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Vikrant Engineers & Others v. Shridhar Bhaskar Paranjape & Another
Structured Summary of the Opinion — D.K. Deshmukh, J.
Factual and Procedural Background
This petition under Article 227 of the Constitution of India challenges the order dated 14-8-1986 passed by the IInd Extra Joint District Judge, Pune in Civil Appeal No. 862/1984. The appeal was filed by the respondents against the judgment and decree dated 20-7-1984 of the IVth Additional Small Causes Judge in Civil Suit No. 184/79.
The original civil suit was instituted by the present petitioners (plaintiffs). They pleaded that defendants Nos. 1 and 2 (respondents Shridhar Bhaskar Paranjape and Bhaskar Tukaram Joshi) were the owners of Plot No. 9, Survey No. 91, Pune. The plaintiffs alleged that because the defendants lacked funds to construct a building, the parties entered into an agreement (the record refers to a date of 24-2-1971 in several places and once to 24-2-1972) under which the plaintiffs advanced Rs. 20,000 to the defendants; the defendants were to construct a building suitable for a factory and thereafter grant a lease of the building to the plaintiffs for 50 years at Rs. 200 per month.
The plaintiffs alleged that the defendants completed construction but failed to execute a lease in their favour or deliver possession. The trial court (Small Causes Court) on 20-7-1984 decreed the suit, directing defendant No. 1 to execute the lease as per the agreement and ordering defendants to deliver possession. The Appellate Court, however, allowed the appeal filed by defendant No. 1, holding that a suit for specific performance of an agreement to grant a lease was not tenable under section 28 of the Bombay Rent Act; it set aside the trial court's judgment and dismissed the suit. The petitioners seek to challenge that appellate order by way of Article 227.
Legal Issues Presented
- Whether a suit for specific performance of an agreement to grant a lease (and alternatively for refund of the earnest money or compensation) is tenable under section 28 of the Bombay Rent Act.
- Whether a suit for possession or recovery of rent under section 28 of the Bombay Rent Act requires an existing relationship of landlord and tenant between the parties as a condition precedent.
- Whether a plaintiff is compelled to split causes of action (i.e., bring one suit under the Rent Act for recovery/compensation and another in the ordinary civil court for specific performance), and whether that conflicts with Order II, Rule 2 of the Civil Procedure Code.
Arguments of the Parties
Petitioners' Arguments (learned Counsel Shri Anturkar)
- The suit for specific performance (lease) and/or alternatively for refund of the earnest money or compensation is tenable under section 28 of the Bombay Rent Act.
- A suit for compensation or refund is tenable under section 28 because it arises out of the provisions of section 18 of the Bombay Rent Act.
- If refund/compensation suits are maintainable under section 28 but suits for lease are not, litigants would be forced into two suits, contrary to the principle in Order II, Rule 2 CPC that prevents splitting of reliefs.
- Under the Specific Relief Act, a suit for specific performance can include claims for refund of earnest money and compensation; therefore section 28 should be read to permit a single suit where both reliefs (specific performance and refund/compensation) are claimed.
- Section 28 confers jurisdiction to deal with any claim or question arising out of the Rent Act; therefore, the claim for execution of the lease deed can be tried under that section.
Respondents' Arguments (relying on precedent)
- Relying on the Division Bench decision in Govindji Vanmalidas v. Makhai Ladhabai (Civil Revision Application No. 616/72), a suit for possession between a prospective lessee and prospective landlord is not tenable under section 28 of the Bombay Rent Act.
- Relying on the Supreme Court judgment in Sushila Kashinath Dhonde v. Hariial Govindji Bhogani ((1969) 3 SCC 223 / AIR 1971 SC 1495), a suit for possession under section 28 requires an existing relationship of landlord and tenant between the plaintiff and defendant; since such a relationship does not exist here, the suit as framed by the plaintiffs is not tenable under section 28.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Govindji Vanmalidas v. Makhai Ladhabai (Civil Revision Application No. 616/72) — Division Bench, Bombay High Court (16–17 July 1975) | Holds that a suit for specific performance of an agreement to grant a lease is not covered by the provisions of section 28 of the Bombay Rent Act; a suit for possession between prospective lessee and prospective landlord is not tenable under section 28. | The court treated this Division Bench decision as binding and followed it to conclude that the plaintiffs' claim for specific performance (lease) was not maintainable under section 28. |
| Sushila Kashinath Dhonde v. Hariial Govindji Bhogani, (1969) 3 SCC 223; A.I.R. 1971 S.C. 1495 (Supreme Court) | Holds that certain actions arising under section 28 (for example claims under section 18 relating to recovery) may be maintainable even if a landlord-tenant relationship does not exist; but for suits concerning recovery of rent or possession of premises under Part II, an existing landlord-tenant relationship is necessary. | The court relied on the Supreme Court's articulation that section 28 encompasses various types of actions; it applied the distinction that for recovery of rent or possession an existing landlord-tenant relationship is required, while other actions under section 28 may not require that relationship. |
Court's Reasoning and Analysis
The judge analyzed the plaintiffs' pleadings which sought three primary reliefs: (i) direction to execute a lease deed in favour of the plaintiffs; (ii) direction to place plaintiffs in possession of the demised premises; and (iii) fixation of standard rent at Rs. 200 per month.
The court examined the wording of sub-section (1) of section 28 of the Bombay Rent Act, which vests jurisdiction in Rent Courts (Courts of Small Causes or specified Civil Judges) to entertain suits or proceedings "between a landlord and a tenant relating to the recovery of rent or possession of any premises to which any of the provisions of this part apply" and further to "decide any application made under this Act and to deal with any claim or question arising out of this Act or any of its provisions."
Applying that provision to the reliefs claimed, the court distinguished between the types of actions contemplated by section 28:
- Specific performance of an agreement to grant a lease (the first relief): The court held that this relief is not covered by section 28 of the Bombay Rent Act. The judge expressly stated that the first relief "will not be covered by the provisions of section 28."
- Possession of the demised premises (the second relief): The court noted that section 28 permits courts under the Rent Act to try suits between a landlord and tenant relating to recovery of rent or possession. Consequently, where a suit claims possession under section 28, existence of a landlord-tenant relationship between the parties is necessary. The court relied on the interpretation in Sushila Dhonde to explain that although section 28 covers several types of actions (and some do not require an existing landlord-tenant relationship), for recovery of rent and possession the relationship is a pre-condition.
- Fixation of standard rent (the third relief): The court treated this within the scope of claims relating to rent/possession governed by the Act and thus tied to the landlord-tenant relationship requirement where relevant.
The judge reconciled the Supreme Court's decision in Sushila Dhonde (which held that not all matters under section 28 require an existing landlord-tenant relationship) with the Division Bench decision in Govindji Vanmalidas (which held that a suit for specific performance of an agreement to grant a lease is not within section 28 and that possession claims require landlord-tenant relationship). The judge acknowledged the force of the petitioners' contention that this results in potential splitting of causes of action and possible tension with Order II, Rule 2 CPC, but held that the Division Bench decision is binding and must be followed despite reservations.
The court therefore concluded that the Appellate Court was correct in finding that the Rent Court lacked jurisdiction to entertain a suit framed as one for specific performance of a lease. Because the Appellate Court found lack of jurisdiction, the judge directed that the plaint be returned to the plaintiffs for presentation to the appropriate court (the defendants' counsel did not oppose this course).
Holding and Implications
Holding: The petition under Article 227 was dismissed. The judge declared that, following binding precedent, the claim for specific performance of an agreement to grant a lease is not tenable under section 28 of the Bombay Rent Act and that, for a suit seeking recovery of rent or possession under section 28, an existing landlord-tenant relationship between the parties is necessary. DISMISSED
Implications:
- Direct effect on parties: The trial court's decree directing execution of the lease and delivery of possession was set aside by the Appellate Court; this opinion upholds the consequence that the Rent Court lacked jurisdiction to entertain a suit for specific performance of a lease as framed. The Article 227 petition seeking to overturn the appellate decision was dismissed.
- Procedural direction: Because the Appellate Court held that the Rent Court had no jurisdiction, the plaint is to be returned to the plaintiffs so they may present it to the appropriate civil court (the defendants did not oppose this direction).
- Precedential effect: The judge followed binding Division Bench authority (Govindji Vanmalidas). The opinion notes the tension between that authority and the practical effect of splitting causes of action (and potential friction with Order II, Rule 2 CPC), but expressly states that the Division Bench decision remains binding; the opinion does not purport to create or depart from binding precedent.
Order: Petition dismissed; rule discharged with no order as to costs; plaint to be returned to plaintiffs for presentation to the appropriate Court.
D.K Deshmukh, J.:— By this petition filed under Article 227 of the Constitution of India, the petitioners challenges the order dated 14-8-1986 passed by the IInd Extra Joint District Judge, Pune in Civil Appeal No. 862/1984. That appeal was filed by the respondents challenging the judgment and decree dated 20-7-1984 passed by the IVth Addl. Small Causes Judge, Pune in Civil Suit No. 184/79. That civil suit was filed by the present petitioners, claiming therein that the respondents Shridhar Bhaskar Paranjape and Bhaskar Tukaram Joshi, the original defendants Nos. 1 and 2 are the owners of a final plot of land No. 9 Survey No. 91, Pune. It was alleged that as the defendants did not have enough funds to raise a construction on that plot of land they approached the plaintiffs and an agreement was entered into between the plaintiffs and the defendants on 24-2-1971. As per that agreement the plaintiffs were to advance an amount of Rs. 20,000/- to the defendants. The defendants were to construct a building on that land, which would be suitable for a factory and that after completing the building, a lease would be granted to the plaintiffs of that building for a period of 50 years at the monthly rent of Rs. 200/-. It was alleged that thereafter the defendants raised construction on the plot. But as per the agreement they did not create lease of the building in favour of the plaintiffs and did not hand over possession of the building to the plaintiffs as agreed to by the agreement. Therefore a suit was filed for a direction to the defendant to execute lease deed as per the agreement dated 24-2-1972 in favour of the plaintiffs. A direction was sought for fixation of the Standard Rent at Rs. 200/- per month and further direction was also sought against the defendants to hand over possession of the building to the plaintiff. The trial Court decided the suit by its order dated 20th July, 1984 and the trial Court decreed the suit in favour of the plaintiffs and directed the defendant No. 1 to execute lease deed as per the agreement dated 24-2-1971. The Court also directed the defendants Nos. 1 and 2 to deliver possession of the building as per the agreement to the plaintiffs. In the appeal filed by the defendant No. 1 the Appellate Court, however, held that the suit for specific performance of contract to grant lease was not tenable under section 28 of the Bombay Rent Act and therefore, the Appellate Court allowed the appeal filed by the defendant No. 1, set aside the judgment and order passed by the trial Court and dismissed the suit. Therefore it is the order of the Appellate Court which is challenged by the original plaintiffs in the present petition.
2. Shri Anturkar, the learned Counsel appearing for the petitioners urged before me that the suit for specific performance of an agreement to grant lease of the building in favour of the petitioners and/or in the alternative form, to refund of the earnest money, was tenable under section 28 of the Bombay Rent Act. He submitted that a suit for compensation or for refund of the amount advanced would be tenable under section 28 of the Bombay Rent Act, because the suit arises out of provisions of section 18 of the Bombay Rent Act. In the submission of the learned Counsel if it is held that a suit for refund of the consideration is tenable under section 28 of the Act and at the same time if it is held that a suit for lease deed, which also arises out of the same agreement is not tenable under section 28 of the Bombay Rent Act, then it would amount to driving the litigants to two suits, namely, a suit in ordinary Civil Court of general jurisdiction for an executive of a lease deed and the other for compensation or for refund of the earnest money. The learned Counsel by referring to the provisions of Specific Relief Act, pointed out that in a suit for specific performance of a contract, a claim for refund of the earnest money and also a claim for compensation can always be made. By referring to the provisions of Orders II, Rule 2 of Civil Procedure Code, he submitted that failure of the defendants to perform their part of contract gives a right to the plaintiffs to claim two reliefs namely, a relief for specific performance of the contract and for compensation or refund of the earnest money then in the teeth of the provisions of Rule 2 of the Order II the plaintiff cannot file a suit only for a part the relief which he is entitled to. The learned Counsel further submitted that section 28 of the Act, therefore, is to be so read that it permits filing of one suit where both the reliefs can be claimed by the plaintiffs. The learned Counsel also submitted that section 28 of the Act confers jurisdiction on the Court under the Bombay Rent Act, to try any proceeding or to deal with any claim or question arising out of this Act or any of its provisions. In the submission of the learned Counsel the claim of the plaintiffs for execution of the lease deed therefore, can be tried under section 28 of the Act. On the other hand the learned Counsel appearing for the original defendants relying on the judgment of the Division Bench of this Court in Civil Revision Application No. 616/72, the case of (Govindji Vanmalidas v. Makhai Ladhabai)1, decided on 16th and 17th July, 1975, submitted that a suit for possession between prospective lessee and prospective landlord is not tenable under the provisions of section 28 of the Act. The learned Counsel further relying on a judgment of the Supreme Court in the case of (Sushila Kashinath Dhonde v. Hariial Govindji Bhogani)2, (1969) 3 SCC 223 : A.I.R 1971 S.C 1495 : (1969) 3 SCC 223, submitted that in a suit for possession filed under section 28 of the Bombay Rent Act there has to be existing relationship of landlord and tenant between the plaintiff and defendant. As there is no existing relationship of landlord and tenant in the present case, the suit as framed and filed by the plaintiffs would not be tenable before the Court under section 28 of the Bombay Rent Act.
3. Now if in the light of these rival submissions, the record of the case is perused it becomes clear that the plaintiffs were claiming three reliefs in the suit:— (i) a direction to the defendant to execute lease deed in favour of the plaintiffs (ii) a direction to the defendants to place the plaintiffs in possession of the demised premises and (iii) an order for fixation of the standard rent at the rate of Rs. 200/- per month.
4. Now so far as the first relief is concerned clearly it will not be covered by the provisions of section 28 of the Bombay Rent Act. The provision of the Bombay Rent Act, which is material for the purpose of this petition is to be found in sub-section (1) of section 28 of the Bombay Rent Act which reads as under:
“(1) Notwithstanding anything contained in any law and notwithstanding that by reason of the amount of the claim or for any other reason, the suit or proceeding would not, but for this provisions, be within its jurisdiction.
(a) in Greater Bombay, the Court of Small Causes, Bombay;
(aa) in any area for which a Court of Small Causes is established under the Provincial Small Causes Courts Act, 1887, such Court and:
(b) elsewhere the Court of the Civil Judge (Junior Division) having jurisdiction in the area in which the premises are situate or, if there is no such civil Judge the Court of the Civil Judge (Senior Division) having ordinary jurisdiction, shall have jurisdiction to entertain and try any suit or proceedings between a landlord and a tenant relating to the recovery of rent or possession of any premises to which any of the provisions of this part apply (or between a licensor and a licensee relating to the recovery of the licence fee or charge, and to decide any application made under this Act and to deal with any claim or question arising out of this Act or any of its provisions and (subject to the provisions of sub-section (2) no other Court shall have jurisdiction to entertain any such suit, proceeding or application or to deal with such claim or question.”
5. So far as the second relief claimed by the plaintiff in the suit is concerned, which is for possession of the demised premises, perusal of the provisions of section 28 of the Act shows that the courts under the Bombay Rent Act, have jurisdiction to entertain and try any suit or proceedings between a landlord and tenant relating to the recovery of rent or possession of the demised premises to which any of the provisions of Part II applies. Thus it appears that for a suit claiming a decree of possession to be tenable under section 28 of the Act there has to be relationship of landlord and tenant in existence.
6. In so far as the judgment of the Supreme Court in the case of Sushila Kashinath Dhonde, referred to above is concerned, it appears that there was an agreement between the parties for construction of a building and for that an amount of Rs. 12,500/- was advanced as a loan towards the construction. It was also agreed that after completion of the building a portion of the building would be given on lease to the plaintiff. However, the agreement was breached and the premises were given on lease to some 3rd party. Therefore, the suit was filed for recovery of the construction loan of Rs. 12,500/-. The question, therefore, that fell for consideration before the Supreme Court was would a suit for recovery of construction loan, filed by a person against another persons, who did not answer to the description of the landlord and tenant to be tenable under the provisions of section 28 of the Act. The case put up before the Supreme Court was whether for a suit to be filed under section 28 of the Act, existence of the relationship between the landlord and tenant, between the parties to the suit, is a condition precedent. That argument was not accepted by the Supreme Court and the Supreme Court held that the suit for recovery of the loan advanced which was in the nature of the construction loan is recoverable under the provisions of section 18 of the Bombay Rent Act and therefore, though the relationship of landlord and tenant does not exist between the parties to the suit, the suit was tenable under the provisions of section 28 of the Act. However, while deciding this aspect of the matter the Supreme Court in paragraph 13 has observed thus:
“Having due regard to the aspects mentioned above and the provisions of section 18(3) and 28(1), in our opinion it is not necessary that there should be a relationship of landlord and tenant in respect of all the matters covered by section 28(1) of the Act, so as to give jurisdiction to the Court of Small Causes. No doubt, one type of action contemplated under that section viz. a suit or proceeding for recovery of rent or possession of any premises to which any of the provisions of Part II apply may be between a landlord and a tenant but in respect of the other matters dealt with in that sub-section, it is not necessary that the relationship of landlord and tenant should exist between the parties before the Court.”
7. It is clear from these observations of the Supreme Court that according to the Supreme Court there are various types of actions contemplated by section 28 of the Act. However, in so far as one type of action contemplated by section 28 of the Act i.e a suit or proceeding for recovery of rent or possession of any premises to which any of the provisions of part II, existence of relationship of landlord and tenant between the parties to the suit is necessary. Though that may not be so in relation to the other actions contemplated by section 28 of the Act. It appears that this judgment has been considered by the Division Bench of this Court in its judgment in Govindji Vanmalidas case referred to above, the Court in paragraphs 33, 34 and 35 of its judgment have dealt with this aspect of the matter. It is obvious, therefore that the Division Bench of this Court has held that for maintaining a suit under section 28 of the Bombay Rent Act, for a decree of possession existence of relationship of landlord and tenant between plaintiff and tenant is necessary. It has also been held in categorical terms that a suit for specific performance of an agreement to grant lease is not covered by the provisions of section 28 of the Act.
8. It is no doubt true that there is considerable force in the submission made by the learned Counsel Shri Anturkar appearing for the petitioner that in this view of the matter now the plaintiff has necessarily to split up his cause of action while he can maintain a suit under section 28 of the Act against the same party for recovery of the amount and also for compensation as it would be covered by the provisions of section 18 of the Act, he will have to approach another Court for specific performance of that contract. There is also considerable force in the submission of Shri Anturkar that such a course of action would not be permissible under the provisions of Order II, Rule 2 of the Civil Procedure Code. Shri Anturkar is also right in submitting that this aspect of the matter has not been considered by the Division Bench while deciding Govindji Vanmalidas's case. However, in my opinion only because one or some aspects of the matter have not been considered by the Division Bench, for that matter the judgment of the Division Bench does not lose its binding effect. As the judgment in Govindji's case is rendered by the Division Bench I am bound by it though I may be having some reservations about the law that is laid down. I have no alternative but to follow the law laid down by the Judgment of the Division Bench. In the result, the petition fails and is dismissed. Rule discharged with no order as to costs.
9. At this stage it is pointed out by Shri Anturkar that the Appellate Court has dismissed the suit on finding that the Rent Court had no jurisdiction to entertain the suit. In the submission of Shri Anturkar the correct course to be followed by the Appellate Court, after finding that the Rent Court had no jurisdiction to entertain the suit was to return the plaint to the plaintiffs for representation to the appropriate Court. The request is not opposed by the learned Counsel for the defendants. In this view of the matter it is directed that, as the Appellate Court has held that the courts under the Bombay Rent Act, did not have jurisdiction to entertain the suit of the plaintiffs the plaint be returned to the plaintiffs for presentation to the appropriate Court.
10. Petition dismissed.
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