TaxTMI 
TaxTMI 
2007 (10) TMI 606
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.... The appellant-tenant was the original defendant whereas the respondent-landlord was the original plaintiff in the suit instituted in the Court of Small Causes at Bombay. The landlord is a partnership firm registered under the Partnership Act, 1932. It owned a premises, bearing Shop No. 2, situated at ground floor of Plot No. 3, A.M. Ward, Chembur, Govind Road, Mumbai (hereinafter referred to as 'the suit premises'). According to the landlord, the suit premises was let out to the tenant. It was alleged that tenant was not paying rent regularly. It also initiated certain proceedings against the landlord. The landlord did not want the tenant to continue to occupy the suit premises. Accordingly, by a notice dated February 23, 2001, the landlord determined the tenancy with effect from March 31, 2001. In spite of determination of tenancy, the tenant did not hand over vacant and peaceful possession of the suit premises to the landlord. The landlord, therefore, filed a suit in the Small Causes Court, Bombay on April 2, 2001. In a written statement, dated August 1, 2001, the tenant disputed the averments made and allegations levelled by the landlord and contended that it was not li....
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....t the tenant was a 'sick company' within the meaning of the Sick Industrial Companies Act, 1985 (hereinafter referred to as 'SICA'). In accordance with Section 22 of that Act, hence, all proceedings against a sick company stood suspended. No order of eviction, therefore, could have been passed by the courts below. On all these grounds, it was submitted that all the courts were wrong in passing a decree of eviction against the tenant and the said order deserves to be set aside by this Court. 8. Mr. Parekh, learned counsel for the respondent-landlord, on the other hand, supported the decree passed by the Small Causes Court, confirmed by a Bench of that Court as also by the High Court. He submitted that as far as constitutional validity of Section 3(1)(b) of the Rent Act is concerned, the point is covered by a decision of the Division Bench of the High Court of Bombay in M/s Crompton Greaves Ltd. v. State of Maharashtra, AIR 2002 Bom 65. The Small Causes Court as well as the High Court were, therefore, wholly justified in proceeding with the matter and in deciding it on merits. He submitted that tenancy was terminated in accordance with law. It was, therefore, obligat....
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.... more than two years, the tenant has not paid even a pie to the landlord. Such tenant, urged the counsel, does not deserve sympathy and cannot claim equitable relief. On all these grounds, the counsel prayed for dismissal of the appeal. CONSIDERATION OF CONTENTIONS 9. We have given anxious and thoughtful consideration to the rival contentions of the parties. And in our opinion, no case has been made out by the appellant-tenant for grant of discretionary and equitable relief from this Court. CONSTITUTINAL VALIDITY OF SECTION 3(1)(b) 10. As far as constitutional validity of Section 3(1) (b) of the Rent Act is concerned, in our opinion, the courts below were right in rejecting the contention raised by the tenant and in proceeding to decide the matter on merits in view of the decision in M/s. Crompton Greaves Ltd. 11. Our attention has been invited by the learned counsel for the parties to the relevant provisions of the Act. The Act came into force with effect from March 31, 2000. It repealed the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947. The Preamble of the Act recites; An Act to unify, consolidate and amend the law relating to the control of rent and repairs....
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....tions. The Bombay Rent Act was enacted originally as a temporary measure in order to protect the tenants from eviction from their premises and also from arbitrary enhancement of rent. The necessity for the control of rents by special legislation for properties located within the urban areas was felt during World War II. At that time not much by way of new construction for civil population was possible. A good proportion of private accommodation was requisitioned by the authorities for the war effort. In consequence, rents were beginning to shoot up. Landlords were trying to get rid of their existing tenants to get better rents. The legislation was undertaken primarily to save the tenants from harassment of unscrupulous landlords. To quote the words of Sarkaria J, Nagindas Ramdas v. Dalpatram Ichharam, (1974) 1 SCC 242 at page 248 : (AIR 1974 SC 471) (at page 474). "The strain of the last World War, industrial Revolution, the large scale exodus of the working people to the urban areas and the social and political changes brought in their wake social problems of considerable magnitude and complexity and their concomitant evils. The country was faced with spiralling inflation, soaring....
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....ut. It is also meant to legitimise the pagadi or premium system which was prohibited earlier. Thus the Act has been enacted in order to strike a balance between the interests of landlords and tenants and for giving a boost to house building activity and in doing so the legislature in its wisdom has decided and thought it fit not to extend the protection of the Rent Act to certain class of tenants like multinationals scheduled banks, public sector undertakings and private and public limited companies having share capital of more than Rs. 1 crore. This is essentially a matter of legislative policy. The legislature would have repealed the Rent Act altogether. It could also withdraw the protection under the Rent Act on rental basis [see D.C. Bhatiya v. Union of India, (1995) 1 SCC 104] or on income basis [see Delhi Cloth and General Mills Ltd. v. S. Paramjit Singh, (1990) 4 SCC 923] or any other understandable basis. In our view it is for the legislature to decide" what should be the appropriate basis for the purpose of classification and the legislature as of necessity must have a lot of latitude in this regard. Whether any particular category of tenants needs to be protected under th....
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....Plaintiffs recover possession of the suit premises. For determination of quantum of mesne profits, enquiry under O. 20 R. 12(c) of the Code of Civil Procedure is directed. However, the order to pay mesne profits shall be subject to the Plaintiffs obtain permission of the BIFR to recover mesne profits against the Defendants. Preliminary decree be drawn accordingly". 18. A Bench of Small Causes Court, Bombay confirmed the above order and dismissed the appeal. Before the High Court, again all the contentions were reiterated by the tenant, but the High Court negatived them and dismissed the writ petition. The High Court noted that it was not in dispute between the parties that notice terminating the tenancy was issued by the landlord on February 23, 2001 and tenancy was determined with effect from March 31, 2001. On that day, i.e. March 31, 2001, paid up share capital of the Company (tenant) was more than rupees one crore. If it were so, observed the High Court, Small Causes Court was right in proceeding with the matter and in passing the decree of eviction against the tenant. 19. The Courts were also right in relying upon Shree Chamundi Mopeds Ltd. v. Church of South India Trust ....
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....existence of a jurisdictional fact is thus a sine qua non or condition precedent to the assumption of jurisdiction by a Court or Tribunal. JURISDICTIONAL FACT AND ADJUDICATORY FACT 24. But there is distinction between 'jurisdictional fact' and 'adjudicatory fact' which cannot be ignored. An 'adjudicatory fact' is a 'fact in issue' and can be determined by a Court, Tribunal or Authority on 'merits', on the basis of evidence adduced by the parties. It is no doubt true that it is very difficult to distinguish 'jurisdictional fact' and 'fact in issue' or 'adjudicatory fact'. Nonetheless the difference between the two cannot be overlooked. 25. In Halsbury's Laws of England, (4th Edn.), Vol.1, para 55, p.61; Reissue, Vol.1(1), para 68, pp.114- 15, it is stated: "There is often great difficulty in determining whether a matter is collateral to the merits or goes to the merits. The distinction may still be important; for an erroneous decision on the merits of the case will be unimpeachable unless an error of law is apparent on the face of the record of the determination or unless a right of appeal lies to a court in res....
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....en the construction was made. The Rent Controller recorded a finding of fact that the construction was put up after March 24, 1947. The finding was confirmed by the District Judge. But the High Court interfered in revision. 30. Setting aside the decision of the High Court, this Court stated: "It is clear from the orders of the Rent Controller and of the District Judge in appeal that the question whether the second floor was newly constructed or not was really a question of fact, though undoubtedly a jurisdictional fact on which depended the power of the Rent Controller to take action under s. 7A. If the Rent Controller had wrongly decided the fact and assumed jurisdiction where he had none, the matter would be open to reconsideration in revision. The High Court did not, however, go into the evidence, nor did it say that the finding was not justified by the evidence on record. The High Court referred merely to certain submissions made on behalf of the landlord and then expressed the opinion that what was done to the second floor was mere improvement and not a new construction. We think that the High Court was in error in interfering with the finding of fact by the Rent Controller ....
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....ffect from 31.3.2001 and on that day the paid up share capital of the petitioners/Company was more than Rupees one crore, no fault can be found with trial Court taking cognizance of the eviction proceedings initiated against the petitioners, as the trial Court definitely had jurisdiction to entertain such proceedings, considering the provisions of law comprised under Section 3(1)(b) of the said Act, as rightly submitted by the learned advocate for the respondents. The clause (b) of Section 3(1) of the said Act clearly provides that "the said Act shall not apply to any premises let or sub-let to banks, or any Public Sector Undertaking or any Corporation established by or under any Central or State Act, or foreign missions, international agencies, multinational companies, and private limited companies and public limited companies having a paid up share capital of rupees one crore or more". Undisputedly, the petitioner/Company is a Public Limited Company having share capital of more than Rupees one crore". (emphasis supplied) 34. All the Courts were, therefore, in our considered opinion, right in holding that the provisions of the Rent Act were not applicable to the present case. S....
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....t are legion, even as situations for applications of this equitable rule are myriad. We affirm the proposition that for making the right or remedy claimed by the party just and meaningful as also legally and factually in accord with the current realities, the Court can, and in many cases must, take cautious cognizance of events and developments subsequent to the institution of the proceeding provided the rules of fairness to both sides are scrupulously obeyed." (emphasis supplied) 37. In our judgment, the law is fairly settled. The basic rule is that the rights of the parties should be determined on the basis of the date of institution of the suit. Thus, if the plaintiff has no cause of action on the date of the filing of the suit, ordinarily, he will not be allowed to take advantage of the cause of action arising subsequent to the filing of the suit. Conversely, no relief will normally be denied to the plaintiff by reason of any subsequent event if at the date of the institution of the suit, he has a substantive right to claim such relief. 38. In the instant case, in our opinion, the courts below were right in holding that the date on which tenancy was determined, the right in f....
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....ontention of the appellant would mean that a tenant would not be within the mischief of unlawful subletting if after the landlord gives a notice terminating the tenancy on the ground of unlawful subletting the sub-tenant vacates. The landlord will not be able to get any relief against the tenant in spite of unlawful subletting. In that way the tenant can foil the attempt of landlord to obtain possession of the premises on the ground of subletting every time by getting the sub-tenant to vacate the premises. The tenant's liability to eviction arises once the fact of unlawful subletting is proved. At the date of the notice, if it is proved that there was unlawful subletting, the tenant is liable to be evicted". (emphasis supplied) 42. The Court approved the view taken by the High Court of Gujarat in Maganlal Narandas Thakkar v. Arjan Bhanji Kanbi, (1969) 10 Guj LR 837. In Maganlal, the High Court of Gujarat had an occasion to consider a pari materia provision under the Saurashtra Rent Control Act, 1951?. 43. A similar argument was advanced before the Court. However, considering the scheme of the Act, the Court refuted the contention. The Division Bench observed; "So far as the ....
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.... tenant to hand over possession to him. By enacting Section 12 of the Rent Control Act, the landlord's right to terminate the tenancy is not affected, but the enforcement of his right to recover possession immediately thereafter from the tenant is affected. The provisions of Section 12 prevent a landlord from recovering possession of the property from a tenant even after a lawful termination of his tenancy, provided the tenant fulfils the conditions mentioned in Section 12. Section 12 does not take away the right of the landlord to recover possession of the premises but merely postpones the enforcement of this right of the landlord so long as the tenant fulfils the conditions laid down in that section. Having put this impediment in the enforcement of the right of possession of the landlord or in other words, having clothed the tenant with an immunity from dispossession, the Legislature proceeds in Section 13 to lay down those conditions on the fulfillment of which the landlord is entitled to recover possession of the premises from the tenant. Section 13, therefore, provides for those contingencies on proof of which the tenant loses the immunity from dispossession under Section ....
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....Act. The provisions of Section 15 of the Saurashtra Rent Control Act make subletting unlawful. Therefore, any subletting by the tenant after the Act came into operation immediately removes the impediment in the way of the landlord to recover possession and entitles him immediately to go to the Court and ask for recovery of possession. In order to convey the correct meaning of the words 'has sub-let' it is not necessary to show that the subletting was in existence on the date of suit. It is enough that the subletting has taken place sometime after the Act came into operation; it does not matter that the subletting came to an end before the landlord gave notice or before the landlord filed a suit". (emphasis supplied) 44. In our opinion, the ratio laid down in the above cases applies to the present case as well. Admittedly, on the date the tenancy was terminated, the tenant (Public Limited Company) was having a paid up share capital of rupees more than one crore. Under clause (b) of Section 3(1) of the Act, therefore, the provisions of the Act were not applicable to the suit-premises. It is true that a resolution was passed by the Company to reduce the paid up share capital....