1. Eviction suit for habitual default of rent under the Bombay Rent Act — Dispute over whether a loan amount could be adjusted as advance rent. (Para 1 , 2 )
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1998 Supreme(SC) 949
SUPREME COURT OF INDIA
A.S.Anand : V.N.Khare
Jamnabai Ramchandra Vadekar
Versus
Modern Auto And Machinery Agency
Case No. : 9875 of 1995
Date of Decision : 9/8/98
High Courts exercising supervisory jurisdiction under Article 227 should not disturb concurrent findings of fact unless they are perverse. Additionally, a loan cannot be adjusted against rent unless the specific contractual condition of mutual agreement is satisfied.
Headnote:(A) Rent Act - Section 12(3)(a) - Eviction of tenant - Habitual defaulter - Tenant failed to pay arrears of rent within the stipulated period after notice - Concurrent findings of trial court and first appellate court holding tenant as wilful defaulter. (Para 1)
(B) Constitution of India - Article 227 - Scope of supervisory jurisdiction - High Court should exercise powers sparingly - High Court cannot disturb concurrent findings of fact arrived at by lower courts on correct appreciation of evidence - Re-appreciation of evidence by High Court leading to reversal of concurrent findings without basis of perversity is an excess of jurisdiction. (Para 3)
(C) Contract Law - Adjustment of loan against rent - Promissory note stipulating that a loan may be treated as advance rent "if mutually agreed by and between the parties" - In absence of evidence of such mutual agreement, loan cannot be adjusted towards rent. (Paras 2, 3)
Facts of the case:
Landlords filed a suit for eviction and recovery of rent arrears against tenants on the ground of habitual default. Both the trial court and the first appellate court decreed the suit, finding the tenant to be a wilful defaulter. The High Court, in a writ petition, set aside these concurrent findings, treating a loan taken by the landlord from the tenant as an advance payment of rent.
Findings of Court:
The promissory note clearly required mutual agreement to treat the loan as rent advance. Since no such agreement was proven, the High Court misread the evidence and exceeded its jurisdiction under Article 227 by disturbing the concurrent findings of the lower courts.
Issues: Whether a loan taken by the landlord could be adjusted against rent in the absence of mutual agreement, and whether the High Court was justified in overturning concurrent findings of fact under Article 227.
Ratio Decidendi: The court held that a conditional agreement to treat a loan as rent advance requires proof of mutual consent. Furthermore, the supervisory jurisdiction of the High Court under Article 227 should be exercised sparingly and not used to substitute its own view for concurrent findings of fact unless those findings are perverse.
Result: Appeal allowed.
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Table of Contents
2. Whether a loan provided by the tenant to the landlord could be adjusted against rent arrears in the absence of a mutual agreement. (Para 2 )
3. The High Court exceeded its jurisdiction under Article 227 by disturbing concurrent findings of fact without evidence of a mutual agreement to adjust the loan. (Para 3 )
4. A loan cannot be treated as advance rent unless the specific conditions for such adjustment, including mutual agreement, are satisfied. (Para 3 )
5. Appeal allowed — High Court judgment set aside — Trial and first appellate court orders restored — Tenant granted one year to vacate. (Para 3 , 6 , 7 )
6. When can a High Court exercise its jurisdiction under Article 227 to disturb concurrent findings of fact?
Powers under Article 227 of the Constitution are to be exercised sparingly and should not be used to disturb concurrent findings of fact arrived at by lower courts based on a correct and proper appreciation of evidence. (Para 3 )
7. Can a loan given to a landlord be adjusted against rent arrears if the agreement requires mutual consent?
No. If a promissory note stipulates that a loan may be treated as advance rent only if mutually agreed by the parties, the amount cannot be adjusted without evidence of such mutual agreement. (Para 3 )
(1) THE appellants are the landlords of commercial premises being Room No. 9, 1st Floor, Vadekar Mansion, Lamington Road, Bombay. The respondents are the tenants of the said premises, being the heirs of the original tenant. On 18-5-1982 a notice was issued by the landlord demanding the arrears of rent and intimating about the termination of the tenancy on the ground that the tenant was a habitual defaulter. This notice was not responded to nor did the tenant file any application in the Small Cause Court for fixation of standard rent within the stipulated period of one month from the date of receipt of the above notice under Section 12(3)(a) of the Bombay Rent Act. The landlords on 24-9-1982 instituted a civil suit in the Court of Small Causes, Bombay praying for eviction of the tenant and recovery of arrears of rent. Since the tenant after entering appearance through the counsel did not appear the trial court on 5-10-1984 passed an ex parte decree. On the tenants application, the ex parte decree was set aside on 13-3-1985. The tenant filed the written statement and after issues were framed, parties led evidence. On 9-2-1988 the trial court decreed the suit. The trial court found, as a fact, that the tenant was in arrears of rent for more than six months and was therefore liable to be evicted being a wilful defaulter. The trial court also found that the tenant had neglected to pay the arrears of rent within one month from the date of receipt of the notice and had not paid the same even on the first day of the hearing of the suit. The aggrieved tenant filed an appeal before the Division Bench of the Court of Small Causes. The learned first appellate court reappreciated the entire evidence and independently came to the conclusion that the tenant was in arrears of rent for more than six months and was as such a habitual defaulter. The first appellate court confirmed the findings recorded by the trial court and dismissed the appeal filed by the tenant on 17-11-1989. The tenant was granted four months time by the appellate court to vacate and hand over the vacant portion of the premises and to furnish an undertaking to that Court that they would not part with possession of the suit premises in favour of anybody in the meanwhile. The tenant after furnishing the undertaking, filed a writ petition under Article 227 of the Constitution putting in issue the judgment and order of the first appellate court, dated 17-11-1989. The learned Single Judge of the High Court on 23-11-1995, after reappreciating the evidence set aside concurrent findings of fact recorded by the trial court and the first appellate court and by a laboured judgment allowed the writ petition setting aside the judgment of the appellate court and consequently the suit for eviction filed by the landlord. By special leave the landlord is before us. We have heard learned counsel for the parties and examined the record.
(2) THE entire case centres around the question whether the sum of Rs 5000 which had been taken by the landlord from the tenant as loan was adjustable towards the rent payable, as in that event the High Court would be right in saying that since the rent had been received in advance, there was no question of any default. At this stage it would therefore be necessary to examine the promissory note dated 28-8-1969. It reads thus:
"I have borrowed a sum of Rs 5000 (Rupees five thousand) from you and have executed a demand promissory note for the said amount. The said sum will carry interest at the rate of 1-1/28 per mensem. The said loan will be repaid to you within three months. In case if the loan is not repaid within that period and if mutually agreed by and between the parties, the same may be treated as an advance towards the rent payable in respect of the premises in your occupation and will be adjusted accordingly."
The receipt of the amount of Rs 5000 on the previous date, i.e., 27-8-1969 reads thus:
"On demand I, (Dr) Jayant Ramc
