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Case Number

S.A.O No. 28 of 1970.

Attorney(S)

R.M.Lal
S.B.Singh

Judges

Mr. P.N Khanna, J.

Acts

SECTION 39 DELHI RENT CONTROL ACT 1958
sub-section (7) of section 15,

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Smart Summary

Structured Summary of the Opinion — P. N. Khanna, J.

Factual and Procedural Background

This is an appeal under section 39 of the Delhi Rent Control Act, 1958 by M/s Rai & Sons Pvt. Ltd. (the appellant), alleged to be the tenant of a portion of Phelps Building, Connaught Place, New Delhi, against an order dated March 18, 1970 of the Rent Control Tribunal, Delhi. The Tribunal had dismissed the appellant's appeal and confirmed the order dated January 12, 1970 of the Additional Controller directing the appellant under section 15(2) of the Act to deposit arrears of rent and to make future rent deposits.

Background events leading to the order: during the pendency of an eviction application (brought on the ground that the appellant had sublet, assigned or parted with possession in favour of other respondents without landlord's consent), respondent No. 1 (the landlord) made an application under section 15(2) for directions that the appellant pay arrears and future rent. The appellant contested liability, asserting that the original tenancy was created in 1955 in favour of Rai Ranjit Rai in his personal capacity (with a right to use the premises for business of companies with which he was associated) and that Rai Ranjit Rai never surrendered that tenancy; the appellant said it had paid rent for Rai Ranjit Rai's account. The rate of rent was also in dispute.

The Additional Controller found prima facie that a landlord-tenant relationship existed and that the appellant had agreed prima facie to pay rent at Rs. 1,940 per month; the Controller directed deposit of arrears and future rent. The Rent Control Tribunal affirmed that order. The appellant brought the matter in second appeal to this Court.

Legal Issues Presented

Whether an order under section 15(2) of the Delhi Rent Control Act directing deposit of arrears and future rent can be made where the person proceeded against denies that he is a tenant (i.e., whether denial of tenant status ousts the Controller's jurisdiction to make such interim orders).
Whether the Controller and the Rent Control Tribunal may, in appropriate cases, make interim orders fixing or directing deposit of rent on the basis of prima facie evidence of a landlord-tenant relationship, and how the discretion to make such interim orders should be exercised.
What protective measures (if any) should be applied to avoid prejudice to a party if the interim order later turns out to have been made against a person who is not the true tenant (for example, safeguards against double recovery or wrongful loss to the party directed to deposit).

Arguments of the Parties

Appellant's Arguments (as advanced by Mr. Ved Vyas)

The appellant denied being the tenant; the original tenancy was in the name of Rai Ranjit Rai personally, who had not surrendered his tenancy and remained tenant to date.
An order under section 15(2) could be made only if the relationship of landlord and tenant were established; there was no provision in the Act for making an interim order on mere prima facie evidence when the person proceeded against asserted that he was not a tenant.
The appellant offered three alternatives to secure the landlord's position (repeated before this Court): (a) Ranjit Rai would deposit the entire rent up to date and continue monthly deposits; (b) the appellant would furnish a bank guarantee for the total arrears and augment it; (c) the appellant would pay arrears and make further monthly payments under protest without prejudice — these were offered to protect the appellant's position if ultimately held not to be tenant.
The appellant referred to a Calcutta High Court single-judge judgment (Jamini Khan v. Dhirendra Nath Jundu A.I.R. 1953 Cal. 762) and to a Division Bench decision (G. R Gellatly v. J.R.W Cannon) to support the position that the Act should not permit summary interim orders against a person who expressly denies being a tenant.

Respondent No. 1 (Landlord) Arguments (as advanced by Mr. Radha Mohan Lal)

None of the appellant's alternatives was acceptable because they were not in accordance with law; if the payment were to be accepted, it must be unconditional (offer (c) acceptable only if unconditional).
The landlord insisted he was entitled to receive rent, and if ultimately relationship is not established, the appellant could bring a civil suit to recover any amount paid.
The Additional Controller had jurisdiction to determine whether the appellant was a tenant and was bound to pass an order under section 15(2) when the landlord applied for it. He relied on the Supreme Court decision in Om Parkash Gupta v. Dr. Rattan Singh (1963 P.L.R. 543) to the effect that a mere denial of the relationship does not oust the jurisdiction of the statutory tribunals under the Rent Act.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Jamini Khan v. Dhirendra Nath Jundu, A.I.R. 1953 Cal. 762	Interpreted section (as per single-judge) to give a workable meaning to procedure under the Rent Act (referenced by appellant's counsel).	The Court noted the citation was of limited relevance in view of subsequent Division Bench authority; the opinion records the appellant's reliance on it but does not base its decision on it.
G. R. Gellatly v. J. R. W. Cannon (Calcutta Division Bench decision, cited in the opinion)	Division Bench observation that the Rent Act applies only to tenants and that if a person pleads that he is not a tenant, certain provisions cannot be applied until that question is decided against him (cited by appellant).	The Court recorded the appellant's reliance on this Division Bench view but distinguished it from the Supreme Court authority; the opinion uses it to frame the debate rather than as a controlling authority.
Om Parkash Gupta v. Dr. Rattan Singh, 1963, 65 P.L.R. 543 (Supreme Court)	Holds that a simple denial of the relationship of landlord and tenant does not oust the jurisdiction of tribunals under the Rent Act; tribunals must determine the question of relationship in appropriate cases.	The Court relied on this Supreme Court precedent as settling that the Controller has jurisdiction to decide whether the person proceeded against is a tenant and, consequently, to make interim orders under the Act in appropriate circumstances.

Court's Reasoning and Analysis

The Court began by analysing section 15 of the Delhi Rent Control Act. It observed that the section permits the Controller, in proceedings for recovery of possession where arrears are claimed or in eviction proceedings on other grounds, to direct a tenant to deposit arrears and to continue paying rent month by month. The section contemplates situations where either the amount or the person entitled to rent is in dispute, and it expressly provides for interim orders to be made pending final decision.

The opinion noted that the Act contains no specific provision expressly addressing the situation in which the person proceeded against affirmatively denies being a tenant. The Court therefore turned to precedent. Relying on the Supreme Court's decision in Om Parkash Gupta v. Dr. Rattan Singh, it held that a mere denial of the landlord-tenant relationship does not oust the jurisdiction of the statutory tribunals; the tribunals must be able to determine that preliminary question as part of their statutory function. The power to grant substantive relief under the Act includes, in appropriate cases, the power to grant provisional relief by interim order.

However, the Court emphasized that the power to make interim orders is discretionary and must be exercised with care. The Court explained the policy reasons that should govern that discretion: where an interim order requires a person proceeded against to deposit rent, but later proceedings establish that the person was not the tenant, complications could arise — for example, the landlord might recover rent twice from different persons or the person subjected to the interim order might suffer undue loss. To avoid such adverse consequences, the Controller should examine the circumstances and exercise discretion properly.

Applying these principles to the present case, the Court observed that the Tribunal and Controller had formed an impression (after examining letters on record) as to the tenancy history: the premises had been originally let to Rai Ranjit Rai personally and there was an impression that he had surrendered the tenancy in favour of the appellant company in or about 1957. The appellant (whose Managing Director is Rai Ranjit Rai) had offered to pay rents under protest or provide guarantees to protect the landlord. Given the circumstances and the Controller's and Tribunal's findings on prima facie facts, the Court concluded it was appropriate to uphold the direction for deposit but with protective clarifications.

The Court therefore upheld the order directing deposit, while clarifying that the deposit was to remain with the Controller and could not be withdrawn until the specific question of whether the appellant is the tenant was finally decided. The Court gave the appellant further time to comply with the deposit direction and made clear the interim nature of the order; it also stated that if the landlord ultimately failed to establish that the appellant was the tenant, the deposited amount would be refunded to the appellant.

Holding and Implications

Holding: The Court upheld the order of the Rent Control Tribunal directing deposit of arrears and future rent but modified it by clarifying protective conditions. The appeal was partly allowed to the extent of the stated modifications. There was no order as to costs.

Implications and direct effects:

The appellant is directed under section 15(2) of the Act to deposit with the Controller, within one month of the date of this Court's order, amounts calculated at the monthly rate specified in the earlier orders (recorded in the opinion as Rs. 1,940 per month) for arrears from January 1, 1969 up to the month prior to the month in which the deposit is made, and to continue monthly deposits by the 15th day of each succeeding month.
The amount so deposited shall remain with the Controller and no party shall be entitled to withdraw it until the Additional Controller adjudicates the question whether the appellant is the tenant and makes an order for payment of the deposit.
The order is expressly interim and without prejudice to the substantive claims of the parties; if respondent No. 1 (the landlord) fails to establish that the appellant is the tenant, the deposited amount shall be refunded to the appellant.

The opinion does not purport to lay down a new principle of law beyond applying and following Supreme Court authority; its principal function is to apply established precedent to the facts and to shape an appropriate interim remedy that protects the parties' rights pending final determination of the tenancy question.

Disposition (as stated in the opinion): Appeal partly allowed.

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Rai & Sons(P). Limited. v. Phelps & Co. (P). Limited And Other

P.N Khanna, J.:— This is an appeal under section 39 of the Delhi Rent Control Act, 1958, herein called ‘the Act’ by M/s Rai & Sons Pvt. Ltd. a company which is alleged to be the tenant in a portion of the building known as Phelps Building, in Connaught Place, New Delhi, against the order dated March 18, 1970, of the Rent Control Tribunal, Delhi, who dismissing its appeal, confirmed the order dated January 12, 1970 of the learned Additional Controller, Delhi directing the appellant under section 15(2) of the Act to deposit the arrears of rent at the rate of Rs. 1,940,-per month with effect from January 1, 1969 up to date within one month of the order and also to deposit futhre rent month by month by the 15th day of the next following month at the same rate. During the pendency of the application for eviction of the appellant and respondents No. 2 to 5 on the ground that the appellant had sublet, assigned or otherwise parted with possession of portions of the tenancy premises in favour of respondents Nos. 2 to 5 without the landlord's consent, an application under section 15(2) of the Act was made by the respondent No. 1 for directions against the appellant to pay arrears of rent and the future rent. The appellant company constested the claim of respondent No. 1. It contended that the eviction petition was filed on the basis of a tenancy which admittedly was created in the year 1955. This tenancy was in favour of one Rai Ranjit Rai in his personal capacity with a right to use the premises for the purposes of the business of the companies with which he was associated. Although the rent was paid by the appellant during the past few years, this, the appellant contended, was being done for and on behalf of Rai Ranjit Rai, who never surrendered his tenancy and continues to be the tenant up to this date. The rate of rent was also disputed. The appellant's averments were, however, denied by respondent No. 1, the landlord.

2. The Additional Controller held that prima facie the relationship of landlord and tenant existed between the parties; and that the appellant had prima facie agreed to pay Rs. 1940/- per month as rent. The appellant was, therefore, directed to pay the arrears of rent and future, as stated above The learned Rent Control Tribunal in appeal, concurred in this finding, dismissed the appeal and confirmed the said order of the learned Additional Controller. The appellant has come up to this court in second appeal against the said order.

3. At the outset, the learned counsel for the appellant, Mr. Ved Vyas, referred to three alternatives which were offered by the appellant-Company to respondent No. 1 during the course of arguments before the learned Rent Control Tribunal and which offer was repeated in this court, i.e

(a) Mr. Ranjit Rai shall deposit the entire amount of rent up to date and shall go on depositing rent from month to month without prejudice to the contentions of the respondent landlord;

(b) The appellant company shall furnish bank guarantee for the total amount and rent due up to date and shall augment this guarantee periodically to safeguard all legitimate right of the landlord; or

(c) The appellant company shall pay the entire amount of rent up to date and shall make further commitments monthly, under protest without prejudice to the contentions of the parties.

4. Mr. Radha Mohan Lal, the learned counsel for respondent No. 1 however, insisted that none of the aforesaid alternatives was acceptable to his client as none was in accordance with law. Offer (c) could be accepted by his client only if the payment was made unconditionally. The landlord, according to him, was and not entitled to the arrears of rent of the premises and the question of attaching conditions did not arise which were neither waranted by law nor acceptable to his client. Respondent No. 1, the landlord, would be within his rights to receive the rent, he urged; and in case the relationship of landlorc and tenant was not established ultimately, the appellant could file a civil suit to recover the amount paid by him.

5. Mr. Ved Vyas then contended that an order for deposit of rent under section 15(2) of the Act could be passed only if the relationship of landlord and tenant, which has been denied by the appellant in this case, was established. There was no provision in the Act for making an interim order on the basis of some so-called prima facie evidence of the relationship of landlord and tenant, when the person proceeded against as a tenant asserts that he is not a tenant. The refference by the learned Tribunal, submitted Mr. Ved Vyas, to the judgment of the Calcutta High Court in Jamini Khan v. Dhirendra Nath Jundu . A. I. R 1953 Cal. 762. where a learned single Judge observed that the section must be given a workable meaning, was of little relevance in view of the judgment of Division Bench of that Court in G. R Gellatly v. J.R.W Cannon,2 where the appellant conceded that he was a tenant, and on the basis necessary orders were passed. But, in his written statement he had taken up the plea that he was not a tenant, Dealing with that plea, the Division Bench observed that “the Rent Act can apply only to tenants. In fact, section 14(4) itself says that an order under that section will be made if the ‘tenant’ contests the suit. If the person, sued as a tenant, pleads that he is not a tenant then till that question is decided against him there can be no question of proceeding against him there as tenant or applying to him section 14(4) or any other provision of the rent act” The learned counsel, submitted that unless it was firmly established that the appellant was a tenant and a finding to that effect was given, order under section 15(2) could not be passed on the basis of a so-called summary inves. tigation.

6. A reading of section 15, makes it clear that in every proceeding for the recovery of possession of any premises on the ground that the tenant inspite of two months notice of demand has neither paid nor tendered the whole of the arrears of rent legaly recoverable from him, the Controller, after hearing the parties, has to make an order directing the tenant to pay to the landlord or deposit with the Controller within one month, the arrears of rent; and to continue to pay or deposit, month by month, by the fifteenth day of each succeeding month, the monthly rent. In proceedings for eviction on any ground other than the non-payment of rent, the Controller, on an application from the landlord for the purposes, can like wise make a similar order. The section contemplates two situations, where either the amount or rate of rent is in dispute, or there is any dispute as to the person or persons to whom the rent is payable. In both such cases, the Controller has the power to resolve the dispute. It is also provided that pending the final decision by the Controller in each of the said two cases, interim order have to be passed by the Controller. In one case interim rent is fixed while in the other case the tenant is directed to deposit with the Controller the amount of rent, which cannot be withdrawn by any party till the dispute is finally decided by the controller and order for payment is made by him No specific provision has been made in the Act for the case where the person proceeded against as a enant denies that he is a tenant.

7. Mr. Radha Mohan Lal, the learned counsel for respondent No. 1, contended that the Additional Controller had the jurisdiction to determine whether the appellant was a tenant or not; and was bound to pass an order under section 15(2) of the Act. when the application was made to him for the purpose, by respondent No. 1. He relied on Om Parkash Gupta v. Dr. Rattan Singh . 1963 65 P. L R. 543., where the Supreme Court observed:—

“If the relationship is denied, the authorities under the Act have to determine that question also, because a simple denial of the relationship cannot oust the jurisdiction of the tribunals under the Act. True they are tribunals of limited jurisdiction, the scope of their power and authority being limited by the provisions of the Statute. But, a simple denial of the relationship either by the alleged landlord or by the alleged tenant would not have the effect tf ousting the jurisdiction of the authorities under the Act because the simplest thing in the world would be for the party interested to block the proceedings under the Act to deny the relationship of landlord and tenant. The tribunals under the Act being creature of the Statute have limited jurisdiction and have to function within the four corners of the Statute creating them. But, within the provisions of the Act. they are tribunal of exclusive jurisdiction and their orders are final and not liable to be questioned in collateral proceeding like a separate suit or application in execution proceeding. In our opinion, therefore, there is no substance in the contention that as soon as the appellant denied the relationship of landlord and tenant, the jurisdiction of the authorities under the Act was completely ousted.”

8. In the case before the Supreme Court, the appellant had denied that he was a tenant and had asserted that he was a licensee under the tenant. The Additional Controller, however, passed an order directing the appellant to deposit the arrears of rent and future rent as and when it became due. The respondent in the said case then made an application under sub-section 15(7) of the Act for striking out his defence against eviction on the ground that the appellant had failed to make the payment or deposit. The appellant denied that he had made any default in the regular payments and asserted that if there was a default, it was not intentional and was the result of miscalculation. This was his attempt to enjoy the benefits under the Act, as a tenant. The Controller however, struck out his defence. It was under these circumstances, that the Supreme Court observed “Such an order can be passed by the Controller, for the benefit of the tenant, only if the Controller decides that the person against whom the proceedings for eviction had been initiated was in the position of a tenant. Thus any order passed by the Controller eitherunder section 15 or other sections of the Act, assumes that the Controller has the jurisdiction to make the order, i. e. to determine the issue of relationship. In this case, when the Controller made the order for deposit of arreas of rent due under section 15(1) and on default of that made an order under sub-section (7) of section 15, striking out the defence, the controller must be deemed to have decided that the appellant was a tenant.”

9. Thus, it is manifest that though no specific provision is made in the Act, authorising the Controller to decide whether the person proceeded against is a tenant or not the Supreme Court has settled that the jurisdiction of the Controller to decide this controversy is not ousted by the denial of the existence of the relationship of landlord and tenant by one of the parties. The power to grant a relief would normally include the power to grant that relief on a provisional basis also, in appropriate cases, by an interim order. The jurisdiction to decide to relationship between the parties, therefore, includes the authority to make interim order in this respect, in appropriate cases,. This is a matter in the discretion of the Controller, which has to be exercised keeping in view all the circumstances of the case. A situation may arise when after going into full evidence led by the parties, the Controller may come to the conclusion that the person proceeded against as a tenant is not a tenant; and some other person is a tenant. In such a case, the landlord may become entitled to recover rent from that person, who may ultimately be adjudged to be the tenant. If the landlord has in the meanwhile recovered rent, under an interim order, from a person who, though proceeded against as a tenant, has ultimately been held not to be tenant, then the landlord may be able to recover the same rent twice over from two different persons. The person proceeded against as a tenant, though wrongly, may then have to experience difficulties and face proceedings to recover the amount, which he may have paid in compliance with the interim order of the Controller. Such and other complications have to be avoided and the Controller, therefore, has to exericise his discretion, in suitable cases in a proper manner only after examining all the facts involved in the case.

10. In the present case, the Rent Control Tribunal was left with an impression, after examining certain letters on record that the premises in dispute were let out to Rai Ranjit Rai in his individual capncity and not to the appellant company. The learned Tribunal after referring to certain other letters then formed an impression that Rai Ranjit Rai surrendered the tenancy in favour of the appellant company sometimes in 1957, although this was not the case set up by the landlord. Rai Ranjit Rat is the Mannaging Director of the appellant company. One of the alternatives offered on behalf to the appellant was that the appellant company would pay the entire amount of rent up to date and shall make further commitments monthly under protest without prejudice to the contentions raised by them The Appellant Company is thus prepared to pay the rent provided that the company's interest is safeguarded in case it is finally held that the appellant is not the tenant. The order of the learned Rent Control Tribunal confirming the order of the Additinoal Controller directing the appellant to deposit the entire arrears of rent with effect from 1.1.1969 up to date at Rs. 1941/- per month can, therefore, be allowed to stand with the clarification that the amount deposited by the appellant will remain deposited with the Controller and none of the parties will be entitled to withdraw the same, without the order of the Controller in this connection after the question whether the appellant is the tenant or not is finally decided. As the time allowed in the original order for payment, has already run out, further time has also to be given to the appellant to comply with the orders. The appellant is accordingly directed under section 15(2) of the Act to deposit with the Controller within one month of the date of this order an amount calculated at the rate of Rs. 19401-per month with effect from January, 1969 up to the end of the month previous to that in the which deposit is made and continue to deposit month by the 15th day of each succeeding month a sum equivalent to the rent at the said rate. No person shall be entitled to withdraw the amount so deposited, untill the Additional Controller decides the relationship of landlord and tenant between the parties and makes an order for payment of the same. This order is of an interim nature and will not prejudice the respective claims of the parties. In case, respondent No. 1 fails to establish that the appellant is a tenant, the amount lying in deposit with the Controller as a result of this order shall be refunded to the appellant.

11. The order of the Rent Control Tribunal is accordingly upheld with the aforesaid modifications. The appeal is thus partially allowed to that extent. There shall be no order as to costs.

12. Appeal partly allowed

Rai & Sons(P). Limited. v. Phelps & Co. (P). Limited And Other

Structured Summary of the Opinion — P. N. Khanna, J.

Factual and Procedural Background

Legal Issues Presented

Arguments of the Parties

Appellant's Arguments (as advanced by Mr. Ved Vyas)

Respondent No. 1 (Landlord) Arguments (as advanced by Mr. Radha Mohan Lal)

Table of Precedents Cited

Court's Reasoning and Analysis

Holding and Implications

Rai & Sons(P). Limited. v. Phelps & Co. (P). Limited And Other

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