Madras High Court
S.Venkateswaran vs V. Parthasarathy Naidu on 22 December, 2008
Author: S.Palanivelu
Bench: S.Palanivelu
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT DATED : 22/12/2008 CORAM THE HONOURABLE MR.JUSTICE S.PALANIVELU C.R.P. (PD) (MD) No.1896 of 2008 and M.P. (MD) No.1 and 2 of 2008 1. S.Venkateswaran 2. Stellarani ... Petitioners Vs. V. Parthasarathy Naidu ... Respondent Prayer Civil Revision Petition filed under Section 25 of Tamil Nadu Buildings (Lease and Rent Control) Act 1960 (As amended by Act 23 of 1973 and Act 1 of 1980) against the docket order in I.A. No.140 of 2008 in R.C.A. No.9 of 2008 dated 26.09.2008 on the file of the Appellate Authority / Principal Subordinate Judge, Kumbakonam against the order and decretal order dated 12.08.2008 in I.A. No.146 of 2004 in R.C.O.P. No.20 of 2004 on the file of the Principal District Munsif, Kumbakonam / Rent Controller, Kumbakonam. !For Petitioners ... Mr.T.R.Subramanian ^For Respondents ... Mr.A.R.L.Sundaresan, Senior Counsel for Ms.A.L. Gandhimathi * * * :ORDER
The petitioners are the tenants in the buildings belonging to the respondent. The tenants are Proprietors /Founders/Executive Trustees of Sri Kumaragurubarar College of Pharmacy and Nursing having their office in the scheduled buildings, which is a residential one. The respondent filed R.C.O.P. No.20 of 2004, on the file of the Rent Controller (Principal District Munsif), Kumbakonam for eviction of these petitioners under four grounds. Pending the enquiry of the said R.C.O.P., the respondent filed I.A. No.146 of 2004 under Section 11 of the Tamil Nadu Buildings Lease and Rent Control Act (in short 'Act') for direction to the tenants to pay or deposit the arrears of rent of Rs.90,750/- (Rupees Ninety thousand seven hundred and fifty only) within a reasonable time and in default, to strike off the evidence and direct them to put the petitioners in possession forthwith of the property.
2.(i) The allegations in the affidavit of the petitions are that in pursuance of a lease agreement dated 08.10.2003, both the parties agreed for the lease of the scheduled building for a monthly rent of Rs.8,250/- (Rupees Eight thousand two hundred and fifty only) payable on the fifth of next English calendar month and the advance of Rs.75,000/- was paid by the tenants to the landlord and it was also agreed that on the expiry of ten months period, the tenants shall vacate the building and hand over possession to the landlord and to get back Rs.75,000/- paid as advance without interest.
2.(ii) From January 2004 to November 2004 totalling Rs.90,750/-, the tenants have to pay the arrears of the rent and by not paying the same, they have committed wilful default. The tenants filed O.S. No.153 of 2004 before the Vacation Civil Judge at Thanjavur on 19.05.2004 and obtained an order of ad- interim injunction not to interfere with the possession and evict them except due process of law.
2(iii). In the said plaint, the tenants have averred that upto last three months the rent was paid through cheques and for other three months the rent was paid in cash by them to the landlord and according to the said allegations, the last three months is January, February and March 2004 only. It is further stated that they, according to their college accounts, upto May 2004, have paid the rent and as the suit was transferred to the District Munisf Court, Kumbakonam from the Vacation Civil Court, Thanjavur, and the same was pending, the landlord refused to receive the rent. Hence, from January 2004 to November 2004 the wilful default continues. Hence, the order has to be passed directing them to pay or deposit the arrears of rent of Rs.90,750/- within a reasonable time and in default to strike off the defence and direct them to put the landlord in possession.
3. In the counter filed by the tenants, it is mentioned that as per the Rent Control Act, a sum equal to one month rent shall be kept as advance, but the landlord is keeping Rs.75,000/- as advance, in which Rs.66,750/- towards eight months rent from June 2004 has to be adjusted and the remaining Rs.750/- shall be adjusted towards 2005 February rent and on or before 05.03.2005 the rent for February 2005 has to be paid, for which course of action, the tenants are prepared. The landlord has to pay 50% of the electricity consumption charges and from June 2004, the landlord has to pay Rs.4,000/- for eight months at the rate of Rs.500/- per month. From 15.12.2004 alone the tenants have obtained separate service connection.
4. The land lord was examined as PW1 before the learned Rent Controller and ten documents were marked on his side. The petitioners/tenants did not examine any witness and two documents were marked on their behalf.
5. After hearing both the parties, the learned Rent Controller, allowed the application directing deposit of Rs.90,750/- within two months, in default, the eviction order will be passed in R.C.O.P. No.20 of 2004.
6. The tenants carried the matter in appeal before the learned Rent Control Appellate Authority (Principal Subordinate Judge), in R.C.A.No.9 of 2008 and he filed an application in I.A. No.146 of 2004 for stay of the order of the Rent Controller and under Section 23 (2) of the Act, the learned Rent Control Appellate Authority passed a conditional order of stay, challenged in this Revision, which reads thus:
"Heard. Interim stay granted to deposit the arrears of rent Rs.90,750/- to be deposited in as per the claim in I.A.No.146 of 2004 into the Court on or before 06.10.2008 failing which the stay order will be cancelled. Call on 13.10.2008."
7. Even though the order impugned is only a conditional order of interim stay, directing to deposit arrears of rent Rs.90,750/-, in order to determine whether the appellate authority is competent to pass such order imposing the condition afore mentioned, it has become inevitable and imperative on the part of the Court to deal the matter in depth and then only, an appropriate solution could be secured. The grounds set out in the petition also warrant such an effort. The learned counsel for both sides also argued the matter elaborately.
8. The learned counsel for the petitioner/tenant Mr.T.R.Subramanian, would submit that inasmuch as the advance amount, being withheld by the landlord himself and that the Courts below though having adverted to these points, wrongly passed an order for deposit and eviction.
9. Resisting the said contention, the learned Senior Counsel for the respondent Mr.AR.L.Sundaresan, would submit that a catena of decisions of the Supreme Court and this Court have consistently held that notwithstanding anything contained in the provisions of Section 7 of the Act, in the absence of the option expressed by the tenant, the rental arrears need not be adjusted in the advance amount and the tenants could only be termed to be a wilful defaulters.
10. Despite the fact that the electricity consumption charges is agreed to be remitted by the tenants, in which the landlord has to pay 50%, there was no agreement that on the failure on the part of the landlord, the tenants can adjust the due payable by him in the rent on the advance.
11. As regards wilful default, the learned counsel for the respondent / landlord cites an earlier Division Bench decision of this Court reported in 1950 (2) MLJ 579 wherein the learned Judges have decided that the tenant should have exercised the option and called upon the landlord to make the adjustment and the mere fact that the landlord had with him an advance amount does not mean that the tenant has not committed default within the meaning of Section 7 (2) of the Act.
12. In this context, it is profitable to extract Section 7 of the Act for better understanding, which reads as follows:
"7. Landlord not to claim or receive anything in excess of fair rent or agreed rent.- (1) Where the Controller has fixed, [or refixed] the fair rent of a building -
(a) the landlord shall not claim, receive or stipulate for the payment of
(i) any premium or other like sum in addition to such fair rent, or (ii) save as provided in Section 5 or Section 6, anything in excess of such fair rent:
Provided that the landlord may reeive, or stipulate for the payment of, an amount not exceeding one month's rent by way of advance;
(b) save as provided in clause (a) any premium or other like sum or any rent paid in addition to, or in excess of, such fair rent, whether before or after the date of the commencement of this Act, in consideration of the grant, continuance or renewal of the tenancy of the building after the date of such commencement, shall be refunded by the landlord to the person by whom it was paid or at the option of such person, shall be otherwise adjusted by the landlord:
[Provided that where before the fixation or refixation of the fair rent, rent has been paid in excess thereof, the refund or adjustment shall be limited to the amount paid in excess for the period commencing on the date of the application by the tenant or landlord under sub-section (1) of Section 4 or sub- section (3) of Section 5, as the case may be, and ending with the date of such fixation or refixation].
(2) Where the fair rent of a building has not been so fixed -
(a) the landlord shall not claim, receive or stipulate for the payment of, any premium or other like sum in addition to the agreed rent:
Provided that the landlord may receive, or stipulate for the payment of, an amount not exceeding one month's rent, by way of advance;
(b) save as provided in clause (a), any sum paid in excess of the agreed rent, whether before or after the date of the commencement of this Act in consideration of the grant, continuance or renewal of the tenancy of the building after the date of such commencement, shall be refunded by the landlord to the person by whom it was paid or, at the option of such person, shall be otherwise adjusted by the landlord.
(3) Any stipulation in contravention of sub-section (1) or sub-section 2 shall be null and void.
13. In support of his contention, the learned counsel for the petitioners gains strength from a decision of the Supreme Court reported in 1989 2 SCC 686 Modern Hotel, Gudur represented by M.N.Narayanan Vs. K.Radhakrishnaiah and others, wherein Their Lordships have expressed their view that so long as the amount of advance, more than the monthly rent, was available with the landlord kept without refund, should have been paid immediately and in case if advance amount is kept with the landlord then there was no wilful default. The operative portion of decision reads thus:
"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.5000 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."
14. It is his further contention that a Larger Bench of the Supreme Court, in a decision reported in 1996 3 SCC 45, K.Narasimharao Vs. T.M.Nasimuddin Ahmed, has also opined that the arrears of rent can be adjusted by the landlords in the advance amount. The operative portion of the judgment is as follows:
"The provision clearly enacts the course to be adopted in the case of any excess amount being paid by the tenant to the landlord, taking into account the factor that the tenant in certain circumstances may be compelled to make payment as advance or an amount in excess of that required to be paid to the landlord according to law. For that situation the provision imposes the legal obligation on the landlord to immediately refund the excess amount to the tenant unless the tenant exercises the option of requiring the landlord to adjust that amount towards any dues of the tenant or in any other manner indicated by the tenant. This provision has the effect of creating a corresponding enforceable right in the tenant to recover the excess amount from the landlord or to have it adjusted for his benefit in case the landlord fails to discharge his obligation of refunding that amount. The provision of adjustment of the excess amount at the option of the tenant clearly visualises its adjustment towards the rent due from the tenant since the jural relationship envisages payment only of rent by the tenant to the landlord towards which it can be adjusted."
15. Their Lordships in the said case posed a question before entering into discussion in paragraph 4 as follows:
"The question, therefore, is whether the said excess amount paid by the tenant to the landlord being available with the landlord, the tenant can be held to have committed wilful default in payment of rent even though he had not expressly asked the landlord to adjust that amount towards the arrears of rent."
16. To decide the above said question, Their Lordships have referred and discussed the earlier decisions of the Supreme Court and finally reached conclusion, contained in paragraph 13 as follows:
"The landlord was bound to immediately refund that excess amount even before the arrears accrued, and he not having made the refund was bound to adjust it towards the rent due from the tenant. On these facts, the tenant could certainly not be held to be a wilful defaulter in the payment of rent. The High Court is, therefore, right in deciding against the landlord."
17. In the above said case before Their Lordships, the advance amount was Rs.3000/- and the monthly rent agreed was Rs.150/-. As per Section 7 (2) of the Act, the landlord could only detain one month's rent as advance and the statutory duty cast upon him to refund the balance of Rs.2,850/- immediately to the tenant and hence, the above question emerged and after a thorough discussion on the subject, the finding was rendered by the Supreme Court.
18. The learned counsel for the petitioner also placed reliance upon a decision of this Court reported in 1993 2 MLJ 39 Nazimuddhin Ahmed represented by his wife and P.A.A.Naseema Ahmed Vs. K. Narasimha Rao in which, the learned Judge of this Court after referring to the Modern Hotel case (supra) and other decisions of the Supreme Court, arrived at a conclusion that Section 7 (2) makes it very clear that any amount paid by the tenant in excess of the agreed rent for one month shall be refunded by the landlord to the tenant and thus, there is a mandate of the law to the landlord to refund that amount even though the tenant has not asked for that and that but, an option is given to the tenant to tell the landlord to adjust that amount towards rent and the landlord shall do and finally concluded that the tenant has not committed wilful default in payment of rent.
19. In a subsequent decision of this Court reported in 1994 2 MLJ 264, S.Sahabudeen represented by his power of attorney S.Mohammed Mansoor Vs. Muniammal, the view taken in the Nizamuddin Ahmed case (supra) has been discussed by His Lordship Justice Srinivasan, (as then he was) finding that it has been consistently held by this Court that unless the tenant has called upon the landlord to make an adjustment of the advance amount as against the rent, he cannot escape the consequences of wilful default in payment of rent.
20. In a subsequent decision of the Supreme Court reported in 2002 4 SCC 675, Raminder Singh Sethi Vs. D.Vijayarangam, it is held that it is not the case of the tenant that the contract between the parties provides for adjustment of rent, no sooner it fell into arrears from out of the amount of advance amount and in short the appellant tenant was not absolved of his obligation to pay the rent due month by month in spite of an amount of advance rent being available with the land lord. After referring to Narasimha Rao's case (supra) and other Supreme Court cases a learned Judge of this Court in 2005-5-CTC-473, R.Murugan Vs. M.O.M.Abubucker, reached a conclusion as follows:
"The mere fact that the landlord had with him an advance amount does not mean that the tenant has not committed wilful default within the meaning of Section 10(2)(i) of the Act. The Courts below have rightly negatived the submissions made on behalf of the tenant that in view of the advance amount there is no wilful default. Broadly looking into the matter, it is a clear case of wilful default and the order of eviction passed by the Court below on the ground of wilful default is to be endorsed with."
21. The learned Judge, in the above said decision has distinguished the ruling rendered by the Apex Court in K.Narasimharao's case and observed that in the case before the Supreme Court under factual circumstance as the tenant had made repairs and claimed adjustment of the advance of Rs.1000/-, the Supreme Court has held that the landlord was bound to adjust the advance amount towards the alleged due from the tenant and the case in hand stands on different footing, since the parties are governed by lease agreement. But, even though in the present case on hand also the parties are governed by the lease agreement, still as the question formulated by the Supreme Court and an answer was rendered for the same in unequivocal terms, in my view, the principles of K.Narasimharao's case are squarely applicable to the case on hand. Even if the advance amount was agreed to be refunded to the tenant on the expiry of lease period, such stipulation contravening sub-sections 1 and 2 is null and void in the presence of Sub-rule (3) to Section 7 of the Act.
22. In yet another decision of this Court reported in 2008 1 TNLJ 309, N.Vijayalakshmi Vs. C.R.Prasad @ Rajendra Prasad a learned Judge is of the view that even though a sum of Rs.2,35,000/- is in the hands of the landlord towards advance, the arrears of rent for the months of June and July 2003 at the rate of Rs.6,300/- per month cannot be considered as a wilful default. Under such circumstance, it was held while exercising the revisional power, this Court cannot interfere with the concurrent findings of the Courts below unless it is shown before this Court that the findings of the Courts below is perverse and not on the basis of the evidence. The learned Judge has also referred and followed the cases of K.Narasimharao and Modern Hotel, decided by the Supreme Court. In K.Narashima Rao's case, the Honourable Supreme Court has pointed out that even in the absence of any option expressed by the tenant to landlord for adjustment of amount towards the arrears of rent, still the excess amount not having been refunded by the landlord, the tenant could not certainly be held to be a wilful defaulter in payment of rent.
23. In my considered view, following the decision of the Apex Court in K.Narasimharao's case, (by larger Bench of Supreme Court) even though there is no express option by the tenant to the landlord, he having retained the advance amount, has got a legal obligation to refund the advance amount to the tenant retaining the one month rent and in the absence of such refund, is bound to adjust the rent in the advance amount, which is being kept by him. (Emphasis supplied)
24. The learned Senior Counsel for the respondent Mr.AR.L.Sundaresan would further submit that even though it is conceded without admitting, that the arrears of rent could be adjusted in the advance amount retained by the landlord, the tenant had been in arrears even after the rental arrears was adjusted in the advance amount.
25. This Court sees considerable force in his arguments. In the order passed by the Rent Controller, she has specifically and clearly furnished facts of wilful default with reference to the months for which the arrears have fallen. The following are further particulars.
25.(i). The monthly rent agreed is Rs.8,250/-. Advance amount Rs.75,000/- was in the hands of the landlord. On 04.06.2004, the respondent / landlord issued notice requiring the tenants to pay the rent from January, 2004. Hence, there had been arrears for five months on the date of issuance of notice.
25.(ii). A second notice was issued on 06.07.2004 by the landlord to the tenants and after receipt of the same, rent for three months was paid by the tenants by means of a cheque. The tenants themselves adjusted the rental arrears between June 2004 and February 2005 in the advance amount Rs.75,000/- retained by the landlord and sent a balance of Rs.750/- by means of a memo dated 23.03.2005. From March 2005 to May 2005, the rent of Rs.24,750/- payable, was paid by means of a memo on 17.06.2005.
25.(iii) The rent for the months of June and July 2005 of Rs.16,500/- was paid by a memo dated 14.09.2005.
25.(iv) A sum of Rs.24,750/- being the rental arrears for the months of August, September and October, 2005 was paid by virtue of memo dated 10.03.2006. However, the respondent filed a petition under Section 11 (4) of the Act claiming the arrears from January 2004 to November 2004.
25.(v) The learned Rent Controller has clearly observed that the tenants have not established the fact that they paid the rent from the months of January 2004 and April 2004.
26. Even though it is conceded that the tenants adjusted the rental arrears in the advance amount of Rs.75,000/-, there remains arrears of rent between January,2004 and April,2004 which has been remaining unpaid till today. As per the provisions contained in Section 7 of the Act, the landlord is authorised to retain one month's rent as advance and the tenant is not at all entitled to adjust the arrears of rent in the said amount equal to one month's rent which would represent a security in the hands of the landlord. If it is so, the adjustment of arrears as contended by the tenants, between June 2004 to February 2005 cannot be made in the advance, but one month rent would remain unpaid that could be the rent for the month of February 2005. Hence, it is to be concluded that rent for the month of February 2005 also has not been paid so far to the landlord.
27. In view of what are stated above, the necessary corollary is, rental arrears for January 2004 to May 2004 (as mentioned in notice dated 04.06.2004) as well as the rent for February 2005 have not been paid till today and this default on the part of the tenants is nothing but a wilful default which would entitle the landlord to get favourable orders in the petition under Section 11(4) of the Act.
28. In such view of this matter, this Court does not find any infirmity in the conditional order passed by the appellate authority. However, the quantum is not Rs.90,750/-, but it should have been the rental arrears for six months, namely, from January 2004 to May 2004 and February 2005 totalling Rs.49,500/-.
29.(i) Hence, the conditional order passed by the appellate authority dated 26.09.2008 has to be modified. The conditional order of interim stay granted by the appellate authority in I.A.No.140 of 2008 in R.C.A.No.9 of 2008 is modified with respect to the quantum of arrears alone, namely, Rs.49,500/- instead of Rs.90,750/-.
29(ii). The order passed by the appellate authority on 26.09.2008 shall stand as such with reference to the grant of stay and the default clause, however, the rental arrears payable is Rs.49,500/- and the date on or before which, it shall be deposited before the Rent Controller is 20.01.2009.
With the afore-said directions, the civil revision petition is disposed of. Consequently, connected M.Ps are closed. No costs.
srm To
1) The Principal Subordinate Judge, Kumbakonam.
2) The Principal District Munsif, Kumbakonam.