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Lakshmikant Shreekant (Huf) Through Its Karta, L.K Jhunjhunwala v. M.N Dastur & Company Pvt. Ltd.
Factual and Procedural Background
The plaintiff filed a suit for recovery of possession of the premises known as No. 2, Rajdoot Marg or 75/48, Chanakyapuri, New Delhi, along with recovery of rent and mesne profits. The defendant had been a tenant since at least 1960, initially paying a composite rent of Rs. 2050 per month under a lease dated 28.11.1960. In February 1990, the rent was Rs. 8,000 per month. A prior suit resulted in a compromise increasing the rent to Rs. 20,000 per month effective from 1.1.1991 for six years. After the expiry of this period, the defendant failed to vacate despite termination of tenancy by notice dated 1.1.1997, prompting the present suit. The defendant contested the suit, claiming the standard rent under the Delhi Rent Control Act was Rs. 2050 and that rent in excess was not recoverable.
Legal Issues Presented
- Whether the plaintiff is entitled to a decree for possession under Order 12 Rule 6 of the Code of Civil Procedure based on admissions in the pleadings.
- Whether the rent payable is limited to the standard rent of Rs. 2050 fixed under the Delhi Rent Control Act or the mutually agreed enhanced rent of Rs. 20,000 per month.
- Whether the suit is maintainable given the provisions and protections under the Delhi Rent Control Act.
- Whether the court should exercise its discretion under Order 12 Rule 6 CPC to pass a decree on admissions when there are disputed legal and factual issues.
Arguments of the Parties
Plaintiff's Arguments
- The landlord-tenant relationship, termination of tenancy, and rent increase to Rs. 20,000 per month from 1.1.1991 are not disputed facts.
- The defendant’s plea that the standard rent is Rs. 2050 and rent above that is not recoverable is malafide and vexatious.
- The defendant has been paying rent at Rs. 20,000 per month, including deducting TDS under the Income Tax Act on that basis, evidencing acceptance of the enhanced rent.
- The standard rent under the Delhi Rent Control Act has not been fixed, so the contractual rent mutually agreed upon applies.
- No bonafide triable issue arises; hence, the plaintiff is entitled to a decree under Order 12 Rule 6 on admissions.
- Relied on precedents including M/s. Sun Chandra and Company v. Punjab & Sind Bank (1996), Asa Singh Virdi v. Asit Kumar Sarkar (1997), and M.M Chawla v. J.S Sethi (1970) to support the position that contractual rent prevails in absence of fixed standard rent.
Defendant's Arguments
- The premises were let out in 1960 at a composite monthly rent of Rs. 2050, which is the standard rent under Section 6 of the Delhi Rent Control Act.
- Rent in excess of Rs. 2050 is not legally recoverable under the Delhi Rent Control Act.
- The power under Order 12 Rule 6 CPC is discretionary, and since issues exist as to rent entitlement and maintainability under the Rent Control Act, discretion should not be exercised to grant the decree at this stage.
- Relied on State Bank of India v. Midland Industries and Ors (AIR 1988 Delhi 153) and Bhagwan Din Tewari and Anr. v. Sheoraj and Ors (AIR 1931 Oudh 321) to argue that judgment on admission is discretionary and should not be granted if triable issues exist.
- Contended that Sections 4, 5, and 6 of the Delhi Rent Control Act bar recovery of rent exceeding the standard rent fixed in 1960.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| M/s. Sun Chandra and Company v. Punjab & Sind Bank, 1996 (5) AD (Del) 323 | Contractual rent prevails in absence of fixed standard rent under Delhi Rent Control Act. | Supported the view that rent agreed mutually and paid is valid unless standard rent fixed by Rent Controller. |
| Asa Singh Virdi v. Asit Kumar Sarkar, 1997 (43) DRJ 87 | Legal principle that contractual rent continues until standard rent is fixed. | Reinforced that absence of standard rent fixation allows contractual rent enforcement. |
| M.M Chawla v. J.S Sethi, 1970 (2) SCR 390 | Standard rent fixation and contractual rent relationship under Rent Control laws. | Used to establish that parties can mutually enhance rent unless standard rent is fixed. |
| State Bank of India v. Midland Industries and Ors, AIR 1988 Delhi 153 | Discretion under Order 12 Rule 6 CPC to refuse judgment on admission when triable issues exist. | Illustrated that courts may refuse decree under Rule 6 if issues go to the root of the case. |
| Bhagwan Din Tewari and Anr. v. Sheoraj and Ors, AIR 1931 Oudh 321 | Discretion of courts under Order 12 Rule 6 CPC to require proof despite admissions. | Confirmed that courts are not bound to grant judgment merely on admissions if discretion suggests otherwise. |
Court's Reasoning and Analysis
The court analyzed the admitted facts and legal provisions, focusing on the nature of the rent payable and the exercise of discretion under Order 12 Rule 6 CPC. It noted that the tenancy relationship and termination were admitted, as was the payment of rent at Rs. 20,000 per month after 1.1.1991. The defendant's claim that the standard rent was Rs. 2050 under the Delhi Rent Control Act was found to be malafide and vexatious, as no application for fixation of standard rent was ever made under Section 12 of the Act. Without fixation of standard rent, the contractual rent mutually agreed upon by the parties remains valid and payable.
The court further observed that the discretion under Order 12 Rule 6 must be exercised judicially and not arbitrarily. While triable issues preclude judgment on admission, no bonafide triable issue arose here because the defendant’s plea was contrary to settled legal position and facts. The court emphasized that the contractual rent, supported by documentary evidence including TDS certificates, was the operative rent. The termination notice under Section 106 of the Transfer of Property Act was valid and undisputed.
Accordingly, the court concluded that the plaintiff was entitled to a decree for possession under Order 12 Rule 6 CPC, as the admitted facts and legal principles justified disposing of the suit without trial.
Holding and Implications
The court allowed the application under Order 12 Rule 6 CPC and passed a decree for possession in favor of the plaintiff and against the defendant.
The defendant was directed to hand over possession of the premises. The plaintiff was also granted proportionate costs. The decision directly affects the parties by concluding possession and rent disputes in favor of the plaintiff on admissions and settled legal principles. No broader precedent was established beyond the application of discretion under Order 12 Rule 6 and the interpretation of the Delhi Rent Control Act in the absence of standard rent fixation.
J.B Goel, J.— In this application under Order 12 Rule 6 of the Code of Civil Procedure (for short ‘the Code’) the plaintiff seeks a decree for possession of the premises/property No. 2, Rajdoot Marg also known as 75/48, Chanakyapuri, New Delhi in a suit filed for recovery of possession of the premises, besides recovery of rent and mesne profits.
It is alleged that the defendant had been a tenant of the plaintiff and in February, 1990 the rent was Rs. 8,000/- per month. The plaintiff had filed a suit for possession against the defendant where a compromise was arrived at and the rent was increased to Rs. 20,000/- per month with effect from 1.1.1991 for a period of six years and since then the defendant has been paying rent at this rate; but after expiry of six years agreed period the defendant did not vacate the premises; and the tenancy of the defendant has been terminated by means of notice dated 1.1.1997 but the defendant has not vacated the premises, hence the present suit.
The defendant has filed written statement contesting the suit. It is not disputed that the plaintiff had let out the premises to the defendant. However, it is alleged that the premises were initially let out by a lease dated 28.11.1960 for a composite monthly rent of Rs. 2050/- and the same rent is the standard rent and as this rent is less than Rs. 3500/- per month the suit is not maintainable in view of the Delhi Rent Control Act. It is, admitted that in February, 1990 the defendant was paying rent @ Rs. 8000/- and then @ of Rs. 20,000/- after the earlier suit was compromised; however it is alleged that that is not the rent payable under the Delhi Rent Control Act. Receipt of notice dated 1.1.1997, terminating the tenancy and the reply dated 14.1.1997 is admitted.
In reply to application under Order 12 Rule 6 it is disputed that the plaintiff is entitled to decree under Order 12 Rule 6.
Learned counsel for the plaintiff has contended that the relationship of landlord and tenant, termination of tenancy and the fact that the rent had been agreed to be increased to and is being paid @ Rs. 20,000/- per month with effect from 1.1.1991 is not disputed; and the plea of the defendant that the standard rent of the premises is Rs. 2050/- or that rent in excess of Rs. 2050 is not recoverable is not bonafide and is a vexatious plea. He has referred to documents placed on record showing that the defendant has been paying the rent after deducting TDS under the Income Tax Act on the basis of the monthly rent of Rs. 20,000/-, the standard rent as contemplated under Delhi Rent Control Act has not been fixed and in the absence of standard rent, contractual rent as mutually increased from time to time is the rent payable, the defence is malafide and vexatious and no bonafide triable issue arises for determination and plaintiff is entitled to decree of possession on admission. He has relied on M/s. Sun Chandra and Company v. Punjab & Sind Bank 1996 (5) AD (Del) 323; Asa Singh Virdi v. Asit Kumar Sarkar. 1997 (43) DRJ 87 and M.M Chawla v. J.S Sethi. 1970 (2) SCR, 390.
Whereas learned counsel for the defendant has contended that the premises were let out in the year 1960 at a composite monthly rent of Rs. 2050/- and that would be the standard rent under Section 6 of the Delhi Rent Control Act and any amount in excess of the same is not the rent legally recoverable. He has further contended that the power under Order 12 Rule 6 CPC is discretionary and two issues arise, namely, whether the landlord is entitled to rent in excess of Rs. 2050/-; the suit is not barred under Delhi Rent Control Act; and in these circumstances discretion should not be exercised. He has relied on State Bank of India v. Midland Industries and Ors. AIR 1988 Delhi 153 and Bhagwan Din Tewari and Anr. v. Sheoraj and Ors AIR 1931 Oudh 321 (2).
In the case of Bhagwan Din Tewari (supra) the plaintiff's suit was dismissed by the Additional Subordinate Judge and the appeal was dismissed by the District Judge. In second appeal, before the High Court, it was argued that one of the eight defendants had admitted in the lower appellate court the plaintiff's claim and as such a decree should have been made by that court against that defendant. This contention was considered in view of Order 12 Rule 6 and it was observed that the lower appellate court after considering the matter had come to the conclusion that no decree should be made on the mere admission of the plaintiff's' title even as against the defendant who admitted it. In that context it was noticed that this rule invested the court with a discretion as to the order or judgment which it would make under this provision and that the court is not bound to give judgment in accordance with the admission; and instead it may in its discretion require facts admitted to be proved otherwise than by admission. The High Court in the facts of the case found no ground for interference with discretion exercised by the lower appellate court. In the second case of State Bank of India (supra) the plaintiff bank had filed a suit for recovery of their dues. The suit was contested on various pleas and 7 issues were framed. The plaintiff sought a decree under Order 12 Rule 6 CPC. It was observed that judgment on admission by the defendant under Order 12 Rule 6 is not a matter of right and is rather a matter of discretion of the courts though such discretion has to be judicially exercised and where a case involves questions which cannot be conveniently disposed of on a motion under the rule, the Court is free to refuse exercise of the discretion. On this case, on facts, it is observed that the objections raised go to the root of the case and if these were found against the plaintiff are likely to non-suit the plaintiff. Obviously, the defence raised triable issues in that case and the application was disallowed in peculiar facts of that case.
Each case has to be considered and decided on its own facts and circumstances. There is no dispute to the proposition that discretion vested in a court or authority must be exercised along sound judicial lines and not arbitrarily. It is indeed impossible to lay down hard and fast rule in matters that affect discretion.
Under Order 14 Rule 1 CPC the court is required to frame issues of facts or of law that necessarily and properly arise for determining the real controversy involved on the pleadings of the parties. Such issue arises when a material proposition of fact or law is affirmed by one party and denied by the other. The court would not frame an issue which does not arise on the pleadings nor a issue need be framed on a point of law which is perfectly clear. The court is required to apply its mind and understand the facts before framing issues.
Learned counsel for the defendant laying great stress on Sections 4, 5 and 6 of the Delhi Rent Control Act has contended that the premises were let in 1960 at a monthly rent of Rs. 2050/- and that rent is the standard rent under Section 6 of that Act, and rent or increase in rent in excess of that rent is not legally recoverable under sections 4 and 5 of that act. He has further contended that in view of this dispute/plea raised no decree can be passed under Rule 6 or in any case discretion thereunder ought not be exercised at this stage.
As noticed earlier the discretion has to be exercised reasonably and not arbitrarily. If a triable issue of fact or law arises bonafide which need investigation that will not entitle to a judgment under this Rule and discretion will necessarily be exercised against such claimant. However, if the plea is malafide or preposterous, or vexatious and can be disposed of without going into facts or is contrary to law or settled legal position will it be justified for the court to keep its hand off and allow the game of the defendant to have its sway? In my view the answer is No.
Under Section 12 of the Delhi Rent Control Act, 1958 application for standard rent could be made within two years of letting and only then Rent Controller could fix the standard rent. No such application is alleged to have been made in this case and no such standard rent has at any time been fixed; hence the rent agreed between the parties continues to be contractual rent. Section 4 or 5 of that Act would be attracted only after standard rent is fixed under Section 6 or 9 of that Act and so long as the standard rent of the premises is determined by the Controller, the tenant, must pay the contractual rent. There is no legal bar which may disentitle the parties to agree mutually to enhance the rent from time to time. (M.M Chawla v. J.S Sethi. (1970) 2 SCR, 390 and Asa Singh Virdi v. Asit Kumar Sarkar., 1997 (43) DRJ 87).
In view of this settled legal position the contention that rent of Rs. 2050/- which was agreed initially is the standard rent has no basis and obviously is malafide and vexatious. This plea cannot be pressed to decline discretion under Order 12 Rule 6.
Admittedly, the rent has been mutually increased from time to time, it was Rs. 8000/- per month in February, 1990 and from 1.1.1991 it was mutually enhanced to Rs. 20,000/- per month. It is not disputed that since then rent is being paid at this enhanced rate of Rs. 20,000/-. Plaintiff has also placed on record the Certificates/Declarations given by the defendant having deducted TDS under the income Tax Act on the basis of rent being Rs. 20,000/-. Correctness of these is not disputed.
Receipt of notice under Section 106 of the Transfer of Property Act terminating the tenancy is not disputed which is also acknowledged by defendant in their reply dated 14.1.1997 No illegality in this notice is alleged or pointed out.
The position that emerges is that (i) the relationship of landlord and tenant is admitted; (ii) the tenancy has been validly terminated; (iii) the rent is Rs. 20,000/- per month i.e more than Rs. 3500/-, the suit is beyond the purview of Delhi Rent Control Act. On these facts plaintiff is entitled to judgment under Order 12 Rule 6.
I, accordingly, allow this application and pass a decree for possession under Order 12 Rule 6 of the Code in favour of the plaintiff and against the defendant and direct the defendant to hand over the possession of the premises, namely, 2, Rajdoot Marg, New Delhi also known as 75/48, Chanakyapuri, New Delhi. Plaintiff will also get proportionate costs on this relief.
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