# < CARONALTD v. MIS P ARV A 11IY SW AMINA THAN & SONS - **Citation:** [2007] 10 S.C.R. 656 - **Court:** Supreme Court of India - **Decided:** 2007-10-05 - **Case number:** Writ Petition No. 8781 of2004 - **Bench:** C.K. Thakkerandp.Sathasivam - **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/caronaltd-v-mis-p-arv-a-11iy-sw-amina-than-sons-22087 - **Pages:** 28 ## Headnote Maharashtra Rent Control Act, 1999-s. 3(J)(b)-Applicability c of-Tenant a company having paid up capital share of more than Rs. one crore-Suit for eviction before regular Court-On the ground of default in payment of rent-Tenant-company reducing its paid up capital share to less than Rs. one crore, subsequent to institution of suit-Trial court passing decree, holding thats. 3(J)(b) was not D applicable-Confirmed by appellate court as well as High CourtAfter interim order of Supreme Court partial payment of rent-Plea that the trial court did not have the power to decide the case in absence of jurisdictional fact of 'paid up capital '-Held: Eviction decree was rightly passed-Section 3(1)(b) is not applicable to the present case, E as the jurisdictional fact of 'paid up capital' was existing on the date of termination of tenancy and institution of suit-The subsequent unilateral act of reduction of paid up capital by tenant would not take away the accrued right inf avour of Landlord-In the facts of the case, tenant is also not entitled to equitable relief-Rent Control and ~ F Eviction-Constitution of India, 1950-Article 136. Code of Civil Procedure, 1908- 'Jurisdictional fact' and 'adjudicatory fact '-Distinction between. Jurisdiction-Jurisdiction of Court/Tribunal-Held: A Court can G decide the issues of a case only if the jurisdictional fact exists. A_ ... Subsequent Events_;_Effect of-Held: An accrued right by virtue of existingfact at the time of institution of suit cannot be put at naught by a subsequent event. H 656 CARONAL TD. v. MIS. PARV ATHYSWAMINATHAN & 657 SONS Respondent-landlord had let out the premises in question to the A appellant-tenant (a Public Limited Company having a paid up share capital of more than rupees one crore). Applicability ofMaharashtra Rent Control Act, 1999 was exempted to such tenants by Section 3(1 )(b) thereof. Due of default in payment of rent, landlord gave a notice to the tenant on .23.2.2001 determining the tenancy w.e.f. B 31.3.2001. Since the premises was not vacated, landlord filed a suit ~ for eviction before Small Causes Court. It also prayed for payment of mesne profits. Subsequent to filing of suit Tenant Company passed a resolution to reduce the paid up share capital to less than Rs. one crore. But the said resolution was never approved by BIFR. Trial c Court passed decree of eviction-holding that provisions of the Act were not applicable to the suit premises. The same was confirmed by a Bench of Small Causes Court in appeal and by High Court in Writ Petition.On interim order of this Court, the tenant deposited part payment in the Court. D Appellant-tenant contended that in view of pendency of the question regarding constitutional validity of Section 3(1 )(b) of the Act, the matter should not have been decided by the courts below; that even if constitutionality thereof was assumed, it was not applicable to the present case, the company having its paid up capital E less than Rs. one crore; that the landlord should have made out the grounds under the Act for eviction; that the fact of 'paid up capital' -( being a 'jurisdictional fact' and in absence thereof, the Court had no power to deal with and decide the matter; and that the proceedings could not have continued as the same stood suspended in view of F Section 22 of Sick Industrial Companies Act, 1985, the Company being a sick company. Respondent-landlord interalia contended that constitutional - A-- validity had been covered by decision of High Court; that subsequent G resolution of the Company reducing the share capital to less than Rs. one crore would not deprive the owner to the 'right accused' as the 'jurisdictional fact' was very much in existence at the time of initiation of the proceedings; and that the appeUant was not entitled even to any equitable relief. H 658 SUPREME COURT REPORTS [2007] 10 S.C.R. A Dismissing the appeal, the Court ---,' HELD: 1. All the Courts were, right in holding that the provisions of the Rent Ac ## Text _Characters 0–39,996 of 59,313. This is a partial read: ask again with offset=39996 for what follows._ -~. A ---< CARONALTD. v. MIS P ARV A 11IY SW AMINA THAN & SONS B OCTOBER 5, 2007 [C.K. THAKKERANDP.SATHASIVAM,JJ.] Maharashtra Rent Control Act, 1999-s. 3(J)(b)-Applicability c of-Tenant a company having paid up capital share of more than Rs. one crore-Suit for eviction before regular Court-On the ground of default in payment of rent-Tenant-company reducing its paid up capital share to less than Rs. one crore, subsequent to institution of suit-Trial court passing decree, holding thats. 3(J)(b) was not D applicable-Confirmed by appellate court as well as High CourtAfter interim order of Supreme Court partial payment of rent-Plea that the trial court did not have the power to decide the case in absence of jurisdictional fact of 'paid up capital '-Held: Eviction decree was rightly passed-Section 3(1)(b) is not applicable to the present case, E as the jurisdictional fact of 'paid up capital' was existing on the date of termination of tenancy and institution of suit-The subsequent unilateral act of reduction of paid up capital by tenant would not take away the accrued right inf avour of Landlord-In the facts of the case, tenant is also not entitled to equitable relief-Rent Control and ~ F Eviction-Constitution of India, 1950-Article 136. Code of Civil Procedure, 1908- 'Jurisdictional fact' and 'adjudicatory fact '-Distinction between. Jurisdiction-Jurisdiction of Court/Tribunal-Held: A Court can G decide the issues of a case only if the jurisdictional fact exists. A_ ... Subsequent Events_;_Effect of-Held: An accrued right by virtue of existingfact at the time of institution of suit cannot be put at naught by a subsequent event. H 656 CARONAL TD. v. MIS. PARV ATHYSWAMINATHAN & 657 SONS Respondent-landlord had let out the premises in question to the A appellant-tenant (a Public Limited Company having a paid up share capital of more than rupees one crore). Applicability ofMaharashtra Rent Control Act, 1999 was exempted to such tenants by Section 3(1 )(b) thereof. Due of default in payment of rent, landlord gave a notice to the tenant on .23.2.2001 determining the tenancy w.e.f. B 31.3.2001. Since the premises was not vacated, landlord filed a suit ~ for eviction before Small Causes Court. It also prayed for payment of mesne profits. Subsequent to filing of suit Tenant Company passed a resolution to reduce the paid up share capital to less than Rs. one crore. But the said resolution was never approved by BIFR. Trial c Court passed decree of eviction-holding that provisions of the Act were not applicable to the suit premises. The same was confirmed by a Bench of Small Causes Court in appeal and by High Court in Writ Petition.On interim order of this Court, the tenant deposited part payment in the Court. D Appellant-tenant contended that in view of pendency of the question regarding constitutional validity of Section 3(1 )(b) of the Act, the matter should not have been decided by the courts below; that even if constitutionality thereof was assumed, it was not applicable to the present case, the company having its paid up capital E less than Rs. one crore; that the landlord should have made out the grounds under the Act for eviction; that the fact of 'paid up capital' -( being a 'jurisdictional fact' and in absence thereof, the Court had no power to deal with and decide the matter; and that the proceedings could not have continued as the same stood suspended in view of F Section 22 of Sick Industrial Companies Act, 1985, the Company being a sick company. Respondent-landlord interalia contended that constitutional - A-- validity had been covered by decision of High Court; that subsequent G resolution of the Company reducing the share capital to less than Rs. one crore would not deprive the owner to the 'right accused' as the 'jurisdictional fact' was very much in existence at the time of initiation of the proceedings; and that the appeUant was not entitled even to any equitable relief. H 658 SUPREME COURT REPORTS [2007] 10 S.C.R. A Dismissing the appeal, the Court ---,' HELD: 1. All the Courts were, right in holding that the provisions of the Rent Act were not applicable to the present case. It is an admitted fact that the appellant-tenant is a Public Limited B Company having a paid up share capital of more than one crore rupees. The Courts below considered the contention as to constitutional validity of clause (b) of Section 3(1) of Maharashtra Rent Control Act, 1999 and observed that the vires of the provision ~ was upheld by the High Court in some other case. It also appears that as the point was concluded by that decision, the issue as to vires C was not pressed by the tenant before the Trial Court. The courts below were, therefore, fully justified in proceeding to decide the matter on merits. [Paras 13, 15, 16 and 34] [666-C-D; 669-D, F; 675-H; 676-A] D Mis Crompton Greaves Ltd. v. State of Maharashtra, AIR 2002 Bom., referred to 2. 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 E 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, Small Causes Court was right in proceeding with the matter and in passing the decree of eviction against the tenant. F [Para 18) [670-E-F] 3. The Courts were also right in holding that eviction proceedings initiated by the landlord against the tenant were · maintainable even if the Company was 'sick' under SICA and Section 22 of that Act would not operate as bar to such proceedings. G [Para 19) [670-G) A__ Shree Chamundi Mopeds Ltd. v. Church of South India Trust Association, [1992) 3 SCC 1, relied on. 4.1. The fact as to 'paid up share capital' of a Company can be H said to be a 'preliminary' or 'jurisdictional fact' and said fact would ~- ~_,.J.. CARONALTD.v.M/S.PARVATHYSWAMINATHAN& 659 SONS confer jurisdiction on the Court to consider the question whether the provisions of the Rent Act were applicable. If the jurisdictional fact exists, a Court, Tribunal or Authority has jurisdiction to decide other issues. If such fact does no~ exist, a Court, Tribunal or Authority cannot act. It is also well settled that a Court or a Tribunal cannot wrongly assume existence of jurisdictional fact and proceed to decide a matter. The underlying principle is that by erroneously assuming existence of a jurisdictional fact, a subordinate Court or an inferior Tribunal cannot confer upon itself jurisdiction which it otherwise does not possess. The existence of a jurisdictional fact is thus a sine qua non or condition precedent to the assumption of jurisdiction by a Court or Tribunal. [Paras 20, 21and23] [671-A, D, E, H; 672-A] Halsbury's Laws of England, (4th Edn.), Vol.1, para 55, p.61; Reissue, Vol.1 (1 ), para 68, pp.114-15, referred to. 4.2. 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. For assumption of jurisdiction by a Court or a Tribunal, existence of jurisdictional fact is a condition precedent. But once such jurisdictional fact is found to exist, the Court or Tribunal has power to decide adjudicatory facts or facts in issue. [Paras 24 and 31] [672-B-C; 674-D] JagdishPrasadv. Ganga Prasad, [1959] Supp 1SCR133;Arun Kumar v. Union of India, [2007] 1 SCC 732 and Roshanlal v. Jshwardas, [1962] 2 SCR 947, referred to. R. v. Fulham Rent Tribunal, (1950) 2 All ER 211; Brittain v. Kinnaird, (1819) 1 Band B 432 and Eversole v. Smith, 159 SW 2nd 35, ref erred to. A B c D EF G H 660 SUPREME COURT REPORTS [2007] 10 S.C.R. A Halsbury's Laws of England, (4th Edn.), Vol.1, para 55, p.61; ~, Reissue, Vol.1(1), para 68, pp.114-15, referred to. 4.3. 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 B 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 institutio~ of the suit, he bas C a substantive rightto claim such relief. [Para 37] (677-D-E] Gajanan Dattatraya v. Sherbanu Hosang Patel and Ors., (1975] 2 sec 668, relied on. Pasupuleti Venkateswarlu v. Motor and General Traders, (1975] D 1SCC770; Goppulal v. Thakurji Shriji Shriji Dwarkadheshji, [1969) 3 SCR 989 : [1969) 1 SCC 792 and Magan/al Narandas Thakkar v. Arjan Bhanji Kanbi, (1969) 10 Guj LR 837, referred to. 4.4. In the instant case, the courts below were right in holding E that the date on which tenancy was determined, the right in favour of the landlord got accrued. Such righ(could not have been set at naught by the tenant by unilateral act by passing a resolution to reduce 'paid up share capital' of the Company. [Para 38] [677-F] F 4.5 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 G Company to reduce the paid up share capital to less than rupees one crore, but the said resolution was never approved by BIFR. But even otherwise, once it is proved that the tenancy was legally terminated and the Act would not apply to such premises, a unilateral act of tenant would not take away the accrued right in favour of the H landlord. Unless compelled, a Court of Law would not interpret a r CARON AL TD. v. MIS. PARV ATHY SW AMINA THAN & 661 SONS [C.K. THAKKER, J.] provision which would frustrate the legislative intent and primary A object underlying such provision. [Para 44) (682-D-F) 5. The appellant-tenant does not deserve discretionary and equitable relief under Article 136 of the Constitution oflndia. The tenant has not paid 'rent'/' mesne profits' since more than ten years. B Even after approaching this Court, it had made part payment pursuant to·interim order. But nothing was paid/deposited thereafter ~ even though two years have passed. These facts have not been _disputed by the appellant. [Para 45) (682-G-H; 683-A) CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2805 of C 2005. From the Judgment and final Order dated 01.11.2004 of the High Court of Judicature at Bombay in Writ Petition No. 8781 of2004. Jaideep Gupta and Chander Shekar Ashri for the Appellant. D P.H. Parekh, E.R. Kumar, Sanand Ramakrishnan and Rajeev Mishra (for P.H. Parekh & Co.) for the Respondents. The Judgment of the Court was delivered by C.K. THAKKER, J. 1. This appeal by special leave is filed by the appellant-Carona Ltd. (hereinafter referred to as 'the tenant') against the judgment and order passed by the High Court of Judicature at Bombay on November 1, 2004 in Writ Petition No. 8781 of2004. By E the said order, the learned Single Judge of the High Court dismissed the F writ petition filed by the tenant and confirmed the order passed by a Bench of Small Causes Court at Bombay on August 3, 2004 in Appeal No. 277of2003 which in turn confirmed the judgment and decree of eviction dated February 11, 2003, passed by a Judge of Small Causes Court at Bombay in T.E. & R. Suit No. 226/240 of 2001 in favour of the G respondent-partnership fim1 (hereinafter referred to as 'the landlord'). FACTS 2. To appreciate the controversy raised in the present appeal, few H -~ 662 SUPREME COURT REPORTS [2007] 10 S.C.R. A relevant facts may be stated. ~ 3. 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 B 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 certaill proceedings against the landlord. The landlord did not want the tenant to C continue to occupy the suit premises. Accordingly, by a notice dated February 23, 2001, the landlord determined the tenancy with effect from March 31, 200 l. 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, D 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 liable to be evicted. The Small Causes Court, Bombay, however, passed a decree of eviction against the tenant on December 16, 2002 which was confirmed by a Bench of that E Court as also by the High Court. The said order is challenged in the present appeal. INTERIM ORDER BY THIS COURT 4. On February21, 2005, notice was issued by this Court. Status F quo as regards possession was ordered to be maintained. On April 18, 2005, leave was granted. Pending appeal, stay of dispossession was continued subject to the tenant depositing a sum of Rs. twenty four lakhs with the Registry of the Court within eight weeks which was allowed to be withdrawn by the landlord without furnishing security. The matter was G ordered to be placed for final hearing and that is how the matter is before us. SUBMISSIONS H 5. We have heard the learned counsel for the parties. CARONALTD. v. M/S.PARVATHYSWAMINATHAN & 663 SONS [C.K. THAKKER, J.] 6. Mr. Gupta, learned counsel for the appellant-tenant contended A that all the courts committed an error oflaw and of jurisdiction in passing the decree of eviction against the tenant. He submitted that the suit filed by the landlord was not maintainable and it ought to have been dismissed by the courts below. He also submitted that the question as to constitutional validity of clause (b) of sub-section ( 1) of Section 3 of the Maharashtra B Rent Control Act, 1999 (hereinafter referred to as 'the Rent Act') is pending before this Court and in view of the said fact, the courts below ought not to have proceeded to decide the matter. Alternatively, it was argued that even if it is assumed that the provision is legal, valid and intra vires, it would not apply to the case on hand inasmuch as tenant's net c worth/paid up share capital has been substantially eroded and it was not rupees one crore or more when the proceedings were initiated by the landlord. The provisions of the Rent Act, therefore, applied to the suit premises and unless and until one of the grounds of eviction specified in the Rent Act had been made out, the landlord was not entitled to a decree D for possession. The learned counsel urged that the fact as to 'paid up capital' of the Company was a 'jurisdictional fact' and in absence of such fact, the Court had no power, authority or jurisdiction to consider, deal with and decide the matter. 7. It was further contended that the proceedings could not have been E continued in view of the fact that 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 F 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 G 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 Seciion 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 Mis Crompton Greaves Ltd v. H 664 SUPREME COURT REPORTS (2007] 10 S.C.R. A State of Maharashtra, AIR (2002) Born 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, obligatory on the tenant to hand over vacant and peaceful possession of the property B to the landlord, but it failed to do so. The landlord was, therefore, constrained to approach a Court of law which passed a decree for possession in favour of the landlord holding that since the paid-up share capital of the Company was more.than rupees one crore, the provisions of the Act were not applicable to it. The counsel urged that there was no c illegality in the said finding and obviously, therefore, the landlord was entitled to possession of suit-premises and the tenant could not resist . eviction. An appellate Court confirmed the said decree. Before the High Court it was contended by the tenant that a unanimous resolution was passed by the Company to decrease the share capital to less than rupees D one crore (Rs. 41 lakhs from Rs. 8.20 crores). Such unilateral action at a subsequent stage, submitted the counsel, would not deprive the owner of the property to the 'right accrued' in favour of the landlord. The 'jurisdictional fact' (paid up share capital of more than rupees one crore) was very much in existence at the time when the proceedings were initiated E against the Company. But even otherwise, considering the factual situation, the tenant was not entitled to any relief. It was stated that though the socalled resolution was said to have been passed, it had not been approved by the Board for Industrial and Financial Reconstruction (BIFR). In the eye of law, therefore, there was no decrease of share capital. The High F Court was, hence, wholly right in observing that even on that ground, the tenant was not entitled to any relief. The counsel also submitted that this Court is exercising discretionary and equitable jurisdiction under Article 136 of the Constitution. The tenant is not entitled to such equitable relief. It was submitted that the tenant has not paid rent since several years i.e. G from January 1, 1995. According to the counsel, the amount due and payable by the tenant as on August 31, 2007 comes to Rs. 56,22,000/ - pursuant to interim order passed by this Court on April 18, 2005, an amount of Rs. 24 Iakhs was deposited by the appellant in this Court which was withdrawn by the landlord, but even excluding that amount, the tenant H is liable to pay to the landlord an amount of Rs. 32,22,000/-. It was j_ ' )-- ~ "' CARONALTD.v.M/S.PARVATHYSWAMINATHAN& 665 · SONS [C.K. THAKKER, J.] further stated that after order dated April 18, 2005 i.e. for 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(l)(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 Mis. 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 of certain premises and of eviction and A B c D E for encouraging the construction of new houses by assuring a fair return on the investment by landlords and to provide for the matters F connected with the purpose aforesaid. Whereas it is expedient to unify, consolidate and amend the laws prevailing in the different parts of the State relating to the control of rents and repairs of certain premises and of eviction and for encouraging the construction of new houses by assuring a fair G return and to provide for the matters connected with the purposes aforesaid. 12. Section 3 grants exemption and enacts that the Act would not apply to certain premises. Clause (b) of sub-section (1) of the said section H 666 SUPREME COURT REPORTS [2007] 10 S.C.R. A declares that the Act would not apply "to any premises let or sub-let to 1 Banks, or any Public Sector Undertakings 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 B one crore or more". (emphasis supplied) ~ 13. It is an admitted fact that the appellant-tenant is a Public Limited Company having a paid up share capital of rupees more than one crore c (Rs.8.20 crores). The Courts below considered the contention as to constitutional validity of clause (b) of Section 3(1) of the Rent Act and observed that the vires of the provision was upheld by-the High Court in Mis. Crompton Greaves Ltd In that case, constitutional validity of Section 3(l)(b) was challenged on the ground that it was arbitrary, D discriminatory and unjust. It was contended that the so-called distinction between the Companies having a paid up share capital ofless than rupees -,. one crore and the Companies having a paid up capital of more than rupees one crore was arbitrary, discriminatory and unreasonable neither founded on any intelligible differentia nor the so-called classification has rational E or reasonable nexus to the object sought to be achieved by the Legislation. It was urged that denial of protection of the Act to the Companies solely on the basis of 'paid up share capital' was based on irrational criterion and was hit by Article 14 of the Constitution. ~ F 14. The Court, however, negatived the contention and upheld the validity of the provision. The Court stated; "10. We do not see any force in any of these contentions. The Bombay Rent Act was enacted originally as a temporary measure in order to protect the tenants from eviction from their premises G and also from arbitrary enhancement of rent. The necessity for the I ~-- control of rents by special legislation for properties located within the urban areas was felt during World War IL At that time not much by way of new construction for civil population was possible. A good proportion of private accommodation was requisitioned by H the authorities for the war effort. In consequence, rents were CARONALTD. v. MIS. PARVATHYSWAMINATHAN & 667 SONS [C.K. THAKKER,J.] beginning to shoot up.-Landlords were trying to get rid of their A 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, B 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 cost of living, increasing urban population C and scarcity of accommodation. Rack renting and large scale eviction of tenants under the guise of the ordinary law, exacerbated those conditions making the economic life of the community unstable and insecure. To tackle these problems and curb these evils the Legislatures of the States in India enacted "Rent Control D Legislations". 11. The rent control laws are in force in the State for more than 60 years. As a result of these legislations a host of problems have cropped up. These problems have been discussed by various committees appointed by the Central Government and State E Governments. The reports of such committees indicate that freezing of rentals at old historic levels, the excessive protection of tenancy rights and the extreme difficulties of recovering possession even for the owner's own use hit hard the house owners of modest means; rendered investment in housing for rental unattractive; F inhibited the letting out of available a.ccommodation and thus had aggravated the acute scarcity of accommodation for hire. It was felt that the laws were being often abused by the rich tenants a.gainst the poor or middle class landlords. 12 The State of Maharashtra appointed a Committee known as Rent Acts Enquiry Committee (for short Tembe Committee) which observed as under : " ........ The result of all this has been that the suppiy ofrental G H A B 668 SUPREME COURT REPORTS [2007] 10 S.C.R. housing in the market is gradually shrinking. Except in the public sector, the growing tendency is to dispose off houses on ownership or hire purchase basis. Rental housing has, therefore, almost come to a halt in cities like Bombay. This has adversely affected the economically weaker sections of the society"; " .... The rent law that was enacted for the benefit of the tenants is thus operating to the detriment of their interest in that the ·~ flow of rental housing is gradually shrinking". C Tembe Committee had recommended exemption of premises of floor area more than 65 sq. meters for business, trade or stor-- CARONALTD. v. M/S.PARVATHYSWAMINATHAN& 671 SONS [C.K. THAKKER,J.] 20. The learned counsel for the appellant-Company submitted that A the fact as to 'paid up share capital' of Rs. one crore or more of a Company is a 'jurisdictional fact' and in absence of such fact, the Court has no jurisdiction to proceed on the basis that the Rent Act is not applicable. The learned counsel is right. The fact as to 'paid up share capital' of a Company can be said to be a 'preliminary' or 'jurisdictional B fact' and said fact would confer jurisdiction on the Court to consider the question whether the provisions of the Rent Act were applicable. The question, however, is whether in the present case, the learned counsel for the appellant tenant is right in submitting that the 'jurisdictional fact' did not exist and the Rent Act was, therefore, applicable. c 21. Stated simply, the fact or facts upon which the jurisdiction of a Court, a Tribunal or an Authority depends can be said to be a 'jurisdictional fact'. If the jurisdictional fact exists, a Court, Tribunal or Authority has jurisdiction to decide other issues. If such fact does not exist, a Court, Tribunal or Authority cannot act. It is also well settled that a Court or a D ·· Tribunal cannot wrongly assume existence of jurisdictional fact and proceed to decide a matter. The underlying principle is that by erroneously assuming existence of a jurisdictional fact, a subordinate Court or an inferior Tribunal cannot confer upon itself jurisdiction which it otherwise does not possess. 22. In Halsbury's Laws of England, (4th Edn.), Vol.I, para 55, p.61; Reissue, Vol.1(1), para 68, pp.114-15, it has been stated: E "Where the jurisdiction of a tribunal is dependent on the existence of a particular state of affairs, that state of affairs may F be described as preliminary to, or collateral to the merits of the issue. If, at the inception of an inquiry by an inferior tribunal, a challenge is made to its jurisdiction, the tribunal has to make up its mind whether to act or not and can give a ruling on the preliminary or collateral issue; but that ruling is not conclusive". G 23. The existence of a jurisdictional fact is thus a sine qua non or condition precedent to the assumption of jurisdiction by a Court or H 672 ·· SUPREME COURT REPORTS [2007] 10 S.C.R. A 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 B 'fact in issue' and can be detennined 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. c D E F 25. In Halsbury's Laws of England, (4th Edn.), Vol.I, 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 detennination or unless a right of appeal lies to a court in respect of the matter alleged to have been erroneously determined. An error of law or fact on an issue collateral to the merits may be impugned on an application for an order of certiorari to quash the decision or in any other appropriate fonn of proceedings, including indirect or collateral proceedings. Affidavit evidence is admissible on a disputed issue of jurisdictional fact, although the superior courts are reluctant to make an independent detennination of an issue of fact on which there was a conflict of evidence before the inferior tribunal or which has been found by an inspector after a local inquiry". 26. In R. v. Fulham Rent Tribunal, (1950) 2 All ER 211, it was held that the question whether premium for renewal of tenancy was or -t .. G was not paid was ajurisdictional fact and, therefore, was held to be a condition precedent for the lawful exercise of jurisdiction by a Rent Tribunal. In Brittain v. Kinnaird, (1819) 1B&B432, however, the factum as to possession of a 'boat' with gunpowder on board was held to be a part of the offence charged and thus a finding of fact or adjudicatory fact. H )- CARONALTD. v. MIS. PARV ATHY SW AMINA THAN & 673 SONS [C.K. THAKKER, J.] t-- It was stated: "The logical basis for discriminating between these A cases and other falling on opposite sides of the line, is not easily discernible". (emphasis supplied) 27. Likewise, the fact whether the petitioner was an 'adult' in B adoption proceedings was not held to be a 'jurisdictional' fact (Eversole / v. Smith, 159 SW 2nd 35). 28. InJagdish Prasadv. Ganga Prasad, [1959] Supp 1 SCR 733, the questin was whether the landlord was entitled to enhancement of rent. c Under the Act, he was not entitled to such rent unless a 'new construction' had been made after June 30, 1946. It was held by this Court that the question whether construction was new or not was a 'jurisdictional fact' and if the court wrongly decided the said fact and thereby conferred jurisdiction not vested in it, the High Court could interfere with the order. D The Court stated that "once it had the power it could determine whether the question of the date of construction was rightly or wrongly decided". [See also Arun Kumar v. Union of India, [2007] -1 SCC 732]. 29. But, in Roshanlal v. Ishwardas, [1962] 2 SCR 947, this Court held that the Rent Controller had jurisdiction to fix standard rent for new E construction made after March 24, 194 7. The question was as to when the construction was made. The Rent Controller recorded a finding of fact that the construction was put up after March 24, 1947. The finding .-:...4, was confirmed by the District Judge. But the High Court interfered in revision. F 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 G undoubtedly a jurisdictional fact on which depended the power of the Rent Controller to take action under s. 7 A. 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, H ··~ -~ 674 - . -SUPREME COURT REPORTS [2007] 10 S.C.R. A 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 B error in interfering with the finding of fact by the Rent Controller and the District Judge, in support of which finding there was clear and abundant evidence which had been carefully considered and accepted by both the Rent Controller ~ and the District Judge ". c (emphasis supplied) 31. It is thus clear that for assumption of jurisdiction by a Court or a Tribunal, existence of jurisdictional fact is a condition precedent. But once such jurisdictional fact is found to exist, the Court or Tribunal has D power to decide adjudicatory facts or facts in issue. :32. As already seen earlier, in the case on hand, the appellant Company was having 'paid up share capital' of more than Rs. one crore, not only when the notice was issued and tenancy was determined but also E when the suit for possession was instituted. What was stated was that a resolution was passed by the Board of Directors to reduce 'paid up share capital' from Rs. 8.20 crores to Rs. 41 lakhs (less than Rs.