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  • provisions of Section 108 (q) of the Transfer of Property Act.
  • section 108(e) of the Transfer of Properly Act
  • section 108(e) of the Transfer of Property Act
  • SECTION 39 DELHI RENT CONTROL ACT 1958
  • sub section (7) of section 15 ot the Act,
  • sub-section (7) of section 15
  • TRANSFER OF PROPERTY ACT
  • S. 108 (e), T.P Act
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Citation Codes
Equivalent Citations
citation codes
Case Number
Attorney(S)
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Acts
  • provisions of Section 108 (q) of the Transfer of Property Act.
  • section 108(e) of the Transfer of Properly Act
  • section 108(e) of the Transfer of Property Act
  • SECTION 39 DELHI RENT CONTROL ACT 1958
  • sub section (7) of section 15 ot the Act,
  • sub-section (7) of section 15
  • TRANSFER OF PROPERTY ACT
  • S. 108 (e), T.P Act
Smart Summary

Judgment Summary — SN. Andley, C.J. (Second Appeal under section 39, Delhi Rent Control Act, 1958)

Factual and Procedural Background

The respondent (landlord) filed a petition for eviction against the appellants (tenants) on June 12, 1964 under the Delhi Rent Control Act, 1958, on grounds of non-payment of rent, sub-letting and change of user. The contractual rent was Rs. 500 per month.

On September 16, 1964 the Rent Controller, under section 15(1) of the Act, ordered the appellants to deposit arrears of rent amounting to Rs. 3,700 up to May 27, 1964, and fixed an interim rent of Rs. 300 per month to be deposited within one month and future monthly rents by the 15th of each succeeding month. The appellants deposited the arrears and interim rent only up to April 1966.

In a separate proceeding the Controller fixed standard rent at Rs. 187 per month effective January 1, 1960 by order dated April 30, 1966; that order was quashed on appeal by the Tribunal on January 22, 1968 and remanded for fresh trial.

On May 2, 1966 part of the premises were destroyed by fire. The appellants did not deposit the interim rent thereafter. The respondent applied to the Controller under section 15(7) on April 27, 1968 for an order striking out the appellants' defence. The appellants replied (May 27, 1968) and later made a substantive application (June 11, 1968) seeking modification of the September 16, 1964 order on the ground of overpayment and abatement due to destruction by fire.

By order dated August 6, 1968 the Controller dismissed the respondent's application under section 15(7), condoned the appellants' default and fixed a date for disposal of the appellants' June 11, 1968 application. The respondent appealed to the Tribunal, which on December 6, 1968 allowed the appeal, granted the respondent's relief under section 15(7) and struck out the appellants' defence, directing that the eviction petition be decided according to law.

The appellants filed the present second appeal under section 39 of the Act against the Tribunal's order. While this appeal was pending, the Controller on January 30, 1969 passed an order of eviction; the appellants' appeal against that eviction before the Tribunal was dismissed on April 3, 1972 as time-barred. An additional appeal (S A O. No. 241 of 1972) was placed for admission at the time of hearing of the present appeal.

Legal Issues Presented

  1. Whether the appeal against the interlocutory order (order under section 15(7) striking out the defence) becomes infructuous or incompetent once a final eviction order has been passed in the meantime.
  2. Whether the Tribunal was justified in interfering with the Rent Controller's exercise of discretion (under section 15(7) of the Rent Control Act) in condoning the appellants' default in depositing rent.
  3. Whether, upon partial destruction of the tenancy premises by fire, the tenants were entitled to unilaterally suspend payment of rent (including after a deposit order under section 15(1) of the Act), or whether the Transfer of Property Act (section 108(e)) allows only an option to treat the lease as void.

Arguments of the Parties

Appellants' Arguments

  • The Rent Controller's order condoning the default was an exercise of discretion (section 15(7) uses the word "may") and the Tribunal should not have interfered with that discretion.
  • After part of the premises were destroyed by fire and the respondent refused either to reconstruct or permit reconstruction, the appellants had the right to suspend payment of rent (or claim abatement), and therefore they were justified in not depositing the interim rent.

Respondent's Arguments

  • A preliminary objection: because a final order of eviction was subsequently passed against the appellants following the section 15(7) order, the present appeal against the section 15(7) order has become infructuous and incompetent.
  • As the appellants failed to comply with the Controller's deposit order, the respondent was entitled to the relief under section 15(7) to strike out the defence and proceed with the eviction petition.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Durga Swaroop v. Murari Lal (1964 68 PLR 586) Held that where an order striking out the defence is made, remedy lies in filing an appeal against that order and where no such appeal is filed the order becomes final and cannot be challenged in an appeal against the final eviction order. The Court found reliance on this decision misconceived because the facts and principles (and procedural posture) differed; the court distinguished it and did not accept the respondent's submission based on it.
Saradindu Mukherjee v. Jahar Lall Agarwala Analogy to preliminary and final decrees: when dealing with an appeal against a preliminary decree, the High Court should give necessary and consequential directions regarding the final decree. The Court applied this analogy to hold that an appeal against an interlocutory/preliminary order (such as under section 15(7)) may necessitate modification of any final order passed in the meantime.
Basawant Mallappa Neje v. Kallappa Virbhadrappa Koliwale, AIR 1938 Bom 222 Agreement with the principle that the appellate court dealing with preliminary orders can affect or vary the final decree passed in the same suit. Used to support the proposition that the appeal against an interlocutory order can lead to modification or supersession of a final decree passed later.
Talebali v. Abdul Aziz (Calcutta High Court Full Bench) The appellate court has power to reverse or vary a preliminary decree and also to affect the final decree; if the preliminary decree is set aside the final decree is superseded; the court should give directions to set aside or vary the final decree. Quoted and applied by the Court by analogy to hold that appeals against interlocutory orders may justify altering subsequent final orders.
Jampti Rangiah v. Kunala Peddireddi, A.I.R. 1957 A.P. 330 Established that subordinate or dependent orders remain effective only so long as the order or decree on which they depend is not reversed or superseded. Relied upon to reject the respondent's preliminary objection that the appeal had become infructuous because a final order had been passed in the meantime.
Sidick Haji Hoosein v. Bruel and Co., 1910 8 IC 1049 Under section 108(e) of the Transfer of Property Act, where tenancy premises are wholly or substantially destroyed, the lessee's right is to treat the lease as void; he cannot simultaneously continue in possession and refuse to pay rent. Applied to show that a tenant who does not exercise the option to treat the lease as void remains liable for rent and cannot unilaterally suspend payment.
Gandavalla Munuswamy v. Marugu Muniratniah Under section 108(e) T.P. Act a lease is not automatically determined by destruction; the lessee has the option to treat it as void but must communicate intention and surrender possession; he cannot continue in possession and claim the lease is void. Quoted at length and applied to demonstrate that continued possession without surrender precludes treating the lease as void and asserting rent suspension.
Case(s) reported in A.I.R. (?) Allahabad 125 and re-Alanduraiappar's case, AIR 1963 Mad 94 Authority for the proposition that there cannot be a unilateral suspension of rent after destruction; tenant remains liable until court order or landlord agreement for reduction. Cited to reinforce the principle that tenants cannot unilaterally stop paying rent and must obtain court relief or landlord agreement.
Kisaan Chand v. Ramesh Chander (decision of Deshpande J.) Tenant continues liable for whole of the rent until he obtains an order from Court or agreement from the landlord for reduction/abatement. Relied upon to support the conclusion that the appellants could not unilaterally suspend payment and that failure to comply with deposit orders justified the respondent's application under section 15(7).

Court's Reasoning and Analysis

The Court's analysis proceeded in two main parts: first addressing the respondent's preliminary objection about competency/infructuousness, and then dealing with the merits of the appellants' contentions.

Preliminary objection (competency / infructuousness):

  • The Court examined the statutory appeal scheme: section 38(1) (appeal from Controller to Tribunal) and section 39(1) (second appeal to the High Court). It concluded that the appeal was competent when filed and that competence is not destroyed merely because a final order (eviction) was passed in the meantime.
  • The Court accepted the established analogy between preliminary and final decrees: where an appeal against a preliminary order is pending, a subsequently passed final decree can be modified if the appeal against the preliminary order succeeds. It cited and applied authorities (including Saradindu Mukherjee and Talebali) to support this view.
  • On this basis the Court rejected the respondent's reliance on Durga Swaroop v. Murari Lal as distinguishable and held there was no substance in the preliminary objection.

Merits of the appellants' contentions:

  • On the first contention (that the Controller's exercise of discretion under section 15(7) should not have been disturbed because section 15(7) uses "may"): the Court acknowledged that "may" confers discretion, but emphasised that discretion must be exercised in accordance with settled legal principles.
  • The Court noted relevant facts: the Controller condoned delay even though the standard rent had been fixed on April 30, 1966 and the fire occurred on May 2, 1966; the appellants did not apply for modification of the September 16, 1964 order until after the respondent filed the section 15(7) application; the appellants' substantive application was filed only on June 11, 1968 (after the respondent's April 27, 1968 application).
  • The Tribunal held that the appellants could not rely on suspension of rent under section 108(e) of the Transfer of Property Act because that provision gives the lessee the option to treat the lease as void and not the right to continue in possession while refusing to pay rent. The Court agreed with the Tribunal's legal conclusion and held that the Tribunal was entitled to come to a contrary conclusion to the Controller's order.
  • On the second contention (right to suspend payment after destruction and refusal to reconstruct), the Court examined section 108(e) T.P. Act and authorities. It concluded that section 108(e) gives an option to treat the lease as void; it does not permit a tenant to continue in possession and unilaterally suspend payment of rent. Citing case law, the Court held there cannot be unilateral suspension; a tenant remains liable until an order of court or agreement with the landlord for abatement or reduction is obtained.
  • Because an order for deposit of rent had been made under section 15(1) of the Rent Control Act, the tenant could not unilaterally suspend payment; failure to comply with such an order is a breach entitling the landlord to seek relief under section 15(7).
  • Applying the facts (the appellants failed to deposit rent after February 19, 1966; the fire occurred May 2, 1966; no application for suspension/abatement was made until June 11, 1968 and only after the landlord's April 27, 1968 application), the Court held the Controller was not justified in condoning the delay and the Tribunal was justified in setting aside the Controller's order.

Holding and Implications

Holding: The Court dismissed the appellants' second appeal under section 39 of the Delhi Rent Control Act, 1958. Appeal dismissed.

The Court awarded costs against the appellants (counsel's fee of Rs. 200/-).

Implications: The direct effect is that the appellants' appeal is dismissed and the Tribunal's order (which allowed the respondent's application under section 15(7) and struck off the defence) and the subsequent proceedings sustaining eviction were not disturbed by this second appeal. The Court did not purport to lay down any novel, broader precedent beyond applying existing authorities and accepted principles concerning (a) the interplay between interlocutory/preliminary orders and subsequently passed final orders, and (b) the limited scope of a tenant's rights under section 108(e) of the Transfer of Property Act. No new legal principle was proclaimed beyond the application of these authorities to the facts of the case.

Costs and dispositional note: Appeal dismissed with costs (counsel's fee Rs. 200/-).

    The Chamber Of Colours And Chemicals (P.) Ltd., Delhi v. Trilok Chand Jain .

    SN. Andley, C.J:— In this second appeal under section 39 of the Delhi Rent Control Act, 1958, the tenants are the appellants and the landlord is the respondent. On June 12, 1964, the respondent §ld a petition for eviction of the appellants under the said Act on the ground of non-payment of rent, sab-letting and change of user. Ammittedly the conractual rent was Rs. 500/- per imnth. Since one of the grounds for eviction was non-paymeat of rent covered by clause (a) to the proviso to sub-section (1) of section 14 of the said Act, the Rent Controller, on September. 16. 1964 passed an order as required by sub-section (1) of section 15 of the said Act, against the appellants to deposit areais of rent amounting to Rs. 3,700/- upto May 27, 1964 and then up to date rent at the rate of Rs. 300/- which was nixed as the interim rent with in one month from that date and future rent at the same rate month by month by the 15th of each succeeding, month. It was not disputed that the arrears of rent and the interim rent were deposited by the appellants upto April, 1966. In another proceeding between the parties for fixation of standard rent, the Controller by his order dated April 30, 1966, fixed Rs. 187/- per month as the standard rent with effect from January 1, 1960. On appeal, the order 6xing standard rent was quashed by the Tribunal on January 22, 1968 and the case was remanded back to the Rent Controller for fresh trial.

    2. In the mean time, on May 2, 1966, part of the premises were destroyed by fire. Inasmuch as the appellants did not deposit the interim rent fixed by the Controller, the respondent on April 27, 1968, made an application to the Controller under subsection (7) of section 15 of the Act praying for an order that the defence against eviction may be Struck out. The appellants replied to this application on May 27, 1968 and contended that the amount deposited by them already was in excess of the amount which had to be deposited. They further pleaded that the respondent was not entitled to claim rent on the ground that part of the premises had been destroyed by fire particularly as the respondent had refused either to reconstruct the destroyed premises or to permit the appellants to do so. After, filling this reply, the appellants also filed an application on June 11, 1968. They contended that the rent already deposited was in excess of the rent due and that part of the tenancy premises had been destroyed by fire and were not in existence and that the standard rent of the permises which remained in existence could not be more than Rs. 40/- per mensem The appellants, therefore, “prayed that the order dated September 16, 1964 under subsection (I) of section 15 of the Act referred to earlier be modified and an order be made for deposit of rent in view of the cricumstances mentioned in this application.

    3. By order dated August 6, 1968, the respondent's application under sub-section (7) of section 15 of the Act was dismissed. By this order, the Controller condoned the appellants’ default in depositing the rent and fixed a date for disposing of the appellant's application dated June 11, 1968 for modification of the order dated September 16, 1964.

    4. Being dissatisfied with the dismissal of his application under subsection (7) of section 15 of the Act, the respondent filed an appeal before the Tribunal. By order dated December 6, 1968, the Tribunal allowed the appeal and the respondent's application under sub-section (7) of section 15 of the Act and struck off the appellants defence with a direction that the respondent's petition be decided according to law. Against this order, the appellants filed this appeal. During the pendency of this appeal the Controller on January 30, 1969, passed an order of eviction against the appellants, the appeal against which before the Tribunal was dismissed on April 3, 1972 on the ground of having been tiled beyond time. Against this order, the appellants have filed S A O. No. 241 of 1972 which was placed for admission at the time of the hearing of this appeal.

    5. A preliminary objection has been raised by the respondent to urge that inasmuch as a final order of eviction has been passed against the appellants following upon the order under sub section (7) of section 15 ot the Act, this appeal against the order under sub-section (7) of section 15 of the Act has become infructuous In my view, there is no warrant for this proposition. Sub-section (1) of section 38 of the Act provides that an appeal shall lie from every order of the Controller made under this Act to the Rent Control Tribunal and subject to sub-section (2), a second appeal against an order of the Tribunal lies to the High Court under sub-section (1) of section 39 of the Act. It cannot be doubted that the appeal when filed was competent. If so, it cannot be rendered incompetent merely because a final order has been passed. If the appeal against the order under sub-section (7) of section 15 which may be described as an interlocutory order or even as a preliminary order succeeds the final order even if passed in the mean time will have to be suitably modified. Reliance by the respondent on Durga Swaroop v. Murari Lal . 1964 68 PLR 586, is misconceived. In fact this was a contrary case because it was decided in this case that when an order striking out the defence is made, the remedy of the aggrieved party lay in filing appeal against that order and where no such appeal is filed, the order becomes final and, therefore, cannot be challenged in an appeal against the final order of eviction. On the contrary, it is legitimate to apply the analogy of a preliminary decree and a final decree and the position appears to be well established that if an appeal is filed against the preliminary decree and the final decree is passed during the pendency of the appeal, the final decree will be suitably modified, even though no appeal has been filed against it in view of the decision of the appeal against the preliminary decree.. Such a case was the one in Saradindu Mukherjee v. Jahar Lall Agarwala,2 where it was observed that it will be the duty of the High Court in dealing with the appeal against the preliminary decree to give necessary and consequential directions regarding the final decree. In Basawant Mallappa Neje v. Kallappa Virbhadrappa Koliwale . AIR 1938 Bom 222 agreement was expressed with a Full Bench decision of tae Calcutta High Court in Talebali v. Abdul Aziz,4 where it was observed,—

    “the function of the final decree is merely to restate and apply with precision what the preliminary decree has ordained; that the decree being in the same suit, the Court in appeal from the preliminary decree as it has power to reverse or vary the preliminary decree, has also power to affect the final decree; that as the right of appeal from the preliminary, decree is given without any qualification, the passing of the final decree is no bar to the institution or hearing of any appeal against the preliminary decree………..if the preliminary decree is set aside, the final decree is superseded whether the appeal was brought before or after the passing of the final decree; and that the Court when setting aside or varying the preliminary decree can and should give directions for setting aside or varying the final decree if the existence of the final decree is brought to its notice as in all cases it should be.”

    6. In my opinion, these observations would apply with equal force to an appeal against an order under sub-section (7) of section 15 of the Act during the pendency of which a final order of ejectment has been passed following this order. The same idea is expressed by the well settled principle of law that certain orders and decrees which are subordinate and dependent upon earlier orders and decrees could only remain in force so long as the order or decree on which they were dependent are not reversed or superseded. Jampti Rangiah v. Kunala Peddireddi. . A.I.R 1957 A.P 330 There is, therefore, no substance in the preliminary objection raised by the respondent.

    7. On the merits, the appellants have raised two contentions. The first contention is that the order of the Rent Controller condoning the default by the appellants was an order in his discretion” and should nos have been interfered with by the Tribunal. It is no doubt true that sub-section (7) of section 15 of the Act uses the word “may,” because it says that if a tenant fails to make payment or deposit as required by this section the Controller may order the defence against eviction to be struck out and proceed with the hearing of the application. At the same time the discretion has to be exerecised in accordance with well settled principles. The Rent Controller condoned the delay notwithstanding the fact that in spite of the fact that the standard rent was fixed on April 30, 1966 and the fire took place on May 2, 1966, the appellants did not make any application for modification of the order dated September 16, 1964 under sub-section 1 of section 15 of the Act and it was only when the respondent made an application under sub-section (7) of section 15 of the Act that the appellants claimed suspension and overpayment of rent and later filed a substantive application. The Tribunal held that the appellants could not rely upon the doctrine of suspension of rent by reason of the fact that under section 108(e) of the Transfer of Properly Act the only option left to the appellants after the destruction of the tenancy premises was to treat the lease to be void and that the appllants did not exercise such option and in fact continued to hold on to the tenancy premises. I, therefore, do not find any substance in this submission based on the word “may” and hold that the Tribunal was entitled to come to a contrary conclusion on the basis of law particularly in an appeal against an order which was appealable under the Act. On the second point on merits, it is contended that it was the appellants right to suspend payment of rent on the destruction of the premises and upon the refusal of the respondent either to reconstruct it himself or permit the appellants to dose. Let me first examine the position under the Transfer of Property Act. In the case of tenancy premises being wholly destroyed or rendered substantially and permanently unfit by fire etc. for the purposes for which it was let, the only right given to the lessee by section 108(e) of the Transfer of Property Act is to exercise the option of treating the lease to be void. In such a case the lessee cannot continue to hold on to the premises or say that the lease continues but he will not pay the rent If the lessee does not exercise the option to treat the lease to be void, he will remain liable to pay the rent. (See Sidick Haji Hoosein v. Bruel and Co. . 1910 8 IC 1049 In Gandavalla Munuswamy v. Marugu Muniratniah,7 it was observed:—

    “Under S. 108 (e), T.P Act a lease is not automatically determined on the destruction by fire or irresistible force of a substantial portion of the property leased It is a matter of option with the lessee to get rid of the lease or not. He could treat it as void if he so desired. But the law does not compel him to do so. This aspect of the matter makes it all the more necessary that an unambiguous declaration of the lessee s intention to treat the lease as void must be communicated to the lessor. The lessor would not otherwise be able to take appropriate steps on the footing that the lease has come to an end and he is therefore at liberty to dead with the property as he chooses. What is even more important is that a mere declaration of intention to treat the lease as void is not sufficient. The lessee must also yield up possession of the property to the lessor as required by the provisions of Section 108 (q) of the Transfer of Property Act. He cannot continue in possession and yet declare that he has treated the lease as void. That would obviously, be an inconsistent and impermissible position to adopt. So long as a lessee has not surrendered to his lessor the possession which he obtained from the latter at the time of the lease, he cannot rid himself of his obligations under the lease. His holding to the possession into which ha was inducted by his lessor will estop him to the possession into which he was inducted by his lessor will estop him from disputing the right of his lessor to evict him and to recover possession from him.”

    8. To the same effect are the cases reported in A.I.R (?) Allahabad 125, and in re-Alanduraiappar's case . AIR 1963 Mad 94. There cannot be any unilateral suspension of rent. The tenant continues to be liable for the whole of the rent until he obtains an order from the Court or agreement from the landlord for reduction of the proportionate part of the rent, (See Kisaan Chand v. Ramesh Chander,9 a decision of Deshpande J. of this Court.) Therefore, where an order for deposit of rent has been made unde subsection (1) of section 15 of the Act, the tenant cannot unilaterally suspend the payment or deposit of rent as ordered by the Controller and if he does so he undoubtedly commits a breach of the order of the Controller which will entitle the tenant to ask for an order under sub-section (7) of section 15 of the Act.

    9. The facts of this case are glaring. The order under sub-section (1) of section 15 of the Act was made on September 16, 1964. The appellants did not deposit any rent after February 19. 1966 the period after May 1, 1966. The fire took place on May 2, 1966 and no application even was made for suspension or abatement of rent until June 11, 1968 and that too after the respondent had filed his application on April 27, 1968 for an order under subsection (7) of section 15 of the Act. In these circumstances, the Rent Controller was clearly not justified in condoning the delay in the deposit of rent and the Tribunal was more than justified in upsetting the order of the Controller. The appellants have no. made out any case for interference in this second appeal under section 39 of the Act and I, therefore, dismiss this appeal with costs. Counsel's fee Rs. 200/-.

    10. Appeal dimissed.

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    Comments

    The Chamber Of Colours And Chemicals (P.) Ltd., Delhi v. Trilok Chand Jain .
    (May 18, 1973)