1. This is the plaintiffs second appeal.
2. The plaintiff is the landlord, and the defendant is his tenant in respect of the premises in question. The monthly rent stipulated is Rs. 250/-. The defendant (the respondent herein) is said to have fallen into arrears. Claiming a sum of Rs. 1290/- being the arrears of rent, the plaintiff brought the suit against the defendant-respondent in O. S. No. 195 of 1972 on the file of the 1st Additional I Munisiff, Bangalore City. The defendant in the suit contended that the plaintiff had received a sum of Rs. 1500/- at the commencement of the lease as premium and that he, the defendant, was entitled to get that sum adjusted out of the sum claimed by the plaintiff in the suit. Placing reliance on subsection (2) of Section 18 of the Karnataka Rent Control Act, 1961 (the Act), the Munsiff upheld the defendant's plea in his judgment dated 30-3-1973. This finding has been confirmed by the Principal Civil Judge, Bangalore by his judgment dated 20-2-1975 in R. A. No. 157 of 1974 on his life. These concurrent findings are challenged by the plaintiff in this second appeal.
3. Admittedly when this lease came into existence Part III of the Act was not applicable to the premises in question.
4. Part III, containing Sections 14 to 18, deals with fixation of fair rent and matters allied thereto. Section 18 and in particular, sub-section (2) thereof is relevant for our purpose.
5. Since it may be necessary, while construing sub-section (2) of Section 18, to keep in view sub-section (1) thereof also, the entire section is extracted below:
'18. Unlawful charges not to be claimed or received. - (1) Where the fair rent of a building has been determined.
(a) no person shall claim, receive or stipulate for the payment of any sum as premium or pugree or any consideration whatsoever in cash or kind, in addition to such fair rent or save as provided in Section 16 and 17 any rent in excess of such fair rent:
Provided that the landlord may receive or stipulate, for the payment of an amount not exceeding two months rent by way of advance;
(b) save as provided in Clause (a), any premium or pugree or other consideration or any rent paid in addition to such fair rent whether before or after the commencement of this part in consideration of the grant or continuance or renewal of the tenancy of the building after such commencement shall be refunded or returned by the landlord or other person to the person by whom it was paid or at the option of such person otherwise adjusted by the landlord or other person;
Provided that where before the determination of the fair rent any amount has been paid in excess thereof, the refund or adjustment shall be limited to the amount paid in excess after the date of application for fixing the fair rent.
(2) Where the fair rent of a building has not been so determined.
(a) no person shall after the commencement of this Part receive or stipulate for the payment of any sum as premium or pugree or any consideration whatsoever in cash or kind, in addition to the agreed rent;
(b) save as provided in Clause (a) any sum or consideration paid in excess of the agreed rent whether before or after the commencement of this Part in consideration of the grant, continuance or renewal of the tenancy of the building after such commencement shall be refunded or returned by the landlord or other person to the person by whom it was paid or at the option of such person otherwise adjusted by the landlord or other person.
(3) Any stipulation in contravention of sub-section (1) of sub-section (2) shall be null and void.
(4) It shall not be lawful for the tenant or any person acting or purporting to act on behalf of the tenant or a sub-tenant to claim or receive any sum or any consideration as a condition of relinquishment, transfer or assignment of his tenancy or sub-tenancy, as the case may be, of any building.
(5) Any landlord who contravenes the provisions of sub-section (1) or sub-section (2) and any tenant or other person who contravenes the provisions of sub-section (4) Shall, on conviction, be punished with fine which may extend to five hundred rupees;
Provided that such fine shall not be less than the amount of premium or pugree or the value of the consideration referred to in sub-section (1), (2) or (4) as the case may be.'
6. As can be seen reference is made in sub-section (1) (a) of Section 18 to Ss. 16 and 17 also. Here itself it may be noted that Sections 16 and 17 prohibit any increase in the fair rent or decrease or diminution in such rent (fair rent) except as provided in the aforesaid provisions. Section 16 (1) says that if any addition, improvement, or structural alterations are made at the expense of the landlord there may be an increase in the fair rent fixed. Sub-section (3) provides that if, for some reason, there happens to be any decrease or diminution in the accommodation or amenities provided in the building, the tenant may claim a reduction in the fair rent fixed. Section 17 enables the landlord to claim more rent than the rent stipulated in case the local authority, in whose jurisdiction the premises lies, increase the house tax or less payable.
7. I have referred to Sections 16 and 17 and what they provide for in some detail since I feel that it will help us in understanding the meaning of the two terms alternatively used in several sub-sections of Section 18, the terms being 'in addition to' and 'in excess of'.
8. The question that falls for our consideration in this appeal is, as to whether any sums obtained by a landlord from his tenant at the time of granting or renewing a lease in respect of a building not covered by Part III of the Act, by way of premium or advance with an agreement providing for either adjustment or repayment of that sum at a particular period or point of time, is required to be refunded or returned or adjusted to by the landlord as provided in Clause (b) of sub-section (2) of Section 18 of the Act.
9. As already stated, in the instant case, when the landlord had obtained, the premium or advance Part III of the Act was not applicable to the premises. Now, it is applicable. Since no fair rent, as provided is the Act, has been determined or fixed re : this building, sub-section (1) of Section 18 is not applicable. It is sub-section (2), if at all, that has relevance.
10. Now, under Clause (a) of sub-section (2) , even though fair rent has not been fixed re : a building but if Part III applies to it, the landlord should not receive or stipulate for the payment or any sum as premium or pugree etc., by the tenant 'in addition to the agreed rent'. As is clear this has only prospective appellations. Clause (b) of sub-section (2), which has retrospective application, says that any sum obtained by the landlord as premium etc., whether before or after the commencement of Part III of the Act 'in excess of the agreed rent' shall be refunded or returned or adjusted as the case may be. What is prohibited in Clause (a) of sub-section (2) in obtaining premium etc., 'in addition to the agreed rent'; but, what is required to be refunded or adjusted under Clause (b) of sub-section (2) is any sum or consideration obtained 'in excess of the agreed rent.' Are not these two terms different? and, if so, what do they respectively mean?
11. The word 'addition' is derived from the root word 'add'. The word 'add', according to Chambers 20th Century Dictionary, means : 'to join or annex (to something else)'. The word 'excess' , as defined in that Dictionary, also means : 'going beyond what is usual or proper'. In 'excess of the agreed rent' means receiving as rent something in excess of the agreed rent, but not 'apart from it' (the agreed rent). We may illustrate this. We will take an item of food to prepare which more than one ingredient is added. We may say that in the preparation of that Item 'ABD' are required. If one wants to say that with 'AB', 'C' should be put, one will say that it addition to AB put 'C'. But, if one wants to convey that measure-wise only so much of 'A' be added and not more, he will say put only so much of 'A' and not in excess of that (that quantity). It appears to me that in this sense the aforesaid two terms have been used in several clauses of these sections. That also appears to be the intention of the legislature. Clause (a) of sub-section (1) gives us an indication. In that clause both terms are used. It says that after the fair rent of a building is determined, the landlord should not receive anything by way of premium etc., in addition to such fair rent. That clause also further says that by way of any rent the landlord should not receive anything in excess of such fair rent except as provided in Sections 16 and 17. The said two sections provide for the increase of or reduction in the fair rent already fixed under circumstances.
12. Understood this way what Clause (b) of sub-section (2) provides is that if the landlord had received any sum in excess of the agreed rent he should refund or return or adjust it even though he has received the said sums prior to the commencement of this part (Part III). This clause - Clause (b) does not cover a case wherein what had been received by the landlord prior to the commencement of this part, was something not as rent, but, in addition to that, which may include advance or premium also. The intention of the legislature, perhaps, was not to nullify contracts validly entered into between the parties prior to the application of this part of the building concerned. Besides this, it may be noted that any violation of the aforesaid provisions has penal consequences. Sub-section (5) of Section 18 provides that 'a person contravening these provisions shall, on conviction, be punished with a fine which may extend to Rs. 500/-'. A penal provision, as is well known, cannot have retrospective consequences. Referring to the intention of the legislature a learned Judge of this Court, in a similar case, has also taken the same view as above. In Mt. Sharadamma v. Nagappa Hande, (C. R. P. No. 1128 of 1974 decided on 14-2-1975), the learned single Judge has observed as follows :
'In the present case, at the time of the contract, receiving Rs. 2500/- as advance was not invalid and there are no specific terms in the Act invalidating such contract or to the effect that it shall become void after the expiry of five years. The contention that the amount which was lawfully received and which, under the contract, was only repayable at the determination of the lease and without interest was to be adjusted towards the rent due is untenable. The intent of the section is not to render illegal contracts which had been validity entered into and performed and to which Part III was not applicable when the contract was entered into. I, therefore, hold that the Court below was in error in holding that the respondent was entitled to have the amount of Rs. 2500/- adjusted towards the rent payable and that he need not pay the rents until Rs. 2500/- was so adjusted.'
I am in agreement with the aforesaid views.
13. In the instant case that part of the agreement relating to the obtaining of advance reads like this;
'Received Rs. 1500/- (Rupees One thousand five hundred only) by cheque Pvt. Ltd. Bangalore as deposit without interest......' Under the agreement the landlord has to return the said sum when the parties determine the lease. For the reason stated above this amount is not liable for adjustment as provided under Clause (b) of sub-section (2) of Section 18. Not properly construing the said clause, the Courts below have wrongly held that that sum was available for adjustment. In the circumstances, the decrees of the Courts below are liable to be set aside.
14. Accordingly, this appeal is allowed: the judgments and decrees of both the Courts below are hereby set aside and the plaintiff's suit is decreed as prayed for. However, parties are directed to bear their own costs in this appeal.
15. Appeal allowed.