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Smart Summary

Factual and Procedural Background

The petition before the Court was filed by a tenant seeking revision of an order of the District Judge of Madurai that dismissed the tenant's revision under Section 25 of the Madras Buildings (Lease and Rent Control) Act, 1960. The order under challenge arose from proceedings initiated when the respondent-landlord filed an application for eviction under Section 10(2)(i) of the Act on 8 August 1963 before the Rent Controller, alleging wilful default in payment of rent for the period 14 January 1963 to 16 July 1963.

On 19 October 1963 the tenant, who had been served, appeared in court and made a written endorsement agreeing to pay future monthly rent on or before the 10th of the succeeding Tamil month and consenting that, if he failed to pay future rent on time, the landlord could take possession without further notice and that judgment could be rendered accordingly. The landlord's advocate endorsed that an eviction order may be passed on those terms, and the Rent Controller ordered the petition "in terms of the joint endorsement."

The endorsement did not mention the landlord's claim for arrears due up to 16 July 1963, and after the order the tenant remained in possession and paid monthly rent regularly for over four years. On 6 January 1968 the landlord filed an execution petition seeking eviction on the ground of wilful default for October-November 1967. The tenant contested execution on the ground that the order based on the joint endorsement was not executable for future defaults and that the landlord should have filed a fresh eviction petition under Section 10(2)(i) for any defaults occurring after the joint endorsement. The District Munsif on the execution side rejected the tenant's objection, and the District Judge, Madurai, dismissed the tenant's revision, leading to this petition.

Legal Issues Presented

  1. Whether a joint endorsement/compromise made before the Rent Controller that contemplates eviction on the basis of future default is enforceable and executable under the Madras Buildings (Lease and Rent Control) Act, 1960.
  2. Whether parties (landlord and tenant) can, by agreement or compromise, contract out of the protections and procedures provided by the Act so as to permit execution of an eviction without fresh proceedings under Section 10(2)(i).
  3. Whether objections to the competency or jurisdiction of the authority that passed the order can be raised in execution proceedings.

Arguments of the Parties

Tenant's Arguments

  • The order passed by the Rent Controller in terms of the joint endorsement was not executable to evict for defaults occurring in the future; the endorsement contemplated only future defaults and did not admit any past wilful default.
  • If a default occurred after the date of the joint endorsement, the landlord was required to file a fresh petition for eviction under Section 10(2)(i) of the Act rather than executing the earlier order, because execution would circumvent the statutory scheme.
  • The tenant contended in execution proceedings that the order sought to be executed had been passed by an authority that lacked jurisdiction to grant eviction for an anticipatory or future default.

Landlord's Arguments

  • The landlord relied upon the Supreme Court ruling in Ramamurthi Subudhi v. Gopinath Naick to support the proposition that a compromise decree may change the nature of the relationship (in that case, the compromise was held to create a licence not a lease) and that execution could proceed on the compromise terms.
  • Implicitly, the landlord argued that the joint endorsement permitted execution on its terms for future defaults and that the compromise/order should be treated as enforceable without fresh litigation under the Act.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Isherdas Shani and brothers v. Rajeswara Rao (1968) 2 M.L.J. 233 That rent control and related statutes are remedial measures conceived for the protection and welfare of tenants and that the object of such legislation would be frustrated if tenants were permitted to enter into contracts giving up the protection afforded by the Act. The Court invoked this authority to support the proposition that the parties could not, by compromise or contract, renounce rights and obligations under the Madras Buildings (Lease and Rent Control) Act and thereby bypass the statutory procedures for eviction.
Ramamurthi Subudhi v. Gopinath Naick (Supreme Court) Addresses whether a compromise decree created a lease or merely a licence and whether the House Rent Control Act applied; in that instance the compromise was held to create a licence and the rent control statute did not apply. The Court considered and rejected reliance on this decision by the landlord, distinguishing the present case on its facts: the joint endorsement here left the tenant's status as tenant intact (not transformed into a licencee), so the landlord's reliance on that ruling did not support execution in this case.

Court's Reasoning and Analysis

The Court proceeded by examining the text of the joint endorsement, the order made by the Rent Controller, and the scheme and purpose of the Madras Buildings (Lease and Rent Control) Act, 1960.

First, the Court observed that the endorsement dated 19 October 1963 referred only to future payment of rent and to consequences in case of future default; it made no admission that the tenant had committed any past default or wilful default, nor did it address the landlord's claim for arrears up to 16 July 1963. From this the Court inferred that arrears up to the date of the endorsement must be assumed to have been paid and that no ground for eviction prior to that date had been admitted or established.

Second, the Court analyzed the statutory scheme of the Act and emphasized that the Act was intended to regulate lettings and to prevent unreasonable evictions. The Court stressed that the essential pre-condition for eviction under the Act is establishment of one or other of the grounds specified in Section 10 or Sections 14 to 16. The Rent Controller's jurisdiction to direct eviction depends on such a finding in respect of defaults preceding the date of the application.

Third, the Court noted that Section 11 of the Act permits the Controller or appellate authority to make an order directing the tenant to put the landlord in possession if the tenant defaults in payment of rent accruing due until the termination of proceedings; however, there is nothing in the Act empowering the prescribed Tribunal to order eviction on the basis of future or anticipatory defaults.

Fourth, applying the foregoing principles to the facts, the Court concluded that what the parties had effectively done by the joint endorsement was to enter into a contract or compromise that would bypass the statutory procedure for eviction laid down by the Act — permitting direct execution on account of future default without a fresh inquiry under Section 10(2). The Court held that such a contract was not permissible because it contravened the protective purpose of the Act and amounted to renouncing rights and obligations under the statute.

The Court considered the landlord's reliance on Ramamurthi Subudhi v. Gopinath Naick but distinguished it: in that case the compromise was held to create a licence and thus the House Rent Control Act did not apply; by contrast, in the present case the joint endorsement preserved the juridical status of the tenant as a tenant within the meaning of the Madras Act, and therefore the Act's protections continued to apply.

Finally, the Court addressed whether the tenant's objection could be raised in execution proceedings. It held that if the order sought to be executed had been passed by an authority without jurisdiction to do so, the judgment-debtor could raise that objection in execution proceedings. Accordingly, the Court accepted the tenant's execution-stage objection that the earlier order was not competent to be executed so as to evict for future defaults.

Holding and Implications

Holding: The Court allowed the revision petition and set aside the orders of the District Munsif and the District Judge, Madurai, which had rejected the tenant's objection in the execution proceedings.

Implications:

  • Direct effect on the parties: the orders below are set aside and the tenant's revision succeeds; there is no order as to costs.
  • Legal principle applied: parties cannot, by compromise or contract, renounce the protections and procedures provided by the Madras Buildings (Lease and Rent Control) Act and thereby permit execution for alleged future defaults without compliance with the statutory process (e.g., a fresh inquiry under Section 10(2) where appropriate).
  • The Court rejected the landlord's contention that the compromise transformed the tenancy into a licence for the purpose of avoiding the Act; the joint endorsement left the tenant within the statutory definition of 'tenant'.

The opinion did not expressly state that it was laying down a new legal precedent beyond applying established principles and cited authorities; its direct effect was to set aside the impugned orders and to protect the tenant from execution based on the joint endorsement for alleged future defaults.

    Ramiah Chettiar v. K. Sankaralingam Pillai.

    1. This petition is filed by the tenant to revise the order of the learned District Judge of Madurai, dismissing the revision petition filed by him under Section 25 of the Madras Buildings (Lease and Rent Control) Act, 1960, (hereinafter referred to as the Act), against the order passed by the District Munsif, Tirumangalam in E.P. No. 57 of 1968 in R.C.O.P. No. 21 of 1963. The dispute between the parties arose under the following circumstances. The respondent-landlord filed an application for eviction against the tenant-petitioner under Section 10 (2) (i) of the Act on 8th August, 1963 before the Rent Controller. The ground alleged in the petition was that the tenant had committed wilful default in the payment of rent for the period 14th January, 1963 upto 16th July. On 19th October, 1963, the tenant, who had been served, with notice, appeared' in Court and made an endorsement to the following effect:

    The respondent hereby agrees that in future he will pay the petitioner regularly the monthly rent due for every Tamil month on or before the 10th of the succeeding Tamil month. I hereby agree that in case I fail to pay in future the rent due for a month on or before the 10th of the succeeding month, the petitioner shall in these very proceedings and without notice to me, take possession of the petition schedule premises. Judgment may be rendered in accordance with these terms.

    2. This endorsement was signed by the tenant on 19th October, 1963. Below his signature the landlord's advocate made the following endorsement:

    Eviction order may be passed on the above terms.

    3. On the same date the Rent Controller passed the following order:

    Joint endorsement made. Petition is ordered in terms of the joint endorsement.

    4. It is important to note that nothing is stated in the endorsement about the claim made by the landlord for arrears of rent due by the tenant for the period from 14th January, 1963 upto 16th July, 1963. As the endorsement dated 19th October, 1963 contemplates only a default in the payment of future rent, it must be assumed that all arrears of rent due by the tenant upto 19th October, 1963 had been paid to the landlord. There is no admission in the endorsement that the tenant has committed any default, much less wilful default. Nor is there anything in the order of the Court to show that any ground justifying the eviction of the tenant had been established or admitted. Subsequent to the date of the order passed in terms of the joint endorsement the tenant continued to be in possession of the premises and was paying the monthly rent regularly for a period of more than four years. However, on 6th January, 1968, the landlord filed an execution petition praying for eviction of the tenant on the ground that he had committed wilful default in payment of rent, for October, November, 1967. The tenant contested the application on the ground that the order passed by the Rent Controller on foot of the joint endorsement was not executable and that if any default had been committed by him in the payment of rent for a period long subsequent to the date of the joint endorsement, the landlord was liable to file another petition for eviction Under Section 10 (2) (i) of the Act and could not validly execute the order dated 19th October, 1963 thereby circumventing the provisions of the special enactment. This contention was rejected by the learned District Munsif on the execution side and revision filed against this order before the learned District Judge, Madurai, met with the same fate.

    5. It is well-settled that where the tenancy is governed by the Madras Buildings (Lease and Rent Control) Act, 1960, it is not open to the landlord or the tenant to contract themselves out of the obligations under the Act, or to agree to resort to a procedure not contemplated by the Act, A scrutiny of the entire scheme of the Act shows that notwithstanding contracts to the contrary, the Legislature intended to regulate the letting of residential and non-residential buildings and the control of rents of such buildings and the prevention of unreasonable eviction of tenants therefrom in the State of Madras. It is not, therefore, open to the parties to enter into a contract, which would have the effect of by-passing the provisions of the Act. The legal position would be the same even though such a contract is embodied in a compromise which has received the imprimatur of a Tribunal contemplated by the special enactment. The essential pre-condition to the eviction of a tenant under the Act is that the one or the other of the grounds mentioned in Section 10 or Sections 14 to 16 of the Act should have been established. In this case the Rent Controller had the jurisdiction to direct eviction, only if he found, as a fact, that the tenant had committed wilful default in the payment of rent for the period preceding the date of the application. Under Section 11 of the Act, if the tenant defaults to pay rent accruing due in respect of the building until the termination of the proceedings before the Controller or the appellate authority, the Controller or the appellate authority, as the case may be, would have the power to make an order directing the tenant to put the landlord in possession of the building, regardless of the fact whether the original ground alleged in the petition had been established or not. It is important to note that there is nothing in the Act which empowers the prescribed Tribunal to order eviction if default be committed in future. What has happened in this case is that the tenant, after continuing in possession of the premises for over four years after the termination of the proceedings before the Rent Controller and paying rent regularly every month, was alleged to have committed default in the payment of rent for October-November, 1967. The Rent Controller, who is a creature of the statute and whose jurisdiction is circumscribed and limited by the provisions thereof, has no power to direct eviction on the basis of an anticipatory default. What the parties have done, in effect, is to enter into a contract, whereby they renounced the rights and obligations under the Act and prescribed, resort to a process of direct execution in violation of the provisions of the Act, without its being preceded by an enquiry under Section 10 (2) of the Act. As has been held by Ramamurti, J.; in Isherdas Shani and brothers v. Rajeswara Rao (1968) 2 M.L.J. 233, these Acts are remedial measures conceived for the protection and welfare of tenants, and the object of the legislation will be frustrated, if tenants are permitted to enter into contracts giving up the protection afforded to them by the Act.

    6. Learned Counsel for the landlord relies upon the ruling of the Supreme Court in Ramamurthi Subudhi v. Gopinath Naick . That was a case where two persons litigating before the ordinary civil Court, entered into a compromise under Order 23, Rule 3 Civil Procedure Code in the Court of the Subordinate Judge, Berhampur, who granted a decree in terms of the compromise. The decree-holder filed an application for execution of the decree and the judgment-debtor objected to the execution. The point that arose for consideration before their Lordships of the Supreme Court was whether the compromise decree created a lease or licence. Upon the terms of the compromise it was held that only a licence had been created and not a lease and consequently the Orissa House Rent Control Act did not apply to the relationship between the parties to that compromise and that execution could proceed. On the contrary, the joint endorsement made on the petition filed by the landlord in this case shows that the relationship of landlord and tenant continued unimpaired by the compromise and the tenant agreed to pay the future monthly rent regularly on or before the 10th of the succeeding month. It is clear from the terms of the compromise that the petitioner-tenant continued to be in possession of the premises in his capacity as tenant and that his juridical status was not in any manner transformed by virtue of the compromise into that of a licencee. Section 2 Sub-clause (8) of the Act defines a 'tenant' in very broad terms, to include any person by whom or on whose account rent is payable for a building and even to include the surviving spouse, or any son, or daughter and any person continuing in possession after the termination of the tenancy in his favour. The petitioner would clearly be a 'tenant' within the meaning of this definition. I therefore repel the contention of the learned Counsel for the respondent that, by virtue of the compromise, the petitioner ceased to be a tenant and became a mere licencee and therefore, escaped the mischief of the Act.

    7. It is next contended that the objection of the tenant could not be properly raised in execution. I am unable to agree. If the order sought to be executed had been passed by an authority which had no jurisdiction to do so, it was certainly open to the judgment-debtor to raise in execution proceedings any objection regarding the competency of the order or the jurisdiction of the Tribunal that had passed it. I am therefore of the view that the compromise entered into between the parties in R.C.O. P. No. 21 of 1963, embodied what in fact was a contract by-passing the provisions of the Act, which is intended to save the tenants even from their own contracts.

    8. If, in this case, the joint endorsement had admitted that the tenant had committed default in the payment of rent and was therefore liable to eviction, and if further an eviction order had been passed by the Rent Controller with a condition that it would remain suspended so long as the tenant continued to pay the rent regularly in future, and would come into force the moment he committed default it would perfectly be an enforceable order. But, unfortunately, that is not the case here. I, therefore, set aside the order of the Courts below and allow this revision petition. In the circumstances, I make no order as to costs.

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    Comments

    Ramiah Chettiar v. K. Sankaralingam Pillai.
    (Sep 26, 1969)