- Bookmark
- Share
- CaseIQ
D.C Oswal v. V.K Subbiah And Others
Factual and Procedural Background
The appellant is a tenant of premises in Sivakasi, Tamil Nadu, governed by the Tamil Nadu Buildings (Lease and Rent Control) Act. The agreed rent was Rs 275 per month. The respondents/landlords filed an eviction petition in 1980 alleging (a) “wilful default” in payment of rent and (b) unauthorised change of user from residential to mixed residential-commercial. The tenant asserted that rent had always been collected in two- or three-month lumps because the landlords lived elsewhere and visited the premises only periodically; two rent receipts corroborating this practice were produced. At the time the eviction petition was filed, only three months’ rent was outstanding. The tenant also denied any breach of user conditions, contending that mixed use had been accepted since 1973.
The Rent Controller dismissed the eviction petition. On appeal, the Appellate Authority reversed that decision, ordering eviction, and the High Court affirmed the appellate decision. The present judgment is on the tenant’s further appeal before the Supreme Court of India.
Legal Issues Presented
- Whether the appellant’s non-payment of three months’ rent constituted “wilful default” under the Tamil Nadu Buildings (Lease and Rent Control) Act when the landlords had a longstanding practice of collecting rent at two- or three-month intervals.
- Whether the alleged change of user from residential to mixed use could be invoked as a ground for eviction when the landlords had acquiesced in such use for seven years (1973-1980) before initiating proceedings.
Arguments of the Parties
Appellant's Arguments
- Rent collection was always irregular by mutual convenience; therefore, a three-month arrear cannot be labelled “wilful default”.
- The premises were let for mixed residential and commercial purposes from the outset, or at least the landlords had accepted mixed use since 1973, precluding eviction on that ground.
Respondents' Arguments
- Eviction should be ordered for wilful default and change of user.
- (During hearing) Counsel conceded that mixed use had in fact continued unchallenged since 1973.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| S. Sundaram Pillai v. V.R. Pattabiraman, (1985) 1 SCC 591 | Distinction between mere “default” and “wilful default” in rent-control statutes. | Used to emphasise that only wilful, not merely inadvertent or mutually tolerated, defaults justify eviction. |
| Premchand Ranka v. A. Vasanthraj Khatod, (1992) 1 SCC 369 (Order dated 27-3-1991 in C.A. No. 1367/1991) | Where the landlord consents to receive rent at multi-month intervals, arrears for a similar period do not constitute wilful default. | Analogised to hold that three months’ non-payment, in light of the accepted practice, was not wilful default. |
Court's Reasoning and Analysis
The Supreme Court noted that both parties relied on the distinction between “default” and “wilful default” articulated in S. Sundaram Pillai. Examining the rent receipts, the Court accepted the tenant’s evidence that the landlords habitually collected rent for two or three months at a time without objection. Consequently, the failure to pay precisely monthly did not demonstrate a deliberate or contumacious refusal to pay; hence, the statutory condition of “wilful” default was not met.
Regarding change of user, the Court recorded the respondents’ concession that the premises had been used partly for commercial purposes since 1973, and no objection had been raised until the 1980 eviction petition. The seven-year acquiescence led the Court to conclude that the landlords had accepted the mixed use, negating this ground for eviction.
Applying the principles from Sundaram Pillai and the short order in Premchand Ranka, the Court found the appellate reversal and High Court affirmation unsustainable because neither statutory ground for eviction was proved.
Holding and Implications
Appeal Allowed; High Court judgment reversed; eviction petition dismissed.
Immediate Consequences: The appellant retains possession of the premises. The Court, however, adjusted the rent to Rs 400 per month effective 1 January 1982 and directed the tenant to pay rent monthly in advance by the end of each month. No costs were awarded.
Broader Implications: While not creating new precedent, the decision reinforces that (a) landlords’ longstanding acceptance of irregular rent collection negates a finding of wilful default, and (b) acquiescence over an extended period bars eviction on the ground of change of user.
Ranganath Misra, C.J— Special leave granted.
2. Appellant is the tenant of a premises located in Sivakasi within the State of Tamil Nadu to which the provisions of the Tamil Nadu Buildings (Lease and Rent Control) Act apply. The rental of the premises is Rs 275 per month. Respondents initiated action for eviction on the plea that there was “wilful default” in the matter of payment of rent and change of user. It was contended that the lease was residential but it had been used partly for commercial activity.
3. The appellant took the stand that rent was not being collected every month since the respondents resided away from the place where the property is situated and every two to three months they used to come and collect rent at landlords' convenience. Two receipts were produced to support this stand. Rent was collected in one case for three months and in the other for two months at a time. Admittedly at the time of filing of the petition for eviction three months' rent had fallen due. So far as the change of user was concerned it was denied by pleading that mixed use was the basis of the tenancy.
4. The original authority dismissed the petition but that has been reversed in appeal and the reversal has been upheld by the High Court.
5. Two contentions were raised before us: (i) there is no case of wilful default particularly when the two receipts showed acceptance of rent for periods as pleaded by the tenant without demur and (ii) that the premises had been rented out also for business use and at any rate admittedly from 1973 there has been this change.
6. Counsel for the respondents does not dispute that from 1973 there has been change of use. The petition for eviction is of 1980. It follows that for seven years no objection was raised for change of use and for the first time when eviction was sought, conversion was made the second ground. In these circumstances, we are prepared to accept the submission advanced on behalf of the appellant that the landlords accepted the user to be also other than residential.
7. Both parties relied upon a decision of this Court in the case of S. Sundaram Pillai v. V.R Pattabiraman (1985) 1 SCC 591, where default and ‘wilful’ default were distinctly treated. In the several statutes operating in the different States regulating the law relating to landlord and tenant ‘wilful’ default has been made the ground of eviction while default is not. We may also refer to a short but suggestive order dated March 27, 1991, of this Court in Civil Appeal No. 1367 of 1991 (Premchand Ranka v. A. Vasanthraj Khatod (1992) 1 SCC 369) to support our conclusion. A situation where the landlord had consented to collect rent for two to three months at a time non-payment of rent for three months cannot constitute wilful default. Since in the present case default was of three months at the time of filing of the case, we are prepared on the basis of the evidence on record that it was not a case of wilful default. Accordingly the conclusion reached in appeal and upheld by the High Court would not be sustainable.
8. We allow the appeal and reverse the judgment of the High Court and dismiss the petition for eviction. We would, however, like to add that judicial notice can be taken of the fact that rental has escalated everywhere and appropriate rent in the present case should be raised to Rs 400 per month from January 1, 1982. The tenant should have a direction to pay the rent in advance from month to month as stated by him in the courts below and it should be by the end of every month. There will be no order as to costs.
Alert