1. Eviction petitions filed against tenants for wilful default in payment of rent and municipal taxes under the Andhra Pradesh Buildings (Lease, Rent & Eviction) Control Act, 1960. (Para 1 , 2 )
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1994 Supreme(SC) 132
SUPREME COURT OF INDIA
S. MOHAN AND M. K. MUKHERJEE, JJ.
Kranti Swaroop Machine Tools Pvt. Ltd., and another, Appellants
Versus
Smt. Kanta Bai Asawa and others, Respondents.
Civil Appeal Nos. 5252-5255 of 1993, D/- 27-1-1994.
Advocates appeared
Mr. A. Subba Rao and Mr. A.D.N. Rao, Advocates, for Appellants; Mr. S.K. Mehta, Mr. Dhruv Metha and Mr. Bal Chand, Advocates, for Respondents.
Important Points
A tenant cannot be evicted for wilful default in payment of rent or municipal taxes if the landlord holds a security deposit sufficient to cover the arrears, even without a specific request for adjustment, particularly when such deposits are prohibited under the relevant Rent Control Act.
Subject
Eviction - Wilful Default
Act Referred
Headnote
Andhra Pradesh Buildings (lease, rent & eviction) Control Act, 1960 - Section 7(2)(a) – Tenant - Demise premises – Eviction - Payment of rent - Two mulgies were let out to appellants tenants under separate lease-deeds executed - Ex. P1 is in respect of mulgi bearing No. and Ex. P2 is in respect of mulgi bearing No. - Alleging that tenants had committed wilful default in payment of rent as well as taxes due to Municipal Corporation in respect of demise premises, landladies filed four eviction petitions bearing R. C. Nos. on file of First Additional Rent Controller - Tenants contended that they did not commit wilful default either with regard to payment of rent or municipal taxes - Petitions were clubbed together. Common evidence was adduced in R.C. No. - Rent Controller came to conclusion that tenants had committed willful default in payment of rent as well as the municipal taxes - Accordingly, all four eviction petitions were allowed - Tenants were directed to vacate premises within a period of two months - It could not be said that tenants had not committed any wilful default in payment of municipal taxes - It was found that default had been committed by tenant in respect of tax and same amounts to wilful default in payment of rent which would entitle landladies to evict tenants - Revision petitions were allowed – Held, tenant cannot save himself from consequences of eviction under Act on ground of default in the payment of rent by claiming automatic adjustment of any excess rent paid. consequent upon mutual enhancement of rent, even if illegal unless there is an agreement between parties for such an adjustment - Tenant may also in a given case seek adjustment of excess rent in hands of landlord against arears by specifically asking landlord for such an adjustment before filing of suit or in response to notice to quit and even in written statement by way of set-off within period of limitation - Reason for Court refraining to go into these questions is because Court find decree for eviction passed against appellants can be sustained on second ground, viz. bona fide requirement of shop for business requirements of members of joint family - It is not now necessary for Court to consider correctness of observation made by Full Bench of Patna High Court on question of default and right of tenant to claim adjustment because what was claimed by way of adjustment in said case was a certain excess amount paid over a long period of 30 years as enhanced rent under a mutual agreement though such payment was contrary to law - But in case before Court amount of Rs. 140 had not been paid as enhanced rent under any such agreement - It was in fact, an amount which had been paid in advance which was liable to be adjusted whenever it was necessary or required - In result, Court set aside judgment of High Court - Petition for eviction will stand dismissed - Civil appeals are allowed.
Legal Category Hierarchy
Advocates:
A.D.N.Rao, A.SUBBA RAO, Bal Chand, Dhruv Mehta, S.K.MEHTA
A.D.N.Rao, A.SUBBA RAO, Bal Chand, Dhruv Mehta, S.K.MEHTA
Table of Contents
2. Tenants claim no wilful default and request adjustment of security deposit; landladies argue adjustment requires specific request and deposit is not for automatic offset. (Para 6 , 7 , 8 , 9 )
3. The court analyzed the nature of the security deposit and distinguished between illegal rent enhancement and advances prohibited by the Rent Act. (Para 10 , 11 , 12 , 13 , 14 , 15 , 16 , 17 , 18 , 19 )
4. A tenant cannot be evicted for wilful default if the landlord holds a prohibited advance or deposit sufficient to cover the arrears, regardless of a specific adjustment request. (Para 13 , 14 , 18 , 19 )
5. High Court judgment set aside and eviction petitions dismissed. (Para 20 )
6. Can a tenant be evicted for wilful default if the landlord holds an advance payment prohibited by the Rent Act?
No. If the landlord holds an advance or deposit in violation of statutory prohibitions against receiving premiums, the tenant cannot be considered a wilful defaulter if that amount covers the arrears, even if the tenant failed to specifically request an adjustment. (Para 13 , 14 , 19 )
7. Is a specific request for adjustment necessary when a landlord holds a security deposit to cover rent arrears?
No. The court held that an obligation to adjust exists to prevent the purpose of the deposit from being rendered nugatory, and a specific request by the tenant is not required. (Para 13 )
8. Does the rule regarding automatic adjustment of prohibited advances apply to illegal mutual enhancements of rent?
No. The court distinguished between advances paid at the start of tenancy and excess rent paid over a long period due to illegal mutual enhancement, noting that the latter may not be automatically adjusted. (Para 15 , 16 , 17 , 18 )
Judgment
MOHAN, J.:- All these appeals can be dealt with under a common judgment since they arise out of one and the same order in all the Courts. The 1st respondent landlady, Smt. Kanta Bai Asawa and her mother Smt. Godavari Bai Rathi are the owners of mulgies bearing Municipal Nos. 3.2.840/6 and 3.2.840/7, situated at Veer Sawarkar Road, Kacheguda, Hyderabad. These two mulgies were let out to appellants tenants under separate lease-deeds (marked as P1 and P2 respectively in the trial Court) executed on 23-9-1978.Ex. P1 is in respect of mulgi bearing No. 3.2.840/6 and Ex. P2 is in respect of mulgi bearing No. 3.2.840/7. Alleging that the tenants had committed wilful default in payment of rent as well as the taxes due to the Municipal Corporation in respect of the demise premises, the landladies filed four eviction petitions bearing R. C. Nos. 291 / 84, 292/84, 1972/86 and 1973 / 86 on the file of the First Additional Rent Controller at Hyderabad. The tenants contended that they did not commit wilful default either with regard to payment of rent or municipal taxes.
2. All the petitions were clubbed together. Common evidence was adduced in R.C. No. 29 1/84. The Rent Controller came to the conclusion that the tenants had committed willful default in payment of rent as well as the municipal taxes. Accordingly, all the four eviction petitions were allowed. The tenants were directed to vacate the premises within a period of two months.
3. Aggrieved by the order of eviction, appeals were preferred in R.A. Nos. 387/ 390/ 89 to the learned Chief Judge, City Small Causes Court, Hyderabad. The appellate Court held that there was no basis for the trial court to conclude that the tenants had committed wilful default. For these reasons, the appeals were allowed.
4. Thereupon ,revisions were preferred in Civil Revision Petition Nos. 2658, 2941, 3122 and 3129/1990 to the High Court. The learned single Judge came to the conclusion that the lower appellate court was right in reversing the order of eviction on the ground of wilful default in payment of rent.
5. Concerning the municipal takes, he was of the view that it could not be said that the tenants had not committed any wilful default in payment of municipal taxes. It was found that the default had been committed by the tenant in respect of tax and the same amounts to wilful default in payment of rent which would entitle the landladies to evict the tenants. The revision petitions were allowed. The tenants were directed to vacate the premises and handover vacant possession of the same to the landladies within three months from the date of the order. Thus, the present civil appeals.
6. It is urged on behalf of the appellants that the High Court had gone wrong in its conclusion that the tenants had committed wilful default. The parties are governed by a contract which has been embodied in the rent deed dated 23-9-1978. That rent deed contains several clauses which are beneficial to the tenants. Ignoring those clauses, the High Court had come to an incorrect conclusion an both of question of law and facts. Under clause 3 of the agreement, the tenant had deposited with the landladies a sum of Rupees 10,000/-. That deposit was not to carry any interest. It could be adjusted at the termination of tenancy towards the rent, light bills and damages which may be found due. This deposit was to be returned to the tenants only at the time of tenants vacating the premises. Under Clause 5, it was stipulated that the non-payment of two months deposit as agreed will entitle the landladies to eject the tenants as wilful defaulter. The same is reiterated in Clause 14.
7. Under Clause 22, it had been agreed that when the tenants vacate the shop, they could remove the changes made by them and without permission of the landladies and restore to original condition at their cost. Under Clause 24, the details of re-construction through the landladies to be made at tenants cost were detailed out . As regards municipal ta
