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Jayantilal Kalabhai Mehta Vs. Ratilal Gulabdas Mehta - Court Judgment

LegalCrystal Citation
SubjectTenancy
CourtGujarat High Court
Decided On
Judge
Reported in(1977)18GLR374
AppellantJayantilal Kalabhai Mehta
RespondentRatilal Gulabdas Mehta
Cases ReferredGaurishanker Chhitarmal Gupta v. Smt. Gangabai Tokersy
Excerpt:
- - 1. one interesting question which arises in this revisional application is as regards the liability of the tenant for eviction on account of non-payment of permitted increases as contemplated by sections 10, 10a 10aa, ioc, 10cc, 10d and 10e of the bombay rents, hotel and lodging house rates control act, 1947 (hereafter referred to as 'the rent act'), when the rent as per contract has been paid by him and accepted by the landlord without making any increase in the rent. on june 24, 1963 and raised a dispute about standard rent as well as permitted increases. the advocate received the copy of the reply, but with regard to the amount tendered he endorsed 'received the copy of this. jt is well known that maharashtra high court differed from this view of the gujarat high court and held.....d.p. desai, j.1. one interesting question which arises in this revisional application is as regards the liability of the tenant for eviction on account of non-payment of permitted increases as contemplated by sections 10, 10a 10aa, ioc, 10cc, 10d and 10e of the bombay rents, hotel and lodging house rates control act, 1947 (hereafter referred to as 'the rent act'), when the rent as per contract has been paid by him and accepted by the landlord without making any increase in the rent. the suit pertains to possession of the residential premises, and according to the plaintiff (present petitioner) they were in possession of the tenant (present opponent) at a monthly rent of rs. 18-91 ps. it was further the case of the plaintiff that there was increase in the taxes of the suit premises; and.....
Judgment:

D.P. Desai, J.

1. One interesting question which arises in this revisional application is as regards the liability of the tenant for eviction on account of non-payment of permitted increases as contemplated by Sections 10, 10A 10AA, IOC, 10CC, 10D and 10E of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947 (hereafter referred to as 'the Rent Act'), when the rent as per contract has been paid by him and accepted by the landlord without making any increase in the rent. The suit pertains to possession of the residential premises, and according to the plaintiff (present petitioner) they were in possession of the tenant (present opponent) at a monthly rent of Rs. 18-91 Ps. It was further the case of the plaintiff that there was increase in the taxes of the suit premises; and the defendant-tenant was called upon to pay the same. The plaintiff also claimed an increase on account of providing of amenity of flush latrine as the municipality compelled him to do so. The opponent-defendant was in arrears of rent from June 1, 1962. It is not in dispute, therefore that rent up to 31-5-1962 was paid to the landlord. On June 11, 1963, the landlord served a notice to the tenant demanding arrears of rent amounting to Rs. 379-42 Ps. as due till 31-5-1963. This amount consisted of the following items:

Rs. 226-92 being rent from 1-6-4962 to 31-5-1963 at the rate of

Rs. 18-91 ps. per month

Rs. 30-00 by way of increase in latrine tax at the rate of Rs. 3/-per

month for a period of 10 years from 1-4-1953 to 31-3-1963.

Rs. 42-00 by way of increase in water-tax from 1-4-1956 to 31-3-63.

Rs. 1-50 being increase for two month from 1 -4-1963 to 31 -5-1963

on the total yearly increase of Rs 91- i.e. Rs. 3/- in latrine tax

and Rs. 6/- in water tax.

Rs. 79-00 by way of increase on account of gutter connection and

construction of flush latrine.

----------

Rs. 379-42 Total.

2. The defendant-tenant replied to this notice within one month i.e. on June 24, 1963 and raised a dispute about standard rent as well as permitted increases. However, he tendered an amount of Rs. 272-83 Ps. subject to contentions and disputes about standard rent and permitted increases to the advocate of the plaintiff along with the reply to the notice. The advocate received the copy of the reply, but with regard to the amount tendered he endorsed 'Received the copy of this. I have to receive instructions from my client to receive money from you. So I have not taken any amount from you.' On July 2, 1963, the same amount was sent by money order by the tenant to the landlord; and that money order was refused. Thereafter, the suit was filed on August 3, 1963. Before framing of the issues, the defendant had deposited Rs. 642/- in all in the trial Court. The issues were framed on August 10, 1964.

3. Apart from raising the dispute about standard rent and permitted increases in to the notice within the prescribed time of one month, the defendant tenant raised the same dispute in the written statement in the suit. The trial Court fixed the standard rent at Rs. 21-85 Ps. break of consists as under:

Rs. 17-00 per month being the rent without increases.

Rs. 0-85 per month being permitted increases at 5 per cent,

falling within Section IOC of the Rent Act.

Rs. 0-25 per month being increase in sanitary tax falling

under Section 10 of the Rent Act.

Rs. 0-50 per month being increase in water tax falling under

Section 10 of the Rent Act.

Rs. 3-25 per month being increase on account of construction

of flush latrine falling under Section 10D of the Rent Act.

---------

Rs. 21-85 Total.

In view of this finding, the relief for possession was refused to the plaintiff by the trial Court which fixed the standard rent at Rs. 17/- per month plus permitted increases at Rs. 4-85 per month; and gave decree for Rs. 246-75 to the plaintiff. The standard rent came to be fixed by the trial Court by its judgment delivered on July 31, 1965. Being aggrieved by this decree, the landlord preferred an appeal to the District Court. The learned Assistant Judge of that Court who heard the appeal dismissed it with costs. Hence the present revisional application.

4. The trial Court held that the defendant was not a tenant in arrears as alleged by the plaintiff and that he was ready and willing to pay standard rent of the suit premises. The plaintiff was held not entitled to recover possession. The appellate Court held that the defendant was a tenant in arrears of rent for more than six month, but he was ready and willing to pay the amount of standard rent and permitted increases; and therefore, the plaintiff was not entitled to possession of the suit premises.

5. Thus, we have a concurrent finding of fact by the Courts below that the defendant in this case was ready and willing to pay standard rent and permitted increases of the suit premises. The first question which arises in this revisional application is what is the effect of the tender of the amount of Rs. 272-83 Ps. by the tenant to the advocate of the plaintiff within one month of the receipt of the notice and thereafter sending of the same amount by money order on July 2, 1963 to the plaintiff? Would it establish readiness and willingness on the part of the defendant to pay the standard and permitted increases of the suit premises? The contention or behalf of the plaintiff-landlord was that in a case falling under Section 12(j)(a) of the Rent Act readiness and willingness to pay standard rent and permitted increases can be established only by making an application under Section 11 of the Rent Act within the prescribed period of one month as contemplated by Section 12(3)(a) of the said Act. It was also urged that mere raising of dispute as to the standard rent and permitted increases within a period of one month by way of reply to the notice is not sufficient. The contention was that the tenant should apply within that period of the one month for fixing the standard rent and in case he fails to do so, his case would be covered by Section 12(3)(a) of the Rent Act, because raising of the dispute in such a case at the time of filing of the written statement would not take the case out of Section 12(3)(a) of the Act. It may be observed that undisputedly the tenant in this case was in arrears of rent for a period of more than six month prior to the date of the notice; and that the rent was payable by the month. It is also not in dispute that within one month of the receipt of the notice, the tenant had raised a dispute as to the standard rent and permitted increases and that as per the Gujarat view taken in Ambalal v. Babaldas III G.L.R. page 625, raising of such a dispute within one month would lake the case out of Section 12(3)(a) of the Act. Jt is well known that Maharashtra High Court differed from this view of the Gujarat High Court and held that the tenant can raise a dispute as to the standard rent and permitted increases in the written statement also; and in that case the provisions of Section 12(3)(b) of the Act will apply. This, dispute has now been resolved by the Supreme Court in Harbanslal Jagmohandas and Anr. v. Prabhudas Shivlal (Civil) Appeal No. 282 of 1971) and Rev. Everett M. Fasanachat and Anr. v. West End Works (Civil Appeal No. 2068 of 1971) (1977) XVIII G.LR. 157 both decided together on March 12, 1976. Though the Supreme Court in that case upheld the view of the Gujarat High Court and did not accept the view of the Maharashtra High Court, there are some observations in this judgment on the basis of which it has been contended before this Court on behalf of the plaintiff-landlord that the only way in which dispute about standard rent and permitted increases could be raised within one month by the tenant is by filing an application under Section 11 of the Rent Act for fixing the standard rent. The submission is that this observation of the Supreme Court makes the law prevailing in this State as interpreted by this Court that the dispute can be raised also by a reply to the notice within one month, ineffective.

6. In the present case, the tenant has not given an application for fixing the standard rent though he had raised a dispute about standard rent and permitted increases within one month of the receipt of the notice, Therefore, the scope for the aforesaid contention by the landlord. Before considering the need for deciding this contention, first of all we will have to see what is the effect of tender of the amount of rent to the advocate for the plaintiff and subsequently to the plaintiff by money order. Has the tenant by those acts demonstrated his readiness and willingness to pay the standard rent and permitted increases before the suit came to be filed by the landlord? That is the first question which arises for consideration. The finding of the Courts below as regards readiness and willingness to pay standard rent and permitted increases was challenged as erroneous in law, as the courts below did not take into consideration the fact that the claim for permitted increases was from 1-4-1953 to 31-3-1963 in respect of the one item and from 1-4-1956 to 31-3-1963 in respect of the another. Admittedly, if we take the permitted increases at the rate determined by the trial Court, for all these years, then the amount tendered to the plaintiff's advocate as well as to the plaintiff by money order would be less than the amount due as per the standard rent and permitted increases fixed by the trial Court. Therefore, in order to consider the aforesaid question, the need has arisen to interprete the provisions of Sections 10, IOC and 10D of the Rent Act, in the context of the question posed in the beginning of this judgment. We may now take note of the provisions bearing upon this question.

7. Standard rent is defined by Section 5(10) of the Act to mean (in cases where the standard rent is not fixed by the Court as contemplated) the rent at which the premises were let on September 1, 1940, or if not let on that date, the rent at which they were last let, or if let for the first time after that date, the rent at which they were first let. In these three instances, the Legislature takes contractual rent as the standard rent subject to the provisions of S. II/-. Of course, in any of the cases specified in Section 11, the rent fixed by the Court is standard rent. Section 5(7) defines permitted increases to mean 'an increase in rent permitted under the provisions of this Act'. Part II of the Act deals with residential and other premises; and in that part occur the relevant sections which may have to be taken into consideration with regard to the question nosed before this Court. These Sections are 7,9, 10, 10A(1) and (3), 10AA, 10C(1) (items (1) and (4) only), 1OC 2 10CC, 10D(I) and (3), 10E. They may be reproduced:

7 Except where the rent is liable to periodical increment by virtue of an agreement entered into before the specified date it shall not be lawful to claim or receive on account of rent for any premises any increase above the standard rent, unless landlord was, before the coming into operation of this Act, entitled to recover increase under the provisions of the Bombay Rent Restriction Act, 1939, or the Bombay Rents, Hotel Rates and Lodging House Rates (Control) Act, 1941, or entitled to recover such increase under the provisions of this Act.' '9 A landlord shall be entitled to make such increase in the rent of the premises, as may be reasonable, for an improvement or structural alteration of the premises which has been made with the consent of the tenant given in writing: and such increase shall not be deemed to be an increase for the purposes of Section 7.

Explanation. In this section improvement and alterations do not include the repairs which the landlord is bound to make under Sub-section (1) of Section 23.

10. Where a landlord is required to pay to a local authority in respect of any -premises any rate, cess or tax levied for the purposes of such authority he shall be entitled to make an increase in the rent of the premises by an amount not exceeding the increase paid by him by way of such rate, cess or tax over the amount paid in the period of assessment which included the date of the coming into operation of this Act or the date on which the premises were first let, whichever is later, and such increase in rent shall not be deemed to be an increase for the purposes of Section 7.

10A. Notwithstanding anything contained in Section 10 and 10A;

(1) If any area specified in Schedule 111 to this Act a rate or tax on buildings, house's or lands or a rate or tax in the form of such rate or tax on buildings, houses or lands levied under the Bombay Municipal Boroughs Act, 1925, or the Bombay District Municipal Act, 1901, or the Cantonments Act, 1924, or the Bombay Village Panchayats Act, 1933, as the case may be, is increased after the 31st day of March, 1949, a landlord shall not, in respect of any premises situated in any of the areas specified in the said Schedule, and let on or before the said date, be entitled to make any further increase in the rent of the said premises on account of the payment by him of such increase in the rate or tax;

(3) the State Government may be notification published in the Official Gazette direct that in any area other than those specified in schedule 111, a landlord shall not be entitled to make any increase in rent in respect of any premises situate in such area on account of the payment by him of an increase in the rate or tax imposed or levied by any local authority for its own purpose on buildings, houses or lands after such date as may be specified in the notification.X X X

10AA. (1) Notwithstanding anything contained in Sections 10 and 10A,

(a) If in the city of Ahmedabad the general tax levied under Section 129 of the Bombay Provincial Municipal Corporations Act, 1949, or in any other area to which Clause (I) of Section 10A applies a rate or tax on buildings, houses or lands or a rate of tax in the from of such rate or tax on buildings, houses or lands levied under any of the enactments referred to in the said Clause (1) is increased after the 31st day of March, 1949, a landlord, in respect of any premises situated in any of the said areas, and let on or before the said date, shall be entitled, after the date of commencement of the Bombay Rents, Hotel and Lodging House Rates Control (Second Amendment) Act, 1953 (hereinafter in this section referred to as the appointed date), to make an increases in the rent of the said premises on account of the payment by him of such increase in the rate or tax;

(b) a landlord shall be entitled, after the appointed date, to make an increase in the rent of any premises situated in any of the said areas and let after the 31st day of March, 1949 on account of the payment by him of any increase in such rate or tax;

(c) if a notification has been issued under clause

(3) of Section 10A in respect of any area, a landlord shall be entitled, after the appointed date, to make an increase in the rent of any premises situated in such area on account of the payment by him of an increase in the rate or tax imposed or levied by any local authority for its own purpose on buildings, houses or lands after the date specified in such notification:

Provided that the increase referred to in Clauses (a),(b) and (c) above shall not exceed:

(i)the difference the amount of the increase paid by the landlord by way of rate or tax and the amount, if any, by which the Urban Immovable Property tax is reduced after 31st day of March 1949; or

(ii) five percent, of the standard rent, whichever is less,

(2) Any increase made under Sub-section (1) shall not to be an increase for the purposes of Section 7.

10C.(1) A landlord shall also be entitled to make an increase in the rent of premises referred to in column 1 which were let on or before the first day of September, 1949, by an addition to the rent at the rates specified against them in column 2 below:

1 2(1) Residential premises the rent Not exceeding 5 per centof which does not exceed Rs.20 per month.x x x(4) Non-residential premises other thanthose specified in items (5) and (6) below:(a) the rent of which does not exceed Rs. 50 per month.(2) the rent of which exceeds Rs. 50 Not exceeding 5 per per month. of the standard rent.(2) Any increase under Sub-section (1) shall not be deemed to be an increase for the purposes of Section 7.

x x x

10CC. (1) In the Saurashtra area and the Kutch area of the State and in the areas of the merged territories of the former Baroda State, in the case of premises let on or before the specified date and used for the purposes of a cinema, a landlord shall also be entitled to make an increase in the rent of such premises by an addition to the rent at a rate not exceeding fifty per cent of the standard rent. (2) Any increase under Sub-section (1) shall not be deemed to be an increase for the purposes of Section 7.

Explanation-Far the purposes of this section, the expression 'premises' shall have the same meaning as is assigned to it in Sub-clause (b) of Clause (8) of Section 5.' '10D. (1) Subject to the provisions of Sub-sections (2) and (5) and notwithstanding anything contained in Section 9, a landlord shall further be entitled to make an increase in the rent of premises by an addition to the rent, in the manner prescribed, of an amount not exceeding five per cent per annum of the expenses incurred on account of special or heavy repairs of special additions to premises or special alterations made therein or additional amenities provided for the premises or on account of improvements or structural alterations made under Section 9;

Provided that the increase permitted by this sub-section shall not, in respect of improvements or structural alterations, being addition to the increase already made under Section 9 and shall after the commencement of the Bombay Rents, Hotel and Lodging House Rates Control (Second Amendment) Act, 1953, be in substitution of the reasonable increase permitted under that section, notwithstanding anything contained therein.

x x x

(3) Any increase under Sub-section (1) shall not be deemed to be an increase for the purposes of Section 7.

x x x

10E.(1) Where a landlord is liable to pay in respect of any premises, any levy of, or increase in, the ground-rent, non-agricultural assessment or any other tax on land imposed by the State Government, he shall be entitled to make an increase in the rent of the premises by an amount not exceeding the increase paid by him by way of such ground-rent, non-agricultural assessment or tax, as the case may be. The amount of such increase in rent to be recovered from tenant shall bear the same proportion as the rent payable by him in respect of his premises bears to the total amount of the rent recoverable for the whom of the premises if let. (2) Any increase under Sub-section (1) shall not be deemed to be in increase for the purposes of Section 7.

Significantly as regards increase in the standard rent as permitted under these provisions, the Legislature had used the same phrase in all the aforesaid provisions viz. 'shall be entitled to make an increase in the rent' in Sections 9, 10, 10AA, 10C, 10CC and 10E. In Section 10A, the Legislature while speaking negatively says 'shall not, be entitled to make any further increase in the rent' (vide Section 10A(1), or 'shall not be entitled to make any increase in the rent' (vide Section 10A(3). In Section 10D(1), the phrase used is 'shall further be entitled to make an increase in the rent.'

8. One thing is quite clear and about that, no dispute has been raised by the learned advocates for both the sides before this Court. The legislative intent is that the increases permitted by the aforesaid provisions do not take effect automatically. It is also not in dispute that the landlord has to do some act of making an increase in the rent. In the present case, rent has been accepted upto 31-5-1963 by the landlord without making any increase. The rent has remained in arrears from 1-6-1963. Therefore, the question has arisen whether in respect of the rent which has been accepted by the landlord, the landlord is entitled to make an increase now and face the tenant with a threat of eviction in case he does not pay the amount of increase though he has already discharged his liability of paying rent by payment thereof which has been accepted by the landlord. When we start with the position that increases in the rent permitted by the aforesaid provisions do not take effect automatically and that the landlord has to do some act in order to make the increases effective, we will have to examine the question in the light of the concept of standard rent and permitted increases as envisaged by the scheme of the Act in question. The phrase commonly used in the aforesaid provisions speaking about the making of increase in the rent or not making an increase in the rent would go to show that by enacting these provisions the Legislature provided for making permitted increases part of the standard rent. Section 7 of the Act debars the landlord from recovering on account of rent any increase in the standard rent unless the landlord is inter alia entitled to recover such increases under the provisions of the Act. To my mind, the position that permitted increases form part of the standard rent and cannot exist independently of it, is no longer res Integra in view of the judgment of the Supreme Court reported as Bombay Municipality v. L.I.C. Bombay : [1971]1SCR335 . In that case the Municipal Corporation fixed rateable value of the rented premises for the years 1957-58 and 1958-59. On April 1, 1958 additional tax known as educational cess was imposed at the rate of 11 per cent of the rateable value under Section 140 of the Bombay Municipal Corporations Act, 1949. As the landlord became entitled to increase the rent recoverable from the tenant to the extent of the increase in the tax payable to the Corporation under the provisions of Section 10AA of the Act, the Assessor and Collector of the Corporation served a notice on the landlord proposing to increase the rateable value of the building in question by adding the increase which the landlord became entitled to recover from the tenant. The landlord maintained that the amount of educational cess being permitted increases, cannot be included in the rent which was to be taken into consideration for fixing the rateable value. This plea was disallowed by the Small Causes Court; and the respondent landlord preferred an appeal to the Court of Small Causes at Bombay which was also dismissed. The respondent thereafter approached the High Court. The High Court of Bombay held that the rateable value could be fixed only on the basis of the standard rent provided by the Rent Act and the amount of permitted increases could not be included in rent for the purposes of valuation. The contention which prevailed with the High Court was that permitted increases were not be recovered as part of the rent. The matter went to the Supreme Court, and the Supreme Court, after examining the provisions of Sections 10, 10A, 10AA and Section 7 of the Act, made the following observations at page 1536:

It is quite clear that Section 7 does not prohibit the recovery of the increase to which landlord may be entitled under the provisions of the Act in addition to the standard rent. The obvious implication of the definition of 'permitted increase' in Section 5(7) is that such an increase becomes a part of the rent. The language which has been employed in Sections 9, 10 and 10AA seems to indicate that the Legislature treated the permitted increase as a part of the rent which the landlord would be entitled to receive from the tenant.

Therefore, we have before us the settled position now that permitted increases under the provisions reproduced earlier do not exist independently of the standard rent, but they become part and parcel of the standard rent on their being effected by the landlord in accordance with the provisions of the Act. These permitted increases are a sort of statutory increases in the contractual rent which have the effect of raising the standard rent. In the present case, as per the finding of the Courts below, the contractual rent which was standard rent was Rs. 17I-per month. Therefore, the amount of Rs. 4-85 ps. per month which is the amount of permitted increases becomes part and parcel of the standard rent. So long as the standard rent is not paid to the landlord and received by him, the tenant's liability to pay the same is not extinguished or discharged. Therefore, it is understandable that these permitted increases can be made in respect of the rent which is not paid and is in arrears even by a subsequent act of making a demand and giving of a notice. But so far as the standard rent which is already paid by the tenant and received by the landlord is concerned, it is fairly clear that there is no question of increase in the standard rent already paid. This follows from the concept that permitted increases form part of the standard rent. The liability of the tenant whether under the contract or after the termination of the contract, is to pay the standard rend and standard rent only. So long as permitted increases are not made, the standard rent remains the same and its payment by the tenant and acceptance by the landlord discharges the tenant from the obligation of payment of standard rent. In such a case, it is not possible to create a distinct obligation to pay permitted increases apart from the standard rent already paid by a dichotomy between the standard rent and permitted increases as two distinct and independent obligations. In such cases, to treat permitted increases as a distinct obligation from the standard rent would, in my opinion, not only violate the principle of law laid down by the Supreme Court in the Bombay Muni- cipality's case (supra), but also enable the landlord by a notice of demand to create a statutory obligation creating retrospective liability in respect of the period for which the obligation to pay standard rent has been fully discharged by the tenant. This could not be the intention of the Legislature. If it was, the Legislature would have expressed it in clear words. In fact, the Legislature refrained from providing for an automatic increase in respect of matters covered by the various provisions relating to permitted increases reproduced above. Again, the tenant would not know the amount of permitted increases paid by the landlord in case where permitted increases are in respect of increase of rates or taxes The landlord in a given case may allow such increase to accumulate for a number of years and then, even though the tenant has paid the standard rent and the landlord has accepted it, suddenly face the tenant with a demand for permitted increases over a number of years and claim eviction on that basis. The landlord would not be affected by the bar of limitation in such a case if the tenant wants protection of the Act. This would rather create an oppressive situation for the tenant. Similarly, in a case covered by Section 10CC relating to letting of premises for the purpose of cinema in the Saurashtra and Kutch areas of the State and in the areas of the merged territories of the former Baroda State, increase in the standard rent is permitted at a rate not exceeding fifty percent of the standard rent. Under Section 10C, item 6, similar increase is permitted in respect of premises used for the purposes of a cinema in other areas. The landlord in these two cases also would go on accepting the standard rent without making the increase for a number of years and then face the tenant with a demand for permitted increases at 50 percent of the standard rent for a period of several years. The tenant would be again placed in the same oppressive situation. Looking to the object with which the Act was enacted and in the context of the concept of standard rent as laid down by the Supreme Court as well as in the context of the language employed by the Legislature in the aforesaid provisions, the only reasonable interpretation of the word 'rent' occurring in the aforesaid provisions would be rent due and not paid by the tenant. The phrase 'shall be entitled to make increase in the rent' should be interpreted to mean 'shall be entitled to make increase in the rent which is due and not paid.'

9. My attention was invited to a decision of the Supreme Court reported in Gaurishanker Chhitarmal Gupta v. Smt. Gangabai Tokersy 1971 All India Rent Control Journal, page 207. In that case, rent was in arrears from 1st December, 1954 when the notice dated June 15, 1955 was given to the tenant Prior to that, two notices were given, the first being of December 21, 1954 claiming a sum of Rs. 240-7-6 being the increments in the municipal tax in respect of the building from March 1, 1950 to November 30, 1954 at Rs. 0-1-6 per rupee per month. The tenant replied to this notice pleading that all the dues including all legitimate increments payable by him were paid I to the receiver of this property till November, 1954. Thereafter another notice dated March 24, 1955 was sent to the tenant reiterating demand for payment of increments in the Municipal tax By that notice the tenancy of the tenant was terminated by the end of April 1955. Then followed the notice of June 15, 1955 which restricted claim to the period from December 1, 1954 till the end of May, 1955. The ten admittedly had not paid the rent and permuted increases for this period, and in this context, the contention was advanced that the permuted increases demanded by the landlord will take effect only from June 15, 1955. It may be mentioned that at an earlier stage on December 21, 1954 also increase in the tax was claimed upto November 15, 1954 by the landlord and that the tenant claimed to have pared all the dues November 1954 to the receiver including all legitimate increment him. Therefore, this was a case in which the tenant himself admitted that permitted increases were charged from him and were paid of to the receiver till the end of November, 1954. It is in this context following observations in paragraph 16 of the report reached upon by Mr. Mankad for the petitioner have to be read:

16 We are not inclined to accept the contention of Mr. Desai that the permitted increases demanded by the landlord will take effect only from June 15, 1955. We are of the opinion that it is sufficient if the landlord charges the tenant at a higher rate and makes a demand at that rate and that the date from which the demand would be effective would not be the date of intimation. So far as we could see there is nothing in law to prevent the landlord making the increase at the time of giving the notice... There is nothing in the Act which requires a landlord to give first a notice under Section 10 or 10C and then a further notice under Section 12. In this case the landlord has given a notice on June 15,1955 calling upon the appellant to pay the arrears due from December 1, 1954. There is no controversy that the amount was not paid till the institution of the suit.

(Emphasis suppled)

In that case, a concession was made before the Small Causes Court as regards break up of the total amount of Rs. 52-9 6 claimed by way of rent and permitted increases. The Supreme Court dealt with a case where rent and permitted increases from December 1, 1954 were not paid. The Supreme Court did not lay down in this case that in respect of standard rent already paid, the obligation to pay permitted increases can subsequently be created by the landlord by making a demand and giving notice.

10. No other decision was cited in order to show that though permitted increases would form part of the standard rent as held by the Supreme Court still in case of standard rent having been paid by the tenant and by the landlord the obligation to pay can be created and enforced by the landlord as distinct obligation by virtue of the provisions of Sections 9, 10 and 10A and onwards of the Act. My conclusion, therefore, is that by virtue of the aforesaid provisions the landlord is entitled to make an increase in the standard rent only in respect of the period for which the standard rent is in arrears i.e. due and not paid. This he could do because obligation to pay standard rent which is liable to be changed by way of increase as contemplated by the aforesaid provisions of the Act has not been discharged by the tenant. It was also urged that Section 12 of the Act uses the words 'standard rent and permitted increases' which would show that the intention of the Legislature was to treat two concepts as distinct and separate. It is no possible to accept this contention. Sub-section (1) of Section 12, in conferring protection on the tenant, speaks inter alia of readiness and willingness to pay 'the amount of the standard rent and permitted increases, if any '. This phrase is rather indicative of permitted increases being a part and parcel of the standard rent.

11. We will now have to examine the effect of the tender of Rs. 272-83 Ps. to the advocate of the plaintiff by the defendant and sending of the same amount on July 2, 1963 to the plaintiff by money order. Section 12 of the Act needs reproduction on this point.

12.(1) A landlord shall not be entitled to the recovery of 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, in so far as they are consistent with the provisions of this Act.

(2) No suit for recovery of possession shall be instituted by a landlord against a tenant on the ground of non-payment of the standard rent or permitted increases due, until the expiration of one month next after notice in writing of the demand of the standard rent or permitted increases has been served upon the tenant in the manner provided in Section 106 of the Transfer of Property Act, 1882.

(3) (a) Where the rent is payable by the month and there is no dispute regarding the amount of standard rent or permitted increases, if such rent or increases are in arrears for a period of six month more and the tenant neglects to make payment thereof until the expiration of the period of one month after notice referred to in Sub-section (2) the Court may pass a decree for eviction in any such suit for recovery of possession.

(b) In any other case, no decree for eviction shall be passed in any such suit if, on the first day of hearing of the suit or on or before such other date as the Court may fix, the tenant pays or tenders in Court the standard rent and permitted increases then due and thereafter continues to pay or tender in Court regularly such rent and permitted increases till the suit is finally decided and also pays costs of the suit as directed by the Court.

(4) Pending the disposal of any such suit, the Court may out of any amount paid or tendered by the tenant pay to the landlord such amount towards payment of rent or permitted increases due to him as the Court thinks fit.

Explanation:In any case where there is a dispute as to the amount of standard rent or permitted increases recoverable under this Act the tenant shall be deemed to be ready and willing to pay such amount if, before the expiry or the period of one month after notice referred to in Sub-section (2) he makes an application to the Court under Sub-section (3) of Section 11 and thereafter pays or tenders the amount of rent or permitted increases specified in the order made by the Court.

Sub-section (1) of Section 12 lays an obligation on the tenant to pay standard rent and permitted increases if any to the landlord or to show his readiness and willingness to pay the same. In the present case, the standard rent including permitted increases due from 1-6-1962 to 31-5-1963 i.e. the month ending prior to the date of the notice given by the plaintiff under Section 12(2) comes to Rs. 262-20 Ps. at the rate of Rs. 21-85 Ps. per month. Demand for rent of this period and for permitted increases for different periods upto 31-5-1963 was made by the notice Exh. 43 dated June 11, 1963. The arrears of rent apart from permitted increases claimed in this notice were Rs. 226-92 Ps. from 1-6-1962 to 31-5-1963. Thus, so far as the notice of demand with regard to arrears under Section 12(2) was concerned, the demand was limited to 31-5-1963. The present case would not fall under Section 12(3)(a) of the Act, because the tenant given one month's time under that vary provision to make the payment. The notice was given on June 11, 1963. Therefore, till July 11, 1963 the tenant could have made payment of the amount of standard rent and permitted increases and would have thus demonstrated his willingness and readiness to pay standard rent and permitted increases. This will follow from the provisions of Section 12(3)(a) of the Act. Thus, in the present case, assuming for the time being, that there was no dispute about standard rent, because the tenant failed to make an application for fixing the standard 'rent, within one month of receipt of the notice, and, therefore, the case was governed by Section 12(3)(a), it is clear that arrears were for more than six month and the tenant did not neglect to make payment of standard rent and permitted increases because he did send an amount of Rs. 272-83 Ps. i.e. more than the arrears on the date of the notice to the landlord by money order. Therefore, by an act done prior to the filing of this suit, the defendant had made good the default committed by him of not paying the arrears of standard rent and permitted increases from 1-6-1962 to 31-5-1963. It is obvious that the landlord in the present case was entitled to permitted increases only at the rate fixed by the trial Court from 1-6-1962 and not before in view of the interpretation of the relevant provisions of the Act made above. Thus, full amount of standard rent and permitted increases was paid within one month of the receipt of the notice by the tenant. By this act, the original default made by the tenant was made good by him. In that case, there is no reason to differ from the finding of the Courts below that the tenant has shown his readiness and willingness to pay standard rent and permitted increases in the sense that he demonstrated that readiness and willingness prior to the filing of the present suit. The landlord in such a case is not at liberty to refuse the amount of standard rent and permitted increases tendered to him and go to the Court and then insist upon his pound of flesh by maintaining that the Court has to decide now the case in the light of the provisions of Section 12(3)(a) or Section 12(3)(b) alone and not the question of readiness and willingness apart from these provisions. In my opinion, therefore, the tenant having demonstrated his readiness and willingness to pay standard rent and permitted increases within one month of the notice of demand, was not liable to be evicted. The notice of demand as contemplated under Section 12(2) of the Act having been fully complied with, the suit for recovery of possession could not be instituted by the landlord.

12. Mr. Mankad for the petitioner, however, contended that in the present case, the money order was sent on July 2, 1963 and by that time the rent for the month of June, 1963 also in to arrears and, therefore, the rent for 13 month was in arrears; and calculated at the rate of Rs. 21-85 Ps. the amount would come to Rs. 284-05 Ps. In his submission, therefore, the tender being not of the full amount, the landlord was not bound to accept the same. This contention brings up for interpretation provisions of Section 12(2) of the Act which debar a landlord from suing a tenant on the ground of non-payment of standard rent and permitted increases until the expiration of one month next after the notice of demand of the standards rent or permitted increases has been served upon the tenant. The sub-seion efoyes the words 'notice in writing of the demand of the standard rent or permitted increases'. This phrase postulates the existence of arrears of standard rent or permitted increases on the date the demand is made. Now, on the date of the notice when the demand is made the standard rent and permitted increases not paid and due were up to May 1 1963 It is with regard to non-payment of the standard rent and permitted increase that notice in writing demanding the same has to be served upon the tenant before filing a suit for eviction; and the tenant would be called upon to comply with this demand of arrears prior to the late of demand if he wants to demonstrate his readiness and willingness to pay standard rent and permitted increases. As regards rent which would accrue due subsequent to the date of demand notice, it is clear that there cannot be any question of demand because the standard rent or permitted increase for that month have not accrued due In my view, therefore demand notice is effective only for the period for which standard rent permitted increases have accrued due prior to the date of the notice As has been observed time and again, Sub-section (2) of Section 12 gives a so t of locus poenitentia io the erring tenant. He could make good default by complying with the demand and for doing so he is given one month s time so that he can demonstrate his readiness and willingness at that stage by complying with the demand for standard rent and permitted increases which have accrued due prior to the date of demand. The purpose of Sub-section (2) being thus to give an opportunity to a tenant of making good his earlier default, the said provisions cannot be construed as including the demand of rent which is yet to accrue due, because there is no question of non-payment thereof on the date, the demand is nude It is therefore, not possible to accept the contention that the demand contemplated by Sub-section (2) of Section 12 in the present case would also cover the period of June, 1963. The contention like the present in a different context seeking to include rent for the month after the date of demand notice was dealt with by my learned brother J.M. Sheth, J. (as he then was) in Civil Revision Application No. 687 of 1971 decided on November 1974 in the following words (page 16 of the original judgment):

It is significant to note that so far as rent for October, 1968 is concerned, it was not due at the time notice Ex. 32 was given. It became due subsequently. For such that became due subsequent to that notice, no notice was given as contemplated Section 12(2) of the Act. Section 12(2) of the Act clearly indicates that no suit for recovery of possession shall be instituted by a landlord against a tenant on the -wound of non-payment of the standard rent or permitted increases due, until the examination of one month next after notice in writing of the demand of the standard or permitted increases has been served upon the tenant in the manner provided in Section 106 of the Transfer of Property Act, 1882. In the instant case, no such notice having bean given after this rent of October, 1968 became due no such suit for eviction on the ground of non-payment of rent can be entertained.

In view of the aforesaid position with regard to the demonstration of readiness and willingness to pay standard rent and permitted increases as found by the Courts below and as explained in this judgment, it is clear that the tenant was entitled to protection of the Act available to him under Section 12(1) of tile Act. Therefore, it will not be necessary to examine the contention advanced by Mr. Mankad that the latest decision of the Supreme Court in Civil Appeal No. 282 of 1971 and Civil Appeal No. 2058 of 1971 (supra) lays down only one method of escape from the provisions of Section 12(3)(a) of the Act. That method, according to the contention of Mr. Mankad is to be found emphasized by the Supreme Court in the following observations.

The tenant can claim protection from the operation of Section 12(3)(a) of the Act only if the tenant makes an application within one month of the service of the notice terminating the tenancy by raising a dispute as to standard rent.

14. Mr. Mankad's attempt was to show that present case fell under Section 12(3)(a) of the Act, because no dispute as to standard rent by making an application as contemplated by the aforesaid provisions was made by the tenant. It is not necessary to examine this contention because of the position that prior to the filing of this suit, the tenant had effectively demonstrated his readiness and willingness to pay standard rent and permitted increases; and, therefore, he made himself qualified for the protection under Section 12(1) of the Act. This having been done before the filing of the suit, the question of application of Section 12(3)(a) or Section 12(3)(b) does not arise in the present case.

15. In the result, the application will fail. Rule will stand discharged Looking to the question of interpretation involved, it will be fair to order each party to bear its own costs.


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