1999 JTR(SC) 1206
1999 AIR(SC) 3839 ; 1999 AIR(SCW) 3914 ; 1999 4 AllMR(SC) 519 ; 2000 1 BomCR(SC) 906 ; 2000 37 CLA 12 ; 1999 98 CompCas 716 ; 1999 3 CTC 671 ; 2000 1 GLH 166 ; 2000 1 GLR 916 ; 1999 8 JT 298 ; 1999 2 RCR(Rent) 483 ; 2000 RLR 17 ; 1999 6 Scale 537 ; 1999 8 SCC 11 ; 2000 25 SCL 369 ; 1999 SCR 624 ; 2000 1 UJ 118 ; 1999 WBLR 538 ; 1999 8 Supreme 598
1999(8) Supreme 598
Supreme Court in India
(From Gujarat High Court)
B.N. Kirpal & N. Santosh Hegde, JJ.
Gujarat Steel Tube Co. Ltd. -Petitioner
versus
Virchandbhai B. Shah & Ors. -Respondents
Special Leave Petition (C) No. 14657 of 1999
Decided on 12-10-1999
Counsel for the Parties :
For the Petitioner : Ranjit Kumar, H.A. Raichura and Ms. S.H. Raichura, Advocates.
Very Important Point
Filing of an eviction petition on ground of non-payment of rent cannot be regarded as filing of a suit for recovery of money within meaning of Section 22 of Sick Industrial Companies (Special Provisions) Act, 1985.
Act
Referred
:BOMBAY RENT ACT : S.11(4)
BOMBAY RENTS, HOTEL AND LODGING HOUSE RATES CONTROL ACT : S.12(2), S.11(4)
SICK INDUSTRIAL COMPANIES SPECIAL PROVISIONS ACT : S.22
TRANSFER OF PROPERTY ACT : S.106
(A) The interplay between the Sick Industrial Companies (Special Provisions) Act, 1985 (Sections 15(1) and 22) and the Bombay Rent Act (Sections 11(4) and 12(2)) governed this eviction dispute. Section 22 of the Sick Industrial Companies Act, as amended in 1994, bars suits for recovery of money against sick companies without the Board's consent, but does not prohibit an eviction petition based on non-payment of rent. Section 11(4) of the Bombay Rent Act empowers the court to fix standard rent or direct deposit of rent during pendency of a suit, even while a challenge under Section 12(2) regarding notice under the Transfer of Property Act is pending. The provisions operate concurrently, allowing eviction proceedings for arrears of rent to proceed independently of the restrictions imposed on monetary recovery suits.
(B) Key principles include: (i) An application under Section 11(4) of the Bombay Rent Act is maintainable despite pending challenges under the Sick Industrial Companies Act; (ii) Non-payment of rent justifies eviction even under rent control protection; (iii) Section 22 of the Sick Industrial Companies Act does not bar eviction petitions for recovery of possession; (iv) A suit for eviction for arrears is distinct from a suit for recovery of money; (v) The court must consider facts and circumstances to determine if an order under Section 11(4) is just and proper.
Facts of the case:
The respondent sought eviction of premises from the petitioner for non-payment of rent. During the suit, the respondent filed an application under Section 11(4) of the Bombay Rent Act. The petitioner contended that as a sick company referenced before the Board under the Sick Industrial Companies Act, no suit for recovery could proceed, and that a notice under Section 12(2) of the Bombay Rent Act had not been issued. The trial court and the appellate bench rejected the petitioner's contentions, leading to this appeal.
Findings of Court:
The courts correctly held that Section 22 of the Sick Industrial Companies Act does not prevent the filing of an eviction petition on grounds of non-payment of rent. An application under Section 11(4) is not akin to a suit for recovery of money and is maintainable. The provisions of the Rent Control Act apply independently, and the tenant's right to occupy does not equate to property under the Sick Industrial Companies Act for the purposes of Section 22.
Issues:
(i) Whether an application under Section 11(4) of the Bombay Rent Act is maintainable when the tenant is a sick company under the Sick Industrial Companies Act; (ii) Whether non-payment of rent justifies eviction despite protections under Rent Control Act; (iii) Whether Section 22 of the Sick Industrial Companies Act bars eviction proceedings; (iv) Whether a notice under Section 12(2) of the Bombay Rent Act was required before filing the application.
Ratio Decidendi:
The distinction between a suit for recovery of money and an eviction petition for non-payment of rent is critical. Section 22 of the Sick Industrial Companies Act bars suits for recovery of money but does not bar eviction proceedings. Section 11(4) of the Bombay Rent Act provides an independent remedy for the court to regulate rent during pendency, and its maintainability is not defeated by the provisions of the Sick Industrial Companies Act.
Result:
The petition is dismissed, and the appeal is dismissed (S.L.P. dismissed).
(A) The interplay between the Sick Industrial Companies (Special Provisions) Act, 1985 (Sections 15(1) and 22) and the Bombay Rent Act (Sections 11(4) and 12(2)) governed this eviction dispute. Section 22 of the Sick Industrial Companies Act, as amended in 1994, bars suits for recovery of money against sick companies without the Board's consent, but does not prohibit an eviction petition based on non-payment of rent. Section 11(4) of the Bombay Rent Act empowers the court to fix standard rent or direct deposit of rent during pendency of a suit, even while a challenge under Section 12(2) regarding notice under the Transfer of Property Act is pending. The provisions operate concurrently, allowing eviction proceedings for arrears of rent to proceed independently of the restrictions imposed on monetary recovery suits.
(B) Key principles include: (i) An application under Section 11(4) of the Bombay Rent Act is maintainable despite pending challenges under the Sick Industrial Companies Act; (ii) Non-payment of rent justifies eviction even under rent control protection; (iii) Section 22 of the Sick Industrial Companies Act does not bar eviction petitions for recovery of possession; (iv) A suit for eviction for arrears is distinct from a suit for recovery of money; (v) The court must consider facts and circumstances to determine if an order under Section 11(4) is just and proper.
Facts of the case:
The respondent sought eviction of premises from the petitioner for non-payment of rent. During the suit, the respondent filed an application under Section 11(4) of the Bombay Rent Act. The petitioner contended that as a sick company referenced before the Board under the Sick Industrial Companies Act, no suit for recovery could proceed, and that a notice under Section 12(2) of the Bombay Rent Act had not been issued. The trial court and the appellate bench rejected the petitioner's contentions, leading to this appeal.
Findings of Court:
The courts correctly held that Section 22 of the Sick Industrial Companies Act does not prevent the filing of an eviction petition on grounds of non-payment of rent. An application under Section 11(4) is not akin to a suit for recovery of money and is maintainable. The provisions of the Rent Control Act apply independently, and the tenant's right to occupy does not equate to property under the Sick Industrial Companies Act for the purposes of Section 22.
Issues:
(i) Whether an application under Section 11(4) of the Bombay Rent Act is maintainable when the tenant is a sick company under the Sick Industrial Companies Act; (ii) Whether non-payment of rent justifies eviction despite protections under Rent Control Act; (iii) Whether Section 22 of the Sick Industrial Companies Act bars eviction proceedings; (iv) Whether a notice under Section 12(2) of the Bombay Rent Act was required before filing the application.
Ratio Decidendi:
The distinction between a suit for recovery of money and an eviction petition for non-payment of rent is critical. Section 22 of the Sick Industrial Companies Act bars suits for recovery of money but does not bar eviction proceedings. Section 11(4) of the Bombay Rent Act provides an independent remedy for the court to regulate rent during pendency, and its maintainability is not defeated by the provisions of the Sick Industrial Companies Act.
Result:
The petition is dismissed, and the appeal is dismissed (S.L.P. dismissed).
Eviction - The judgment relied on this case to support the principle that an eviction petition under the Rent Control Act is maintainable notwithstanding Section 22 of the Sick Industrial Companies Act.
Order
The respondent had filed a suit against the petitioner herein for eviction of the premises which had been let by the respondents to the petitioner. During the pendency of the suit, an application under Section 11(4) of the Bombay Rent Act was filed. In this application, it was stated that the petitioner herein had not been paying the rent and, therefore, appropriate orders as contemplated by the said sub-section should be passed.
2. In the reply which was filed to the said application, it was, inter alia, contended that the petitioner company had become sick and a reference had been made to the B.I.F.R. under Section 15(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 (for short “the Act”). The contention of the petitioner herein was that in view of the provisions of Section 22 of the Act no suit for recovery of money could be filed or proceeding taken against the present petitioner.
3. The trial Court vide its order dated 25th January, 1999 rejected the said application under Section 11(4) which was filed by the respondent. Thereupon a revision was filed and the Appellate Bench of the Small Causes Chief Court, Ahmedabad by its order dated 12th July, 1999 came to the conclusion that the provisions of Section 22 of the Act were not applicable in such a case. It placed reliance on a decision of this Court in Shree Chamundi Mopeds Ltd. v. Church of South India Trust Association1 . The petitioner thereafter filed a civil revision before the High Court but with no success.
4. It is submitted by Shri Ranjit Kumar, learned counsel for the petitioner that in view of the plain language of Section 22 of the Act, the application under Section 11(4) of the Bombay Rent Act was not maintainable. He also contended that no notice as contemplated under Section 12(2) of the Bombay Rent Act had been issued and, therefore, the question of an application under Section 11(4) being filed could not arise.
5. It is no doubt true that Section 12(2) requires a notice to be issued in the manner provided by Section 106 of the Transfar of Property Act before a suit of recovery of possession on ground of non-payment of rent can be filed. This is an objection to the maintainability of the suit which will have to be decided when the court takes up for consideration the question as to whether order for eviction should be passed or not. Notwithstanding this objection having been taken, an application under Section 11(4) can be filed. The said sub-section reads as follows :
11. Court may fix standard rent and permitted increase in certain cases. ....................
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(4) Whether at any stage of a suit for recovery of rent, whether with or without a claim for possession of the premises, the Court is satisfied that the tenant is withholding the rent on the ground that the rent is excessive and standard rent should be fixed, the Court shall, in any other case if it appears to the Court that it is just and proper to make such an order the Court may make an order directing the tenant to deposit the Court forthwith such amount of the rent as the Court considers to be reasonably due to the landlord, or at the option of the tenant an order directing him to pay to the landlord such amount thereof as the Court may specify. The Court may further make an order directing the tenant to deposit in Court periodically, such amount as it considers proper as interim standard rent or at the option of the tenant an order to pay to the landlord such amount thereof as the Court may specify, during the pendency of the suit. The Court may also direct that if the tenant fails to comply with any order as aforesaid, within such time as may be allowed to it, he shall not be entitled to appear in or defend the suit except with leave of the Court, which leave may be granted subject to such terms and conditions as the Court may specify.
xxx xxx xxx”
6. While dealing with an application under Section 11(4), the Court will have to apply its mind, take all facts and circumstances into consideration, and then decide whether it is just and proper to make an order requiring the payment of the rent by the tenant. At this stage, we are only concerned with the order passed on an application under Section 11(4). The stage of considering the contention that a notice under Section 12(2) had not been issued had not arisen before the trial Court. It is presumably for this reason that in none of the orders passed by the Courts below there is any direct reference to any contention raised on the basis of Section 12(2) of Bombay Rent Act.
7. It was sumitted by Shri Ranjit Kumar that Section 22 of the Act after its amendment in 1994 does not permit the filing of any suit for the recovery of money. He submitted that the application which was filed for eviction by the landlord was to the effect that there were arrears of rent which had not been paid and, therefore, the Court should order payment of rent and at the same time order eviction of the tenant on account of non-payment of arrears.
8. For the purpose of considering this contention we will proceed on the basis that the tenancy of the petitioner had been terminated by a notice having been issued under Section 106 of the Transfer of Property Act. In other words, the petitioner was entitled, at the time when the application under Section 11(4) was filed, to the protection of the Rent Control Act and no more.
9. Section 22 no doubt, inter alia, states that notwithstanding any other law no suit for recovery of money shall lie or proceeded with except with the consent of the Board, but as we look at it the filing of an eviction petition on ground of non-payment of rent cannot be regarded as filing of a suit for recovery of money. If a tenatn does not pay the rent, then the protection which is given by the Rent Control Act against his eviction is taken away and with the non-payment of rent order of eviction may be passed. It may be possible that in view of the provisions of Section 22, the trial Court may not be in a position to pass a decree for the payment of rent but when an application under Section 11(4) is filed, the trial Court in effect gives an opportunity to the tenant to pay the rent failing which the consequences provided for in the sub-section would follow. An application under Section 11(4), or under any other similar provision, cannot, in our opinion, be regarded as being akin to a suit for recovery of money.
10. We may also point out that this Court in Shree Chamundi Mopeds Ltd., (supra) had occasion to consider the question as to whether an application for eviction under the Rent Control Act was maintainable notwithstanding the provisions of Section 22 of the Sick Industrial Companies Act. It was held that on the termination of the contractual tenancy, the Karnataka Rent Control Act, with which the Court was concerned in that case, gave protection to a statutory tenant to continue to occupy the premises but the said right could not be regarded as property of the company for the purpose of sub-section (1) of Section 22 of the Act. The Court held that the provisions of Section 22(1) were not applicable to the eviction proceedings instituted by the landlord against the sick company. It appears to us that the aforesaid principle would be clearly applicable in the present case and appropriate orders could be passed under the relevant provisions of the Rent Control Act.
11. The High Court and the Appellant Bench of the Small Causes Chief Court were, therefore, right in coming to the conclusion that the provisions of Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 did not in any way prevent the filing of an eviction petition on the ground of non-payment of rent and that the order under Section 11(4) of the Bombay Rent Act could be passed.
The petition is, accordingly, dismissed.
(C.R.) SLP dismissed.
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