RAKESH WADHAWAN AND ORS. v. M-S. JAGDAMBA INDUSTRIAL CORPORATION AND ORS

Citation: [2002] 3 S.C.R. 468

Court: Supreme Court of India

Bench: R.C. LAHOTI, BRIJESH KUMAR

Judgment text

-- RAKESH WADHAWAN AND ORS. v. MIS. JAGDAMBA INDUSTRIAL CORPORATION AND ORS. APRIL 26, 2002 - [R. C. LAHOTI AND BRIJESH KUMAR, JJ. ] Rent Control and Eviction: East Punjab Urban Rent Restriction Act, I 949 (E. P. U. R. R. Act): Section 13(2)(i) and its proviso. Eviction on the ground ofdefault in payment ofrent-Proof ofrate of rent-Tenants plea that rent recited in lease deed was not acted upon and hence rent not payable at that rate-Held, Deed oflease and payment ofrent through Cheque at an agreed rent for a certain period are enough to overrule the plea oftenants. 'Assessed by Controller' qualifies the entries preceding expression -1 Controller has to make assessment ofnot only the cost ofapplication but also of arrears of rent and interest on such arrears and pass an interim order- If the amount deposited is short, the Controller may afford opportunity to tenant to tender the deficit amount within a reasonable time.

Preamble andSection I 3(2)(i) and its proviso-Lacunae in the provision ofthe E. P. JJ. R. R. Act-Proving advantageous for unscrupulous litigants and creating obstacles in its smooth functioning-Object sought to be achieved has been frustrated-Need to revamp emphasized - be a dispute as to the date on which the monthly rent becomes due according to the contract of tenancy which will also need to be resolved without which the period for :which interest at six per cent per annum is liable to be paid would not be capable of being quantified. For two reasons, we consider it necessary to place such an interpretation or the language of the proviso. Firstly, it is in conformity with the object of enactment. The legislation was enacted to protect the tenants from the hands of unscrupulous landlords and any interpretation to the contrary would give an upper hand to the landlords and provide a tool in their hands to be cracked like a whip on weaker tenants.

Secondly, such an interpretation would bring the provision in conformity with the several other legislations of the times such as Section 13 ofth~M. P. Accommodation Control Act, 1961, Section 11 of A. P. Buildings (Lease and Eviction) Control Act, 1960, Section 11(4) of Bombay Rents, Hotels and Lodging House Rates Control Act, 1947, Section 15 of Delhi Rent Control Act, 1958 and so on. Thirdly, the provision suffers from ambiguity. In the absence of any in-built indication enabling determination of the quantum of arrears, if disputed, and the period for which interest at six per cent per annum is to be calculated, the provision would become unworkable and hence liable to be struck down under Article 14 of the Constitution. An obligation is cast on the Court to interpret it in such a m! lllner as to make it workable and save it from the vice of being rendered unconstitutional.

Even if Section 13(2)(i) and the proviso would not have been enacted there was Section 114 of the Transfer of Property Act to take care of such situation. The provision in the Rent Control Legislation which obliges the tenant to pay or tender the arrears of rent during the course of hearing and relieve the tenant from the consequences of default in payment of rent is founded on the doctrine of forfeiture of lease for non-payment of rent and equitable principle of granting relief against forfeiture within the exercise of discretion vesting in the Court. The Transfer of Property Act, 1882 did not in terms apply to the State of Punjab however principles underlying or contained in such of the provisions of the Transfer of Property Act as are essentially the principles of equity, justice and good conscience have been held applicable to the State of Punjab and Haryana. Section 114 of T. P. Act embodies one such principle. (See Namdeo lokman Lodhi v. Narmadabai and Ors.

, AIR (1953) SC 228; Guru Nanak Ex Servicemen Cooperative T. F. Society Group No. 2 and Ors. v. The State ofHaryana and Ors. , AIR (1972) Punjab & Haryana 83 D. B. ; Aziz-Ud-Din and Ors. v. Guru Bhagwan Das and Anr. , (1912) 17 IC 991). The rule of equity enshrined in Section 114 of Transfer of Property Act is : Where a lease of immoveable property has deterrn'ned by forfeiture for non-payment of rent and the lessor files a suit for ejectment of the lessee, the Court exercises a discretionary jurisdiction of passing an order relieving the lessee against the consequences of forfeiture if at the hearing of the suit the lessee pays or tenders to the lessor the rent in arrears with interest and costs or furnishes such security as the Court thinks sufficient. Having appointed a time for payment, the Court still retains jurisdiction to extend the time (Chandless-Chandless v. Nicholson, (1942) 2 All ER 315. Even the time appointed by a consent decree can be extended (Smt. Amiya Dev.

Dhirendra Nath Manda! , AIR (1971) Calcutta 263). The discretion conferred by Section 114 of TP Act is of wide amplitude guided by the principles ofjustice, equity and good conscience and the Court would .. examine the conduct of the parties, the comparative hardship and lean in favour of one whose hands are clean (Namdeo Lokman Lodhi v. Narmadabai and Ors. , AIR (1953) SC 228. The discretion to grant relief again forfeiture is available not only to the trial court but also to appellate court (R. S. Lala Praduman Kumar v. Virendra Goyal (dead) by his Lrs. and Ors. , [1969] 1 sec 714. The question which stares us is : whether in enacting Section 13(2)(i) and proviso thereto can we assume that the Legislature intended to place the tenants in a situation worse than what it would have been under the principles deducible from Section 114 of T. P. Act and even if this provision would not RAKESH WADHAWAN v. JAGDAMBA INDUSTRIAL CORPN. [R. C. LAHOTI, J. ] 485 have been there?

We cannot attribute such misplaced wisdom to the Legislature without being uncharitable to it. We are definitely of the opinion that by engrafting Section 13(2)(i) and proviso in the body of the Act the Legislature intended to confer on the tenants a protection, larger and more beneficial than what it would have been if the provision was not enacted. There are yet other serious infirmities with wh;ch the provision suffers. In spite ofthe proviso having been complied with the Rent Controller, proceeds to hold an enquiry and record a finding on the pleas raised in the case. If the Controller finds merit in the dispute raised by the tenant and accepts the truth of his plea, the deposit made by him, though it did not satisfy the claim then made by the landlord would still entitle the tenant to an order rejecting the landlord's application for eviction. Ifthe deposit made by him is to be found in excess, would he be entitled to an order for refund? The provision does not give an answer.

If the tenant fails in substantiating his plea and the amount paid or tendered by him under the proviso is found to be deficient, the landlord would be entitled to an order directing the tenant to put the landlord in possession of the building or ren\ed land. Yet the Controller cannot pass an order for recovery of arrears though found to be due. The > landlord is constrained to initiate separate proceedings for recovery of arrears of rent before the Civil Court. Yet again, during the pendency of proceedings under Section 13, the provision does not contemplate rent falling in arrears month by month being paid or deposited by tenant. The landlord is therefore driven to the need of filing successive proceedings for recovery of rent against an erring tenant. Thus the view so far being taken by the High Court serves neither the interest of the tenant nor the interest of the landlord. All these result in multiplicity of legal proceedings.

The end part of sub-section (2) of Section 13 confers a discretionary jurisdiction on the Controller who "may "' make an order directing the tenant to put the landlord in possession of the builci£ng or rented land''. Once a case for eviction on one of the grounds under Section 13 has been satisfactorily made out the Controller cannot refuse making an order for delivery of possession to the landlord in purported exercise of discretion spelled out by use of word 'may' because the exercise of discretion would then be termed as arbitrary as that of "knight-errant roaming at will" in the words of Benzamin Cordozo. The fact remains that the legislature has chosen to use the word 'may' and not 'shall' at the end of sub-section (2) while empowering the Controller to make an order for eviction of tenant. The purpose of enacting such a provision as in Section 13(2)(i) proviso, which acts almost in terrorem on the tenant, in several rent control laws is dual.

It ensures recovery of rent to the landlord and saves him from the recalcitrant tenant by building pressure on tenant to make payment under pain of eviction. At the same time it protects the tenants from the unscrupulous devices of landlords. Both the purposes are defeated by too simplistic an -· interpretation placed on Section 13(2)(i). proviso of the Punjab Act by the High Court of Punjab and Haryana, as already referred to. It is a settled rule ofconstruction that in case ofambiguity, the provision should be so read as would avoid hardship, inconvenience, injustice, absurdity and anomaly. Justice G. P. Singh in his Statutory Interpretation (Edition 2001) states (at page 113): "In selecting out of different interpretations "the court will adopt that which is just, reasonable and sensible rather than that which is none of those things" as it may be presumed "that the Legislature should have used the word in that interpretation which least offends our sense of justice.

If the grammatical construction leads to some absurdity or some repugnance or inconsistency with the rest ofthe instrument, it may be departed from so as to avoid that absurdity, and inconsistency. Similarly, a construction giving fr e to anomalies should be avoided" What follows from the abovesaid discussion is that the proviso to clause (i) of sub-section (2) of Section 13 must be read as obliging the Controller to assess, by means of passing an order, the arrears of rent, the interest and the cost of litigation all the three, which the tenant shall pay or tender on the first date of first hearing of the main petition following the date of such assessment by Controller.

Such order based on an opinion formed prima facie by perusal of the pleadings and such other material as may be available before the Controller on that day would be an interim or provisional order p which shall have to give way to a final order to be made on further enquiry to be held later in the event of there being a dispute between the parties calling for such determination. The Controller would, however, at the outset assess the rent, the interest and the cost of application in the light of and to the extent of dispute, ifany, raised by the tenant. Such amount, as determined by Controller shall be liable to be paid or tendered by the Controller on the 'first date of hearing' falling after the date of the preliminary or provisional order ofController. The expression "the date offirst hearing" came up recently for the consideration of this Court in Mam Chand Pal v. Smt. Shanti Agarwal (C. A. No. 1187 of 2002 decided on 14. 2. 2002).

It was held that 'the date of first hearing' is the date on which the Court applies its mind to the facts and controversy involved in the case. Any date prior to such date would not be RAKESH WAOHAWAN v. JAGDAMBA INDUSTRIAL CORPN. [R. C. LAHOTI, 1. 1 487 date of first hearing. For instance, date for framing of issues would be the date of first hearing when the Court has to apply its mind to the facts of the case. Where the procedure applicable is the one as applicable to Small Cause Courts, there being no provision for framing of the issues, any date fixed for hearing ofthe case would be the first date for the purpose. The date fixed for filing of the written statement is not the date of hearing. Keeping in view the interpretation so placed on 'the date of first hearing' the obligation cast by the proviso under consideration can be discharged by the Controller on any date fixed for framing of the issues"or for hearing.

It would be the obligation ofthe parties to place the relevant material on record, in the shape ofaffidavits or documents, which would enable the Controller to make a provisional judicial assessment and place it on record to satisfy the spirit of the proviso. It would be desirable if the Rent Controller specifically appoints a date for the purpose of such assessment and order so that the parties are put on adequate notice and. bring the relevant material on record to assist the Controller. A litigant cannot be expected to be ready to comply with the order of the Controller on the very day on which the order is made. How could he anticipate what order the Controller would be making?

> Having held that the Controller, has to provisionally assess (i) the arrears of rent, (ii) the interest on arrears of rent assessed by him, and (iii) cost ofapplication, question arises as to how the provision shall work thereafter or, in other words, what shall be the procedure to be followed thereafter by the Controller. Salmond states in Jurisprudence (Twelfth Edition, pp. 5-6): "Suppose the legislator could draft rules that were absolutely clear in application: even so, he could not foresee every possible situation that might arise, and so, he could not anticipate how he, or society, would wish to react to it when it did arise. Too certain a rule would preclude the courts from dealing with an unforeseen situation in the way they themselves, or society, might think best. As it is, legal uncertainty is counter-balanced by judicial flexibility. " We may with advantage quote a passage from Law in the Making by - Sir Allen (Seventh Edition, 1964, at p.

308): "' This Court', said Scrutton L. J. , 'sits to administer the law; not to make new law if there are cases not provided for. ' 'It may be', said Lord Denning MR. in Att. -Gen. v. Butterworth, [1963] I, Q. B. , 696, 719, 'that there is no authority to be found in the books, but if this be so all I can say is that the sooner we make one the better. ' But how did the Master of the Rolls 'make' this authority? By reference to 'many pointers to be found in the books in favour of the view which I have expressed'. " Again at page 521, the eminent jurist states: "There is no doubt that some judges will 'read into' a statute, under the guise of the 'implied intention' of the legislator, what justice and convenience require. " A statute can never be exhaustive, and therefore, Raghubar Dayal, J. speaking for himself and Wanchoo and Das Gupta, JJ. observed in Manohar Lal Chopra v.

Rai Bahadur Rao Raja Seth Hiralal, AIR (1962) SC 527 at page 532, "that the Legislature is incapable of contemplating all the possible circumstances which may arise in future litigation and consequently for providing the procedure for them. " Sometimes when a difficult situation arises it may demand such directions being made as would pragmatically meet the needs of the situation and resort can be had to the inherent powers of the Court, if need be. Krishna Iyer, J. in The Newabganj Sugar Mills Co. Ltd and Ors. v. The Union of India and Ors, [1976] 1 SCC 120, held "The difficulty we face here cannot force us to abandon the inherent powers of the Court to do'', and he quoted Jim. R. Carrigam to say - "The inherent power has its roots in necessity Jlnd its breadth is coextensive with the necessity. " H. R. Khanna, J. observed in Mis. Jaipur Mineral Development Syndicate, Jaipur v. The Commissioner ofLT.

, New Delhi, [1977] 1 SCC 508 : "The Courts have power, in the absence of any express or implied prohibition, to pass an order as may be necessary for the ends of justice or to prevent the abuse of )t the process of the court. To hold otherwise would result in qu~':: number of cases in gross miscarriage ofjustice. " Jurisdiction to pass procedural orders though not specifically contemplated by statute can be spelled out from what was said by Hidayatullah, J. (as he then was) in Mahant Ram as v. Ganga Das, AIR (1961) SC 882, when orders are 'in essence in terrorem so that dilatory litigants might put themselves in order and avoid delay' the Courts are not powerless to meet a situation for 'such orders are not iike the law of the Medes and the Persians'. I The result of the discussion may be summarized. Under proviso to Section 13(2)(i), the Controller having discharged his obligation of passing RAKESHWADHAWAN v. JAGDAMBA ! NDUSTR! ALCORPN. [R. C. LAHOTI, !.

] 489 an order under the proviso, either suo moto or on his attention in this regard being invited by either of the parties, it will be for the tenant to pay or tender the amount provisionally assessed by the Controller on the first date ofhearing ofthe application for ejectment. On compliance, the Controller would proceed to adjudicate upon the controversy arising for decision by reference to pleadings of the parties and by holding a summary enquiry for the purpose. Such adjudication shall be provisional and subject to the later final adjudication. The finding that may ultimately be arrived at by the Controller may be one • of the following three. The Controller may hold that the quantum of arrears as determined finally is (i) the same as was found to be due and payable under the provisional order, (ii) is less than what was determined by the provisional order, or (iii) is more than the one what was held to be due and payable by the provisional order.

In the first case the Rent Controller has simply to pass an order terminating the proceedings. Jn the second case the Controller may direct the amount deposited in excess by the tenant to be refunded to him. Jn the third case it would not serve the purpose of the Act if the tenant was held liable to be evicted forthwith as is the view taken by the Punjab High Court in the case of Dial Chand (supra). The Controller directing the eviction of the tenant may pass a conditional order affording the tenant one opportunity of and a reasonable time for depositing the amount of deficit failing which he shall be liable to be evicted.

This power in the Rent Controller can be spelled out from the use ofthe word "may" in the expression "The Controller may make an order directing the tenant to put the landlord in possession", as also from the principle of equity and fair play that the tenant having complied with provisional order passed by the Controller should not be made to suffer if the finding arrived at by the Controller at the termination of the proceedings be different from the one recorded in the prov;sional order. While exercising the discretion to make a conditional order of eviction affording the tenant an opportunity of purging himself of the default the Controller may also take into consideration the conduct of the tenant whether he has even after the passing ofthe provisional order continued to pay or tender the rent to the landlord during the pendency ofthe proceedings as a relevant factor governing the exercise of his discretion.

Such a course would be beneficial to the landlord too as he would be saved from the trouble of filing a civil suit for recovery of rent which fell due during the pendency of proceedings for eviction before the Controller. To sum up, our conclusions are: I. In Section 13(2) (i) proviso, the words 'assessed by the Controller' -~ qualify not merely the words 'the cost of application' but the entire preceding part of the sentence i. e. 'the arrears of rent and interest at six per cent per annum on such arrears together with the cost of application'. 2.

The proviso to Section 13(2)(i) ofEast Punjab Urban Restriction Act, 1949 casts an obligation on the Controller to make an assessment of (i) arrears of rent (ii) the interest on such arrears, , and (iii) the cost of application and then quantify by way of an interim or provisional order the amount which the tenant must pay or tender on the 'first date of hearing' after the passing of such order of 'assessment' by the Controller so as to satisfy the requirement of the proviso. 3. Of necessity, 'the date of first hearing of the application' would mean the date falling after the date of such order by Controller. 4. On the failure of the tenant to comply, nothing remains to be done and an order for eviction shall follow. Ifthe tenant makes compliance, the inquiry shall continue for finally adjudicating upon the dispute as to the arrears of rent in the light of the .... contending pleas raised by the landlord and the tenant before the Controller. 5.

Ifthe final adjudication by the Controller be at variance with his interim or provisional order passed under the proviso, one ofthe following two orders may be made depending on the facts situation of a given case. If the amount deposited by the tenant is found to be in excess, the Controller may direct a refund. If, on the other hand, the amount deposited by the tenant is found to be short or deficient, the Controller may pass a condit! ::~.. ~ "' order directing tenant to place the landlord in possession of the premises by giving a reasonable time to the tenant for paying or tendering the deficit amount, failing which alone he shall be liable to be evicted. Compliance shall save him from eviction. 6. While exercising discretion for affording the tenant an opportunity ofmaking good the deficit, one ofthe relevant factors to be taken into consideration by the Controller would be, \ . )o.

whether the tenant has paid or tendered with substantial regularity the rent falling due month by month durin. g'the pendency of the proceedings. RAKESH WADHAWAN ,,JAGDAMBA INDUSTRIAL CORPN. [R. C. LAHOTI, J. ] 49 J The view of the law so taken by us advances the object sought to be achieved by the legislation, serves best the interests of landlord and tenant both, removes uncertainty in litigation and obscurity in drafting ofthe provision and also accords with the principles of justice and equity. Even if, it is an innovation, it is in the field ofprocedural law, without affecting the substantive rights and obligations of the landlord and the tenant and such innovation is permissible on the basis of authority and supported by principles of justice, good sense and reason. We have nottouched the substantive rights of landlord and tenant, and are feeling satisfied with having done a little in the field of procedure so as to effectuate the purpose of enactment.

We do not find that the Controller has, in the present passed any order under Section 13(2)(i) proviso as aforesaid and therefore the order for eviction stands vitiated on the view of the law which we have taken hereinabove. The appeal is allowed. The impugned judgment of the High Court and the orders of the Rent Controller as also of the Appellate Authority are all set aside. The case is sent back to the Controller. The Controller shall, after affording the parties an opportunity of hearing, pass a provisional order under the proviso D to Section 13(2)(i) and afford the tenants an opportunity of making payment , or tender and then proceed to decide the case afresh consistently with the law as settled hereby. The costs before the Appellate Authority, the High Court and this Court shall be borne by the parties as incurred. The costs before the Controller shall abide the result. S. K. S. Appeal allowed.