1. Tenant's defence struck off under Section 13(6) of the M.P. Accommodation Control Act, 1961, for non-payment of GST liability under a lease agreement. (Para 1 , 2 )
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2022 Supreme(SC) 1062
SUPREME COURT OF INDIA
M.R. SHAH, C.T. RAVIKUMAR, JJ.
M/s. Fashion World – Appellant
Versus
Banshidhar Multi Builders Pvt. Ltd. – Respondent
Civil Appeal No. 7325 of 2022 (@ SLP (C) No. 23808 of 2018)
Decided On : : 17-10-2022
Advocates appeared:
For the Appellant(s) : Ms. Taruna Ardhendumauli Prasad, AOR
For the Respondent(s): Ms. Rukhmini Bobde, Adv. Ms. Soumya Priyadarshini, Adv. Mr. Ankit Ambasta, Adv. Mr. Amit Srivastava, Adv. Mr. Vishal Prasad, AOR
For the Appellant(s) : Ms. Taruna Ardhendumauli Prasad, AOR
For the Respondent(s): Ms. Rukhmini Bobde, Adv. Ms. Soumya Priyadarshini, Adv. Mr. Ankit Ambasta, Adv. Mr. Amit Srivastava, Adv. Mr. Vishal Prasad, AOR
The Supreme Court set aside orders striking off a tenant's defense under Section 13(6) of the M.P. Accommodation Control Act, 1961, once the tenant deposited the outstanding GST amount, while directing the payment of enhanced rent as per the lease agreement to balance the interests of both parties.
Headnote:
Accommodation Control Act, 1961 (M. P.) -- S. 13 (6) -- striking off defence -- non-deposit/non-payment of tax payable on rent -- Held -- defence was struck off on non-deposit/payment of balance amount of GST, which is now deposited -- order striking off defence set aside. [Para 5
Legal Category Hierarchy
Table of Contents
2. Whether non-payment of tax liability justifies striking off a tenant's defence under Section 13(6) of the M.P. Accommodation Control Act, 1961, and entitlement to rent enhancement. (Para 6 )
3. The court observed that since the balance GST amount, which led to the striking off of the defence, was deposited, the orders should be set aside. (Para 5 )
4. The order striking off a tenant's defence for non-payment of dues may be set aside upon the subsequent deposit of the outstanding amount. (Para 5 )
5. Orders striking off the defence quashed; tenant permitted to defend suit subject to payment of enhanced rent as per the lease agreement. (Para 8 )
6. Can the defence of a tenant be restored if the dues that led to the striking off of the defence are subsequently paid?
Yes. The court held that since the balance GST amount, which was the reason for striking off the defence, had been deposited, the orders of the Trial Court and High Court striking off the defence were set aside. (Para 5 )
7. Can a landlord seek rent enhancement during the pendency of an eviction suit if the lease agreement provides for periodical increases?
Yes. The court directed the tenant to pay rent with periodical increases of 15% every three years as stipulated in the lease agreement to balance the interests of the parties. (Para 7 , 8 )
8. Does the court have the power to direct the payment of enhanced rent as a condition for restoring a tenant's defence?
Yes. To strike a balance, the court permitted the tenant to defend the suit while simultaneously directing the payment of rent with periodical increases as per the lease agreement. (Para 8 )
JUDGMENT :
M.R. Shah, J.
1. Feeling aggrieved and dissatisfied with the impugned judgment and order passed by the High Court of Madhya Pradesh at Indore in Misc. Petition No. 1509 of 2018 by which the High Court has dismissed the said miscellaneous petition preferred by the appellant and has confirmed the order passed by the learned Trial Court striking off the defence of the appellant – original defendant allowing the application submitted by the original plaintiff – landlord submitted under Section 13(6) of the M.P. Accommodation Control Act, 1961 (hereinafter referred to as the “Act, 1961”), the tenant – original defendant has preferred the present appeal.
2. At the outset, it is required to be noted that as per the Lease Agreement, the tenant is liable to pay the rent @ Rs.58,650/- per month for the area admeasuring 2500 sq.ft. super-built-up area. Under the Lease Agreement, over and above the above amount, the tenant is also liable to pay the maintenance charges as well as the service tax. On coming into force of the GST, the tenant is liable to pay the GST instead of service tax. The tenant, though paid the rent and the other maintenance charges, however, did not deposit/pay the GST. Therefore, the original plaintiff – landlord filed an application before the learned Trial Court under Section 13(6) of the Act, 1961 and prayed to strike off the defence of the appellant - defendant - tenant. The learned Tribunal allowed the said application and struck off the defence of the appellant – defendant – tenant. The order passed by the Trial Court striking off the defence was the subject matter before the High Court. By the impugned judgment and order, the High Court has dismissed the miscellaneous petition filed by the appellant, which is the subject matter of present appeal.
3. We have heard Shri Ardhendumauli Kumar Prasad, learned counsel appearing on behalf of the appellant and Ms. Rukhmini Bobde, learned counsel appearing on behalf of the respondent.
4. At the outset, it is required to be noted that while issuing the notice, this Court passed the following order on 31.08.2018:-
“Application seeking exemption from filing O.T. is allowed.
Issue notice.
Learned counsel for the petitioner states that he is ready to deposit the balance amount of GST which comes to Rs. 5,80,000/- approximately. The petitioner will deposit the said sum before the Trial Court within a period of one week from today.
In the meantime, further proceedings of the suit shall remain stayed.”
5. It is reported that pursuant to the order passed by this Court dated 31.08.2018, the appellant has deposited the balance amount of GST. In that view of the matter and considering the fact that the defence was struck off on non-deposit/payment of the balance amount of GST, which is now deposited, we are inclined to set aside the order passed by the High Court as well as the learned Trial Court striking off the defence of the appellant.
6. However, Ms. Rukhmini Bobde, learned counsel appearing on behalf of the respondent has requested to keep the question of law namely, whether the rent includes the liability to pay the tax or not and whether on non-deposit/non-payment of the tax liability, the defence of the tenant can be struck off under Section 13(6) of the Act, 1961?
6.1 Ms. Rukhmini Bobde, learned counsel appearing on behalf of the respondent has further prayed to consider the enhancement of the rent in case this Hon’ble Court set aside the orders passed by the learned Trial Court as well as the High Court striking off the defence of the appellant. It is submitted that even as per the Lease Agreement and as admitted by the tenant in the written statement, there shall be periodical increase of the rent @ 15% every three years. It is submitted that therefore the tenant may be directed to pay the rent/enhanced rent by giving periodical rise by 15%. It is submitted that though at present the property in question may fetch the rent @ Rs. 4,00,000/- even by giving 15% periodical
