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  • section 14(1) of the Delhi Rent Control Act, 1958 (for short the Act). Rent
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  • section 14(1) of the Delhi Rent Control Act, 1958 (for short the Act). Rent
Smart Summary

Case Summary — Decision on Withdrawal of Deposit after Subsequent Supreme Court Order

Factual and Procedural Background

In February 1967 the appellants (landlords) filed an eviction petition against the respondent under clauses (a) and (e) of the proviso to section 14(1) of the Delhi Rent Control Act, 1958, claiming rent from 1 March 1964 at Rs. 67.50 per month and alleging failure to pay a demand dated 15 October 1966.

The respondent stated that, in other proceedings, interim rent of Rs. 55 per month had been fixed. Pursuant to that, on 28 July 1967 the Additional Controller directed the respondent under section 15(1) of the Act to deposit arrears from 1 March 1964 at Rs. 55 per month and to pay future rent at that rate pending decision.

On 20 July 1976 the Additional Controller found non-compliance with the section 15(1) order and ordered eviction under section 14(1)(a); the ground under section 14(1)(e) was negatived. The Rent Control Tribunal confirmed eviction on 27 September 1979. There was no stay of eviction during the Tribunal appeal and the landlords obtained possession on 9 October 1976.

The respondent's second appeal (S.A.O. No. 42 of 1980) was allowed by this Court on 8 May 1980: this Court held the rent was Rs. 67.50 as res judicata and that the respondent had complied with the section 15(1) order, dismissed the eviction petition and directed the landlords to restore possession. The respondent agreed that the difference of Rs. 12.50 per month (between Rs. 67.50 and the interim Rs. 55) for the period up to 9 October 1976 was payable and was directed to deposit Rs. 1,735.50 with the Additional Controller; the landlords were not entitled to withdraw the deposit unless and until possession was handed over.

The landlords appealed to the Supreme Court. During those proceedings it emerged that the respondent (through his wife) had acquired a DDA flat and was in possession of a vacant residence; the Supreme Court allowed the landlords to amend their eviction petition under section 14(1)(h) and, on that basis, allowed the landlords' petition and set aside this Court's judgment (Prem Chand v. Sher Singh (1981) 2 DRJ 287). Consequently the order of this Court directing restoration of possession was set aside.

The respondent had deposited Rs. 1,735.50 as directed on 8 May 1980, and the landlords withdrew that sum on 22 May 1981. The respondent then applied on 13 July 1981 to the Additional Controller for refund of the deposit on the ground that possession had not been restored as directed by this Court. The Additional Controller and the Tribunal held that possession had not been restored and granted the refund. The landlords appealed against that relief.

Legal Issues Presented

  1. Whether the respondent was entitled to withdraw the sum of Rs. 1,735.50 deposited pursuant to this Court's order dated 8 May 1980, on the ground that the landlords did not restore possession to him.
  2. What is the effect of the Supreme Court's subsequent order (which set aside this Court's order for restoration of possession and allowed eviction under section 14(1)(h)) on the condition restricting withdrawal of the deposited amount?

Arguments of the Parties

Appellants' (Landlords') Arguments

  • The landlords contended they were entitled to the deposited amount as arrears of rent for the period 1 March 1964 to 9 October 1976 at the higher rate of Rs. 67.50 per month; the deposit represented arrears due to them.
  • They argued that the Additional Controller and the Tribunal erred in directing refund because the only restriction in this Court's 8 May 1980 order was that the landlords should not withdraw the deposit unless they handed over possession; that order for restoration of possession was subsequently set aside by the Supreme Court, making it impossible for the landlords to hand over possession.
  • Therefore, after the Supreme Court's decision allowing eviction under section 14(1)(h) and setting aside this Court's judgment, the landlords were not obligated to deliver possession and were entitled to retain the deposited sum.

Respondent's Position (as reflected in the record)

  • The respondent relied on this Court's 8 May 1980 direction that the net sum of Rs. 1,735.50 be deposited and that the landlords should not be entitled to withdraw it unless they restored possession. Because possession was not restored, he applied for withdrawal of the deposit.
  • The Additional Controller and the Tribunal accepted that possession had not been restored as directed by this Court and therefore held the respondent entitled to the refund.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Prem Chand v. Sher Singh, (1981) 2 DRJ 287 Supreme Court's allowance of landlords' amended eviction petition under Section 14(1)(h) and setting aside this Court's earlier judgment directing restoration of possession. The court relied on the Supreme Court's decision to conclude that the earlier order (requiring landlords to restore possession and restricting withdrawal of deposit until restoration) had been set aside; that subsequent development meant landlords were not required to deliver possession and therefore could retain the deposit.
Sher Singh Gupta v. Prem Chand, 1980 Raj. Law Reporter 413 This Court's earlier judgment dated 8 May 1980 directing the tenant to deposit Rs. 1,735.50 as the net difference for the relevant period, with the condition that landlords could not withdraw the deposit unless they handed over possession to the tenant. The court recited the operative paragraph of that judgment and treated it as the source of the deposit and the withdrawal restriction; it then contrasted that order with the subsequent Supreme Court ruling which set aside the restoration-of-possession direction in that judgment.

Court's Reasoning and Analysis

The court's analysis focused on the temporal sequence of judicial orders and the effect of the Supreme Court's intervening decision. The key analytical steps, as reflected in the opinion, were:

  1. Identify the operative undertaking and restriction in this Court's 8 May 1980 judgment: the respondent was to deposit Rs. 1,735.50, but the landlords would not be entitled to withdraw that sum unless and until they handed over possession to the respondent.
  2. Note the subsequent development before the Supreme Court: on appeal the landlords successfully amended their eviction petition to plead acquisition of a vacant residence by the respondent's wife and the Supreme Court allowed eviction under section 14(1)(h), setting aside this Court's earlier order that required restoration of possession.
  3. Reason that because the Supreme Court set aside this Court's direction to deliver possession, the condition for withdrawal (that possession be handed over) could not be fulfilled; however, the court framed the legal question as whether the landlords were entitled to retain the deposited arrears notwithstanding the earlier restriction in light of the Supreme Court's order.
  4. Evaluate the orders of the Additional Controller and the Tribunal, which had held that because possession was not restored the respondent was entitled to a refund. The court concluded that these bodies failed to take into account the subsequent Supreme Court judgment which vacated the restoration order.
  5. Apply the consequence of the Supreme Court's ruling: since the restoration-of-possession order was set aside, the landlords were no longer in a position where they could be required to restore possession; accordingly the earlier condition limiting withdrawal lost its operative force as against the landlords in the changed legal landscape.

On that basis the court determined that the Additional Controller and the Tribunal were wrong to order a refund and that the landlords were entitled to retain the deposited amount.

Holding and Implications

Holding: The appeal is allowed. The judgment and order dated 21 March 1984 (which confirmed the Additional Controller's order dated 20 January 1984) are set aside, and the respondent's application dated 13 July 1981 for withdrawal of the amount deposited by him is dismissed. No order as to costs. (Concluding note: "Appeal allowed.")

Implications:

  • Direct effect on the parties: The respondent is not permitted to withdraw the Rs. 1,735.50 deposited under this Court's 8 May 1980 order; the landlords may retain the amount because the Supreme Court set aside the earlier restoration-of-possession direction that had been the condition for withdrawal.
  • The court's decision rests on the subsequent Supreme Court order changing the legal position between the parties; the opinion does not purport to lay down any new general legal principle beyond applying those orders to the present dispute.
Appeal allowed

    Prem Chand & Another v. Sher Singh Gupta .

    Sultan Singh, J.—The appellants-landlords filed a petition for eviction of the respondent in February 1967 on the grounds mentioned in clauses (a)&(e) of the proviso to section 14(1) of the Delhi Rent Control Act, 1958 (for short ‘the Act’). Rent was claimed from 1st March, 1964 @ Rs. 67.50 They alleged that a notice of demand dated 15th October, 1966 was served upon the respondent but he neither paid nor tendered any amount. In the written statement the respondent alleged that in other proceedings interim rent was fixed at Rs. 55/- per month. The Additional Controller therefore passed an order dated 28th July, 1967 under section 15(1) of the Act directing the respondent to deposit arrears of rent from 1st March, 1964 at Rs. 55/- per month and future rent at the said rate by the 15th of the succeeding month till the decision of the case.

    2. By order dated 20th July, 1976 the Additional Controller held that the respondent had failed to comply with the order passed under Section 15(1) of the Act. He therefore passed an order of eviction under Section 14(1)(a) of the Act. The other ground of eviction under Section 14(1)(e) of the Act was negatived.

    3. On appeal the Rent Control Tribunal by order dated 27th September, 1979 confirmed the order of eviction on ground of non-payment of rent. During the pendency of the appeal before the Tribunal there was no stay of the eviction order. The appellants in execution obtained possession of the premises on 9th October, 1976.

    4. The respondent filed second appeal (S.A.O No. 42 of 1980) which was accepted on 8th May, 1980. It was observed that in the previous litigation between the parties the agreed rent was held to be Rs. 67.50 per month and that finding was res judicate. This court further held that the respondent had complied with the order passed under Section 15(1) of the Act and therefore he was not liable to be evicted. The eviction petition was dismissed. As the landlord-appellants had taken possession of the premises during the pendency of the appeal before the Tribunal this court directed the landlords to restore possession of the premises to the respondent. The respondent at that time had agreed: that a sum of Rs. 12.50 per month being the difference between rent @ Rs. 67.50 per month and the rent at Rs. 55/- per month deposited by him was payable to the appellants for the period ending 9th October, 1976. This court therefore directed the respondent to deposit the sum of Rs. 1735.50 as arrears upto 9th October, 1976 within one month from the date of the order. A condition was however placed that the landlords would not be entitled to withdraw the amount so deposited unless possession of the premises was handed over to the respondent.

    5. The landlords filed an appeal in the Supreme Court challenging the judgment and order of this court. Before the Supreme Court it was discovered that the respondent-tenant had acquired a flat from Delhi Development Authority in the name of his wife and that flat was available to the respoddent the Supreme Court allowed the appellants to amend their petition for eviction respondent that the respondent had acquired possession of a vacant residence within the meaning of Section 14(1)(h) of the Act. The respondent filed his reply to the amended petition for eviction. After considering the averments of the parties the Supreme Court held that the respondent had through his wife acquired vacant possession of a residence in Delhi the appellants petition for eviction of the respondent under Section 14(1)(h) of the Act was allowed “and the judgment of this court was set aside (see: Prem Chand v. Sher Singh, (1981) 2 DRJ 287).

    6. The respondent-tenant in accordance with the order of this court dated 8th May 1980 had deposited the amount of Rs. 1,735.50 which was withdrawn by the appellants on 22nd May 1981.

    7. The respondent-tenant filed an application on 13th July 1981 before the Additional Controller for withdrawal of the amount deposited by him as the landlords-appellants had not restored possession in accordance with the order of this Court. The appellants resisted the refund of the amount but the Additional Controller and the Tribunal held that possession was not restored as directed by this court and therefore the respondent was entitled to the refund of the said amount.

    8. The judgment dated 8th May, 1980 of this Court is Sher Singh Gupta v. Prem Chand 1980 Raj. Law Reporter 413. The last paragraph of the judgment reads as under:

    “Counsel for the landlords have argued that the tenant should be required to deposit Rs. 12.50 per month for the period from 1-3-1964 to 9-10-1976 the date on which he was dispossessed. It is admitted by the tenant that for this period he has paid rent at the rate of Rs. 55/- per month, the interim rate fixed by the Additional Controller. No doubt the rent has been held to be Rs. 67.50 by this court in revision. The tenant ought to pay the difference of Rs. 12.50 p.m He is prepared to dp so. This amount comes to Rs. 1,887.50. Counsel for the landlords agree that they have received an excess amount of Rs. 151/- from the tenant. They are prepared to give a credit for it. Therefore the net amount comes to Rs. 1,735.50. The tenant is directed to deposit this amount. He will do so in cans with the Additional Controller. But the landlords will not be entitled to withdraw the amount so deposited unless and until they hand over possession to the tenant in terms of my order”.

    9. Learned counsel for the appellants submits that the appellants were entitled to the amount of rent for the period 1st March, 1964 to 9th October, 1976 at Rs. 67.50 per month and the amount in question was deposited by the respondent as arrears for the period only. He submits that the Controller and the Tribunal have erred in directing the refund of the amount to the respondent. The order of this court directing the appellants to restore possession to the respondent was set aside by the Supreme Court. According to the above observation of this court the only restriction was that the landlords would not be entitled to withdraw the amount so deposited unless they hand over the possession to the tenant. It is not disputed that the amount was due to the appellants arrears for the period ending 9th October, 1976 but the question is whether they are entitled to retain it without handing over possession. The order of this court directing delivery of the possession to the respondent was wet aside by the Supreme Court and therefore it is not possible for the appellants to deliver possession to the respondent. The Additional Controller and the Tribunal have observed that as possession was not delivered, the landlords were not entitled to retain the amount. This is wrong approach. The order directing the appellants to deliver possession to the respondent was set aside by the Supreme Court and as such the appellants were not required to deliver possession. The Tribunal and the Additional Controller, in my view, have not taken into consideration the subsequent events and facts since the passing of the order dated 8th May, 1980 by this court. After taking into consideration the order of the Supreme Court, it is clear that the appellants were granted an order for eviction of the respondents under Section 14(1)(h) of the Act and judgment of this Court directing delivery of possession to the respondent was set aside.

    10. The appeal is accepted setting aside the judgment and order dated 21st March, 1984 confirming the order dated 20th January, 1984 of the Additional Controller. The application of the respondent dated 13th July, 1981 for withdrawal of the amount deposited by him is dismissed. No order as to costs.

    Appeal allowed
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    Comments

    Prem Chand & Another v. Sher Singh Gupta .
    (Oct 30, 1984)