Receipt of lump sum premium constitutes an offence.

This Revision is directed against a conviction under section 16 (1) read with section 6 (2) (a) of the Madras Buildings (Lease and Rent Control) Act, 1949, and imposition of a fine of Rs.200 with a provision for simple imprisonment for three weeks in case of default. The petitioner who was the landlord, by a lease deed, dated 1st January, 1958, let out to one Dr. M.P. Ganesh Rao the front side of premises No. 129-A in Arcot Road, Kodambakkam, on a monthly rent of Rs.45. Clauses (4) and (5) of the lease deed provided for the payment by the tenant to the petitioner of a sum of Rs.500 as advance, the receipt of which was acknowledged by the petitioner, and for return of the advance without interest on the tenant vacating the premises in his occupation. The question is whether this provision for payment of the amount and refund of the same on the contingency contemplated is within the mischief of section 6 (2) (a) of the Act. The learned Chief Presidency Magistrate thought that it was, and in that view convicted and sentenced the petitioner as aforesaid.

There was some argument in the light of the evidence adduced before the learned Chief Presidency Magistrate as to the precise nature of the payment of Rs.500. Clause (4) of the lease deed states that the tenant of his own accord paid the sum to the petitioner as advance but it was sought to be made out in the evidence that this amount was paid by the tenant with a view for the petitioner to provide for certain amenities asked for by the tenant. But this case of the petitioner has not been accepted by the learned Chief Presidency Magistrate and I can find no reason to differ from him. The actual payment of the sum of Rs.500 and the refund thereof at the termination of the tenancy are not disputed. Though clause (4) of the lease deed mentions that this amount of Rs.500 was paid as advance, it is clear from the lease deed that the so called advance did not represent additional rent or rent paid in advance. Nor does the payment appear to be of the nature of a loan because it was not repayable on demand. It is more like a deposit repayable only on the happening of a certain stipulated event.

Sub- section (2), clause (a) of section 6 of the Act reads:

“(2) Where the fair rent of a building has not been so determined -

(a) the landlord shall not, after the commencement of the Madras Buildings (Lease and Rent Control) (Amendment) Act, 1951, claim, receive or stipulate for the payment of, any premium or other like sum in addition to the agreed rent.”

In view of the argument in this Court it may also be necessary to set out the Proviso to the section which is:

“Provided that the landlord may receive, or stipulate for the payment, of, an amount not exceeding two months’ rent, by way of advance.”

Whether such a deposit as mentioned above is within the scope of “any premium or other like sum” is the question. The word ‘premium’ is a well-understood expression used in contra-distinction to rent normally payable either periodically or on specific occasions. Section 105 of the Transfer of Property Act defines that the price paid or promised in consideration of a lease is called the premium and that the money, share of crops, service or other thing paid periodically or on specific occasions or to be rendered at such times by the tenant is called the rent. Sometimes a premium paid in certain circumstances may almost resemble a loan, when, of course, the amount is repayable. But in this case I have already said that the amount paid in the circumstances was, having regard to the terms, not a loan. Where the deposit repayable as in this case was in consideration of the grant of the lease, can it be said that it is premium paid for the lease. If the amount paid is not refundable, it will present no difficulty for that will undoubtedly be premium. But the payment being on condition that the amount is refundable on the happening of a certain event, it is necessary to determine whether the amount can be sai