Citation Codes

Equivalent Citations

citation codes

Case Number

A.F.A.D No. 718 of 1956

Attorney(S)

C.C. Ganguly and Gyan Chand Tandon
Ganganarayan Chandra and Ajit Kumar Bose

Judges

Laik, J.

Acts

provisions of section 2 read with sections 12(1) (i) and Sec. 14 of the 1950 Act,
provisions of Sec. 106 of the Transfer of Property Act.
Schedule A, Clause 3 of the Rent Control Act, 1950.
SECTION 106 TRANSFER OF PROPERTY ACT
provisions of section 21 of the 1950 Act
Sec. 106 of the Transfer of Property Act.
Rent Control Act, 1950.

See more information ...

Smart Summary

Structured Summary of the Opinion

Factual and Procedural Background

This appeal arises from a suit for ejectment under the Rent Control Act, 1950. The plaintiff (landlord) alleged that the defendants (a firm) were monthly tenants of the entire premises at No. 28B, Nalin Sarkar Street, Calcutta, paying rent at Rs. 97-3-6 per month, and sought ejectment on the sole ground that the defendants were defaulters: specifically, that they had defaulted in paying rent for two months on more than three occasions in an 18-month period.

The plaint did not specify particulars of the alleged defaults; the evidence tendered in the trial indicated defaults relating to two units during May to September 1951 (short payments of 6 pies each month for those months, with one month—June—being disputed) and a third unit for November and December 1951.

The landlord did not issue the ejectment notice until 4 February 1954; the suit was instituted on 24 May 1954. The Small Cause Court Judge entered a decree for the plaintiff. The defendants appealed to the Special Bench of the Court of Small Causes, Calcutta, and the Bench allowed the appeal, finding inter alia that (a) there was no evidence of default for June 1951, and (b) 15 days' notice was insufficient because the tenancy was held to be for manufacturing purposes. The Special Bench also held that defendants could not deduct occupiers' share of consolidated rates; the Bench was said to have erred in one factual finding about a deposit date.

The plaintiff (appellant in this Court) challenged the Special Bench decision by way of the present appeal. The defendants filed a cross-objection seeking permission to deduct Rs. 177-1-3 (owners' and occupiers' share of taxes) towards rent.

Legal Issues Presented

Whether the notice for ejectment was legally sufficient—i.e., whether 15 days' notice was adequate or whether the tenancy's character as for manufacturing purposes attracted a longer notice period (reference to Sec. 106 of the Transfer of Property Act).
Whether the defendants were "defaulters" as alleged by the plaintiff: specifically, whether the plaintiff proved defaults by reference to money order coupons and other evidence for the months in 1951 identified.
Whether payments made by defendants to municipal authorities (owners' and occupiers' shares of taxes), particularly when made under compulsion, can be treated as payment of rent to the landlord or as deductible from rent.
Whether an earlier application by the plaintiff (Ext. 1) for standardization of rent, in which the plaintiff admitted use for manufacturing, operated as res judicata preventing the plaintiff from disputing the tenancy's character now.
Whether acceptance by the landlord of short payments (6 pies short) amounted to a waiver of default, and the relevance of section 21 of the Rent Control Act, 1950, to that question.

Arguments of the Parties

Appellant's (Plaintiff's) Arguments (Mr. Ganguly)

The notice was sufficient because the premises were let for a mixed purpose (manufacturing and residential), so 15 days' notice sufficed under Sec. 106 of the Transfer of Property Act; reliance was placed on A.I.R. 1952 Cal. 320 (Sati Prasanna Mukherjee v. Md. Fazel) and an unreported decision (Chandra Kanta Jha v. Badrinarain Shaw) to support that the tenancy could be held not to be exclusively for manufacturing absent clear materials.
The defendants were unquestionably defaulters: there were short payments of 6 pies each month, which are evidenced by the Ext. 3 series (money order coupons). Under section 2 read with sections 12(1)(i) and 14 of the Rent Control Act, 1950, the agreed rent (including the shortage) must be treated as rent.
Payments to the Corporation or municipal authorities of tax shares, absent a contract or agreement, are not equivalent to payment of rent to the landlord; reliance was placed on I.L.R. 1951 Cal. 627 (Manmatha Nath Sadhukhan v. Abdus Sobhan) to support that voluntary payments to municipal authorities do not equate to rent paid to landlord.

Respondents' (Defendants') Arguments (Mr. Chandra)

The plaintiff's earlier application for standardization of rent (Ext. 1), under Sec. 9 of the Act of 1948, expressly admitted the premises were being used for manufacturing; the resulting order should be treated as res judicata and preclude the plaintiff now arguing differently as to the tenancy's character.
The money order coupons (Ext. 3 series) are defective evidentially: they do not show year and only identify months (May onwards, but not June); thus the plaintiff failed to prove persistent defaults for 1951 as alleged.
Even assuming short payments of 6 pies each month, the landlord's acceptance of those sums constituted a waiver of default; section 21 of the Rent Control Act, 1950, was invoked (though the judge later found section 21 unhelpful to this argument).
As to the November–December 1951 unit, the defendants were forced to pay municipal taxes on demand; they cited a Supreme Court decision reported at 1957 S.C.J. 177 (Karnani Properties Ltd. v. Miss Augustine & Others) to argue that payments to municipal authorities should be treated as payment of rent to the landlord.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
A.I.R. 1952 Cal. 320 (Sati Prasanna Mukherjee v. Md. Fazel)	Interpreting a lease clause covering multiple uses (dwelling, press, ordinary business) as a lease for multiple purposes and not falling within "manufacturing purposes" under Sec. 106 Transfer of Property Act.	The Court examined this decision and found it distinguishable: because in the present case there was no real dwelling purpose except one room, the principal purpose was manufacturing and the AIR 1952 Cal. 320 decision did not support the appellant's argument that the tenancy was mixed.
Unreported decision of Chatterjee, J. in S.A. No. 391 of 1958 (Chandra Kanta Jha v. Badrinarain Shaw)	Suggested that whether a business is for manufacturing depends on whether production occurs on a large or small scale; in that case no finding was made and the matter was remitted for a factual finding.	The Court rejected the general principle as applied by Chatterjee, J. in that unreported decision, preferring Bench authority (Joyanti Hosiery Mills) and finding Chatterjee J.'s principle inapplicable on the facts before it.
I.L.R. 1951 Cal. 627 (Manmatha Nath Sadhukhan v. Abdus Sobhan)	Addresses the legal effect of voluntary payment to municipal authorities and whether such payment equates to payment of rent to the landlord.	The Court held this decision did not assist the appellant because it dealt with voluntary payments and the facts were different; the Court considered that in the present case the municipal payments were made under compulsion and, combined with evidence of an agreement, could be treated as payment of rent to the landlord.
1957 S.C.J. 177 (Karnani Properties Limited v. Miss Augustine & Others)	Consideration of whether certain payments/charges related to amenities and conveniences could be treated as rent (as cited by respondent).	The Court found the Supreme Court decision of limited assistance on the facts before it, observing that the cited decision related to amenities and conveniences, which were not the facts in the present case.
50 C.W.N. 441 (Joyanti Hosiery Mills v. Upendra Chandra Das)	Held that a hosiery factory constituted a lease for manufacturing purposes within the meaning of section 106 of the Transfer of Property Act.	The Court relied on this Bench authority to support its conclusion that the tenancy in the present case (a hosiery factory) was for manufacturing purposes and therefore required a longer notice period than 15 days.
A.I.R. 1954 Cal. 8 (Prafula Chandra v. Prabartak Trust)	Principle that the reasoning of a prior proceeding is not res judicata; what is res judicata is the decision itself.	The Court applied this principle to reject the respondents' res judicata argument: a statement in the plaintiff's earlier standardization application could not operate as res judicata of reasoning and did not preclude the plaintiff from arguing the tenancy's character in the ejectment suit.
I.L.R. 48 Bom. 38 (William Jacks & Co. v. Joo-sab Mahomed)	Supports the proposition that if premises are required and used for manufacturing to the knowledge of the landlord, six months' notice is necessary (i.e., longer notice applies).	The Court cited this authority to reinforce its view that when premises are used for manufacturing to the landlord's knowledge, a six months' notice is required; this was applied to reject the appellant's contention that the tenancy's "purpose" (as distinct from user) could allow a 15-day notice.

Court's Reasoning and Analysis

The Court addressed the central issues in structured steps:

Notice sufficiency:
- The Court examined the actual occupation and use of the premises. Although one room on the first floor was used for residential purposes, the Court found that this single room did not convert the tenancy into a mixed or primarily residential lease. The principal use was manufacturing (hosiery factory).
- The Court distinguished the AIR 1952 Cal. 320 decision relied upon by the appellant because that decision involved a clear dwelling purpose alongside business uses; that factual matrix did not exist here.
- The Court relied on Bench authority in Joyanti Hosiery Mills (50 C.W.N. 441) and on I.L.R. 48 Bom. 38 to conclude that a tenancy for manufacturing (or premises used for manufacturing to the landlord's knowledge) requires a longer notice period (six months), and consequently 15 days' notice was insufficient.
- The Court rejected the res judicata argument based on the earlier standardization application (Ext. 1), holding that the reasoning in prior proceedings is not res judicata (decision may be, reasoning is not), and thus a prior statement by plaintiff did not preclude re-examination of the tenancy's character in the ejectment suit (relying on A.I.R. 1954 Cal. 8).
Default (evidence and onus):
- The Court scrutinized the money order coupons (Ext. 3 series). It found that although seven coupons were initially filed, only five were marked as exhibits (3 to 3(d)), and two coupons were unaccounted for with no explanation.
- None of the exhibited money order coupons stated the year, and one of the months (June 1951) was not shown on the coupons the plaintiff relied upon. The Court concluded that the onus was on the plaintiff to prove defaults and that the documentary evidence was inadequate to sustain that burden for the period alleged (May–September 1951).
- The plaintiff's failure to specify months/years in the notice, plaint, or in a subsequent application under section 14(4) meant the defendants were taken by surprise when particulars were first tendered at trial; the Court regarded this as a procedural and evidentiary deficiency cutting against the plaintiff's case.
- The Court expressly found that acceptance by the landlord of money orders that were admittedly short of the agreed rent did not, on the facts before it, amount to an effective waiver by the landlord; the Court observed that section 21 of the 1950 Act did not assist the respondent's waiver argument in the circumstances.
Municipal taxes / payments under compulsion:
- For the last alleged unit of default (November–December 1951), the Court accepted that the defendants were compelled to pay municipal taxes: Rs. 177-1-3 was paid on 13-12-51 and the balance on 15-1-52 (the Court corrected a lower court factual finding that had given a different deposit date).
- The defendants' witness stated there was an agreement that the landlord would pay both the owners' and occupiers' shares of taxes, and this point had not been challenged by cross-examination. Given that testimony and that payment was made under compulsion, the Court treated the payment as payment of rent to the landlord for the purposes of assessing default on that unit.
- The Court deemed the I.L.R. 1951 Cal. 627 decision relied on by the appellant inapplicable because it concerned voluntary payments; the present tax payments were, on the evidence, not voluntary.
- The Supreme Court decision cited by the respondent (1957 S.C.J. 177) was considered inapposite because it dealt with amenities and conveniences, a different factual situation from the compelled municipal tax payments here.
Miscellaneous findings:
- The Court criticized certain reasonings of the lower Bench (that tenancy could never be residential because it was in the name of a firm) as unsound.

Holding and Implications

Holding:

The appeal is dismissed. The cross-objection is allowed. The judgment and decree of the Court of appeal below are modified.

Implications and direct consequences (as stated in the opinion):

The suit fails on the ground of insufficiency of notice: 15 days' notice was inadequate because the tenancy was held to be for manufacturing purposes; therefore the plaintiff's ejectment claim could not succeed on that ground.
The Court found that the defendants were not proved to be defaulters for the earlier alleged units (May–September 1951) because the plaintiff failed to discharge the evidential burden; however, for the last unit (November–December 1951) the Court found there was no default because municipal taxes were paid under compulsion and should be treated as payment of rent where an agreement existed and was unchallenged.
The defendants' cross-objection (seeking to deduct Rs. 177-1-3 towards rent) was allowed.
There will be no order as to costs in both the appeal and the cross-objection.

The opinion does not purport to lay down a new broad precedent beyond the application of existing authorities to the facts; its rulings are fact-specific (classification of tenancy use; sufficiency of evidential particulars on default; treatment of compelled municipal payments where an agreement exists).

Disposition signature: S.N.G.

Show full summary ...

Rupeswari Debi v. Lokenath Hosiery Mills

1. This appeal is on behalf of the plaintiff and it arises out of a suit for ejectment under the Rent Control Act, 1950. The plaintiff's case in short was that the defendants were a firm and were monthly tenants in respect of the entire premises No. 28B, Nalin Sarkar Street, Calcutta at a rate of rent of Rs. 97-3-6 per month. Only ground for ejectment was that the defendants defaulted in paying rents for two months each, on more than three occasions in course of 18 months. I may state here that no other particulars of default have been given in the plaint but it transpires from evidence that the defendants defaulted in payment of rent for two units from the month of May to September, 1951 for short payment of only 6 pies each month and the third unit is for November and December, 1951.

2. In spite of alleged default in 1951 the notice for ejectment was not sent before 4th February, 1954 and thereafter the present suit was instituted on the 24th May, 1954. The defence was two-fold. Firstly, the notice was invalid and insufficient and secondly that the defendants were not defaulters. The learned Small Cause Court Judge did not accept both the defences and therefore decreed the suit. The defendants thereafter preferred an appeal before the Special Bench of the Court of Small Causes, Calcutta and the learned Judges allowed the appeal. In allowing the appeal it has been held that the defendants are hot defaulters because there is no evidence of default for the month of June, 1951. Nonetheless the learned Judges held that though the defendants paid the sum of Rs. 177-1-3 representing both the owners' and occupiers' share of taxes and the balance sum of Rs. 17-5-9 was also deposited on 22-8-55, being the rent due from November, 1951, still the defendants were not entitled to deduct the occupiers' share of the consolidated rate. The learned Judges committed a mistake by not looking into the records by holding that the deposit of Rs. 17-5-9 was made on 22-8-55, which is not a fact. The record shows that the sum was deposited on 15-1-52. Lastly even if the defendants were defaulters for the months of November and December, 1951, as held by the learned Judges, they were not held to be defaulters for the earlier two units.

3. On the question of notice the learned Judges held that the tenancy was for manufacturing purposes and therefore 15 days' notice was insufficient and in consequence the learned Judges allowed the appeal, as I have already stated. Aggrieved by the said judgment and decree the plaintiff has preferred the present appeal in this Court. The defendants have also filed a cross-objection for not allowing them to deduct the sum of Rs. 177|1|3 p. towards rent.

4. Mr. Ganguly appearing on behalf of the appellant contended, in the first place, that the notice is sufficient and his grounds are that the premises, when let out, was not exclusively for manufacturing purposes, but was for a mixed purpose, that is, for manufacturing as well as for residential purpose and therefore 15 days' notice was sufficient in view of the provisions of Sec. 106 of the Transfer of Property Act. In support of the said contention Mr. Ganguli referred me to the decision reported in A.I.R 1952 Cal. 320 (Sati Prasanna Mukherjee v. Md. Fazel) (1). He also referred me to an unreported decision of Chatterjee, J. in S.A No. 391 of 1958 (Chandra Kanta Jha v. Badri-narain Shaw) (2) in support of his proposition that without sufficient materials on the record, as in the present case it cannot be held that the tenancy is being used for manufacturing purposes. In the second place Mr. Ganguli contended that there is no escape for the defendants from being defaulters, as it is admitted that there was a short payment of 6 pies each month which will be borne out by Ext. 3 series, that is, the money order coupons. He said that under the provisions of section 2 read with sections 12(1) (i) and Sec. 14 of the 1950 Act, rent must be the entire rent even including the said shortage of 6 pies. He also contended that payment to the Corporation or payment to the municipal authorities of the shares of taxes in the absence of a contract or agreement would not be tantamount to payment of rent to the landlord and in support of the said contention he referred me to the decision in I.L.R 1951 Cal. 627 (3) (Manmatha Nath Sadhukhan v. Abdus Sobhan*).

5. Mr. Chandra on behalf of the respondents tried to answer, so far as the question of notice is concerned, by saying that there is already an application filed (in respect of the very premises which is the subject matter of the present appeal and which has been marked Ext. 1 in this case) under the provisions of Sec. 9 of the Act of 1948, by the plaintiff appellant for standardization of rent, in which the plaintiff herself admitted that the premises are being used for manufacturnig purpose and the same was not for residential purpose. On the basis of the said application the plaintiff has obtained an order in her favour for an increase of 25 per cent, of the rent and therefore Mr. Chandra contended that the said application and the order passed thereon are res judicata between the parties and it will not be open to the plaintiff appellant now to contend that the tenancy was not for manufacturing purpose.

6. On the question of default, Mr. Chandra contended that none of the coupons—Ext. 3 series, relates to any year. Only months of May onwards, except the month of June, are mentioned in those coupons and therefore it cannot be said that the plaintiff has been able to prove that his clients were defaulters from May to September, 1951 on the basis of the said money order coupons. Moreover he contended, that assuming it was short by 6 pies each month, nonetheless the plaintiff accepted the said rent and it will be a waiver on her part to say now that the defendants have committed defaults and in support of his contention, he referred Sec. 21 of the 1950 Act which lays down that the deposit of rent will not be a waiver, as there is no mention therein about the remittance of rent by money order.

7. As to the last unit of default, namely, for November and December, 1951, Mr. Chandra says that his clients were forced to pay the municipal taxes on notice of demand and the decision cited by Mr. Ganguli does not apply to the facts of the present case. Mr. Chandra also referred me to a decision reported in 1957 S.C.J 177 (Karnani Properties Limited v. Miss Augustine & Others) (4) and tried to contend that even if the payment to the municipal authorities is a voluntary payment, still, according To the said decision, it should be taken as payment of rent to the landlord.

8. Now so far as the first point as to notice is concerned, my opinion is that the notice is not sufficient and the suit should fail on this ground alone. It is admitted that the defendant firm are running a hosiery factory in the premises. Though it appears from the evidence that one of the rooms in the 1st floor is being occupied by one of its officers for residence, in my view, the same would not make the purpose of the tenancy a residential purpose or a mixed purpose, that is, both for manufacturing and for residential purpose. In the decision reported in (1) A.I.R 1952 Cal. 320 ibid, the relevant clause in the lease was to the following effect:—

“*** I shall occupy the same for dwelling purposes, for setting up a press and for ordinary business purposes.”

9. On interpretation of this clause P.B Mukharji, J. held that the same was a lease for multiple purpose and does not come within the meaning of ‘manufacturing purposes’ in Sec. 106 of the Transfer of Property Act. But so far as the facts of the present case are concerned, there is no purpose like dwelling purpose except occupation of one room in the 1st floor, as I have already stated, and the principal purpose is for manufacturing purpose. In my view, the said decision does not support Mr. Ganguli's argument. In the Bench decision reported in 50 C.W.N 441 (Joyanti Hosiery Mills v. Upendra Chandra Das) (5) Bijan Kumar Mukherjea, J. dealt with a case of a hosiery factory and his Lordship held, Blank, J. agreeing with him, that the same was a lease for manufacturing purpose within the meaning of section 106 of the Transfer of Property Act. Chatterjee, J. in the said unreported decision which is a case of bakery business, has held that “to decide whether a business is for manufacturing purpose or not, would depend whether the same is being made on a large scale or a smaller scale and as there was no finding in that case, according to Chatterjee, J. his Lordship sent the matter back to the court of appeal for arriving at a finding as to whether it was let out for making bread, biscuits or cakes on a large scale. It appears that the attention of his Lordship was not drawn to the said Bench decision in (5) 50 C.W.N 441 and the decision in (1) A.I.R 1952 Cal. 320. In view of the principles laid down in the said decisions, I am sorry I am unable to accept the principles of law laid down by Chatterjee, J. in his said unreported decision.

10. As to Mr. Chandra's point that the said Ext. 1, viz., the application for standardization of rent is res judicata, I am afraid I am unable to accept the said contention. It is now a settled law that the reasoning is not res judicata but the decision is. Though in the said application it has been stated by the plaintiff that the tenancy was for manufacturing purpose, but nonetheless, in my view, Mr. Chandra cannot argue that the statement made in the said application for standarization of rent would operate as res judicata between the parties. On this proposition I am supported by the Bench decision of this Court reported in (6) A.I.R 1954 Cal. 8 (Prafula Chandra v. Prabartak Trust). There is another thing. The plaintiffs own witness has stated that when the defendant took settlement, they did so for starting a hosiery factory, though he immediately added thereafter ‘and also for residential purpose’. In my view, the said addition is an after-thought, as has been rightly stated by the Special Bench Judges in the court of appeal below.

11. Mr. Ganguli further contended that a distinction must be drawn between the purpose and the user of the tenancy and he referred to Schedule A, Clause 3 of the Rent Control Act, 1950. According to him, though the premises were being used for hosiery factory but the original purpose was not as such. Hence he can take advantage of Sec. 106 of the Transfer of Property Act by contending that it was not for manufacturing purpose. I am afraid I cannot accept the contention of Mr. Ganguli, because if the premises are required and used for manufacturing purposes to the knowledge of the landlord or the lessor, which fact I find is based on evidence in the present case, still then six months' notice would be necessary. I may refer in this connection to the decision in (7) I.L.R 48 Bom. 38 (William Jacks & Co. v. Joo-sab Mahomed). Hence Mr. Ganguli's contention on the point of notice fails. It is also curious to note that nothing has been mentioned in the plaint about the purpose of the tenancy.

12. On the next ground, that is, on the ground of default, my view is that the defendants are not defaulters. I find from the challan that when the money order coupons were first filed, they were seven in number but only five of them have been marked which are Exts. 3 to 3(d). There is no explanation as to where the two other money order coupons are or when they have been taken out and|or why they have not been marked as exhibits. It is curious that in none of these money order coupons the year is mentioned. The onus was on the plaintiff to prove that the defendants were defaulters and it was not for the defendants to say that they were not defaulters. It is extremely difficult for a court to hold that these money order coupons relate to the year 1951. Secondly, it was also not proper on the part of the plaintiff not to state any particulars either of any month or of any year either in the notice or in the plaint or in the subsequent application under section 14(4). For the first time at the time of giving evidence, she sought to make out a case as mentioned above. It was a surprise for the defendants and it was difficult for them to give evidence in rebuttal, then and there.

13. I cannot accept the contention of Mr. Chandra that mere acceptace of the money order, though admittedly less than the agreed rent, will amount to an waiver on the part of the landlord and in my view the provisions of section 21 of the 1950 Act are of no help to Mr. Chandra.

14. But I agree with the contention of Mr. Chandra that there is no default at least for the last unit that is, for November and December, 1951 because the defendants were forced to pay the said sum of Rs. 177-1-3 on 13-12-51 and the balance on 15-1-52.

15. The defendants' witness has stated in examination-in-chief that there was an agreement that the landlord would pay both the owners' and occupiers' share of taxes and there is no cross-examination on this point by the lawyer appearing on behalf of the plaintiff. Now if there be such an agreement and the defendants are compelled to pay the Municipal taxes on behalf of the plaintiff, in my view, it should be regarded as payment of rent to the landlord. The decision cited by Mr. Ganguli, viz., (3) I.L.R 1951 Cal. 627 does not help him as it relates to voluntary payment and the facts of the said decision are entirely different from the facts in the present case I might say that the Supreme Court decision mentioned above as cited by Mr. Chandra is of no help to him because the same relates to amenities and conveniences, which is not the case here.

16. Of course, I cannot help observing that the reasonings of the learned Judges that because the defendants were mills or the tenancy stands in the name of the firm and not in the name of individual partners, the tenancy could never be residential, are faulty and cannot be accepted.

17. In the result, the judgment and decree of the Court of appeal below are modified. The appeal is dismissed. The cross-objection is allowed.

18. There will be no order as to costs in both the appeal and the cross-objection.

S.N.G

Rupeswari Debi v. Lokenath Hosiery Mills

Structured Summary of the Opinion

Factual and Procedural Background

Legal Issues Presented

Arguments of the Parties

Appellant's (Plaintiff's) Arguments (Mr. Ganguly)

Respondents' (Defendants') Arguments (Mr. Chandra)

Table of Precedents Cited

Court's Reasoning and Analysis

Holding and Implications

Rupeswari Debi v. Lokenath Hosiery Mills

Comments