Dina Nath (D) By Lrs. vs Subhash Chand Saini

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO(s). 4563 OF 2014

DINA NATH (D ) BY LRS & ANR. ….APPELLANT(S)

VERSUS

SUBHASH CHAND SAINI & ORS. ….RESPONDENT(S)

JUDGMENT

Rastogi, J.

1. The instant appeal has been filed against the judgment and order

dated 10th May, 2011 passed by the High Court of Delhi in Civil

Miscellaneous (M) No. 44 of 2011 at the instance of the appellants

(tenants) under Article 227 of the Constitution of India upholding

orders of the Rent Controller striking out defence of the appellants on

account of alleged failure to pay the rent.

Signature Not Verified Digitally signed by ASHWANI KUMAR Date: 2019.09.24 16:35:44 IST Reason:

2. The matter earlier was heard by a two Judge Bench of this Court 2

and there was a unanimity on the principles of law that the power to

strike out the defence vested in the Rent Controller under Section

15(7) of the Delhi Rent Control Act, 1958 (hereinafter being referred to

as the “Act, 1958”) is discretionary and not mandatory and it is

imperative that every violation in implementation of the directions of

the Rent Controller under Section 15(1) of the Act, 1958 ipso facto

leave to the striking out of the defence of the tenant and it ought to be

exercised only when the tenant deliberately, contumaciously or

negligently fails to deposit the rent due from him but there was a

divergence of opinion on the facts of the instant case and for that

reason the matter has been placed before us.

3. The facts in brief which may be relevant for the present purpose

and culled out from the record are that the appellants­tenants rented

a shop bearing no. 1445­A, Dariba Kalan, Delhi on a monthly rent of

Rs. 66/­. The respondents­plaintiffs jointly own the above­mentioned

demised premises. The rent for the shop is to be paid to respondent

no. 1, who holds a power of attorney, to collect rent on behalf of the

respondents. In November, 2007, the respondents (landlord) filed an

eviction petition under Section 14(1)(a)(b)(c) and (j) of the Act, 1958

seeking decree for recovery of possession of the rented premises on the 3

manifold reasons. We are not dilating on the grounds of eviction of

the demised premises at this stage since that is the subject matter to

be examined by the Rent Controller where the eviction petition is

pending adjudication.

4. The appellants filed their written statement on 7 th February, 2008

disputing the allegations made by the respondents in the eviction

petition. Since one of the ground on which eviction was prayed for by

the respondents was non­payment of rent in which the order under

Section 15(1) of the Act, 1958 came to be passed on 21 st April, 2008.

It will be appropriate to quote the order dated 21 st April, 2008 ad

infra:­

“RENT CONTROL TRIBUNAL ­ DELHI

E­931/07 21.04.08

Arguments heard u/s 15(1) of DRC Act. The rate of rent and the relationship is not in dispute between the parties though the petitioner claims the arrears w.e.f. 01.01.2007 and the respondent states that he has paid rent upto October, 2007.

Since the orders u/s 15(1) of DRC Act are to be passed on the admitted facts, the respondent is directed to pay or deposit the arrears of rent w.e.f. 01.11.2007 till date @ Rs. 66/­pm within 30 days from today and further continue to pay or deposit the future rent at the said rate month by month before 15th of each succeeding English Calendar month.

4

SD/­ ARC/DELHI/21.04.2008”

5. In terms of the order under Section 15(1) of Act, 1958, the

appellants­tenants have to pay or deposit the arrears of rent w.e.f. 1 st

November, 2007 till date @ Rs. 66/­ p.m. within 30 days from 1 st

November, 2007 and further continue to pay or deposit the future rent

at the said rate month by month before 15 th of each succeeding

English Calendar month.

6. On account of non­compliance of the order dated 21 st April, 2008

as alleged, the respondents filed an application under Section 15(7) of

the Act, 1958 on 28th April, 2009 praying for striking out the defence

of the appellants.

7. The appellants filed their written response to the aforesaid

application and it was specifically stated in paragraphs 3 & 4 that

along with the arrears due from 1st November, 2007, in addition the

advance rent of ten months was deposited and on adjustment of the

advance rent deposited on 21st April, 2008, the monthly rent which

was deposited at a later point of time practically paid in advance and

there was no default committed of the order dated 21 st April, 2008. 5

8. Taking note of the rival claims of the parties, the Rent Controller

vide its Order dated 14th September, 2009 allowed the application filed

by the respondents­landlord under Section 15(7) of the Act, 1958 and

struck off the defence of the appellants in the pending evicting

petition. Dissatisfied with the order passed by the Rent Controller, the

appellants approached the Rent Control Tribunal. By an order dated

24th May, 2010, the Rent Control Tribunal dismissed the appeal and

being dissatisfied, the appellants further approached the High Court

invoking Article 227 of the Constitution of India and that came to be

dismissed vide judgment and order dated 10 th May, 2011 which is

under challenge before us in the instant civil appeal.

9. The moot question arises for consideration is whether the power

vested with the Rent Controller under Section 15(7) of the Act, 1958 is

discretionary and has been judiciously exercised in the facts of the

instant case in striking out the defence of the appellants(tenants) in

the eviction proceedings.

10. Before adverting to the factual matrix relevant to the question of

striking out the tenant’s defence, it will be apposite for us to take note

of the scheme of the Act, 1958.

6

11. The statement of objects and reasons of the Act, 1958 fell for

consideration before the Constitution Bench of this Court in Ashoka

Marketing Ltd. and Anr. Vs. Punjab National Bank and Ors.1,

wherein this Court held that the purpose of the Act, inter alia, is to

give the tenants a larger measure of protection against eviction. This

Court observed:

“…The Statement of objects and reasons for the enactment of the Rent Control Act, indicates that it has been enacted with a view :

(a) to devise a suitable machinery for expeditious adjudication of proceedings between landlords and tenants;

(b) to provide for the determination of the standard rent payable by tenants of the various categories of premises which should be fair to the tenants, and at the same time, provide incentive for keeping the existing houses in good repairs, and for further investment in house construction;

and

(c) to give tenants a larger measure of protection against eviction.

This indicates that the object underlying the Rent Control Act is to make a provision for expeditious adjudication of disputes between landlords and tenants, determination of standard rent payable by tenants and giving protection against eviction to tenants. The premises belonging to the Government are excluded from the ambit of the Rent Control Act which means that the Act has been enacted primarily to regulate the private relationship between landlords and tenants with a view to confer certain benefits on the tenants and at the same time to balance the interest of the landlords by providing for expeditious adjudication of proceedings between landlords and tenant…”

1 1990 (4) SCC 406 7

(emphasis

supplied)

12. Prior to the enactment of Act, 1958, the matter pertaining to rent

and eviction in the State of Delhi was governed by The Delhi and

Ajmer Rent Control Act, 1952(hereinafter being referred to as the “Act,

1952”). Apart from the ground of eviction provided under Section 13

of the Act, 1952 which is corresponding to the grounds for protection

of a tenant against eviction has been enumerated under Section 14 of

the Act, 1958. The corresponding provision of Section 13(5) of Act,

1952 has been provided under Section 15(7) with certain modifications

under Act, 1958.

13. One of the significant modification is that while under Section

13(5) of the Act, 1952, the application by the landlord had to be “for

an order on the tenant­defendant to deposit month by month rent at a

rate at which it was last paid” in all suits for ejectments. Section 15 of

the Act, 1958 makes a distinction between cases where the recovery of

possession is sought on, the grounds of arrears of rent having been

left unpaid within two months of the service of notice of demand and

other ejectment proceedings. In the first class of cases, the Controller

can make an order for payment of rent at the rate at which it was last 8

paid while in the other class of cases the Controller may make an

order for payment at the rate at which it was legally recoverable.

14. The other notable difference is that under Section 13(5) of the

Act, 1952, failure of the tenant to deposit the arrears of rent within 15

days of the date of the order or to deposit the rent for any month by

the 15th of the next following month made it incumbent on the Court

to strike out the defence against ejectment. The language was that on

the failure of the tenant to deposit the rent, in terms of the mandate of

law, “the Court shall order the defence against ejectment to be struck

off”. In the Act 1958, Section 15(7) deals with the matter in case of

failure of the tenant to make the payment for deposit as required by

the Act. The Rent Controller has a discretion to consider the facts and

circumstances of each case and exercise his discretion judiciously in

accordance with law. It will be appropriate to notice Section 13(5) of

Act, 1952 and Section 15(7) of Act, 1958, which are as under:­

THE DELHI AND AJMER RENT CONTROL ACT, 1952

“13 ­ Protection of a tenant against eviction

(5) If the tenant contests the suit as regards the claim for ejectment, the plaintiff­landlord may make an application at any stage of the suit for an order on the tenant­defendant to deposit month by month rent at a rate at which it was last paid and also the arrears of rent, if any, and the court, after giving an opportunity to the parties to be heard, may make 9

an order for the deposit of rent at such rate month by month as it thinks fit and the arrears of rent, if any, and on the failure of the tenant to deposit the arrears of rent within fifteen days of the date of the order or to deposit the rent at such rate for any month by the 15th of the next following month, the court shall order the defence against ejectment to be struck out and the tenant to be placed in the same position as if he had not defended the claim to ejectment; and the landlord may withdraw the amount of money in deposit without prejudice to his claim to any decree or order for recovery of possession of the premises.”

DELHI RENT CONTROL ACT, 1958

“Section 15 ­ When a tenant can get the benefit of protection against eviction

(7) 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.” (emphasis supplied)

15. The change of the words from “The Court shall order the defence

against ejectment to be struck out” to the words “the Controller may

order the defence against eviction to be struck out” is a deliberate

modification in law in favour of the tenant. Under the Act 1952, the

Court had no option but to strike out the defence if the failure to pay

or deposit the rent is proved; under the Act, 1958, the Controller who

takes the place of the Court has a discretion in the matter, so that in

proper cases, even if there is a default in making the payment of rent,

but if he is satisfied on the basis of the material on record in exercise

of judicial discretion, may refuse to strike out the defence in the given 10

facts & circumstances of the case.

16. Broadly speaking, the perusal of Act, 1952 with Act, 1958 shows

primarily the following changes:­

(i) Section 13(5) of the Act, 1952 was meant to safeguard the interest of the landlord only. Section 15(1) of the Act, 1958 is meant primarily by way of benefit to the tenant who gets another opportunity to avoid his eviction by complying with the order passed under Section 15(1). The tenant also by complying with the order passed under Section 15(1) avoids the consequence of his default of payment or tender before filing of the petition.

(ii) Under Section 13(5) of the Act 1952, in case of default, the Court was bound to strike out the defence whereas under

Section 15(7) of the Act 1958, in case of default in compliance with the order passed under Section 15(1) or Section 15(2), the Controller has a discretion to strike out the defence and it is always open to be examined on the facts and circumstances of each case.

(iii) Under the Act, 1958 by complying with the order under Section 15(1), the tenant can defeat the eviction application, whereas under the Act 1952, the tenant did not have this advantage even if he complied with the order under Section 13(5) of the Act 1952.

17. The inevitable result on comparison of Section 13(5) of the Act,

1952 and Section 15(7) of Act, 1958 be that the Court would not be

bound to strike out the defence against ejectment in case of default in

payment of rent in compliance to the order passed under Section 15(1)

of the Act, 1958 and it is always open to the Controller to examine the 11

facts of each case while exercising its discretion which obviously has

to be judicious in approach and with circumspection.

18. While interpreting Section 15(7) of Act 1958, V.R. Krishna Iyer, J.

in Miss. Santosh Mehta Vs. Om Prakash and Ors.2 held that the

power to strike out a party’s defence is an exceptional step and has

only to be exercised where a “mood of defiance” and “gross negligence”

on the part of the tenant is detected. This Court warned against the

landlord using Section 15(7) as a “booby trap” to get the tenant

evicted. It would be better to reproduce the passage which indicate

the approach which has to be adopted in such matters by the Court.

The relevant paras 3 & 4 are as under:­

“3. We must adopt a socially informed perspective while construing the provisions and then it will be plain that the Controller is armed with a facultative power. He may, or may not strike out the tenant's defence. A judicial discretion has built­in­self­restraint, has the scheme of the statute in mind, cannot ignore the conspectus of circumstances which are present in the case and has the brooding thought playing on the power that, in a court, striking out a party's defence is an exceptional step, not a routine visitation of a punitive extreme following upon a mere failure to pay rent. First of all, there must be a failure to pay rent which, in the context, indicates wilful failure, deliberate default or volitional non­ performance. Secondly, the section provides no automatic weapon but prescribes a wise discretion, inscribes no mechanical consequence but invests a power to overcome intransigence. Thus, if a tenant fails or refuses to pay or deposit rent and the court discerns a mood of defiance or gross neglect, the tenant may forfeit his right to be heard in defence. The last resort cannot be converted into the first

2 1980(3) SCC 610 12

resort; a punitive direction of court cannot be used as a booby trap to get the tenant out. Once this teleological interpretation dawns, the mist of misconception about matter­of­course invocation of the power to strike out will vanish. Farewell to the realities of a given case is playing truant with the duty underlying the power.

4. …..The effect of striking out of the defence under Section 15(7) is that the tenant is deprived of the protection given by Section 14 and, therefore, the powers under Section 15(7) of the Act must be exercised with due circumspection.”

19. Subsequent decisions rendered on the subject also recognises

that mere failure to pay rent on the part of the tenant is not enough to

justify an order striking out the defence. It is only a wilful failure or

deliberate default or volitional of non­performance that can call for the

exercise of the extraordinary power vested in the Court. More

importantly, the plentitude of the discretionary power of the Court

under Section 15(7) of the Act, 1958 is with the Rent Controller

whether or not to strike out the defence, needless to say that the effect

of striking out the defence under Section 15(7) of Act, 1958 is that the

tenant be deprived of the protection available to him under Section 14

and it is imperative that such power vested with the Rent Controller

under Section 15(7) of the Act, 1958 must be exercised with due care

and circumspection.

20. In Smt. Kamla Devi Vs. Shri Vasudev3, this Court reiterated

3 1995(1) SCC 356 13

that the power to strike out the defence simply vested the Rent

Controller with the discretion to do so. It was not mandatory for the

Rent Controller to strike out the defence simply because a default had

occurred. It is imperative that exercise of discretion vested with the

authority obviously depends upon the facts and circumstances of each

case and is not open to be exercised under the rule of thumb.

21. The later decision in M/s. Jain Motor Car Co., Delhi Vs. Smt.

Swayam Prabha Jain & Anr.4 does not disturb the legal parameters

regulating the exercise of the power but deals more on the facts and

circumstances of that case in which the power was found to have been

rightly exercised.

22. The interpretation with reference to striking out the defence of a

tenant under Section 15(7) of the Act, 1958 later came up for

consideration before this Court in Aero Traders (P) Ltd. Vs. Ravinder

Kumar Suri5.

23. Reference may be made to a later decision of this Court in Amrit

4 1996(3) SCC 55 5 2004(8) SCC 307 14

Lal Vs. Shiv Narain Gupta6 wherein it was held that sub­section (7)

of Section 15 of the Act, 1958 confers a discretion with the Rent

Controller who may order the defence against eviction to be struck off

and proceed with the hearing of the application if a tenant fails to

make payment or deposit, as required under Section 15 of Act, 1958.

It has been further held that every violation under Section 15(1) of the

Act, 1958 will not ipso facto lead to the striking out the defence of a

tenant. The discretion vested with the Controller under Section 15(7)

of Act, 1958 has to be exercised judiciously and if the non­compliance

of the order under Section 15(1) of the Act, 1958 depicts irrational

disregard to the order, or when the non­compliance is repeated, or

when no reasonable justification is tendered, or for such other similar

reasons, wilful, contumacious, or negligent and careless behaviour,

could lead to the striking out of a tenant’s defence.

24. It clearly emerges from the exposition of law that power vested

under Section 15(7) of the Act, 1958 is discretionary and not

mandatory and depends on contumacious or deliberate default and

must be construed harmoniously so as to balance the rights and

obligations of the tenant and the landlord and the power under

Section 15(7) of Act, 1958 being an exception to be exercised with due

6 2010(15) SCC 510 15

care and circumspection.

25. Coming to the case on hand, there are distinct aspects from

which the question of default in payment of rent has to be viewed. In

the first instance, the question is whether the arrears which the Court

determined and directed the appellant to pay were paid. The answer

indeed is in the affirmative. The Rent Controller passed an order

dated 21st April, 2008 directing the appellants to deposit arrears of

rent from 1st November, 2007 to April, 2008 and to continue to pay

future rent @ Rs. 66/­ p.m. by the 15 th of each succeeding month. It

is not in dispute that the appellants had complied with the order of

deposit of arrears on 21st April, 2008. In fact, they paid ten months

advance rent in addition to arrears from November, 2007 to April,

2008 in compliance of the order dated 21st April, 2008.

26. The second limb which in fact has been missed at all the three

stages is that in addition to the arrears of rent i.e. from November,

2007 to April, 2008, the appellants paid an amount equivalent to ten

months’ advance rent, although there was neither any legal obligation

to do so nor was any direction issued by the Rent Controller for

making such payment. It is not disputed that the additional rent paid 16

by the appellants of ten months advance rent did not represent any

admitted liability, and the fact is that the additional rent of ten

months which was paid by the appellants over the period from 1 st

November, 2007 to April, 2008 was neither adjusted against future

rent nor was it refunded to the appellants.

27. It may be relevant to note that although the respondents­

landlord have claimed arrears for the period 1 st January 2007 to

October 2007, but that was disputed by the appellants as it revealed

from the order dated 21st April, 2008, but as we are examining the

question regarding striking of defence because of non­compliance of

the order passed by the Rent Controller in exercise of his power under

Section 15(1) of Act, 1958, the arrear in terms of order dated 21 st

April, 2008 was to be paid from November, 2007 to April, 2008 and

additional rent of ten months paid on 21st April, 2008 was indeed to be

adjusted by the respondents towards future rent for the period

commencing from 1st May, 2008 and it was the only legal option and

having that excess amount being acknowledged by the respondents­

landlord, the same must have been, in absence of a direction from the

Court, be deemed to have been received and held by the respondents­

landlord for the benefit of the appellants­tenants and adjustment of 17

such excess amount against future liability in that view is the only

possible and legally valid method of appropriation of that amount.

Viewed thus, the amount paid by the appellants on 21 st April, 2008

covered the period of future rent commencing from May 2008 to

February, 2009(ten months).

28. The further limb of the factual matrix is also indisputed from the

record that after adjustment of the rent paid upto February, 2009, the

monthly rent deposited on 27th June, 2008 of one month and 17th

December, 2008 for five months will cover the period till 31 st August,

2009. That means, the appellants have paid advance rent upto 31 st

August, 2009. Not only that, the further two deposits made by them,

first on 1st May, 2009 and second on 5 th May, 2009, if these payments

would have been taken into consideration, the appellants discharged

the entire rent liability commencing from 1 st September, 2009. The

rent which was paid/deposited by the appellants on 21 st April, 2008

followed with 27th June, 2008, 17th December, 2008, 1st May, 2009 and

5th May, 2009 is not in dispute and that covers the rent for a period of

one year and nine months commencing from 1st September, 2009.

29. It clearly manifests from record that on the date of the order 18

passed by the Rent Controller dated 21st April, 2008 itself, the entire

arrears as directed to be deposited by the appellants stood paid and

also on the date of the order passed by the Rent Controller striking out

his defence, rent for the entire intervening period and even beyond

had been paid and what it appears is that suitable reconciliation and

adjustments were required to be made against the months for which

rent was payable but what cannot be disputed is that the amount

which the appellants were called upon to pay and what they have,

pursuant to the directions of the Rent Controller was paid/deposited

at all relevant point of time in excess of what was payable to the

landlord. In the given circumstances, the charge of contumacious

failure and deliberate default in making payment levelled against the

appellants­tenants is, therefore, ill founded.

30. The question is whether the tenants were guilty of contumacious

conduct in withholding such payment. While answering that

question, the amount of rent payable for the demised premises may be

a factor which cannot be brushed aside, but the facts and

circumstances of the case on hand, do not suggest any negligence,

defiance or contumacious non­payment of the amount payable to the

landlord to warrant the taking of that “exceptional step” which is 19

bound to render the tenant defenceless in his contest against the

respondents­landlord.

31. In our opinion, the decision of the Rent Controller and confirmed

by the Single Judge of the High Court of Delhi under the impugned

judgment upholding the decision of striking out of the defence of the

appellants which certainly entails adverse consequences in depriving

of taking their defence and to contest the eviction application filed by

the respondents­landlord has not been exercised judiciously and with

circumspection and for the aforesaid reasons, the impugned judgment

is unsustainable and deserves to be set aside.

32. It appears that the eviction application was filed by the

respondents in the year 2007 and almost 12 years have rolled by and

the matter could not be proceeded because of the pendency of the

proceedings in this Court, we consider it appropriate to observe that

the Rent Controller/Competent Authority may proceed with the matter

and decide the pending eviction application expeditiously on merits

but in no case later than one year in accordance with law.

33. In the result, the appeal succeeds and the impugned judgment of

the High Court of Delhi dated 10 th May, 2011 confirming order of the 20

Rent Controller/Tribunal are hereby set aside with the observations

supra. No costs.

34. Pending application(s), if any, stand disposed of.

………………………….J. (ARUN MISHRA)

………………………….J. (M.R. SHAH)

.…………………………J. (AJAY RASTOGI)

NEW DELHI SEPTEMBER 24, 2019