 of Bombay Act LVII of 1947 authorizes the Court to fix standard rent and permitted increases in certain cases. Sub-section (3) of that section provides;

If an application for fixing the standard rent or for determining the permitted increases is made by a tenant who has received a notice from his landlord under subsection (2) of Section 12, the Court shall forthwith make an order specifying the amount of rent or permitted increases to be paid by the tenant pending the final decision of the application, and a copy of such order shall be served upon thelandlord.

Evidently the provision has been enacted with a view to protect landlords against refusal by tenants to pay rent by making applications on frivolous grounds. The Legislature has, therefore, authorized the Court to pass temporary orders directing payment of rent at a rate which the Court regards in the circumstances of the case as just pending determination of the standard rent. The order being temporary in character, the payment made thereunder is liable to adjustment in the light of the final assessment of standard rent. In my judgment, the landlord cannot claim that no part of the interim rent received by him is liable to be refunded even if the Court fixes standard rent at a rate less than the rate at which interim rent has been fixed. Similarly, it is not open to the tenant to claim that the rent paid by him under the interim order is the only rent payable by him and that he is not liable to pay the difference between standard rent and the interim rent. That view is supported by the explanation to Section 12 of the Act. Section 12 disables a landlord from obtaining possession of any premises 'so long as the tenant pays, or is ready and willing to pay, the amount of the standard rent and permitted increases, if any, and observes and performs the other conditions of the tenancy.'' By the explanation to Section 12 it is provided that the tenant, who pays rent pursuant to an order under Sub-section (3) of Section 11 of the Act, is to be deemed ready and wiling to pay the standard rent. It is clear from the plain words of Section 12 and especially the explanation that the direction for payment of rent under Sub-section (3) of Section 11 was not intended to be a decision as to the standard rent, but it is only intended to protect the tenant against a charge by the landlord that he has not paid the standard rent or that he has failed to perform the conditions of the tenancy, and to protect the landlord against frivolous refusal by his tenant to pay rent relying upon the pendency of proceedings under Section 11 for assessment of standard rent. In my view, therefore, if the rent paid under an order made under Section 11(3) is in excess of the standard rent ultimately assessed, the excess amount received by the landlord must be refunded or adjusted against future rent. Similarly if the amount paid is less than the standard rent, the tenant is liable to pay the difference. If the tenant has made excess payment, he may, in. my view, apply in the proceeding under Section 11 for an order for refund of the excess amount paid by him, or he may adjust the excess payment made against the rent accruing due after the order is passed.

4. It was urged, however, that the right to claim adjustment or to sue or apply for refund can only be exercised within the period prescribed by Section 20 of the Act. That section provides, in so far as it is material:

Any amount paid on account of rent after the date of the coming into operation of this Act shall, except in so far as payment thereof is in accordance with the provisions of this Act, be recoverable by the tenant from the landlord to whom it was paid or on whose behalf it was received or from his legal representative at any time within a period of six months from the date of payment and may, without prejudice to any other remedy for recovery, be deducted by such tenant from any rent payable by him to such landlord.

If Section 20 applies to rent which has been paid under order of the Court under Sub-section (3) of Section 11, the tenant has no right to make adjustments towards rent accruing due after six months after the date of payment, even though by order of the Court he had been compelled to pay an amount in excess of the rent lawfully due by him, and his right to recover the amount is also limited to a period of six months from the date of payment. But, in my judgment, Section 20 does not apply to payments made in compliance with the order of the Court under Sub-section (3) of Section 11. Section 20 in terms prescribes a period of limitation in respect of payment except in so far as the payment is 'made in accordance with the provisions of the Act. A payment which is made pursuant to an order of the Court to enable the tenant to qualify for the protection conferred by Section 12 must, in my judgment, be regarded as payment 'made in accordance with the provisions of the Act and Section 20 does not apply to such payments and the period for recovery of rent paid by the tenant in excess of standard rent is governed by the Limitation Act. I am further of the view that the tenant is entitled to adjust any excess payment made by him towards future rent accruing due irrespective of the bar under Section 20 and that he need not file a suit for recovery of the excess payment made by him. When the Court has ordered the tenant to pay a sum of money as interim rent to qualify him to obtain protection which the statute confers, it would be clearly implicit in the order that the payments made by the tenant and received by the landlord would be adjusted in the same proceeding having regard to the ultimate assessment of standard rent. If, the tenant has been compelled by order of the Court to make an over payment to the landlord, in my view, by application made in the proceedings for assessment of standard rent or in independent proceedings it is open to the tenant to obtain an order for recovery of the excess amount paid by him. I am, therefore, having regard to the facts of the case, of the opinion that on the day, on which the application for a distress warrant was made, there was no rent due by the petitioner and the respondents were not entitled to take out a distress warrant for attachment of the property of the petitioner.

5. I may briefly refer to Karamsey Kanji v. Velji Virji : (1954)56BOMLR619 , on which reliance was placed on behalf of the respondents. That was a case in which an application was filed for fixation of standard rent and on April 17, 1951, standard rent was fixed by the Court. After the application was filed, the landlord filed a suit against the tenant for arrears of rent from January 1, 1951, to December 31, 1951, at the contractual rate for months of January, February and March, 1951, and for standard rent fixed by the Court for the remaining months. The Court in that case held that the landlord could not recover rent for the period between January 1, 1951, and March 81, 1951, at a rate in excess of the standard rent fixed by the Court. The ultimate decision of the Court does not assist the contention sought to be raised on behalf of the respondents. It was urged, however, that the learned Chief Justice in delivering his judgment, referred to Section 20 and observed (p. 624):

Therefore, Section 20 gives the right to the tenant to recover any amount which he has paid to his landlord which is not in accordance with the Act. That right is not an unlimited right, but it is a right which must be exercised within six months from the date of payment. Once the Court comes to the conclusion that the rent which had been recovered by the landlord and which had been paid by the tenant was not the real standard rent but was in excess, and the Court determines what is the real standard rent under Section 11 (1), then, although to the extent that the landlord had recovered the higher rent his act may not be unlawful, still Section 20 gives the right to the tenant to recover whatever he had paid to the landlord in excess within the period of limitation.

These observations are evidently made with reference to payments made voluntarily and not in compliance with the order of the Court under Sub-section (3) of Section 11. A voluntary payment of contractual rent, which is more than the standard rent, can be recovered only if proceedings are taken for claiming refund thereof within six months as provided by Section 20. The learned Chief Justice has pointed out that Section 20 gives a right to the tenant to recover amounts paid to the landlord which are not in accordance with the Act. As I have already observed, a payment under Sub-section (3) of Section 11 is a payment made in accordance with the Act. Even though, therefore, more than six months had elapsed since the date on which the rent had been paid by the petitioner under order of the Court, the petitioner was entitled to adjust the overpayment made by him against rent which had fallen due at the date on which the distress warrant application was made. There was, on that view no amount due by the petitioner on the date of the application for issue of a distress warrant. No amount of rent having 'remained due, the distress warrant was plainly illegal. The Courts below were, therefore, not justified in refusing to direct that the amount deposited by the petitioner should be refunded to him but should be adjusted against rent accruing due for the period between February 1, 1953, and January 31, 1954. The rule is, therefore, made absolute with costs in all the three Courts.


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