Karnataka High Court
Zahira Begum vs Visalakshi on 3 July, 1990
Equivalent citations: ILR1991KAR2092
ORDER K.A. Swami, J.
1. This Civil Revision Petition is preferred against the order dated 22-1-1990 passed by the learned VII Additional Small Causes Judge, Bangalore City in H.R.C.No. 1679/1987 on I.A.No. I filed by the landlady respondent under Section 29 of the Karnataka Rent Control Act, 1961 (for short the 'Act').
2. The petitioner is the tenant of the ground floor of the premises No. 21/1 situated at 16th Cross, I Main Road, Sampangiramanagar, Bangalore. The respondent is the landlady of the premises. She has filed an application for eviction under Section 21 (1)(b), (c), (d), (f) and (h) of the Act.
3. During the pendency of the aforesaid H.R.C. petition, she has filed an application I.A.No. I. under Section 29 of the Act for stopping further proceedings as the petitioner-tenant has not paid the rents uptodate.
4. Having regard to the pleas raised by the parties, the learned VII Additional Small Causes Judge, raised the following points for determination:
1) (a) Does the petitioner prove that the agreed rent for the suit premises is Rs. 2,300/- per month;
or
(b) Does respondent prove that the agreed rent is Rs. 1,800/- per month.
2)(a) Does petitioner prove that the respondent is in arrears of the rent from 1-5-1987 at the rate of Rs. 2,300/- per month;
or
b) What is the arrears of rent payable by the respondent to the petitioner?
5. On the basis of the oral and documentary evidence produced by both parties, the learned VII Additional Small Causes Judge has come to the conclusion that the agreed rent of the premises was Rs. 2,300/- per month; that there was no agreement between the landlady and the tenant to give additional two rooms adjoining to the premises in question as an additional accommodation and on that ground rent was enhanced from Rs. 1,800/- to Rs. 2,300/- per month; that the landlady was entitled to demand and retain the deposit of Rs. 30,000/-as paid by the tenant and that the said amount was not liable to be adjusted towards the arrears of rent and was to be returned only on the termination of the tenancy or at the end of the tenancy. He has further found that the tenant was in arrears of rent from 1-5-1987 to 1-1-1990 and as such he was liable to pay arrears of rent of Rs. 32,500/- as on 1-1-1990. Accordingly, he has directed the tenant to deposit the aforesaid amount in Court within one month from the date of the order i.e., 22-1 -1990.
6. The Revision Petition is referred to a Division Bench on the ground that in the light of a Decision of the Supreme Court in MODERN HOTEL, GUDUR, REPRESENTED BY M.N. NARAYANAN v. K. RADHAKRISHNAIAH AND ORS., read with Section 18(2) of the Act, it is necessary to decide authoritatively as to whether a security deposit will fall within the mischief of Section 18(2) of the Act.
7. Sri G.S. Visweswara, learned Counsel for the petitioner-tenant has advanced the following contentions: that the tenancy was created under ExP-2 dated 30-12-1985 on a rent of Rs. 1,800/- per month; that thereafter having regard to the provisions contained in Sub-section (2) of Section 18 of the Act, it was not at all permissible for either of the parties to enhance the rent even on agreement; that in fact, there was no agreement to enhance the rent from Rs. 1,800/-per month to Rs. 2,300/- per month in respect of the premises in question; that the rent at the enhanced rate of Rs. 2,300/- per month was payable in the event the landlord made available the adjoining additional two rooms; that a sum of Rs. 30,000/- paid in advance under Ex.R-1 was not permissible in law as it was opposed to Sub-section (2) of Section 18 of the Act. Therefore, it became immediately refundable to the tenant and as such the landlady ought to have adjusted the said amount towards the rent payable by the tenant.
8. On the contrary, it is contended on behalf of the respondent-landlady that there was no agreement to give additional two rooms to the petitioner-tenant and the rent of Rs. 1,800/- per month was agreed to be enhanced to Rs. 2,300/- per month to the premises in occupation of the tenant and not inclusive of two additional rooms to be let out to the petitioner-tenant as contended by him; that the tenant had paid the rent at the rate of Rs. 2,300/- per month for a period of 14 months from 15-3-1986 to 14-5-1987 through cheques and if there was no agreement to increase the rent from Rs. 1,800/- to Rs. 2,300/-per month, the tenant would not have paid the rent at the rate of Rs. 2,300/- without insisting upon the delivery of two additional rooms if really there was any such agreement to let out additional two rooms; that a sum of Rs. 30,000/- deposited by the tenant was not an advance rent, but it was a security deposit towards the safety and security of the premises in order to ensure that no damage is caused to the building and the fittings and in the event damage is caused, the same can be adjusted towards the damage caused to the building, and the fittings,
9. In the light of these contentions, the following points arise for consideration:
1) Whether there was an agreement between the parties to-increase the rent from Rs. 1,800/- per month to Rs. 2,300/- per month?
2) When once the premises is let out on an agreed amount of rent, whether it is open to increase the rent even by way of agreement in the light of the provisions contained in Section 18(2) of the Act?
3) Whether the sum of Rs. 30,000/- paid by the tenant at the commencement of tenancy, even if it is treated as a deposit and not advance payment of rent, was permissible?POINT NO. 1
10. On the basis of the evidence on record, the learned VII Additional Small Causes Judge has held that there was an agreement to increase the rent from Rs. 1,800/- per month to Rs. 2,300/- per month; but it was not on a condition that the landlord should give two additional rooms to the tenant. The contention of the petitioner that there was agreement to give two additional rooms is not supported by any documentary evidence. However, it was suggested to the landlady that she had promised to let out additional two rooms to the petitioner on a rent of Rs. 500/- per month and to deliver possession of those two rooms to the tenant. This suggestion was denied by the respondent. If the enhancement of rent from Rs. 1,800/- to Rs. 2,300/- per month was agreed to, on a condition that two additional rooms were to be provided to the tenant, he would not have paid the rent at the rate of Rs. 2,300/- per month without obtaining possession of those two additional rooms. On the contrary, it is not in dispute that the tenant went on paying rent at the rate of Rs. 2,300/- per month from 15-3-1986 to 14-5-1987. It was only when the notice was issued by the landlord to the tenant to vacate the premises, in his reply he pleaded that the landlady had failed to deliver possession of two additional rooms. Therefore, he was not liable to pay the rent at the rate of Rs. 2,300/- per month. On considering all the aspects of the case, we are of the view that the tenant has failed to prove that the landlady had agreed to give two additional rooms for enhancing the rent from Rs. 1,800/- to Rs. 2,300/- per month. On the contrary, it is proved by the landlady that the rent was enhanced from Rs. 1,800/- to Rs. 2,300/- per month and this fact is proved having regard to the fact that the tenant has paid the rent regularly at the rate of Rs. 2,300/- per month from 15-3-1986 to 14-5-1987. During this period there was no whisper at any point of time regarding non-delivery of two additional rooms. Hence, the finding recorded by the learned VII Additional Small Causes Judge that the agreed rent was Rs. 2,300/- per month does not suffer from any infirmity. We accordingly confirm it.
POINT No. 211. The contention of Sri Visweswara, learned Counsel for the petitioner-tenant is that once the rent is agreed to at the time of letting out the premises, any further enhancement in the rent comes under the mischief of Clause (a) of Sub-section (2) of Section 18 of the Act. Therefore, such an agreement to enhance the rent is impermissible in law. Sub-sections (2) and (3) of Section 18 of the Act reads thus:
"18. Unlawful charges not to be claimed or received -
(1) xxx xxx xxx (2) Where the fair rent, of a building has not been so determined -
a) no person shall after the commencement of this Part receive or stipulate for the payment of any sum as premium or pugree or any consideration whatsoever in cash or kind, in addition to the agreed rent;
b) save as provided in Clause (a) any sum or consideration paid in excess of the agreed rent whether before or after the commencement of this Part in consideration of the grant, continuance or renewal of the tenancy of the building after such commencement shall be refunded or returned by the landlord or other person to the person by whom it was paid or at the option of such person otherwise adjusted by the landlord or other person.
3) Any stipulation in contravention of Sub-section (1) of Sub-section (2) shall be null and void."
We have not referred to Sub-section (1) of Section 18 because admittedly no fair-rent is fixed in respect of the premises in question. Therefore, Sub-section (1) is not reproduced above.
12. It is contended that as per Clause (a) of Sub-section (2) of Section 18 of the Act, after the commencement of Part III of the Act, it is not open to any landlord/landlady to receive or stipulate for the payment of any sum of premium or pugree or any consideration whatsoever in cash or kind in addition to the agreed rent. The words 'agreed rent' occurring in Clause (a) of Sub-section (2) of Section 18 of the Act, according to learned Counsel, are referable to the rent agreed at the inception of the tenancy and not the rent subsequently agreed upon by the parties.
13. It is not possible to accept this contention. The Legislature has taken care to specifically mention as to what are the sums which are prohibited to be received by or stipulated for payment to, the landlord. If the Legislature intended to provide that the rent once agreed shall not be enhanced or altered to the disadvantage of the tenant, it would not have used the words "in addition to the agreed rent" in Clause (a) of Sub-section (2) of Section 18 of the Act. It would not have failed to specify it by providing "in addition to the rent agreed at the commencement of the tenancy" or "in addition to the rent agreed at the time of letting out the premises" instead of the words "in addition to the agreed rent". Whenever the Legislature specifically in express terms prohibits doing of certain things and at the same time in the same provision it does not prohibit or impose any such restriction on other subject or thing mentioned therein in the earlier portion, in construing such a provision, care must be taken to ensure that the interpretation does not enlarge the scope and ambit and intendment of the restriction imposed therein. Restrictive piece of legislation should normally be construed strictly in accordance with the tenor of the words used therein and the context in which the restriction occurs. When the words, used in the statute read in the context in which they occur, do not spell out any such restriction, it would not be a correct interpretation to hold that the Legislature intended to prohibit further agreement between the parties regarding the rate of rent. At this stage, it may also be pointed out that similar question came up for consideration before this Court as long back as on 6-2-1968 in T. SEENAPPA v. J. MOHANLAL, 1968(1) Mys.L.J. 307. This Court held thus:
"The Courts below thought that Section 18(2) of the Mysore Rent Control Act prohibits a compromise under which the tenant agrees to pay a higher rent. But it is obvious that there is nothing in that sub-section which prohibits the formation of a new contract of lease in place of the old. What is provided by that subsection is that even in a case where the fair rent of a building has not been determined, the landlord shall not receive from the tenant or stipulate for the payment by him of any sum as premium or pugree or any other consideration in addition to the agreed rent.
This sub-section forbids indirect benefits. Its purpose is to prevent the landlord from obtaining from the tenant by a devious process more than the agreed rent by a stipulation for some additional advantage. If the agreed rent is a specified sum, the landlord shall not receive from the tenant any sum in excess of the agreed rent, in whatever form it is received. This prohibition is one which is intended for the protection of the tenant and the aim of such protection is to save the tenant from coercion or external pressure such as might be brought to bear upon him by the landlord for the payment of a premium or pugree or other consideration in excess of the agreed rent.
But in the present case, the tenant did not agree to pay to the landlord any sum of money in excess of the agreed rent. Although the old agreed rent was Rs. 30/- a month, there was a novatio and a new contract was substituted for the old. Under the new contract which the landlord and the tenant entered into, the agreed rent became Rs. 60/- instead of Rs. 30/- and there is nothing in Section 18(2) of the Mysore Rent Control Act which forbids the formation of a new contract in that way.
But Mr. Jayachandra Raj, appearing for the tenant however contended that para 3 of the compromise petition referred to a stipulation which was unenforceable in law. That stipulation, according to him, was that in the event of two consecutive defaults in the payment of rent, the landlord shall have a right to evict the tenant from the premises. It was urged by Mr. Jayachandra Raj that an order cannot be made by the Munsiff even if the landlord and tenant had entered into such a covenant that when the tenant commits future default in the payment of rent, he shall be evicted. The argument presented was that if the tenant committed any such default, an order for possession must be sought under the provisions of Section 21(1) (a) of the Mysore Rent Control Act, and that no executable order can be made in the present case that he shall be so evicted. Mr. Jayachandra Raj is right in making this submission. From the discussion I have made in the earlier part of this Judgment what emerges is that all that happened between the parties was that they entered into a new contract in substitution of the old. The new contract incorporates the terms of a new lease which came into being by a fresh agreement between the parties. Since the formation of that new contract is not forbidden by Section 18(2), the rights and liabilities of the landlord and the tenant are those which are created by that agreement and could be enforced in the same manner in which they are normally enforced by resort to appropriate proceedings."
Thus it was held in the above Decision that the Act did not prohibit formation of a new contract and that formation of new agreement incorporates the terms of the new lease which came into being between the parties. Formation of the new contract was not forbidden by the Act and the rights and liabilities of the parties would be those which are created by that agreement and they could be enforced in the same manner they are normally enforced by resort to appropriate proceedings.
14. The matter again came up for consideration before a learned single Judge of this Court in PANCHAKSHARAPPA v. VIJAYAKUMAR, . In the said Decision it was held that the rent of the premises was the rent agreed upon at a particular point of time during the subsistence of the lease. As such it was liable, by agreement, to increase as well as decrease. After referring to Clause (a) of Sub-section (2) of Section 18 of the Act, the learned Judge held as follows:
"A plain reading of the above provision clearly indicates that the agreed rent, therefore, has reference not necessarily to the rent agreed to, either before the commencement of the Act or after the commencement of the Act. It merely refers to whatever is the rent agreed to between the tenant and the landlord at any given point of time. The Court must take assistance from the words previously employed in the provision. Those words are "Any sum as premium or pugree or any consideration whatsoever in cash or kind". Normally premium or pugree or consideration as they have been used mean something other than the rent but in addition thereto and connotes a receipt of some article of agreed value or cash which may be in the form of cash or kind. If increase in the rent, by mutual consent was to be included, nothing would have prevented the Legislature to state that after coming into force of the Act no landlord shall enhance the rent even by agreement and even if the tenant is willing to pay the same. Clause (b) of Sub-section (2) of Section 18 of the Act does no more than precluding the landlord from receiving any premium or like sum or consideration in cash or kind. Mr. Prasad tried to derive assistance to Clause (b) of Sub-section (2) of Section 18 of the Act from Sub-section (3) of Section 18 of the Act, to support his case. I do not see any assistance to sustain his contention from the arguments advanced. Sub-section (3) of Section 18 of the Act stipulates that anything in contravention of Sub-section (2) of Section 18 of the Act to be void. That does not help in any way the petitioner because no premium, consideration or any sum or pugree was paid in addition to the rent. The Court should not lose sight of the Golden Rule of construction when confronted with such provisions and such contentions. The Golden Rule is to read the statute as it is without creating ambiguity where none exists. Rent of the premises is the rent agreed at a particular point of time during the subsistence of the lease. It is liable, by agreement, to increase as well as decrease."
Thus as far as this Court is concerned, from the year 1968; it has been the settled position of law that the words 'agreed rent' occurring in Clause (a) of Sub-section (2) of Section 18 of the Act mean, the rent as agreed upon by the landlord and tenant from time to time and not as agreed to at the inception of the tenancy only. Having regard to the enormous appreciation in the value of immoveable properties and fall in the value of a rupee, we are of the view that any other interpretation as contended by Sri Visweswara, learned Counsel for the petitioner-tenant would cause not only great injustice and hardship and would not also be in tune with the legislative intendment. Therefore, we are of the view that both the Decisions lay down the law correctly. We do not think that there is any good reason to take a different view. Accordingly on point No. 2, it is held that the words 'agreed rent' occurring in Clause (a) of Sub-section (2) of Section 18 of the Act, take into their fold the rate of rent as agreed to by the landlord and the tenant from time to time during the subsistence of the tenancy.
POINT No. 315. This contention is also based on the words contained in Clause (a) and (b) of Sub-section (2) of Section 18 and sub- section (3) thereof. It is contended that as it is not open to the landlord to stipulate for payment of any sum as premium or pugree or a rent or any consideration whatsoever in cash or kind in addition to the agreed rent, such stipulation becomes null and void in the light of the provisions contained in Sub-section (3) of Section 18 of the Act, therefore, the amount of Rs. 30,000/- paid by the tenant became payable or became liable to be refunded by the landlady and as such the landlady was either liable to refund the amount of Rs. 30,000/- or adjust it towards arrears of rent and as such the Court below is not justified in holding that the said amount was payable only at the end of the tenancy. The contention of Sri Shaker Shetty is that the said sum is a deposit for ensuring the safety and security of the building let out to the tenant, therefore, it is not liable to be refunded or adjusted towards the arrears of rent.
16. It appears to us that it is not possible to accept this contention. Sub-sections (2) and (3) of Section 7 of the Andhra Pradesh Buildings (Lease, Rent and Eviction) Control Act, 1960 are in pari materia with Sub-sections (2) and (3) of Section 18 of the Act except the proviso contained in the Andhra Pradesh Rent Act which is not relevant for our purpose. The Supreme Court in Modern Hotel's case considered the effect of Sub-sections (2) and (3) of Section 7 of the Andhra Pradesh Rent Act. That was a case in which a sum of Rs. 5,000/- was received by the landlord as advance from the tenant. The question arose as to whether such receipt of advance was permissible. The Supreme Court held that having regard to the provisions contained in Sub-sections (2) and (3) of Section 7 of the Andhra Act, it was not permissible and such an agreement was null and void. The relevant portions of the Judgment are as follows:
"6. The lease deed described the amount of Rs. 6,500/- as advance at four places and stipulates adjustment of a sum of Rs. 1,500/- out of it and the balance amount of Rs. 5,000/- to be paid back to the tenant after the expiry of the lease period. The proviso to Section 7(2)(a) prohibits payment of any sum exceeding one month's rent by way of advance and Sub-section (3) declares the stipulation for payment of rent in advance beyond that of one month as null and void.
7 to 9 xxx xxx xxx
10. Mr. Rao building upon the ratio of these two decisions rightly contended before us that when the landlord had Rs. 5,000/- on tenant's account with him which he was holding for years without paying interest and against the clear statutory bar, there could be no justification for granting a decree of eviction on the plea of arrears of rent. In view of the fact that the stipulation that the amount would be refundable at the end of the tenancy is null and void under Section 7(3) of the Act, the amount became payable to the tenant immediately and the landlord with Rs. 5,000/- of the tenant with him could not contend that the tenant was in default for a smaller amount by not paying the rent for some months."
This Decision completely covers point No. 3 raised for determination.
17. In order to over-come the aforesaid Decision, Sri Shaker Shetty, learned Counsel appearing for the respondent-landlady contended that it is not a sum paid as advance payment of rent but it was paid for due performance of the terms of the lease and for safety and security of the building. No such plea was raised or evidence adduced in that regard before the Court below. Further, in view of the wordings contained in Clauses (a) and (b) of Sub-section (2) of Section 18 of the Act, which prohibit stipulation for payment of any sum, premium or pugree or any consideration whatsoever in cash or kind in addition to the agreed rent, it is not possible to hold that security deposit is excluded from the purview of Sub-sections (2) and (3) of Section 18 of the Act. The words 'any consideration whatsoever in cash or kind are wide enough to take into their fold security deposit also. The security amount paid by the tenant to the landlord will be without any interest. Therefore, it is also a consideration for grant or renewal of the tenancy. Such consideration for grant or renewal of tenancy in addition to the agreed rent is prohibited under Clauses (a) and (b) of Sub-section (2) of Section 18 of the Act and Sub-section (3) of Section 18 of the Act makes such stipulation null and void. Therefore, the agreement to pay a sum of Rs. 30,000/- whether by way of advance rent or by way of security deposit was null and void and the amount paid pursuant to such agreement was liable to be refunded by the landlady or adjusted towards arrears of rent We are also of the view that the scope and ambit of the words 'any consideration whatsoever in cash or kind' do not take into their fold the 'agreed rent' in spite of the fact that they are very wide in character. If we interpret that the words "any consideration whatsoever in cash or kind" do not cover the security deposit, it would defeat the very purpose and intendment of the Act which, among other things, intends to ensure that the tenant is not made liable to pay any sum other than those permissible under the provisions of the Act. Therefore, we are of the view that the trial Judge is not justified in holding that the amount of Rs. 30,000/- paid by the tenant to the landlord was not liable to be refunded or adjusted towards the arrears of rent and it was payable only at the end of the tenancy. Accordingly, point No. 3 is answered as follows:
"The sum of Rs. 30,000/- paid by the tenant to the landlord in addition to the agreed rent, was not permissible in law. As such the landlord was liable to refund or adjust the same towards the arrears of rent."
18. For the reasons stated above, the Civil Revision Petition is entitled to succeed in part. It is accordingly allowed in part. The order of the Court below in so far it directs that the sum of Rs. 30,000/- shall not be adjusted towards arrears of rent and it is payable only at the end of the tenancy is set aside. As the sum of Rs. 30,000/- is more than the arrears of rent due from the tenant, as stated by Sri Shaker Shetty, learned Counsel for the landlady-respondent, we further direct the landlady to refund the remaining sum. The further directions that the respondent-tenant shall deposit a sum of Rs. 32,500/- within one month and failing which the further proceedings be stopped and a show cause notice under Section 29(4) of the Act be issued are also set aside. The Court below is directed to consider the application I.A.No. I in the light of this Decision.