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Allied Engineers Vs. Harbaksh Gill - Court Judgment

LegalCrystal Citation
SubjectTenancy
CourtDelhi High Court
Decided On
Case NumberSecond Appeal No. 135 of 1984
Judge
Reported in1985(8)DRJ151; 1985RLR128
ActsDelhi Rent Control Act, 1958 - Sections 4
AppellantAllied Engineers
RespondentHarbaksh Gill
Advocates: A.K. Bhasin and; M.L. Sharma, Advs
Cases ReferredM.M. Chawala v. J.S. Sethi
Excerpt:
delhi rent control act, 1958 - section 4--a clause in the lease agreement provided that on every successive renewal of lease for a period of three years, the rent will be increased by 10% of the last rent paid ; tenant is liable to pay rent only at the initial rate even for the renewed term of the tenancy. - .....as per clause 2, part iii of the said lease deed enhancing the rent by 10 per cent of the last paid rent. the monthly rent was thus increased to rs. 2887.50. (3) the respondent on 2nd august, 1983 filed a petition under section 14(1)(a) of the act alleging that the appellant had neither paid nor tendered the arrears of rent in spile of service of a notice of demand dated 14th april, 1983. the respondent alleged that a sum of rs. 2362.50 was due as arrears of rent at rs. 262.50 per month for the period april, 1982 to december, 1982 and further rent was due at rs. 2887.50 per month from 1st january, 1983. the respondent admitted that the appellant had deposited rent at rs. 2625.00 per month for the period from april, 1982 to april, 1983 under section 27 of the act. (4) the appellant.....
Judgment:

Sultan Singh, J.

(1) This second appeal under Section 39 of the Delhi Rent Control Act, 1958 (for short 'the Act') challenges the judgment and order dated 2nd April, 1984 of the Rent Control Tribunal confirming the order dated 6th March, 1984 of the Additional Rent Controller directing the tenant appellant to deposit the amount of Rs. 2362.50 as rent for the period ending 31st December, 1982 and arrears at Rs. 2887.50 per month from 1st January, 1983 onwards in accordance with Section- 15(1) of the Act.

(2) The facts are that the respondent-landlady let out flat No. 13, 2nd floor, 'New Delhi House' 27, Barakhamba Road, New Delhi to the appellant for running an office with effect from 20th March; 1976 in terms of a lease deed dated 18th March, 1976 on a monthly rent of Rs. 2625.00 . The. initial period of lease was three years. It was renewed by mutual consent of the parties as per Clause 2, Part Iii of the said lease deed enhancing the rent by 10 per cent of the last paid rent. The monthly rent was thus increased to Rs. 2887.50.

(3) The respondent on 2nd August, 1983 filed a petition under Section 14(1)(a) of the Act alleging that the appellant had neither paid nor tendered the arrears of rent in spile of service of a notice of demand dated 14th April, 1983. The respondent alleged that a sum of Rs. 2362.50 was due as arrears of rent at Rs. 262.50 per month for the period April, 1982 to December, 1982 and further rent was due at Rs. 2887.50 per month from 1st January, 1983. The respondent admitted that the appellant had deposited rent at Rs. 2625.00 per month for the period from April, 1982 to April, 1983 under Section 27 of the Act.

(4) The appellant has resisted the eviction application on various grounds. He alleges that the petition on ground of non-payment of rent is not maintainable as there were no arrears of rent when the notice of demand is alleged to have been issued; that the lease deed dated 18th March, 1976 being unregistered is not admissible in evidence, that the last paid rent was Rs. 2625.00 , that the clause regarding 10 per cent increase of the last paid rent on renewal after every three years is illegal, without jurisdiction under the provisions of the Act; that the rent cannot be increased under any circumstances. The appellant pleads that the rent at the rate of Rs. .2625.00 per month from April, 1982 to April, 1983 was deposited by it under Section 27 of the Act in the office of the Rent Controller. The Controller and the Tribunal held that the last paid rent was Rs. 2887.50 and thereforee directed the appellant-tenant to deposit Rs. 2362.50 as arrears for the period ending 31st December, 1982 and further monthly rent Rs. 2887.50 per month from 1st January, 1983 in accordance with Section 15(1) of the Act.

(5) Learned counsel for the appellant submits that the lease deed dated 18th March, 1976 is not admissible in evidence as the same required registration but was not registered under Section 107 of the Transfer of Property Act read with Section 17 of the Indian Registration Act; that the last paid rent legally payable is Rs. 2625.00 per month and not Rs. 2887.50; that the periodical increase by 10 per cent of the last paid rent after every three years at the time of renewal of lease is in violation of Section 4 of the Act and thereforee the landlord cannot recover the same; that the increase is not lawful within the meaning of Section 7 of the Act and no notice under Section 8 of the Act was ever issued or served by the landlady and thereforee the agreed rent of Rs. 2625.00 cannot be enhanced. Learned counsel for the respondent on the other hand submits that the appellant paid initially rent @ Rs. 2625.00 per month and subsequently the rent was increased to Rs. 2887.50 in terms of lease deed and paid the same for the period from April, 1979 to March, 1982, that the last paid rent was accordingly Rs. 2887.50; that the deposit under Section 27 of the Act at Rs. 2625.00 per month is not the last paid rent and the acceptance of rent deposited by the appellant does not operate as an admission about the correctness of the rate of rent under Section 29 of the Act.

(6) It is not necessary to decide at this stage whether the lease deed is admissible in evidence. Presuming that the lease deed is admissible the question for decision is whether the respondent is entitled to recover the increase in rent by 10 per cent of the last paid rent on every successive renewal of the lease for a period of three years. Clause 2 Part Hi of the lease deed is as follows :

'THE lease is for a period of three years. It is hereby explicitly agreed between both the parties that on every successive renewal of lease for a period of three ycars, the rent will be increased by 10% of the last rent paid. Whenever the Lessee is desirous of renewing the lease, he will give notice in writing to the Lesser three months before the expiry of the term of lease and a new lease deed will be executed on every successive renewal.'

(7) Section 4 of the Act reads as under :

'4(1) Except where rent is liable to periodical increase by virtue of an agreement entered into before the 1st day of January, 1939, no . tenant shall, notwithstanding any agreement to the contrary, be liable to pay to his landlord for the occupation of any premises any amount in excess of the standard rent of the premises, unless such amount is a lawful increase of the standard rent in accordance with the provisions of this Act. (2) Subject to the provisions oF Sub-section (1), any agreement for the payment of rent in excess of the standard rent shall be construed as if it were an agreement for the payment of the standard rent only'.

This section lays down the general principle that no tenant shall, notwithstanding any agreement to the contrary, be liable to pay to his landlord for the occupation of any premises any sum in excess of the standard rent of the premises, unless such sum may be lawfully added to the standard rent in accordance with the provisions of the Act. The sums that can be so added are mentioned in Section 7 of the Act and are called lawful increases. These sums can be claimed after service of a notice under Section 8 of the Act. A tenant is thereforee liable to pay the standard rent and lawful increases only. There is however one exception i.e. the rent may be increased periodically if there exists an agreement between the parties 'having been entered into before the 1st day of January, 1939. If the agreement for periodical increase was made after 1st day of January, 1939 the agreement for periodical increase would not be binding on the tenant and the landlord also cannot take the benefit of any such agreement with a view to increase the rent. In the instant case the parties agreed as per Clause 2 Part Iii of the lease deed to increase the rent after every three years by 10 per cent of the last paid rent. This agreement was entered into after 1st day of January 1939 and thereforee the agreement for periodical increase of rent by 10 per cent of the last paid rent on every successive renewal of lease for a period of three years is not binding upon the parties under Section 4 of the Act.

(8) Learned counsel for the respondent submits that Section 4 operates only after standard rent has been fixed and not before. He refers to M.M. Chawala v. J.S. Sethi, : [1970]2SCR390 wherein it has been observed that the prohibition in Sections 4 and 5 of the Act operates only after the determination of the standard rent and until the Rent Controller fixed the standard rent the contract between the landlord and tenant determines the liability. It has also been held that so long as the standard rent is not determined by the Controller the tenant must pay the contractual rent and after the standard rent is determined the landlord becomes disentitled to recover an amount in excess of the standard rent from the date on which the determination operates. There is no dispute about this proposition. The only question is whether the landlord is entitled to periodical increase by virtue of an agreement entered into after 1st January, 1939. In my view the landlord is not entitled to periodical increase even if standard rent has not been fixed. In almost all cases the standard rent is less than the agreed rent. Section 4 prohibits recovery of agreed rent if it is more than the standard rent. But if the standard rent has not been fixed the tenant is liable to pay and the landlord is entitled to recover the agreed rent. The periodical increase is further addition to the agreed rent or the standard rent. If the agreed rent is the standard rent the enhanced rent including the periodical increase as per agreement would also be more than the standard rent. Section 4 of the Act prohibits periodical increase if the lease has been entered into after 1st January, 1939. As periodical increase by virtue of an agreement entered into after 1st January, 1939 is prohibited under Section 4 of the Act, in my opinion the landlord would not be entitled to enhance rent on the basis of such agreed periodical increase even if the standard rent has not been fixed. In the present case the agreement to enhance the rent was entered into after 1st January, 1939 and Section 4 of the Act prohibits recovery of such enhanced rent. In the instant case 10 per cent is the periodical increase by virtue of an agreement entered into after 1st January, 1939 and thereforee the same is not binding on the parties and the landlord is not entitled to claim the same. As there is prohibition for recovery of periodical increase under Section 4 of the Act on the basis of agreement entered after 1st January, 1939, I am of the opinion that the respondent-landlady cannot claim enhanced rent @ Rs. 2887.50 in this case.

(9) Learned counsel for the respondent submits that the last paid rent was Rs. 2887.50. This may be so but under Section 4 of the Act there is a prohibition for the recovery of the said rate of rent which is just on account of periodical increase by virtue of an agreement entered into after 1st January 1939. The enhanced rent of Rs. 2887.50 on account of 10 per cent periodical increase is not legally recoverable under Section 4 of the Act and thereforee the said rate of rent cannot be considered to be the last paid rent for purposes of Section 15(1) of the Act. The last paid rent would thereforee be the rent which the tenant was paying prior to the increase by 10 per cent of the last paid agreed rent. The Tribunal and the Controller were thereforee wrong in holding that last paid rent was Rs. 2887.50. Recovery of rent at this rate is prohibited by Section 4 of the Act. Under Section 15(1) of the Act a tenant is required to deposit the rate last paid. In this case as the last paid rent was Rs. 2625.00 the Controller had no jurisdiction to direct the tenant, to deposit the arrears or future rent at the rent at the rate of Rs. 2887.50. It is admitted that the appellant-tenant has deposited at the rate of Rs. 2625.00 for the period ending 30th April, 1983 under Section 27 of the Act in the office of the Controller. The appellant-tenant is thereforee liable to deposit at the rate of Rs. 2625.00 only from 1st May, 1983 in accordance with Section 15(1) of the Act.

(10) The appeal is, thereforee, allowed setting aside the order dated 2nd April, 1984 of the Rent Control Tribunal and the order dated 6th March, 1989' of the Additional Rent Controller. However an order is passed under Section 15(1) of the Act directing the appellant-tenant to deposit all arrears of rent at Rs. 2625.00 per month from 1st May, 1983 within one month from today and continue to deposit future monthly rent at the said rate by the 15th of the succeeding month. The appellant shall be entitled to adjust the amounts already deposited by him in pursuance of the impugned order of the Controller. No order as to costs.


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