Judgment

MOHAN, J. :- The short facts leading to this Civil Appeal are as under:

The original owner of suit property situate at Ramamaruti Road, Thane (Maharashtra) was one Omji Mulji.. He leased out three small flats having two rooms and a kitchen in favour of the appellant -company in 1963. The rent was fixed at Rs. 300/- plus Rs. 20 municipal taxes and Rs. 15/- water charges.

2. In 1968, Omji Mulji sold away the property to one Gavand. Thereafter, the appellant tendered the rent including the taxes to the said Gavand from 1968. In the same year of 1968, the municipal taxes were increased. The appellant paid a lump sum of Rs. 398.58 as rent. Due to further increase in the taxes, the appellant tendered Rs. 358.29 including taxes to the owner.

3. In the year 1975, the respondents came to purchase the suit property. Since then, the appellant had been paying regularly rent and taxes at the rate of Rs. 358.29 P.M.

4. The Advocate for the respondents issued a notice dated 27-7-1977 to the appellant terminating their tenancy and called upon the appellant to hand over vacant possession since the appellant was in arrears of permitted increases amounting to Rupees 5,650/ - from February, 1976. The notice also stated two of the grounds for eviction, in that the appellant had altered the premises and causing nuisance to the neighbours.

5. On receipt of the above notice, the appellant filed an application under Section 11(3) of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947 (hereinafter referred to as the Act) for fixation of standard rent. On 30-8-1987, an interim order fixing the rent at Rs. 358/- was passed. It was directed to be deposited in the court on or before 10th of every month. For the months of August, September, the appellant paid the interim rent to the respondents. The same had been accepted. However, since October, 1977 the appellant was depositing the interim rent in the Court of Civil Judge, Junior Division, Thane.

6. On 26-4-1979, the respondents filed Civil Suit No. 384/ 79 in the Court of Civil Judge, Junior Division, Thane for arrears of permitted increases, rent and for possession. The ground urged was that the appellant was in arrears of permitted increases amounting to Rs. 56.50 per month since October, 1976. This was on the basis of calculation at 7% as education cess on the rent of Rs. 358.29, Rs. 30/- water charges, 1/4% as unemployment charges and 1/4% as tree cess. Further grounds for eviction namely unauthorised alteration and creating nuisance were also urged. In September, 1981 the application for fixation of standard rent was dismissed in default for non-appearance. This dismissal came to be noted by the Advocate only in the year 1985. However, the appellant had been depositing the interim standard rent all along.

7. In defence to the Regular Civil Suit No. 384 of 1979, it was urged that the payment of standard rent had been made without fail throughout and, therefore, he was not in arrears. The other grounds namely, unauthorised construction and causing nuisance were also denied. The trial Court decreed the suit for eviction on account of arrears of rent but not permitted increases.

8. Aggrieved by the said order, appellant filed Civil Appeal No. 452 / 1983 before the District Judge, Thane. The said appeal was dismissed. Thereafter, appellant preferred Writ Petition No. 5035 of 1985 before the High Court. That was dismissed on 19-2-1987* that the tenant was not in arrears of rent but had defaulted in payment of permitted increases. Thus, the present civil appeal.

* Reported in (1987) 89 Bom LR 134

9. Mr. Soli J. Sorabjee, learned Senior Counsel for the appellant raised the following points for our consideration.

(i) A valid notice of demand is a condition precedent for the maintainability of suit for arrears of rent or permitted increase. In the absence of requisite demand, there can be no question of non-compliance. In such a case, the consequences mentioned under Section 12(3), sub-section (3)