PARADISE INDUSTRIAL CORPN. BOMBAY versus KILN PLASTICS PRODUCTS

PARADISE INDUSTRIAL CORPN. BOMBAY

KILN PLASTICS PRODUCTS September 29, 1975

(A. ALAGIRISWAMI, P. K. GOSWAMI AND N. L. UNTWALIA, JJ.]

.~ombay Rellts, Hotel cond Lodging House Rates Comrol Act, 1947. Secrwn 11(4)-Failure of defendants to deposit arrears of rent after fixation of fair rent-Court. if competent to make order that defences oi defendants be struck on failure to deposit arJ"ears of rent.

The appellants-plaintiffs filed suit against the defendants-respondents for recovery of possession of the property ·leased to them as also rent and mesne profits in March, 1968. It was alleged that the defendants were in arrears of rent from bt March, 1966 and that the 1wt was Rs. 385 /· inonth. On 30th January, 1968, notice to quit was given to the defendants and the notice was served on lsf February, 1968. On 20fh February, 1968 they filed an application under s.11 of the Bombay Rents, Hotel and Lodging House Rates Control Act. 1947 for fixation of standard rent. It was thereafter that the suit was filed in March, 1968. On 23rd November 1968, the suit came up before Judgi;: of the Small Causes Court and after hearing the parties he made an order requiring the defendants to deposit R9. 13.00-0/• as rent due up to the end of December 1968 and interim sta11dard rent of Rs. 308/- per month to be paid beginning from February 15, 1969. It was further ordered that in default of the defendants depositing the amount the plaintiffs were at liberty to follow the consequential remedy under s.11 ( 4) of the Act. The defendants did not deposit the amount ordered by the Court and on 24th February 1969 the plaintiffs applied to the Court praying for notice to be issued to the defendants to show cause why they should not deposit the aggregate amount of rent and further rent of Rs. 385 I., per month from !st August, 1969, till the disposal of the suit. There was fmiher prayer that in default of the deposit of the amount the defences of the defendants may be ordered to be struck off. Upon this application notice was issued to the defendants and on 2nd June, 1969, an order was made requiring the defendants to deposit Rs. 14,007 I· within one month and to continue to deposit Rs. 385 /· per month in accordance with the earlier order. It was further ordered that in default of the deposit the defences of the defendants were to be struck off and that the suit should be placed for ex parte orders on 15th July. 1969. The defendants were absent on that day, and the suit was adjourned to 5th August, 1969. On the 5th August the suit was again adjourned to 6th and on that day an ex-parte decree for possession, recovery of arears of rent and costs was passed. However, on the 4th August the defendants had mad1e an application stating that on proper calculation the amount of arrears of rent would come to Rs. 7065/- and praying for extension of time for deposit of this amount. The defendants were allowed to deposit the amount without prejudice to the rights and contentibns of the partie9 and notice was ordered to be issued to the plaintiffs. The defendants deposited the amount but did not take out <llld serve the notice on the plaintiffs and the notice was ulti-mately discharged for want of prosecution on 19fh September, 1969. An appear was filed before the App~lla~e Bench of the Simall Causes Court against the ex-parte decree and it was dismissed. The High Court on an application mad.e by the defendants under Art. 227 of the Constitution set aside the decree passed bv the Small Causes Court on 6th August, 1%9 as also the decree passecl by the Appellate Bench and also dismissed the suit.

The High Court held that the order passed by the Small Causes Court on June 2 1969 was illegal and without jurisdiction and every step that was taken by 'the Court subsequently was without jurisdiction and, theref9re, was illegal. The High Court further held that as the defendants had deposited

PARADISE INDUSJ'RIAL CORP. v. KILN PRODUCTS (Alagiriswami, J.) 33

all amounts as ordered by the Court previous to the order of June'. 2. 1969 and also deposited the monthly rent at the rate of Rs. 308/ ~ per month the matter would fall under s. 12 (3) (b) and the suit should be dismissed.

Allowing the appeal by spe~ial leave,

HELD : ( 1 ) The Judge of the Small Causes used the words "defences to be struck off" and did not use the words "he shall not be entitled to appear in or defend the suit except with the leave of the Court, which leave may be granted subject to such terms and conditions as the Court may specify". The word~ •'striking out the, defence" are very commonly used by lawyers. The use of the words 'defence struck off' does not in any way affect the substance of the order and the High Court was wholly in error in holding that because of the form of the order passed on June 2. 1969, the order was illegal and without jurisdiction. The order squarely falls within s.11(4). What the Jaw contemplates i> not adoption or use of formula; it looks at the substance. It is not possible to bring the case wihtin the provisions of s. 12(3)(b) of the Act. [35 EF. 36 BC, HJ.

CIVIL APPELLATE

JURISDICTION : Civil Appeal No.

Appeal by special leave from the Judgment and decree dated the lS'th August 1972 of the High Court of Judicature at Bombay in Spe-cial Civil Application No. 2778 of 1969.

F. S. Nariman and B. R. Agarwala for the Appellant.

Mrs. Urmila Kapoor and Miss Kamlesh, for Respondents 1 and 2.

The Judgment of the Court was, delivered by

ALAGIRISWAMI, J. This is an appeal against the judgment of the High Court of Bombay in an application under article 227 of the Con-stitution by which it not only set aside the ex-parte decrees passed by the Court of Small Causes, Bombay in suit for eviction and rent but dismissed the suit itself. The facts are as follows :

The appellants-plaintiffs filed suit against the defendants-respon-dents for recovery of possession of the property leased to them as also rent and mesne profits in March 1968. It was alleged that the defe11-dents were in arrears of rent from 1st March 1966 and that the rent was Rs. 385/- month. On 30~h January 1968 notice to quit was given to the defendants and the notice was served on 1st February 1968. On 20th February 1968 they filed an application under s.11 of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947 for fixation of standard rent. It was thereafter that the suit was filed in March 1968. On 23rd November 1968 the suit came up before G-Judge of the Small Causes Court and after hearing the parties he made an order requiring the defendants to deposit Rs. 13,090/- as rent due up to the end of Decemeer 1968 and interim standard rent of Rs. 308/-per month to be paid beginning from February 15, 1969. It was fur-ther ordered that in default of the defendants depositing the amount the pliaintiffs were at liberty to follow the consequential remedy under s.11 ( 4) of the Act. The defendents did not deposit the amount ordered by the Court and on 24th February 1969 the plaintiffs applied to the Court praying for notice to be issued to the defendants to show cause why they should not deposit the aggregate amount of rent and further

rent of ~· 3851- per month from 1st August 19.69 till the disposal of the suit. There was further prayer that in default of the deposit of the amount the defences of the defendants may be or-dered to be struck off. Upon this application notice was issued to the defendants and on 2nd June 1969 an order was made requiring the defendants to deposit Rs. 14,607 /- within one month and to con-tinue to deposit Rs. 308/ - per mo11th in accordance with the earlier order. It was further ordered that in default of the deposit the de-fences of the defendants were to be struck off and that the suit should be placed for ex-parte orders on 15th July, 1969. The defendants fail-ed to deposit arrears of rent and the suit came up for orders on 15th July 1969. The defendants were absent on that day and the suit was adjourned to 5th August 1969. On the 5th August the suit was again adjourned to 6th and on that day an ex-parte decree for possession, recovery of arrears of rent and costs was passed. However, on the 4th August the defendants had made an application stating that on proper calculation the amount of arrears of rent would come to Rs. 7065/-and praying for extension of time for deposit of this amount. The de-fendants were allowed to deposit the amount without prejudice to the rights and contentions of the parties and notice was ordered to be issued to the plaintiffs. The defendants deposited the amount but did not take out and serve the rrotice on the plaintiffs and the notice was ulti-mately discharged for want of prosecution on 19th September, 1969. An appeal was filed before the Appellate Bench of the Small Causes Court against the ex-parte decree and it was dismissed. On an appli-cation filed before the High Court learned Single Judge set aside the decree passed by the Small Causes Court on 6th August 1969 as also the decree passed by the Appellate R~nch and also dismissed the suit.

As far as we are able to see the only reason which persuaded the learned Judge to come to this extraordinary conclusion was that under s.11 ( 4) of the Act the only order that could be passed was an order directing, after fixing the interim standard rent to be d~posited within particular time, 'that if the tenant fails to comply with any order made as aforesaid, within such time as may be allowed by it, he shall not be entitled to appear in or defend the .suit except with leave of th.e Court which leave may be granted subiect to such terms and condi-tions 'as the Court may specify', and the section did not authorise the Court to strike off the Defences straightway. The learned Judge found it difficult to understand how the Court could pass an order on June 2, 1969 as follows :

"The qefendant No. ~ ~o deposit the balance. amount of R~. 14 601 / in Court withm month and continue to deposit Rs'.308/- per month as per order passed by scrntiny Court in default Notice absolute and defences to be struck off and suit be fixed for ex parte bearing, on 15th July 1969. De-fendant No. 2 to pay Rs. 30/- to the plaintiffs."

He therefore thought the order passed by the Court on June 2, 1969 was illegal and without jurisdiction and every step t~at was. ta~e~ .by the Court subsequently must be considered to be without 1unsd1ct10n

and illegal. However, considering the question as to what was the pro-per order to be passed in the petition, the learned Judge thought as the defendants had, admittedly deposited by then all amounts as ordered by the Court previous td the order of June 2, 1969 and also deposited the monthly rent at the rate of Rs. 308/- per month the matter would fall under s.12(3)(b) and the suit should be dismissed.

We may in order to facilitate the discussion set ·out the provisions of s. 11(4) of the Act:

"(4) Where at any stage or suit for recovery of rent, whether with or without claim for possession of the premi-ses, 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, and 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 in Court forthwith such amount of the rent as the Court considers to be reasonably due to the land-lord, 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 made as aforesaid, within such time as may be allowed by 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."

The learned Judge of the Small Oauses Court used the words "defences to be struck off" and did not use the words "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". We are afraid the learned Judge of the High Court has missed the substance and chased the shadow. The words "strick-. ing out the defence'' are very commonly used by lawyers. Indeed the application made on 24th February 1969 by the plantiffs was for direction to order the defences of the defendants to be struck off in de-fault of the non-payment of the amount ordered by the Court. The phrase "defence struck off" or "defence struck out" is not unknown in the sphere of law. Indeed it finds place in Order XI, rule 21 of the Code of Civil Procedure :

"21. Where any party fails to comply with any order to answer interrogatories, or for discovery of inspection of docu-ments, he shall, if plaintiff, be liable to have his suit dismiss-ed for want of prosecution, and, if defendant, to have his defence, if any, struck out, and to be placed in the same position as if he had not defended, and the party inten;ogating or seeking discovery or inspection may apply to the Court for an order to_that effect, and an order may be made accordingly."

In effect, both mean the same thing. Nobody could have misunder-stood what was meant. Indeed, one may ·~ven say that the phrase ''the defence to be struck off" or "struck out" is more advantageous from the /point of view of the defendents. Even when defence is struck off the defendant is entitled to appear, cross-examine the plaintiff's witnesses and submit that even on the basis of the evidence on behalf of the plaintiff decree cannot be passed against him, whereas if it is ordered ll. in accordance with s. 11 ( 4) that he shall not be entitled to appear in or defend the suit except with the leave of the Court he is placed at greater disadvantage. The use of the words 'defence struck off' does not i11 any way affect the substance of the order and the learned Judge of the High Court was wholly in error in holding that because of the form of the order passed on June 2, 1960 the order was illegal and without jurisdiction. The order squarely falls within s. 11 ( 4). ·C What the law contemplates is not adoption or use of formula it looks at the substance. The order is not therefore one without jurisdiction. It is one which the Judge was competent to make. Be it noted that the learned Judge does not -hold that the amount ordered to be deposited by the defendants by the order dated June 2, 1969 was wrong or that it could not have been ordered at all. That order also fixed the interim standard rent as contemplated by that section. That section itself con-0 templates that the Court may order the deposit of such amoUJlt of the rent as the Court considers to be reasonably due to the landlord. There-fore, the order dated June 2, 1969 could not be held to be invalid on any ground whatsoever; nor has, it been held to be illegal on any ground other than that the words used were not the proper ones. It is to be further noted that the order itself did not order the defences to be struck off, it only fixed the 15th July 1969 as the date for striking out the defences and to fix the suit for ex-part~ hearing. So, till the expiry of month given by that order for the deposit of money the. question of striking out the defence did not arise nor was it in fact struck out. On the date fixed for striking out defences and fixing the date. for ex-parte hearing the defendants did not appear nor did they appear on the 5th and 6th of August when the suit was fixed for hearing. Though they were permitted to deposit Rs. 7,0001- on their application dated 4th August 1969 they did not take any further steps and so the notice was dismissed. The deposit of Rs. 7,000/- does Hot make any difference to the decision in this case because it was allowed to be deposited without prejudice to the rights and contentions of the parties. The defendants did not even apply for setting aside the ex-parte decree giving proper reasons for their non-appearance on the 5th and 6th August. They went on appeal against the ex-parte decree. The Appellate Bench of <i the Small Causes Court could have decided the appeal only on the basis of the material before it and the learned Judge of the High Court did not rely upon any material whatsoever except the form of the order made on the 2nd June 1969 for not merely setting aside the decree but even dismissing the suit itself. The deposit of the money after the ex-parte decree was passed was wholly irrelevant in considering whether the ex-jl'arte decree passed was proper one a-ad much more so whether the suit itself could be dismissed.

We are unable to understand how the learned Judge found it possible to bring the case within the provisions of s. 12(3) (b) of the

Act. The tenants did not pay either on the 1st day of the hearing of the suit or on or before the date the Court fixed. Indeed on proper construction of law it is s. 11(4) that will apply. Section 12(3)(b) does not deal with case like the present.

The appeal is, therefore, allowed. The judgment of the High Court is set aside and the decree of the Court of Small Causes dated August 6, 1969 as well as the appellate decree passed by the Court of Small Causes are restored. The respondents will pay the appellants' costs.

Appeal allowed.