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  • section 13(1)(b) of the Bombay Rent Act (for short, the Act)
  • section 13(1)(b)
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  • section 13(1)(b) of the Bombay Rent Act (for short, the Act)
  • section 13(1)(b)
Smart Summary

Structured Summary of the Opinion (Khatri, J.)

Factual and Procedural Background

The IInd Joint Civil Judge (Junior Division), Jalgaon, originally passed a decree in favour of the present petitioner (referred to in the opinion as the landlords) for eviction of the respondents (the tenants) under section 13(1)(b) of the Bombay Rent Act, on the ground that the tenants had erected permanent structures on the suit premises without the landlords' written permission. A decree for Rs. 380/- for arrears of rent and mesne profit was also passed by the trial Court.

In appeal, the District Court reversed the trial Court's decree and dismissed the suit. The landlords then filed the present petition under Article 227 of the Constitution challenging the District Court's decision.

Material agreed facts (as stated in the opinion): there are four shops facing a public road with a common godown to the south. The tenants originally occupied the western two shops and the entire godown as month-to-month tenants at a combined rent of Rs. 45 per month. On 25 February 1966 the landlords sold the entire godown to the tenants by registered sale-deed and put them in possession; on the same day the landlords (through the Karta of the family) entered into an agreement to sell all four shops to the tenants. The landlords did not execute a registered conveyance pursuant to that agreement.

The tenants sued for specific performance (Special Civil Suit No. 8 of 1967), which was dismissed by the trial Court on 11 September 1968; an appeal to this Court was dismissed in November 1977, and the tenants had a Special Leave Petition pending in the Supreme Court, as informed during the hearing of the present petition.

During the pendency of that litigation, on 9 September 1971 the landlords issued a quit notice claiming arrears of rent for 58 months (1 November 1966 to 31 August 1971) and alleging unauthorized erection of permanent structures. The tenants replied that after the sale of the godown rent for the two shops had not been fixed by contract and that the proportionate rent for the two shops could not exceed Rs. 20 per month; they also claimed sums owed to them by the landlords that could be set off and admitted having made certain alterations described as repairs undertaken as prospective purchasers.

The landlords filed an ejectment suit on the two grounds (unauthorized permanent structures and arrears of rent). The trial Court fixed standard rent for the two shops at Rs. 20 per month, negatived the non-payment ground, but found the other ground (works amounting to permanent structure) established and decreed eviction. On appeal the District Court disagreed with the trial Court's finding that the works amounted to a permanent structure, held that arrears were fully adjusted by an outstanding sum due from the landlords, and dismissed the suit. The present petition challenges that dismissal.

Legal Issues Presented

  1. Whether the alterations effected by the tenants amounted to a "permanent structure" within the meaning of section 13(1)(b) of the Bombay Rent Act, thereby justifying eviction.
  2. Whether the landlords were entitled to eject the tenants on the ground of arrears of rent claimed in the quit notice dated 9 September 1971, taking into account prior settlements and set-offs between the parties and the change in the tenanted area following the sale of the godown to the tenants.
  3. Whether, in the factual circumstances (including sale of part of the tenanted premises to the tenants), the trial Court lacked jurisdiction to fix standard rent because the tenants had not applied for fixation within one month of service of the demand notice.

Arguments of the Parties

Landlords' Arguments (as advanced by Shri Jahagirdar)

  • The District Court was wrong in holding that the structures erected by the tenants were not of a permanent nature; the works were permanent within section 13(1)(b) and entitled the landlords to eviction.
  • The tenants failed to pay arrears of rent and failed to apply to the trial Court for fixation of standard rent within one month of service of the demand notice; therefore the trial Court had no jurisdiction to fix the standard rent and arrears should have been computed at the earlier rate of Rs. 45 per month.
  • Accordingly, the landlords should have succeeded on both grounds and obtained possession.

Tenants' Arguments (as advanced by Shri Page)

  • The District Court's judgment should be supported: the alterations were in the nature of repairs (not permanent structures) and thus did not ground eviction under section 13(1)(b).
  • After the sale of the godown to the tenants there was no contract fixing the rent for the two shops at Rs. 45; proportionate abatement applied and standard rent for the two shops was Rs. 20 per month.
  • The tenants relied on set-off/adjustment of sums due from the landlords for price of goods sold, which satisfied or exceeded any arrears claimed by the landlords on the date of the demand notice.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
1981 Mah. L.J 290 (Pitambardas v. Dattaji) Tests for deciding whether a construction is a "permanent structure" — reference to nature and situs, mode of annexation, intention of the tenant and surrounding circumstances. The Court relied on the general tests laid down in this decision to evaluate the nature of the works carried out by the tenants and concluded that, on the cumulative facts and the Commissioner's report, the alterations were reparative in nature and not permanent structures under section 13(1)(b).
(1977) 1 SCC 575 : A.I.R. 1976 S.C. 2005 (Harbanslal v. Prabhudas) Cited by landlords to support submission that a tenant's failure to apply for fixation of standard rent within one month of the demand notice deprives the trial Court of jurisdiction to fix standard rent. The Court distinguished this authority on the facts: because part of the tenanted premises had been sold to the tenants, proportionate abatement applied and the reasoning in Harbanslal was not held applicable to the present factual matrix.
1985 Mah. L.J 254 (Chhaganlal v. Narayan Jagannath) Placed alongside the Supreme Court decision to support the proposition regarding jurisdiction to fix standard rent when the tenant fails to apply within one month. The Court treated this decision as resting on the Supreme Court authority and found it distinguishable for the same factual reason (sale of part of the premises to the tenant), holding that the constraint argued by the landlords did not apply here.

Court's Reasoning and Analysis

The Court addressed the two principal grounds relied upon by the landlords in sequence: (A) eviction under section 13(1)(b) for erection of permanent structures and (B) eviction for arrears of rent.

A. Section 13(1)(b) — Whether the works were "permanent structures"

  • The Court first identified the three works done by the tenants: (a) replacement of rotten wooden shutters with iron shutters; (b) removal of a 5-foot asbestos partition and substitution with a brick wall; and (c) changing the roof structure, reversing its slope and increasing the heights of the north and south walls.
  • The trial Court found the roof change amounted to a permanent structure and granted eviction; the District Court disagreed and treated the alterations principally as repairs.
  • Applying the accepted tests (nature and situs, mode of annexation, intention of the tenant and surrounding circumstances) — with specific reliance on the decision of Pendse, J. (1981 Mah. L.J 290) that sets out such tests — the Court examined the factual matrix: the wooden shutters were rotten (supported by a Commissioner's report, Exh. 18); the asbestos partition was low (5 feet) and its substitution did not necessarily amount to creating a permanent structure; the roof and shutter works were undertaken in circumstances that pointed to repair and protection of stock (including the context of communal riots and vulnerability to theft), and the landlords did not object while repairs were being carried out.
  • The Court noted that, although written permission would be required under section 13(1)(b), the cumulative facts — including the Commissioner's report — supported the District Court's conclusion that the alterations were reparative rather than constituting a permanent structure within s. 13(1)(b). The Court therefore found no reasonable basis to disturb the District Court's factual conclusion on this issue.

B. Arrears of rent and entitlement to eviction

  • The Court observed that the parties had settled their account on 16 July 1965, wiping off arrears up to 31 October 1966, with that settlement computed at Rs. 45 per month (and that computation covered both the two shop premises and the godown at that time).
  • The sale of the godown occurred on 25 February 1966 — after the July 1965 settlement — and thus the Court rejected the landlords' contention that the July 1965 settlement could be taken as establishing that Rs. 45 continued to be the rent for the two shops alone after the February 1966 sale. The Court held it was not rational to infer a new contract fixing Rs. 45 for the shops alone from the earlier settlement when the sale of the godown had not been in contemplation at the time of settlement.
  • The Court emphasized the principle that where part of tenanted premises is sold to the tenant, proportionate abatement of rent for the portion sold must follow unless the parties confirmed the prior rent by express or implied contract; that principle applies independently of constraints created by standard-rent legislation. The Court held that this factual situation placed the case within section 11(c) of the Act (as attracting proportionate abatement), and therefore the authorities cited by the landlords about limitation on the trial Court's jurisdiction to fix standard rent (if the tenant fails to apply within a month) were distinguishable.
  • The Court noted concurrent findings below that there was a practice between the parties of adjusting the price of goods sold by the tenants against rent. The tenants had claimed (and there was no dispute) that Rs. 2400 was due from the landlords for price of goods sold. Calculating arrears on the standard rate of Rs. 20 per month (the rate fixed by the trial Court for the two shops), arrears from November 1966 to August 1971 would be Rs. 1160. Given the Rs. 2400 due to the tenants, on the date of the quit notice the tenants in fact had a net balance receivable (Rs. 1240) rather than owing rent. Consequently, there were no arrears due on the date of the demand notice that could support eviction.
  • Given those computations and findings, the Court agreed with the District Court that the arrears-of-rent ground did not benefit the landlords.

In sum, the Court concluded that (i) the works did not amount to a "permanent structure" under section 13(1)(b) on the cumulative facts and evidence (including the Commissioner's report), and (ii) on the rent-accounting and the sale of part of the premises, there were no arrears due on the date of the demand notice. Both grounds for eviction therefore failed.

Holding and Implications

Holding: The petition is dismissed and the District Court's decision stands. The Court thus UPHELD the District Court's dismissal of the landlords' ejectment suit.

Implications:

  • Direct effect on the parties: The landlords are not entitled to possession of the two shop premises; the tenants remain in possession. The landlords' grounds for eviction (unauthorized permanent structures under section 13(1)(b) and arrears of rent) were not established on the facts presented to the Courts below and were rejected by this Court.
  • On the rent issue the Court confirmed that proportionate abatement applies where part of the tenanted premises has been sold to the tenant and that this factual circumstance distinguishes the present case from authorities relied on by the landlords concerning jurisdictional limits on fixation of standard rent; the trial Court properly fixed the standard rent for the shops in the special factual circumstances before it.
  • No broader legal precedent was announced beyond the Court's application of established tests for determining whether works constitute a permanent structure and the application of the principle of proportionate abatement when part of the premises is sold to the tenant. The opinion notes the distinguishing factual features relied upon to differentiate prior authorities.
  • Costs: The petition was dismissed and the Court made no order as to costs.
Petition dismissed.

    Ratanlal Ramgopal Agarwal And Others v. Messers Kurban Hussain Gulamali Lahri And Another

    Khatri, J.:— The IInd Joint Civil Judge (Junior Division), Jalgaon, passed a decree in favour of the present petitioner (hereinafter, ‘landlords’) for eviction of the respondents (hereinafter, ‘tenants’) under section 13(1)(b) of the Bombay Rent Act (for short, “the Act”) on the ground that the latter had erected a permanent structure on the suit premises without the permission of the landlords in writing. A decree for Rs. 380/- for arrears of rent and mesne profit was also passed. In appeal preferred by the tenants, the District Court reversed the trial Court's decree and dismissed the suit. Now the landlords have come up to this Court under Article 227 of the Constitution challenging the District Court decree.

    2. The material facts that are no longer in dispute before me are these: There are in all 4 shops abutting a public road in Jalgaon town. There is common godown adjoining all these four shops in the South. Originally the tenants were holding the western two shops and the entire godown as month to month tenants. The rent per month was Rs. 45-/. On 25th February 1966, the landlords sold the entire godown to the tenants by a registered sale-deed and put them in possession thereof as vendees. On the same day, petitioner No. 2 Shriram Ramgopal Agrawal who was at the material time the Karta of the joint family of the landlords, entered into an agreement with the tenants agreeing to sell all the 4 shops, including the two rented out to the tenants.

    3. As the landlords did not execute a registered conveyance pursuant to the aforesaid agreement, the tenants instituted Spl. Civil Suit No. 8 of 1967 against the landlords in the Court of the learned Civil Judge, (Senior Division), Jalgaon for specific performance of the agreement. This suit came to be dismissed on 11th September 1968 on the ground that the agreement entered into by the Karta on behalf of the joint family was not supported by legal necessity. The tenants carried an appeal from this decision to this Court which also came to be dismissed in November 1977. During the course of the hearing of this petition Shri Page for the tenants has informed the Court that they have approached the Supreme Court and their petition for Special Leave to appeal is pending in that Court.

    4. During the pendency of the aforesaid litigation, the landlord issued a quit notice to the tenants Exh. 29 on 9th September 1971 demanding arrears of rent for 58 months from 1st November 1966 to 31st August 1971. The landlords also made a grievance that the tenants had erected permanent structures on the tenanted premises without their permission in writing. On these twin grounds, the landlords claim possession of the premises. Here it may be made clear that the premises as indicated in this notice are the ??? shops and the godown behind them. The rent was also demanded at the initial rate of Rs. 45/- per month meant for the two shops as well as the entire godown.

    5. The tenants by their reply dated 22nd September 1971 Exh. 32 brought it to the notice of the landlords that after the sale of the godown in their favour, rent for the two shops as such, was not any time fixed by contract between the parties. According to them, the proportionate rent for the two shops premises could not exceed Rs. 20/-. They contended that a sum of Rs. 2483/- was due to them from the landlords on account of the price of goods sold to them and that in accordance with the old practice, this amount was liable to be adjusted towards the arrears of rent if any, claimable by the landlords. According to the tenants, on proper accounting @ Rs. 20/- p.m which would be the maximum rent for the two shops, nothing would be found due from them to the landlords. The tenants candidly admitted to have made certain temprorary alterations in the premises. They justified these works on the ground that they were by way of repairs and undertaken by them as prospective purchasers. They resisted the landlords' claim for eviction on both grounds.

    6. The tenants having not complied with the landlords' demand, the latter filed an ejectment suit in the Civil Court, Jalgaon on the above-mentioned two grounds. The tenants raised several defences before the trial Court on the lines indicated above. By their written statement, they also requested the trial Court to fix standard rent.

    7. The trial Court fixed the standard rent for the two shops premises at Rs. 20/- per month. It negatived the grounds of non-payment of rent. The other ground, however, found favour with it and it decreed the suit for eviction on that ground. In appeal, the District Court disagreed with the trial Court. According to it, the constructions made by the tenants were of a permanent nature within the meaning of section 13(1)(b) of the Act. It also held that the landlords' claim for arrears of rent stood satisfied in full, by adjustment of the sum of Rs. 2400/- which was due from the tenants on account of price of goods sold by them to the plaintiffs. In the result, it dismissed the landlords' suit with costs.

    8. Shri Jahagirdar for the landlords made two principal submissions before me. According to him, the District Court was wrong in holding that the structures erected by the tenants were not of a permanent nature. He pointed out that inasmuch the tenants had failed to pay the arrears of rent or come to Court for fixation of standard rent within one month of service of demand notice on them, the trial Court had no jurisdiction to fix the standard rent. According to the learned Counsel, the arrears should have been computed by the Courts below at the rate of Rs. 45/- per month and the landlords' claim for eviction should have been decreed on both grounds. As against this, Shri Page for the tenants supported the judgment of the District Court.

    9. I shall first dispose of the ground under section 13(1)(b) of the Act. The three structures put up by the tenants are: (a) replacement of old wooden shutters in front of the shops by iron shutters; (b) removal of old asbestos partition wall between the two shop premises and substitution thereof by a brick wall and (c) changing the structure of the roof and increasing the height of the northern and the southern walls in the process.

    10. The trial Court has found as a fact that the aforesaid wooden shutters had gone utterly rotten, and therefore, needed replacement. The Court also found that the absestos partition wall was just 5 feet in height, and that its substitution by a brick wall did not amount to construction of a permanent structure. So far as the change in the roof is concerned, the trial Court found that originally the roof was sloping Southwards from North. Here it may be recalled that the godown purchased by the tenants lies on the South of the shop premises. The tenants reversed the slope of the roof Northwards. For doing so, they had to increase the height of the northern and the southern walls correspondingly. According to the trial Court this change in the structure of the roof amounted to a permanant structure. Eventually it granted eviction on this ground.

    11. In appeal, the District Court came to the conclusion that the change in the roof could not be treated as a permanant structure for more than one reasons. In the first place the tenants were obviously acting as prospective purchasers of the shops under the agreement dated 25th February 1966 The District Court also took note of the fact that in 1970-1971 there were communal riots at Jalgaon. The original roof which was of ordinary sheets had gone rotten, as well as the wooden door shutters. All this made the premises vulnerable to theft and rampage by possible rioters. Thus according to the learned Judge the alterations effected by the tenants were in the nature of repairs.

    12. The question whether a particular construction is a permanent structure or not, has to be decided with reference to the nature and situs of the structure, the mode of annexation, the intention of the tenant and all the surrounding circumstances. I need not refer to various authorities which lay down the aforesaid tests, but just one decision of Pendse, J., in 1981 Mah. L.J 290 1(Pitambardas v. Dattaji). The fact that the wooden shutters in front of the shops were rotten and required replacement is not seriously disputed. Apart from the oral evidence of the tenants, there is also a Commissioner's report on record at Exh. 18. One Advocate Chaudhari was appointed as Commissioner by the trial Court to make a report on the condition of the premises. This report states in clear term that the entire construction was old. It also indicates that the tenants were required to repair the Patra Chhat (roof of sheets) in order to protect their stock-in-trade lying in the shop premises. There is no dispute that when all these repairs were going on, the landlords did not raise any objection. It is true that under section 13(1)(b) of the Act, the permission has to be in writing. There is no such written permission in the present case. However, when all the relevant facts are cumulatively taken into consideration, the conclusion of the District Court that the tenants carried out the alterations in the suit premises by way of repairs, cannot be branded as unreasonable. I may again point out that the Commissioner's report Exh. 18 supports the aforesaid conclusion of the District Court. I do not find good justification to distrub the finding that the works carried out by the tenants do not amount to a permanent structure within the meaning of section 13(1)(b) of the Act.

    13. The next ground of eviction relied upon by the landlords is the failure of the tenants to pay arrears of rent. It is an admitted position that the parties settled their account on 16th July 1965 and arrears of rent upto 31st October 1966 stood wiped off. Exh. 33 is the counterfoil produced by the landlords themselves which clearly establishes the aforesaid position. It is pertinent to note that at the time of this settlement, the arrears of rent were computed at the rate of Rs. 45/- per month which was the agreed rent for not only the two shop premises, but also the godown adjoining all the four shop premises on the South. It is also pertinent to note that this settlement of the rent upto 31st October 1966 took place on 16th July 1965, that is about 7 months before 25th February 1966 on which date the landlords sold away the entire godown to the tenants for good and also agreed to sell away the four shop premises. Shri Jahagirdar for the landlords relies on this particular settlement to support his submission that the parties had reached a new agreement to accept Rs. 45/- as the rent for the two shop premises only. It is difficult to accept this submission. The sale of the godown which took place in February 1966 was not even in contemplation of the parties in July 1965 when the aforesaid settlement took place. It is rationally impossible to infer from this settlement that the parties had reached a new contract that the rent for the two shop premises would also continue to be Rs. 45/- after February 1966.

    14. It is significant to note that by their demand notice Exh. 29 dated 9th September 1971, the landlords do not even remotely aver that Rs. 45/- was agreed to be paid as rent for the two shops only, notwithstanding the sale of the entire godown to the tenants. Indeed the description of the tenanted premises as given in the quit notice includes the godown as well. In their reply Exh. 32, the tenants took a specific stand that the past rent of Rs. 45/- could not continue to be the rent for the two shops only after the sale of the godown to them. In the above circumstances, it is clear that after the sale of the godown to the tenants, the parties never fixed the quantum of the rent payable for the shop oremises alone, by the contract, express or implied. Such a contract cannot be implied from the settlement of July 1965 for the reasons I have already indicated above.

    15. The legal position is plain that when part of any tenanted premises (in the present case about 3/4th of the total area) are sold away to the tenants, the previous amount of rent cannot continue to be legally payable for the portion that remains with the tenants as lessees, unless the parties confirmed it by express or implied contract. Proportionate abatement must follow. This position obtains even under the general law, de hors constraints of standard rent arising under rent legislations. In our case the true position is that the parties never revised the rent for the shop premises. Shri Jahagirdar for the landlords relies on the Supreme Court decision reported in (1977) 1 SCC 575 : A.I.R 1976 S.C 2005 2(Harbanslal v. Prabhudas), and the decision of this Court reported in 1985 Mah. L.J 254 3(Chhaganlal v. Narayan Jagannath) for his submission that because of the tenants failure to prefer an application to the trial Court for fixation of standard rent within a month of the service of the demand notice, the trial Court had no jurisdiction to fix standard rent for the shop premises alone. In my humble opinion, the aforesaid rulings do not apply to a case where proportionate abatement of rent is called for, because part of the tenanted premises are sold away in favour of the tenants for good. The Supreme Court decision and the other decisions resting on it are obviously distinguishable on account of this particular factual aspect. The constraint advanced by Shri Jahagirdar, therefore, does not apply to the present case, which squarely attracts section 11(c) of the Act. In the peculiar circumstances of the case, the trial Court was right in entertaining the request of the tenants to fix the standard rent. The position would have been different, had the parties refixed the new rent by contract, express or implied. The correctness of the quantum of standard rent fixed for the shop premises, namely, Rs. 20/- per month is not disputed before me.

    16. Further there is concurrent finding of the two Courts below that there was a practice followed by the parties, whereunder the price of goods sold by the tenants to the landlords was adjusted towards the arrears of rent. One has only to refer to the notice Exh. 36 dated 12th August 1969 issued by the tenants to the plaintiffs demanding Rs. 2400/- by way of price of goods sold by them to the landlords, and the reply Exh. 37 given by the latter on 29th August 1969. In their reply, the landlords themselves expressly bank on the aforesaid practice. There is no dispute that the tenants were entitled to recover Rs. 2400/- from the landlords on account of price of good sold. The arrears of rent from November 1966 to August 1971 (demanded by the landlords by their quit notice) at the rate of Rs. 20/- work out to Rs. 1160/-. It is thus clear that on the date of service of the demand notice on the tenants, there were no arrears of rent due from the tenants. On the other hand the tenants had to recover Rs. 1240/- from the landlords. On this state of facts, the inference is inescapable that nothing was due to the landlords from the tenants on account of arrears of rent on the day the demand notice was served on the latter. The Courts below were thus right in holding that the ground of arrears of rent did not enure to the benefit of the landlords.

    17. The result of the aforesaid discussion is that the landlords have failed to make out either of the grounds of eviction against the tenants. They are not entitled to get possession of the shop premises. The decision of the District Court does not deserve any interference. This petition is accordingly dismissed. Rule discharged. In the circumstances of the case, there will be no order as to costs.

    Petition dismissed.
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    Ratanlal Ramgopal Agarwal And Others v. Messers Kurban Hussain Gulamali Lahri And Another
    (Mar 25, 1986)