Delhi High Court
P.S. Jain Co. Ltd. vs Atma Ram Properties (P) Ltd. on 16 December, 1996
Equivalent citations: 1997RLR231, 1997IAD(DELHI)454, 65(1997)DLT308, 1997(40)DRJ220, 1997 A I H C 1149, (1997) 65 DLT 308, (1997) 40 DRJ 220, (1997) 1 RENCR 317, (1997) 1 RENTLR 20
Author: M. Jagannadha Rao
Bench: M.J. Rao, Manmohan Sarin
JUDGMENT M. Jagannadha Rao, J.
(1) This is an appeal by the tenant (1st defendant) questioning the order of the learned Single Judge in Ia 8220/90 in Suit No. 1288/89 dated 20.11.94 holding on Issue 2 that the above suit for eviction filed by the landlord (plaintiff) against the appellant and the sub- tenants (respondents 2 to 5) is maintainable in the Civil Court. The contention raised by the appellant is that the civil court has no jurisdiction and that the plaintiff has to go before the Rent Controller and that contention has been rejected by the learned Single Judge.
(2) The Delhi Rent Control Act, 1958, as amended by Act 57 of 1988 has, by introducing Section (c) exempted w.e.f. 1.12.88 all premises whose rent exceeds Rs. 3500.00 p.m. from the purview of the said Act. The appellant-tenant has been paying Rs. 900/.00 p.m. to his landlord (1st respondent) under a registered deed dated 5.1.1978 but the appellant has admittedly subleased the premises to two tenants, to one at Rs. 40,000.00 p.m. and to another at Rs. 4,500.00 p.m. The tenant is contending that inasmuch as he is paying only Rs. 900.00 p.m. to the plaintiff, the premises is governed by the Act. On the other hand, the plaintiff-1st respondent is contending that inasmuch as the "premises" is fetching a rental of Rs.40,000 p.m. and Rs. 4,500 p.m., the premises is exempt from the purview of the Act and the suit is maintainable in the Civil Court. (The registered lease deed here permits the tenant to sub let the premises).
(3) Learned Single Judge held that the test for purposes of the new amendment under Section 3(c) introduced in 1988 is to find out as to what rent the 'premises' has been fetching and not what the tenant is paying to the landlord. Even if the tenant is paying a rent less than Rs.3,500 p.m., in case he has sublet to others and each of the sub-lessees is paying more than Rs.3500 p.m. to the tenant, the 'premises', according to the learned Judge cannot come within the purview of the protection under the Act. He has relied upon certain observations of the Supreme Court in D.C. Bhatia & Others vs. Union of India to the effect that the provision in Section 3(c) is intended to protect tenants who belong to weaker sections of the community. If a tenant is receiving Rs.40,000 p.m. and Rs.4500 p.m. for the self-same premises upon sub-letting - which is permitted by the lease deed, - such a tenant is surely not one intended to be protected. On that basis, issue 2 has been decided in favour of the landlord and it is held that upon notice under Section 106 of Transfer of Property Act,the civil court could be moved for eviction and it is not necessary to go before the Rent Controller.
(4) In this appeal, counsel for the parties have raised the same contentions once again.
(5) The point for consideration in the appeal is: Whether a tenant who is paying a rent of Rs. 900 p.m.(less than Rs. 3500 as specified in Section 3(c) of the Delhi Rent Control Act, 1958) can be evicted by a simple notice under Section 106 Transfer of Property Act, through the civil court if he has lawfully sub-let the premises to two tenants, one for Rs.40,000 p.m. and another for Rs.4,500 p.m. (in each case for more than Rs.3500 p.m.)? Section 3 of the Act deals with 'premises' to which the Delhi Rent Control Act, 1958 is not to apply. One of the clauses is clause (c) as introduced in 1988. It reads as follows: "SECTION 3. Act not to apply to certain premises: Nothing in this Act shall apply (a)....... (b)....... (c) to any premises, whether residential or not,, whose monthly rent exceeded three thousand and five hundred."
(6) It will be noticed that the sub-clause (c) refers to the "premises" which is fetching a rent in excess of Rs.3500 p.m. and not to a tenant who is paying rent in excess of Rs.3500.00 . In fact, the emphasis in all the clauses in Section 3 is on the 'premises' which are exempt. Different classes of 'premises' which are exempt are enumerated in Section 3(c).
(7) It is now well-settled that a mechanical approach to construction of statutes is altogether out of step with the modern positive approach of having a purposeful construction which will effectuate the object and purpose of the statute (Administrator, Municipal Corporation, Bilaspur vs. Dattatrey Dahankar) . The facts of the above case decided by the Supreme Court are quite relevant for the purpose of the case before us.
(8) In that case the M.P. Municipalities Act, 1961 which contained a provision in Section 127A in clause (b) of sub-section 2 exempted buildings whose annual letting value was not in excess of Rs.1800 p.m. from taxation. The proviso thereunder stated that if any such building or land in the ownership of a person who owned any other building or land in the same municipality, the annual letting value of such building or land for the purpose of clause (b) shall be deemed to be the aggregate annual letting value of all buildings or lands owned by him in the Municipality. The High Court took the view that, each tenement had to be separately assessed and no tax could be levied on a building with annual letting value upto Rs.1800. The aggregation was only for exemption and not for fixing up the different rates of higher tax as may become applicable on aggregtion. The High Court held that what was important was the building and not the owner and that if the quarters are let out to different persons then each quarter had to be valued as a separate unit for purpose of the rate of tax. If the annual value of each quarter was below Rs.1800, it would be exempt from assessment. However, on appeal, the Supreme Court reversed the judgment of the High Court and held that a purposive interpretation has to be given to the statute. Section 127A contained a table for taxation at different rates. There was no doubt no provision for taxation of a building having annual value less than Rs.1800. Clause (b) of sub- section (2) expressly exempted buildings and lands, the annual letting value of which did not exceed Rs. 1800. The proviso permitted adding up of annual letting value of all such buildings or lands owned by a single individual in the Municipality. The proviso no doubt stated that the annual letting value aggregated shall be deemed to be 'for the purposes of this clause' meaning thereby for the purpose of clause (b), that is for seeking exemption. But the purpose of the proviso was to deny exemption to buildings or lands owned by the same person where the total letting value of the buildings owned by him exceeded Rs.1800. When aggregation was permitted then, all such lands and buildings were to be taken as a single unit for purpose of fixation. It was held that any other construction would render the purpose of the proviso nugatory and defeat the object of the Act. Their Lordships observed that the legislature could not have intended that all buildings or lands owned by a single individual should get exemption from taxation even if their total letting value exceeded Rs. 1800. What was important was the person owning and not each of the premises.
(9) The Supreme Court in the above case applied the principle of purposive interpretation and laid stress on the 'person' rather than on the property. In the case before us, the same principle of interpretation is applicable, the only difference being that primacy is to be given to the premises and not to the person paying rent.
(10) That a purposeful or liberal construction is to be given to exemption laws is also clear from the following passage from American Jurisprudence (2 d) Vol.31 para 9 (page 337): "THERE is not much difference of judicial opinion as to whether a strict or liberal construction should be given to exemption laws. In a few early cases, it is true, a somewhat narrow construction has been applied to them, the reason given being that such laws are in derogation of the common law and should not be favoured. If no other elements were present, this view might find wider acceptance. Owing, however, to the facts that such statutes are remedial and are enacted for the public good to effectuate beneficient purposes, they should not be narrowly construed, but rather be liberally interpreted with a view to effecting the protection intended to be extended. It is therefore the almost universal rule that they should receive a liberal construction in favour of those intended to be benefited and favourable to the objects and purposes of the enactment, or, as it is sometimes put, a reasonable construction in favour of the purposes and objects of the exemption authorized; and where there is doubt as to whether certain property is exempt or not, the doubt should be resolved in favour of the exemption. No mere technicality should defeat the right of exemption. Accordingly, whenever the claim to the exemption can be brought within the purpose and intent of the statute by a fair and reasonable interpretation, the exemption will be allowed."
(11) In our view, the intention behind Section 3(c) is that a premises which fetches a rent of Rs.3500 p.m. should be exempt and that protection should be restricted to buildings fetching a rent less than Rs.3500 p.m.. In case a tenant paying less than Rs. 3500 p.m. to his landlord has sublet the very same premises - may be lawfully - for a rent above Rs..3500 p.m., then the question naturally arises whether such a tenant can be said to belong to weaker sections of society requiring protection. By sub-letting for a rent above Rs.3500 p.m., the tenant has parted with his physical possession. He is receiving from his tenant (i.e. the sub- tenant) more than Rs. 3500 p.m. though he is paying less than Rs.3500 p.m. to his landlord. The above contrast is well illustrated by the facts of the case before us. The appellant tenant is paying only Rs.900 p.m. to the plaintiff, while he has sublet the premises in two units, one for Rs.40,000 p.m. and another for Rs.4500 p.m. In regard to each of these units, the sub-tenants have no protection of the Rent Act. In our view,the purpose of Section 3(c) is not to give any protection to such a tenant.
(12) Indeed there will be a serious anomaly if such a tenant is to be allowed the benefit of the rent control legislation. If he should get protection, the strange situation will be that when he cannot be evicted except on limited grounds specified in the Act and that too only before the Rent Controller, he could, in his turn, evict his tenants i.e. the sub-tenants, by giving a simple notice under Section 106 of Transfer of Property Act, and then move the civil court. Further, he could after such eviction of his tenants (i.e. sub tenants) induct fresh sub-tenants at still higher rents. In our view, an interpretation which places him in such an advantageous position is to be avoided.
(13) A question may be asked as to how a premises to which the Act would apply so long as the tenant was paying rent less than Rs. 3500 p.m. would suddenly lose the protection when the tenant sublets the whole premises - may be lawfully, for more than Rs.3500 p.m. or sub lets different units of the premises each for a rent of more than Rs. 3500 p.m.?
(14) We do not find any difficulty in answering this question. For example, a building whose rental is fixed (say) at Rs.2000 p.m. with a clause for annual increase of rent by 20% could lose the protection as soon as the rent exceeds Rs.3500 p.m.. On the same analogy, a building where the tenant is paying less than Rs. 3500 p.m. could lose the benefit of protection as soon as there is subletting - may be lawfully - by the tenant of the entire unit for a rent in excess of Rs.3500 p.m. or by subletting of more than one unit of the premises where each unit fetches more than Rs. 3500 p.m. (15) As pointed out in Bhatia's case (supra) by the Supreme Court, the amendment to the Delhi Rent Control Act, 1958 has tried to balance the rights of landlords and tenants, when premises fetching rent above Rs.3500 p.m. are exempted from the purview of the Act. In K.S. Sundarraju Chettiar vs. M.R. Ramachandra Naidu it was observed that the contention that the Rent Act was a legislation for protecting the tenants alone would be an over-simplification of the legislative import of the Rent Act. In Shri Lakshmi Venkateswara Enterprises (P) Ltd. vs. Syeda Vajhiunnissa Begum , it was observed that the Rent Control Act was a beneficial enactment not for tenants alone but for landlords as well. The same aspect was emphasised in Harish Tandon vs A.D.M. where it was stated "it was open to the framers of the Rent Act to look to the interest of the tenant as well as the landlord."
(16) Thus, though as long as the tenant is in occupation of the premises physically and is paying rent which is less than Rs.3500, he may be entitled to the protection, once he sublets the premises lawfully and when the units which are sublet each fetch above Rs.3500 p.m., the premises becomes one "whose monthly rent exceeds Rs. 3500 and the premises loses the protection of the Act. With that, the said tenant who has ceased to occupy the premises also loses the protection of the Act vis-a-vis the said units. It was in fact pointed in Bhatia's case (supra) that the tenant does not have a vested right in the protection afforded by the rent control legislation. His right is merely a right to take advantage of the provisions of the statute and his right will cease once the premises loses the protection. The same principle has been reiterated in Parripati Chandrasekhara Rao & Sons vs. Alapati Jalaiah wherein the validity of a notification under the A.P. Rent Act in respect of buildings whose rental is above Rs.1000 p.m. has been upheld. In that case also, it is held that "in the case of a tenant, the protective shield extended to him survives only so long as and to the extent the special legislation operates. The rights and remedies of the tenants are not vested and could be taken away."
(17) For the aforesaid reasons, we uphold the view of the learned Single Judge. This Appeal is accordingly dismissed.