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Ram Sarup v. Raj Dulari

Delhi High Court
Sep 25, 1972
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Judicial Opinion Summary — P.N. Khanna, J.

Factual and Procedural Background

The respondent landlady, Raj Dulari, filed an eviction petition against the appellant tenants. In their written statement dated November 2, 1965, the tenants asked for fixation of standard rent under the Delhi Rent Control Act, 1958 ("the Act") for premises taken on rent in 1958.

The landlady filed an application under section 15(2) of the Act seeking directions for deposit of arrears of rent claimed from February 1, 1962 at Rs. 175 per month. On March 15, 1963 the Additional Controller fixed an interim rent of Rs. 125 per month under section 15(3) and directed arrears and future rent to be paid at that rate. The eviction petition was dismissed in default on February 6, 1965.

During the pendency before the Controller the appellants deposited Rs. 4,500 with the Additional Controller. The appellants' application of June 4, 1966 for determination of their plea for fixation of standard rent was dismissed; appeals from that order were dismissed, and a related second appeal (SAO 265 of 1968) was also dismissed by the same bench by a separate order.

Meanwhile, on October 16, 1965 the respondent-landlady instituted a suit seeking recovery of a balance of Rs. 3,200 as arrears. She claimed total arrears of Rs. 7,700 (for February 1, 1962 to September 30, 1965 at Rs. 175 per month), from which Rs. 4,500 deposited with the Controller was adjusted, leaving Rs. 3,200 claimed due.

The Sub-Judge held the appellants liable for rent at Rs. 175 per month but found certain earlier shortfalls barred by limitation and decreed Rs. 2,800. Cross-appeals by both parties were dismissed by the Additional District Judge. The present second appeal and cross-objections followed to this Court (decision recorded in this opinion).

Legal Issues Presented

  1. Whether a decree for arrears of rent can be passed by the landlord where the tenant's prayer for fixation of standard rent was pending or had not been decided.
  2. Whether the landlord can recover rent in excess of an interim rent fixed under section 15(3) of the Act during the pendency of the proceedings in which the interim rent was fixed.
  3. Whether, for purposes of limitation, arrears of rent in excess of the interim rent become due—and thus the cause of action accrues—before or only on the termination of the proceedings in which the interim rent was fixed.
  4. Whether the amounts claimed by the landlady (including a sum calculated as Rs. 50 per month difference for certain months) were barred by limitation.

Arguments of the Parties

Appellants' Arguments

  • The appellants contended that because standard rent had not been fixed, the landlady could not obtain a decree for arrears of rent.
  • They further argued that, at most, they could be required to pay only the interim rent of Rs. 125 per month fixed by the Additional Controller and could not be called upon to pay more than that rate.

Respondent-Landlady's Arguments

  • The landlady sought recovery of arrears calculated at the contractual rate of Rs. 175 per month, claiming total arrears of Rs. 7,700 and, after adjustment of deposits with the Controller, a balance of Rs. 3,200.
  • She argued (by cross-objection) that the learned Additional District Judge was wrong to disallow Rs. 400 on the ground of limitation and that this amount should be decreed in her favour.
  • It was also contended that there was no legal bar to demand rent at a rate higher than the interim rent, analogous to the position under section 5 of the Act (as argued by the landlady).

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
M.M. Chawla v. J.S. Sethi, 1969 RCJ 913 (Supreme Court) The interpretation of sub-section (3) of section 15: interim rent is to be paid at the rate at which it was last paid until the standard rent is determined; the Controller must fix interim rent within prescribed time and the expression 'having regard to the provisions of this Act' refers to sections 9 and 10. The Court relied on the authority to state that the Additional Controller should have fixed interim rent at the rate last paid and should fix standard rent only if it could be fixed under sections 9 and 12. The opinion also notes that the author's following of M.M. Chawla in these proceedings had been addressed in a separate order (SAO 265 of 1968) where fixation was held barred by time.
Musumat Ranee Surno Moyee v. Shooshee Mokhee Burmonia, 12 Moore's Indian Appeals 244 (Privy Council) When rights are restored (here by setting aside an auction sale and restoring possession), arrears of rent are to be taken as having become due in the year in which restoration to possession took place. The Court used this reasoning by analogy to hold that when the interlocutory protection limiting landlord's claim (the interim rent order) ceased on termination/restoration (dismissal of eviction), arrears in excess of interim rent became due on that date for limitation purposes.
Hem Chandra v. Kali Prassanno, 30 Indian Appeals 177 (Privy Council) Authority supporting the proposition that the statute of limitation begins to run only when the cause of action accrues. The Court invoked this authority to support the conclusion that limitation for recovery of excess rent begins only when the excess becomes due—here, on termination of the proceedings imposing the interim rent.

Court's Reasoning and Analysis

The Court proceeded through the following analytical steps (based exclusively on the reasoning in the opinion):

  1. The Additional Controller's March 15, 1963 order fixing an interim rent of Rs. 125 per month was passed in accordance with the then prevailing practice but was an interlocutory order that had to be complied with while it remained in force. The practice then did not always fix interim rent at the rate it was last paid; nevertheless, the Controller had jurisdiction to make the order even if the view of law underlying it was later found erroneous.
  2. The interim rent order limited the tenants' obligation during the pendency of the eviction proceedings to pay rent at the interim rate and thereby suspended the landlord's right to claim rent in excess of that interim rate for the period the order operated. This construction was required by section 15(3) so as not to render that protection illusory.
  3. The interlocutory order ceased to operate on February 6, 1965 when the eviction petition was dismissed in default. Once that happened, there was no longer any limitation on the landlord's right to claim the contractual rent; hence the contractual rent of Rs. 175 per month "revived" with retrospective effect insofar as the landlord could pursue outstanding balances which she could not claim while the interim rent was effective.
  4. Consequently, the landlord's cause of action to recover rent in excess of the interim rent (the difference) accrued only on February 6, 1965—the date the eviction proceedings terminated—and not earlier. Until that date the tenant had no legal obligation to pay the excess; the tenant's obligation to pay the difference crystallised only on termination of the interim-protected period.
  5. Applying this accrual rule to the asserted shortfall of Rs. 50 per month for the period February 1, 1962 to September 30, 1962, the Court held that that difference became due on February 6, 1965. Because the landlady filed suit on October 16, 1965, the claim was within the period of limitation and thus not time-barred.
  6. The Court rejected the appellant-tenants' submission that they could be made to pay no more than the interim rent fixed by the Additional Controller while upholding that while the interim order remained in force it must be complied with; but once it expired the contractual rate could be enforced retrospectively to the extent the law permitted.
  7. On the cross-objection regarding the Rs. 400 previously disallowed on limitation grounds, the Court held that the cause of action for the excess accrued only on dismissal (February 6, 1965) and therefore the earlier disallowance for limitation was unsustainable.

The Court repeatedly anchored its construction of section 15(3) on the need to give effect to the tenant protection imagined by that provision and to avoid rendering it illusory.

Holding and Implications

Holding:

DISMISSED — The appeal of the appellants is dismissed. The respondent-landlady's cross-objections are allowed. The judgments and decrees below are modified and the suit of the respondent-landlady is decreed for Rs. 3,200 against the appellants. There shall be no order as to costs in the peculiar circumstances of the case.

Immediate consequences for the parties:

  • The appellants (tenants) are held liable to pay the contractual rent at Rs. 175 per month and the landlord is entitled to recover the arrears calculated on that contractual rate to the extent determined (resulting in decree of Rs. 3,200).
  • The interim rent order (Rs. 125) operated only during the pendency of the eviction proceedings; once those proceedings were dismissed (February 6, 1965), the landlord's right to claim arrears in excess of the interim rent accrued and became enforceable.
  • For limitation purposes, the cause of action for arrears in excess of an interim rent accrues only on termination of the proceedings that gave rise to the interim rent, not before.

Broader legal implications:

The opinion applies and explains the legal effect of section 15(3) of the Delhi Rent Control Act, 1958: while an interim rent order is in force it prevents the landlord from recovering excess rent; on termination of the proceedings the landlord may recover the excess where the contractual or standard rent becomes enforceable. The Court did not purport to set a novel precedent beyond applying existing authorities; it also noted related findings in a separate decision (SAO 265 of 1968) between the same parties concerning the time-bar on fixation of standard rent.

Show all summary ...

P.N Khanna, J.:— In their written statement dated November 2, 1965, filed in reply to an eviction petition of Raj Dulari, respondent landlady, the appellant tenants made a prayer for fixation of standard rent under the Delhi Rent Control Act, 1958, herein called ‘the Act’, for the premises in dispute, which had been taken on rent in 1958. An application under section 15 (2) of the Act was filed by the landlady for directions to the appellants for deposit of arrears of rent due from February 1, 1962 at the rate of Rs. 175/- per month. On March 15, 1963, the Additional Controller fixed Rs. 125/- per month as the interim rent, under section 15 (3) of the Act and directed the arrears and future rent to be paid at that rate. The eviction petition, however, was dismissed in default on February 6, 1965. In the meantime, the appellant tenants had deposited with the Additional Controller from time to time a sum of Rs. 4500/- in all. The appellants filed an application before the Additional Controller on June 4, 1966 for determination of their plea for fixation of standard rent, but the same was dismissed. The appeal against the said order was also dismissed and a second appeal to the High Court, SAO 265 of 1968, has also been dismissed by me today, by a separate order.

In the meantime, the respondent-landlady filed a suit on October 16, 1965 against the appellants for recovery of Rs. 3200/- towards the balance of arrears of rent out of which this second appeal has arisen. A sum of Rs. 7700/- was claimed as arrears from February 1, 1962 up to September 30, 1965 at Rs. 175/- per month. Against this, a sum of Rs. 4500/- was adjusted as amount received in account from the Additional Controller, out of which Rs. 4,375/- were said to be towards rent due from February 1, 1962 to February 29, 1964 at Rs. 175/- per month and the remaining Rs. 125/- were said to be part payment of rent for the month of March, 1964. The balance of Rs. 3200/- was, thus, claimed to be due from the appellants to the respondent-landlady. The appellants resisted the suit and claimed, inter alia, that the respondent landlady was not entitled to claim anything unless their plea of fixation of standard rent was decided. The learned Sub-Judge, however, came to the conclusion that the appellants were liable to pay rent at the rate of Rs. 175/- per month, that the rent from February 1, 1962 onwards had been paid at the rate of Rs. 125/- per month, that the balance of the arrears at the rate of Rs. 50/- per month for the period from February 1, 1962 to September 30, 1962 amounting in all to Rs. 400/- had become barred by time and that for the remaining period, the plaintiff could claim at the rate of Rs. 175/- per month and adjust against it, the proportionate amount deposited for that period. The balance, thus, left worked out to Rs. 2,800/- which sum was decreed against the appellants. Both the respondent landlady and the appellants filed cross-appeals against the said judgment, which however, were dismissed by the Additional District Judge. The appellant tenants in their second appeal to this Court have again claimed that standard rent not having been fixed, decree for arrears of rent could not be passed and in any case decree could not be passed for rent at a rate more than the said Rs. 125/- per month, which had been fixed as the interim rent.
The respondent-landlady also filed cross-objections claiming that the order of the learned Additional District Judge disallowing Rs. 400/- towards arrears of rent on the ground that it was barred by time was erroneous and praying that the said amount Rs. 400/- should be decreed in her favour.
The interim rent at the rate of Rs. 125/- per month, as already stated, was fixed by the Additional Controller on March 15, 1963, in accordance with the then prevailing view of the law, and practice followed by the Controller, according to which, the tenant's prayer for fixation of standard rent made in the written statement was taken into consideration regardless of the limitation provided in section 12 of the Act. Interim rent also used to be fixed in an almost arbitrary manner, not necessarily at the rate at which it was last paid. The Supreme Court in M.M Chawla v. J.S Sethi., 1969 RCJ 913 (para 11), (1) observed: “Sub-section (3) provides that interim rent is to be paid, at the rate at which it was last paid, till the standard rent is determined, but thereby it is not implied that standard rent is determined as an issue arising in the action for ejectment; the clause only means that when there is a dispute relating to the rate of contractual rent payable, the Controller shall within fifteen days of the date of the first hearing of the proceeding, fix the interim rent and the amount so fixed shall be paid by the tenant until the standard rent in relation to the premises is fixed in an appropriate proceeding under the Act. The expression ‘having regard to the provisions of this Act, has reference to sections 9 and 10”.
The Additional Controller should have fixed the interim rent at the rate at which it was last paid and should have proceeded to fix the standard rent only if it could be fixed under sections 9 and 12 of the Act. The order fixing the interim rent at a rate lower than the rent at which it was last paid was an order passed under an erroneous view of the law, but it was not an order without the Additional Controller having jurisdiction to pass it. The order, so long as it stood, had to be complied with and could not be ignored. So far as the appellant's plea for fixation of standard rent was concerned, the same following the aforesaid Supreme Court authority in M.M Chawla's case (1), has already been overruled by me in SAO 265 of 1968, between the same parties, decided separately today, holding that it could not be fixed in this case, being barred by time.
The order fixing the interim rent, however, was in the nature of an interlocutory order, passed during the pendency of the eviction proceedings, which were then pending before the Additional Controller. It limited the liability of the appellant tenants to pay rent at the interim rent rate during the pendency of the eviction proceedings, subject to such adjustments as may be required on the final outcome of those proceedings at their termination. The said interlocutory order expired on February 6, 1965, when the eviction petition was dismissed in default. There was no question of the appellant's liability being limited any more to the payment of interim rent. If the standard rent ultimately fixed, in case it had been fixed, was more than the interim rent, the tenant was liable to pay the excess; and if it was less, then the tenant could claim the excess paid, from the landlord. The contractual rent, in any case, was not in force and stood modified and reduced to the rate, which was fixed, as the interim rent. Once proceedings in the instant case were dismissed and standard rent could not be fixed, the rate of contractual rent of Rs. 175/- per month revived with retrospective effect and the landlady acquired a right to claim the outstanding balance amount, which she could not claim so long as the eviction proceedings lasted and the interim rent was in force. The appellant tenants, therefore, are liable to pay the contractual rent at the rate of Rs. 175/- per month. The contention of the appellant that they cannot be called upon to pay more than Rs. 125/- per month, the interim rent fixed by the Additional Controller, is, thus, without any basis and is rejected.
Dealing with the cross-objections filed on behalf of the respondent-landlady, it is noticed that the cause of action for recovery of arrears at the contractual rate of rent in excess of the interim rent accrued on February 6, 1965 when the eviction petition was dismissed. Before that date, the landlady, as noticed already, could not ask for payment of the arrears at the contractual rate in view of the provisions of section 15 (3) of the Act. A contention was raised that there is no legal bar to demand rent at a rate higher than the rate of interim rent, as is provided by section 5 of the Act, in the case of standard rent. This contention cannot be accepted. Under section 15 (3) of the Act, the tenant's obligation is limited to his paying rent at the rate of interim rent fixed by the Controller. This automatically renders nugatory the rights of the landlord to ask for rent at a rate higher than the interim rent. For, if the landlord's right to claim rent in excess of the interim rent still remained in tact and he could file a suit for recovery thereof, the whole object of the provisions of section 15 (3) would be defeated; and the protection to the tenant provided by section 15 (3) would become illusory. The only construction that can be placed on section 15 (3) is that the interim rent is no less in effect than the standard rent, the only difference being that it is fixed on a provisional basis and subject to subsequent adjustments if necessary. But the landlord cannot claim or receive rent in excess of the said interim rent during the period it remains in force and effective. On the termination of the proceedings in which the interim rent was fixed, the landlord can claim the entire arrears at the rate of standard rent, if it is fixed and at the contractual rate, if it cannot be fixed.
The question then arises, whether the landlord can recover arrears of rent for the period prior to three years from the date of the filing of the suit for its recovery; or do such arrears become irrecoverable as having become barred by time. The order fixing the interim rent in the instant case was passed on March 15, 1962, directing the tenants to pay the arrears at Rs. 125/- per month, thereby modifying the contractual rent. The landlord could not claim or recover the arrears in excess of a sum calculated at the rate of Rs. 185/- per month, as there was no obligation of the appellants to pay the excess. The sum of Rs. 50/- out of the contractual rent became irrecoverable under the law. The retrospective operation of the order fixing the interim rent affected the entire arrears from February 1, 1962 and the contractual rent stopped falling due from month to month; with the result the rent for the month of February, 1962 and for all subsequent months was deemed to accrue due at the rate of Rs. 125/- per month, the interim rate of rent only. On payment of arrears at this rate, there remained no outstanding arrears. If the standard rent had ultimately been fixed with retrospective effect and under the law it could be fixed from one year prior to the date of the application for fixation of standard rent, then the demand by the landlord for rent in excess of the standard rent so fixed may have subjected him to the penalties provided in section 48 of the Act. The rent at the contractual rate therefore, had become irrecoverable on the fixation of the interim rent. On the dismissal of the proceedings in which the interim rent was fixed and standard rent, as already held, not being capable of being fixed, the obligation of the appellants to pay the admitted contractual rent retrospectively, which had lapsed on the fixation of interim rent, came into existence and the landlady acquired the right to recover it. Before this date, there was no legally recoverable rent, which was in arrears. The excess rent for the past period also became due only on the termination of the said proceedings. In Musumat Ranee Surno Moyee v. Shooshee Mokhee Burmonia, 12 Moore's Indian Appeals 244 (PC) (2), an auction sale of the rights of putnidars in a putni taluk by the landlord for arrears of rent was set aside and the putnidars, who had been dispossessed, restored, with mesne profits to be paid by the purchaser during the time they were out of possession. The landlord then brought a suit against the putnidars to recover the arrears of rent, which had accrued before and during the time they were out of possession. The suit was instituted after a period of more than three years from the date of the sale. The Privy Council dealing with the question of limitation held: “that, upon the setting aside of this sale, the restoration of the parties to possession, they took back the estate, subject to the obligation to pay the rent; and that the particular arrears of rent claimed in this action must be taken to have become due in the year in which that restoration to possession tock place.”
The appellant's obligation to pay the difference in the rate of rent calculated at the contractual rate and that calculated at the rate of the interim rent, thus came into existence on February 6, 1965, when the eviction petition was dismissed. The excess amount became due only on that date. The cause of action to enforce the appellant's obligation arose on that date.
The statute of limitation had not started running until the cause of action accrued and the cause of action accrued only when the said difference in the arrears became due and recoverable. (See also Hem Chandra v. Kali Prassanno, 30 Indian Appeals 177 (PC) (3). In this view of the matter, Rs. 50/- per month being the difference in the contractual rate of rent and the rate of interim rent for the period from February 1, 1962 to September 30, 1962 accrued due on February 6, 1965 when the eviction petition was dismissed. The suit for its recovery was filed on October 16, 1965. The claim of the landlady, therefore, cannot be said to be barred by time. Her entire claim accordingly is -within limitation.
The appeal of the appellants, accordingly, is dismissed, while the cross-objections of the respondent landlady are allowed. The judgments and decrees of the courts below are, accordingly, modified and the suit of the respondent-landlady is decreed for Rs. 3,200/- against the appellants. In the peculiar circumstances of the case, however, there shall be no order as to costs.
Appeal dismissed.