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Abasbhai Shaikh Abdul Hussein v. Bhimji Malji Choksey
Structured Summary of the Opinion (Beaumont, C.J., with Rangnekar, J. concurring)
Factual and Procedural Background
The plaintiff owned immovable property which he let to the defendant on a monthly tenancy at Rs. 200 per month (original tenancy from 1918). The plaintiff sued to recover possession, three months' arrears of rent (at Rs. 200/month) and a sum for use and occupation after notice to quit (mesne profits). The defendant initially pleaded entitlement to occupy under a contract until 30 June 1928 but abandoned that defence. The defendant later relied on a previous suit the plaintiff had instituted in the Small Cause Court for Rs. 400 (a "pagri" or premium for four months at Rs. 100/month), arguing that, by Order 2, Rule 2 of the Civil Procedure Code (O.2, R.2 CPC), that prior suit barred the present action for arrears of rent. The parties framed seven issues; the lower court (Baker, J.) did not expressly answer each, but dealt substantively with (1) whether O.2, R.2 barred the rent claim, and (2) whether the defendant's counter-claim (recovery of alleged illegal premiums) was sustainable.
Legal Issues Presented
- Whether the plaintiff's present suit for arrears of rent is barred by O.2, R.2 of the CPC because the plaintiff previously sued in the Small Cause Court for premiums (pagri) arising from the same tenancy.
- Whether the sums paid by the defendant as premiums in 1923–1924 are recoverable from the plaintiff under Section 8 of the Bombay Rent (War Restrictions) Act, 2 of 1918, and if so whether that counter-claim is barred by limitation — in particular whether Article 62 or Article 120 of the Limitation Act applies.
- Whether the payments of Rs. 1,200 per annum from 1923 onward are properly characterised as rent (an increase of rent) or as a separate premium (pagdi) arising under a distinct contract.
Arguments of the Parties
Plaintiff's Arguments
- The plaintiff maintained that the payments sought in the Small Cause Court were not the same cause of action as the arrears of rent claimed in the present suit — i.e., the premium was separate from rent (or otherwise the plaintiff could pursue both where causes differ).
- On limitation, it was argued for the plaintiff that Article 62 of the Limitation Act (three years for actions for money received by the defendant for the plaintiff's use) was applicable to any claim by the tenant to recover premiums paid to the landlord.
Defendant's Arguments
- The defendant initially alleged a contractual right to occupy until 30 June 1928 (a defence later abandoned).
- Defendant asserted that the Small Cause Court suit for Rs. 400 (premium) was part of the same cause of action as the rent claim and that, under O.2, R.2 CPC, the prior suit barred the present suit for arrears.
- In the counter-claim, the defendant contended that the Rs. 1,200 per year payments were illegal premiums under Section 8 of the Bombay Rent (War Restrictions) Act, 2 of 1918, and were recoverable; on limitation, counsel for the defendant (Mr. Somji) argued that Article 62 did not apply because the money was not received by the landlord "for the use" of the tenant and that Article 120 (longer period) applied instead.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Anantram Bhattacharjee v. Mem Chandra Ear (reported as (1) in the opinion) | Authority of the High Court of Calcutta holding that Article 62 should be construed without reference to authorities upon actions for money had and received. | Beaumont, C.J. states he is not prepared to accept that view; he declines to adopt the Calcutta High Court's approach that Article 62 be construed without reference to money had and received authorities. |
| Mahomed Wahib v. Mahomed Ameer (reported as (2) in the opinion) | Support for applying Article 62 (action for money had and received) to cases where defendant received money which in justice and equity belongs to the plaintiff and thereby was received for the plaintiff's use. | Cited by the court (via Mookerjee, J.'s observations) as authority that Article 62 applies to cases analogous to the English action for money had and received; used to support the conclusion that Article 62 governs limitation here. |
| Raghumoni Audhikary v. Nilmoni Singh Deo (reported as (3) in the opinion) | Used for the proposition that Article 62, when referring to "money received by the defendant for the plaintiff's use," points to the English action for money had and received. | Referenced (through Mookerjee, J.'s citation) to support the interpretation that Article 62 applies where the defendant has received money which in justice and equity belongs to the plaintiff. |
Court's Reasoning and Analysis
The court addressed the matters in two principal parts: (A) the effect of O.2, R.2, CPC on the plaintiff's rent claim in light of the prior Small Cause Court suit for premium; and (B) the defendant's counter-claim to recover premiums alleged to be illegal under the Bombay Rent (War Restrictions) Act, 2 of 1918, and the applicable limitation period.
A. O.2, R.2 and Whether Rent and Premium Arise from the Same Cause of Action
- The court acknowledged three possible legal characterisations:
- (i) The rent arises from the 1918 contract and the premium arises under a distinct 1923 contract — two separate causes of action (O.2, R.2 would not apply).
- (ii) The 1923 agreement altered the original tenancy such that the rent was increased from Rs. 200 to Rs. 300 — then only one cause of action (the later contract), and O.2, R.2 would apply.
- (iii) The 1923 arrangement operated under a single contract providing for both rent and a premium as separate components of the same contract — in that case there would also be a single cause of action and O.2, R.2 might apply.
- Beaumont, C.J. reviewed the evidence (plaintiff's and defendant's) and the accounting entries. Although the plaintiff's books sometimes recorded the payments under "shop rent," detailed entries showed sub-entries distinguishing Rs. 200 as rent and Rs. 100 as "pagdi" (premium). The agreement of 1923 appeared to have been made in consideration of the plaintiff withdrawing a notice to quit issued in April 1923; there was no evidence of any agreement that altered the rent of Rs. 200/month.
- On that evidence, Beaumont, C.J. concluded the proper characterisation was the first: the premium (Rs.1,200/year) arose under a separate contract made in 1923 and did not alter the original rent contract. Therefore the rent claim and the premium claim arose from different causes of action and O.2, R.2 did not bar the plaintiff's action for arrears of rent.
- The learned judge also noted a procedural slip in the lower court's order dismissing the action with costs: the plaintiff was at least entitled to costs up to the date on which possession was delivered by the defendant; ejectment was not an issue because the defendant had already given up possession before trial.
B. Counter-claim under the Bombay Rent (War Restrictions) Act — Nature of Payment and Limitation
- Section 8 of the Bombay Rent (War Restrictions) Act, 2 of 1918 was quoted: it prohibits demanding premiums in consideration of tenancy and provides in sub-section (2) that such payments made after 1 Jan 1918 are recoverable by the tenant from the landlord and may be deducted from rent.
- The court accepted the legal effect of Section 8(2): once the premium comes into the landlord's hands it is held by the landlord in a fiduciary capacity "to the use of the tenant" — in other words, the landlord holds the money for the tenant's benefit.
- The question of limitation: Section 12 (recovery of overpaid rent) contains a six-month limit but the court agreed with the learned judge that Section 12 did not apply to premiums. The court therefore turned to the Limitation Act to identify the applicable article.
- Beaumont, C.J. and Rangnekar, J. concluded that Article 62 (three years for actions for money received by the defendant for the plaintiff's use) applies. The reasoning:
- The payments were received by the landlord in circumstances obliging immediate repayment to the tenant (statutory duty under Section 8(2)).
- When money is received by a defendant in such circumstances it is properly described as money received to the use of the plaintiff and therefore falls within Article 62.
- It is immaterial that the statutory right to repayment is created by the Rent Act; what matters is that from the moment of receipt the landlord held the money to the tenant's use.
- The court rejected the defendant's submission that Article 62 was inapplicable and that Article 120 applied, and declined to accept the High Court of Calcutta's contrary view (Anantram Bhattacharjee) that Article 62 should be construed without reference to English authorities on money had and received.
- Because the counter-claim was not brought within three years of the receipt of the money by the plaintiff, the court held the counter-claim was barred by limitation under Article 62.
Holding and Implications
Core Ruling: APPEAL ALLOWED; the decree of the lower court was set aside; the plaintiff's action succeeded and the defendant's counter-claim was dismissed.
Specific orders made by the court (as recorded in the opinion):
- Decree entered for the plaintiff for Rs. 600 as arrears of rent and Rs. 400 for compensation (with interest on the decree) together with costs of the suit.
- Counter-claim by the defendant (for recovery of premiums) dismissed as barred by limitation; counter-claimant to pay costs.
- Defendant to pay the costs of the appeal; cross-objections dismissed.
Implications:
- The direct effect is that the plaintiff recovers the stated amounts and the defendant's attempt to recover premiums paid in 1923–1924 is unsuccessful because it was time-barred under Article 62 of the Limitation Act.
- The court determined (on evidence) that the payments of Rs.1,200 per year were premiums under a separate 1923 agreement rather than an increased rent under the 1918 tenancy; accordingly O.2, R.2 CPC did not bar the rent action.
- The opinion does not purport to lay down a broader new principle of law beyond applying established rules on (i) the proper characterisation of distinct contracts for rent and premium, and (ii) the application of Article 62 where money received by a defendant is held to the use of the plaintiff under statute. The decision's effect is primarily dispositive of the parties' rights in this case rather than announcing novel precedent.
Appeal allowed.
Beaumont, C.J:— This is an appeal from a judgment of Baker, J. The plaintiff is the owner of certain immovable property which he let to the defendant on a monthly tenancy and he sues to recover possession of the property, for three months' arrears of rent at the rate of Rs. 200 per month and a further sum for use and occupation after the expiration of the notice to quit, that is to say, in effect for mesne profits. The defendant in his written statement in the first instance stated that he was not bound to quit because of a certain contract under which he was entitled to occupation till 30th June 1928, but that defence was not persisted in. By his amended written statement he takes the point that the plaintiff had already sued him in the Small Cause Court for a sum of Rs. 400 pagri or premium for four months at the rate of Rs. 100 per month, and he says that suit, having regard to the terms of O. 2, R. 2 of the CPC, is a bar to the plaintiff's present suit for arrears of rent. The parties framed seven issues, but the learned Judge has not in terms answered them. The only two which he deals with in substance are, first of all, whether the plaintiff's claim to arrears of rent does not lie having regard to O. 2, R. 2; and, secondly, whether the defendant's counter-claim, with which I will deal presently, is well founded.
2. Now, the first point arises in this way. There is no doubt that the property was originally let by the plaintiff to the defendant in the year 1918 and the rent payable was Rs. 200 per month. There is also no doubt that as from May 1923 further sums have been payable whether as rent or premium is a question which we have to decide. Further sums amounting to Rs. 1,200 per annum have been payable and have been called premium and it was for four months' arrears of this premium that the suit was brought in the Small Cause Court. Under O. 2, R. 2, it is provided that the plaintiff must make all claims which he is entitled to make under the same cause of action, and if he omits to do so he cannot afterwards sue for the balance, and therefore the question which has to be determined in this case is whether the plaintiff's claim to the rent and the plaintiff's claim to premium arose under the same cause of action. The learned Judge deals with that point in this way. He says:
“The accounts will show that Rs. 300 a month is debited as rent and although the agreement to pay the premium may have been entered into on a different date from that on which the agreement to pay rent was entered into it really only represents one cause of action, viz., the right to recover the rent, the rent being raised from time to time by the plaintiff by threats of evicting the defendant, the actual case which the Rent Act was designed to prevent, and the attempt to make out that this premium has nothing to do with rent fails.”
3. The case had been made by the plaintiff that the premiums charged were in order to induce him not to open a rival shop to the defendant, and the, learned Judge held that case was not proved. But the effect of the passage which I have read, and the judgment which was given, seems to be that the learned Judge holds that this sum which was made payable in 1923 as premium was in effect additional rent. But the learned Judge's finding is not easy to follow. The learned Judge says, the obligation to pay the rent and the premium may have arisen at different dates but nevertheless there is only one cause of action. Now, the question might arise in one or other of three ways. If in fact the rent was made payable under a contract made in 1918 and a premium was made payable under a contract made in 1923, I should say that it was quite clear that the cause of action for premium and the cause of action for rent is in each case different. In each case there is a different contract which the plaintiff hae to sue upon. In such a case O. 2, R. 2, would not apply. If, on the other hand, the contract made in 1923 was that the old rent of Rs. 200 per month was to be increased to Rs. 300 per month, then it is quite clear that in future there would be only one cause of action for the whole of the rent, that cause of action being the later contract which increased and fixed the amount of rent. Obviously in that case O. 2, R. 2, would apply, as there would only be one cause of action. But then there might be a third case, because it might have been provided in 1923 that rent should be paid at the old rate of Rs. 200 per month and in addition a premium of Rs. 100 per month should be payable, so that in that case we should have one contract providing for payment both of rent and of premium. I think in that case O. 2, R. 2, would apply, and if the plaintiff sued only for the premium he could not afterwards sue for the rent. The learned Judge has not shown us definitely into which of these categories he thinks this case falls, but from his reference to the contract for payment of premium being made at a different date from the contract to pay rent, I am rather inclined to think that he puts the case in the first category, namely, that of two distinct contracts, and, in my opinion, on the evidence that is the right view. I think that on the evidence both of the plaintiff and the defendant the only agreement which was made in 1923 was an agreement to pay a premium at the rate of Rs. 1,200 per annum and that no alteration was made in the contract of tenancy for the payment of a rent at Rs. 200 a month. It appears from the evidence that the plaintiff had given the defendant a notice to quit in April 1923 and this agreement to pay a premium was the consideration for the plaintiff agreeing to withdraw that notice. But neither in the evidence of the plaintiff nor in that of the defendant is there any reference to any agreement affecting the payment of the rent which had been payable since 1918. It is said that the books of the parties treat this payment of Rs. 1,200 a year as rent. It is quite true that in the plaintiff's books it is brought in under the heading of “shop rent,” but it was not in fact treated as rent. The payments for the year 1923–1924 are two payments of Rs. 500 and one of Rs. 200, and it seems to me clear that the amount was not added to the rent and treated as increased rent. In the defendant's books he also refers to it as rent, but in his account, which is Ex. 12, he-brings it in as a payment on the debtor side of Rs. 1,200 and in Ex. 13, which is the one which I think the learned Judge must have had in his mind when he referred to the premium being included with the rent as one payment of Rs. 300 per month, there are payments of Rs. 300 per month entered for rent, but then there is a sub-entry in each case showing Rs. 200 for rent and Rs. 100 for “pagdi” or premium. Therefore I think that in fact the payment of the Rs. 1,200 a year was a premium and was not rent, and that the cause of action for the premium arose under a different contract from the cause of action for rent. That being so, I think that O. 2, R. 2, has no application to the case and that the plaintiff was entitled to succeed in the action. I may point out: that in any case there would seem to have been a slip in dismissing the action with costs, because the plaintiff was entitled to costs at any rate down to the date on, which possession was delivered up by the defendant. The issue as to ejectment, does not arise because admittedly the defendant had given up possession before the trial.
4. The other question which has to be dealt with is the defendant's counterclaim. The defendant says that in the years 1923 and 1924 he paid this premium of Rs. 1,200 per annum to the plaintiff, and that is a payment which was forbidden by the Bombay Rent (War Restrictions) Act 2 of 1918, and that accordingly the amount is recoverable Under Section 8 of the Bombay Rent Act, it is provided that no premium may be charged and in sub-S. (2) it is provided that where any such payment has been made the amount shall be recoverable by the tenant by whom it was made from the landlord. Then S. 12 provides for the recovery of rent overpaid, but there is a limitation in that section which provides, that the claim must be made within six, months. I agree with the learned Judge in thinking that S. 12 has no application to a premium, and as we have held that the amount in question in this case was a premium, the limitation in S. 12 does not apply and we have to consider what article of the limitation act is the one applicable to the case. It is argued for the plaintiff that the Article applicable to the case is Article 62 which provides a limitation of three years for money payable by the defendant to the plaintiff for money received by the defendant for the plaintiff's use. Mr. Somji, on behalf of the defendant (plaintiff in counter-claim), has strenuously contended that this sum was not paid by the defendant to the plaintiff for the use of the defendant and he has referred us to a considerable number of cases which in my view really do not affect the question. What we have got here is a sum of money paid by the pendant to the plaintiff in such circumstances that the plaintiff was bound at once to repay it to the defendant. It seems to me that brings the case within Article 62 and that the money must be treated as received by the plaintiff for the defendant's use. Mr. Somji says that the money was payable under a statute and therefore as no other article applies the case falls within Article 120. It is no doubt true that a statute gave the defendant the right to recover the money (whether he would have had any right apart from the statute may be open to question), but it seems to me that once money is paid over by the defendant to the plaintiff in such circumstances that it is immediately repayable, it matters not whether the right to repayment arises under some statute or because of some rule of law or of equity. The gist of the matter is that the moment the plaintiff received the money he was bound to return it to the defendant, and that being so, I think that from the inception, i.e, from the date of the receipt of the money, he held the money to the use of the defendant.
5. In that view of the matter it is not necessary for us to consider the question discussed by the learned Judge as to whether or not under the English law an action for money had and received would lie or not. If a case falls clearly within the words of Article 62, effect must be given to such article. But I am not prepared, as at present advised, to accept the view of the High Court of Calcutta in Anantram Bhattacharjee v. Mem Chandra Ear (1), that Article 62 should be construed without any reference to authorities upon actions for money had and received. That being so, I think that the counter-claim was barred by limitation, since it is admitted that it was not launched within three years of the receipt of the money by the plaintiff. I think therefore that the action must succeed and the counterclaim must fail.
6. Decree of the lower Court set aside. Decree for Rs. 600 arrears of rent and Rs. 400 for compensation with costs of the suit and interest on decree. Counterclaim dismissed with costs. Defendant to pay the costs of the appeal. Cross objections dismissed.
Rangnekar, J.:— The evidence as to the agreement under which the defendant became liable to pay Rs. 1,200 per year as premium or “pagdi” is not very clear. But after going through it carefully I have come to the conclusion that during; the continuance of the tenancy in 1923 the parties entered into a fresh and separate contract whereby the defendant agreed to pay the premium. In other words, there were two distinct and separate contracts, one for payment of rent, and another subsequent to the first, under which the defendant agreed to pay the premium. On this finding I am clearly of opinion that the case does not come within the provisions of O. 2, R. 2 of the CPC.
7. The second question relates to the counter-claim of the defendant for a sum of Rs. 2,400, which he had paid to the plaintiff as premiums in 1923 and 1924. The counter-claim was made in May 1928, and was based on the provisions of Section 8 of the Bombay Rent (War Restrictions) Act, 2 of 1918. The plaintiff contends that the counter-claim is barred by limitation under Article 62, Lim. Act. This contention was rejected by the learned Judge who held that the article applicable to the case was Article 120 of the Act. Section 8 of the Rent Act, ran as follows:
“8.(1) It shall not be lawful for any person, in consideration of the grant, renewal or continuance of a tenancy of any premises, to require the payment of any fine, premium or any other like sum in addition to the rent; (2) where any such payment has been made after the first day of January 1918, the amount shall be recoverable by the tenant by whom it was made from the landlord, and may without prejudice to any other method of recovery be deducted from any vent, payable by him to the landlord; (3) provided that, nothing in this section shall apply to any payment under any agreement entered into before the first day of January 1916.”
8. Now the meaning of the section is that the landlord is not entitled to recover from the tenant any premium in addition to the rent. But if he does so, the tenant can at once recover it, and this he may do in one of two ways, either by deducting it himself from the rent due or by filing an action. Sub-S. (2) makes it clear that from the time the amount of the premium comes into the hands of the landlord it really belongs to the landlord, and the landlord holds it for the benefit of the tenant. In other words, he holds it in a fiduciary capacity, to use technical language, “to the use of the tenant.”
9. If I am right in the construction of Section 8 of the Rent Act, then it follows that the defendant's claim falls within Article 62. Mr. Somji says that Article 62 is not applicable as the right to recover premium is created only by the Rent Act, and that as there is no other specific article applicable to such a case, Article 120 would apply. Assuming that the right to recover the premium arises only under sub-S. (2), Section 8 of the Rent Act, and not under the general principles of the law of contract or equity, still it is difficult to see why Article 62 is not applicable. It is clear on the authorities that Article 62 is applicable to all cases to which the old English form of common law action for money had and received applied. An action for money had and received is, as pointed out by Lord Mansfield, maintainable where a defendant has received money which in justice and equity belongs to the plaintiff under circumstances which rendered the receipt by the defendant for the use of the plaintiff. I am supported in this view by the observations of Mookerjee, J., in Mahomed Wahib v. Mahomed Ameer (2), which are as follows (p. 533):
“It seems to me to be clear, as pointed out by Tiarkby, J., in Raghumoni Audhikary v. Nilmoni Singh Deo (3) that the article, when it speaks of a suit for money received by the defendant for the plaintiff's use, points to the well-known English action in that form; consequently the article ought to apply wherever the defendant has received money which in justice and equity belongs to the plaintiff under circumstances which in law render the receipt of it, a receipt by the defendant to the use of the plaintiff.”
10. In my opinion therefore Article 62 applies to the case and the counter-claim is barred by limitation.
B.V/R.K
11. Appeal allowed.
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