# \-IAGANLAL CHHOTALAL DESAI v. ClfAJ'ljlJRAKANT MOTILAL

- **Citation:** [1969] 1 S.C.R. 58
- **Court:** Supreme Court of India
- **Decided:** 1968-04-22
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/iaganlal-chhotalal-desai-v-clfaj-ljljrakant-motilal-4452
- **Pages:** 7

## Headnote

58
.\-IAGANLAL CHHOTALAL DESAI
v.
ClfAJ'ljlJRAKANT MOTILAL
April 22, 1968
A
'[R. S. BACllAWAT, J. M. SliELAT AND A. N. GROVIoR. JJ.]
B
IJ0111hny Rent.\', Jlotrl and Lodging Hous.~ Rents Control Act (57 of
1947), ~\". 12(1), 12(3) (b) and 20-Scope of-Overpnyme111 of re111-
~dju.\'f1JL'.:n1 agoinst rcnl due \Vltcn pennissible.
Cod(' of ('il·il Procedure (Act 5 of 1908), s. 115-Rc,•i.\ional jurisdicJio11 of l/igli Court.
'fhe appcll:-int \\'as a tci1ant in the respondent's house on ~1 cnntractu;1I
rent of Rs . .100 per n1onth.
The respondent filed a suit cl;1iniing: possc-.-
sion on the ground of non-payn1cnt of rent and cl;,iin1cd arrc:irs of
rent
and mcsnc profits.
·1bc appellant filed his \vritten statcn1cnt, asking for
fixation of the ~:andarcl rent at Rs. 125 per month.
He nllcμ:cd that the
respondent had recovered more than the rent legitimately dtl\: ;:1nd pra;:c<l
for the dismissal of the suit.
He also filed a suit on 14th March 1957
claiming refund of rent paid between 14:h March 1950 and 4th Auw1st
1954 al the rate of Rs. 300 per month, hut he did not pay 1he standard
rent due from him from 4th August J954 nor was he ready and v.·illir..g,to
pay it.
'The trial court decreed the n:spoodent's suit for eviction. The
appell~ltc coun set aside the decree holding that the stantL:.ird rent v.·a'
Rs. 125 and directed the rc~pondcnt to render an account of the over
pay1nenls made to hin1.
Jn revi'\ion. the Hi,!!h Court accepted the findinf!
of the appellate court that the st;1nd:trd rent \\l:tS Rs. 125 hut set a10.idc the
·decree of the appellate court holdin_e that the rent \Vas in arrc:i.r from 4th
August J954 ;ind directed the appellant to pav nlcsnc profits :11 Rs. 125
per month.
In appeal to this Court it was contended that ( 1) the High Court had
no jurisd1ctil)fl. to intcrferi.:: \\'ith the decree of the appellate Court under
~. 115, Civil ProccJure Code; (2) ·n1e rent ~\las not in arrear and should
he treated 01-; paid hy adjustment or deduction of the ovcrpayrncn:s; and
<J)
the appellant
was
entitled to the
protection of s. J".!(1)
:ind
s. 12(3)(h) of the Bombov Rent<, Hotc! anti 1.od.c~n~ House RcnLs Con·
trol Act, 1947.
HEIJJ : ( 1) On the plead in.gs in the respondent's suit. the appellate
Court had acted illegally and \Vith n1aterial irregularity "as it had no Jr.'\ver
10 p;1ss a decree directing the rc.:;pondcnt to rendl!r an account in respect
.of any overpayment of rcn1 made to him.
Therefore. the High C-.ourt had
po\\·er to revi5c the decree. [61DJ
(2) Scclion 20 of the Act ,e.ivcs the tenant a general right to rccoverv
of O\'Crpai<l rent ,~·i.~hin 6 months from the date of payml'11f.
Ifc mav
:il'\o adjust the overpayment by deduction from any rent payahle hy hin1.
Rut if the amount is incar>ahlc of recovery hec:iusc of the b;1r of Jin1il:1tion.
it cannot be recovered hv deduction, .1hat is. the right of rceovefv
hv
(led11ction is barred at the ·,;in1c tin1e ;is the rir!lll of recovcrv hy suit. f62Dl
ln ~he prc,cn1 C;p.,c. lh~ riμht of recovery of the exCCS'\ rcJ): pai<l !~fore
4th Auwsi 1954 become barred on and after 4th Fehmarv 1955.
As
the clai'm for reco\'crv hccamc harrcd. the :1ppell:lnt could n.ot thereafter
odcducr ir frorn rhc renr f!lling due.
Since he never dccluct~<l ir fron1 the
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MAGANLAL v. CHANDRAKANT (Bachawat, !.)
59
A
rent at any time, but filed 'a suit for its recovery, the overpayment could
not be deducted fron1 or adjusted against the, rent falling due after 4th
August 19'54. and therefore, the rent was in arrears. [63F-G]
Sohrab Tavaria v. Ja[ierali, 58 Born, L.R. 680, 687-88 and Karamsey
Kanji v. Velji Virji, 56 Born. L.R. 619, 626, approved.
Bayley v, Walker, [1925] l KB. 447, referred to.
B
(3) The appellant c'Ould not claim the protection of s.
12(1) or
s. 12(3) (h) of the Act, because, (a) he was never ready or willing to
pay the standard rent during the pendency of the suit, (b) he did not at
the first hearing of the, suit or on any other date fixed by the trial

## Text

58
.\-IAGANLAL CHHOTALAL DESAI
v.
ClfAJ'ljlJRAKANT MOTILAL
April 22, 1968
A
'[R. S. BACllAWAT, J. M. SliELAT AND A. N. GROVIoR. JJ.]
B
IJ0111hny Rent.\', Jlotrl and Lodging Hous.~ Rents Control Act (57 of
1947), ~\". 12(1), 12(3) (b) and 20-Scope of-Overpnyme111 of re111-
~dju.\'f1JL'.:n1 agoinst rcnl due \Vltcn pennissible.
Cod(' of ('il·il Procedure (Act 5 of 1908), s. 115-Rc,•i.\ional jurisdicJio11 of l/igli Court.
'fhe appcll:-int \\'as a tci1ant in the respondent's house on ~1 cnntractu;1I
rent of Rs . .100 per n1onth.
The respondent filed a suit cl;1iniing: possc-.-
sion on the ground of non-payn1cnt of rent and cl;,iin1cd arrc:irs of
rent
and mcsnc profits.
·1bc appellant filed his \vritten statcn1cnt, asking for
fixation of the ~:andarcl rent at Rs. 125 per month.
He nllcμ:cd that the
respondent had recovered more than the rent legitimately dtl\: ;:1nd pra;:c<l
for the dismissal of the suit.
He also filed a suit on 14th March 1957
claiming refund of rent paid between 14:h March 1950 and 4th Auw1st
1954 al the rate of Rs. 300 per month, hut he did not pay 1he standard
rent due from him from 4th August J954 nor was he ready and v.·illir..g,to
pay it.
'The trial court decreed the n:spoodent's suit for eviction. The
appell~ltc coun set aside the decree holding that the stantL:.ird rent v.·a'
Rs. 125 and directed the rc~pondcnt to render an account of the over
pay1nenls made to hin1.
Jn revi'\ion. the Hi,!!h Court accepted the findinf!
of the appellate court that the st;1nd:trd rent \\l:tS Rs. 125 hut set a10.idc the
·decree of the appellate court holdin_e that the rent \Vas in arrc:i.r from 4th
August J954 ;ind directed the appellant to pav nlcsnc profits :11 Rs. 125
per month.
In appeal to this Court it was contended that ( 1) the High Court had
no jurisd1ctil)fl. to intcrferi.:: \\'ith the decree of the appellate Court under
~. 115, Civil ProccJure Code; (2) ·n1e rent ~\las not in arrear and should
he treated 01-; paid hy adjustment or deduction of the ovcrpayrncn:s; and
<J)
the appellant
was
entitled to the
protection of s. J".!(1)
:ind
s. 12(3)(h) of the Bombov Rent<, Hotc! anti 1.od.c~n~ House RcnLs Con·
trol Act, 1947.
HEIJJ : ( 1) On the plead in.gs in the respondent's suit. the appellate
Court had acted illegally and \Vith n1aterial irregularity "as it had no Jr.'\ver
10 p;1ss a decree directing the rc.:;pondcnt to rendl!r an account in respect
.of any overpayment of rcn1 made to him.
Therefore. the High C-.ourt had
po\\·er to revi5c the decree. [61DJ
(2) Scclion 20 of the Act ,e.ivcs the tenant a general right to rccoverv
of O\'Crpai<l rent ,~·i.~hin 6 months from the date of payml'11f.
Ifc mav
:il'\o adjust the overpayment by deduction from any rent payahle hy hin1.
Rut if the amount is incar>ahlc of recovery hec:iusc of the b;1r of Jin1il:1tion.
it cannot be recovered hv deduction, .1hat is. the right of rceovefv
hv
(led11ction is barred at the ·,;in1c tin1e ;is the rir!lll of recovcrv hy suit. f62Dl
ln ~he prc,cn1 C;p.,c. lh~ riμht of recovery of the exCCS'\ rcJ): pai<l !~fore
4th Auwsi 1954 become barred on and after 4th Fehmarv 1955.
As
the clai'm for reco\'crv hccamc harrcd. the :1ppell:lnt could n.ot thereafter
odcducr ir frorn rhc renr f!lling due.
Since he never dccluct~<l ir fron1 the
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MAGANLAL v. CHANDRAKANT (Bachawat, !.)
59
A
rent at any time, but filed 'a suit for its recovery, the overpayment could
not be deducted fron1 or adjusted against the, rent falling due after 4th
August 19'54. and therefore, the rent was in arrears. [63F-G]
Sohrab Tavaria v. Ja[ierali, 58 Born, L.R. 680, 687-88 and Karamsey
Kanji v. Velji Virji, 56 Born. L.R. 619, 626, approved.
Bayley v, Walker, [1925] l KB. 447, referred to.
B
(3) The appellant c'Ould not claim the protection of s.
12(1) or
s. 12(3) (h) of the Act, because, (a) he was never ready or willing to
pay the standard rent during the pendency of the suit, (b) he did not at
the first hearing of the, suit or on any other date fixed by the trial court
pay or tender the standard rent and (c) he did not
thereafter continue
to pay or deposit in Court such, rent till the suit was finally
decided
[63H; 64A-B]
C
Civ1L APPELLATE JURISDICTION : Civil Appeal No. 392 of
I)
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1965.
Appeal by special leave from the judgment and order, dated
August 29, November 20, 1962 of the Gujarat High Court in
Civil Revision Application No. 456 of 1960.
M. C. Chagla, and B. R. Agarwala, for the appellant.
S. T. Desai, P. C. Bhartari, !. B. Dadachanji, 0. C. Mathur
and Ravinder Narain, for the respondents.
The Judgment of the Court was delivered by
Rachawat, J. This appeal arises out of a suit between landlord
'md tenant. The defendant was a tenant of Moti Villa, Bungalow
No. 1 in Ahmedabad under the plaintiff.
The contractual rent
was Rs. 300/- per month.
Since October 1, 1948 the defendant
stopped payment of rent on the ground that it was_ excessive.
The
disputes between the parties were referred to the arbitration of
one Sankalchand Parikh who made an award fixing the standard
rent at Rs. 300/- per month and directing the defendant to deliver possession of the premises and to pay arrears of rent and
future rent at that rate.
A decree was passed according to the
award on September 21, 1949.
The plaintiff recovered moneys
by executing the decree but the defendant continued in posses:
sion. On April 20, 1950 the defendant made an application for
fixation of standafd rent.
This applicafron was withdrawn by
him on November 1 L 1950. On August 1, 1955 the High Court
declared that t11e award decree was null and void on the ground
that the claim for fixirtion of the standard rent and recovery of
possession could not be referred to arbitration.
On September S, 1955 the plaintiff served a notice upon the
defendant demanding payment of arrears of rent and asking him
to vacate the premises 'on the expiry of the month of October
next.
On December 26, 1955 the plaintiff instituted Suit No.
5092 of 1955 claiming possession on the ground of non-payment
of rent and sub-letting and also claiming arrea"rs of rent and mesne
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SUPREME COURT REPORTS
(1969 J I S.C.R.
profits.
The defendant filed his written statement on May 1 1956
a'king for fixation of the standard rent at Rs. 125 /- per i'nont11,
denying the sub-letting and alleging -that tl1e plaintiff had recovered more than the rent legitimately due to him.
On March 14.
1957 he filed Suit No. 34 of 1957 agaimt the plaintiff ·claiming
refund of Rs. 15,224/- realised in execution of the void decree.
The first da1e of the hearing of Suit No. 5092 of 1955 was December 26, 1957. On June 19, 1958 the Trial Court decreed
the suit and directed Ihe defendant to give possession of the premises and to pay Rs. 10, 750/- on account of arrears of rent and
mesne profits at the ra1e of Rs. 500/- per mtJnth from the date of
the suit The Trial Court held that the defendant sub-let the
premises, that having withdrawn his application for fixa1ion of the
standard rent it wa' not open to him to ask for fixation of the
standard rent, that if 1he matter were still open the standard rent
would be Rs. 125/- per month, that a sum of Rs. 14,169/2/- was
realised from the defendant in execution of the award decree, that
the defendant was liable to pay rent at Rs. 300/- per month, that
the rent was in arrear and that the notice to quit dated September 5, 1955 was valid.
The defendant tiled an appeal against
this decree.
During -the pendency of the appeal
the
plaintiff
recovered the sum of Rs. I 0, 7 50/- decrcc<l by the trial
Court.
The Assistant Judge, Ahmedabad allowed the appeal, set aside
the decree of the Trial Court and directed the plaintiff to render
an account of the overpayments made to him.
He held that the
defendant did not sub-let the premises, that the standard rent was
Rs. 125/- per month, that it was open to the defendam to ask for
fixation of standard rent, that in execution of the award decree
since 1950 the plaintiff recovered Rs. 14, 169/2/- bfiore the institution of the suit and R<. 10,750/- during the pcndcncy of the
appeal and that taking into account all the recoveries the rent
was not in arrear. The plaintiff filed a revision application against
this decree.
On November 20, 1962 the High Court allowed the
revision application, sct aside the decree of the Assistant Judge,
restored the decree for evic·tion passed by the Trial Court and
directed the defendant to pay mesnc profits at Rs. 125/- per month
from the date of the suit until recovery of possession.
The High
Court accepted the findings of the court below that there was
no sub-letting of the premises, that -the standard rent was Rs. 125/-
per month, that it was open to the defendant to ask for fixation
of the standard rent and that Rs. 14,160/2/- wa' recovered from
him in execution of the award decree before the institution of the
suit. The High Court held that the rent was in arrear, that the
defendant was not ready and willing to adjust the overpayment
against the rent falling due, that the amount recovered from the
defendant was less than the standard rent due from him and the
cost of the suit and that he was not entrtled to t)!e protection of
secs. 12(1) and 12(31{b) of the Bombay Rent•. Hotel and Lodg-
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MAGANLAL V. CHANDRAKANT (Bachmvat, J.)
61
ing House Rents Control Act, 1947 (Bombay Act No. LVII of
194 7). The High Court refused to allow the defendant to raise
a new contention, viz., that there was no valid notice under sec.
12(2) of the Act. The defendant filed this appeal after obtaining special leave from this Court.
Mr. M. C. Chagla contended that the High Court had no
jurisdiction to interfere with the decree of the Assistant Judge
under sec. 115 of the Code of Civil Procedure.
We are unable
to acce]J'I this contention.
The decree passed by the Assistant
Judge was manifestly illegal.
Suit No. 5092 of 1955 was for
possession, arrears of rent and mesne profits.
In his written statement, the defendant asked for fixation of standard rent and prayed
for dismissal of the suit. In that suit the court had no power to
pass a decree directing the plaintiff to render an account in respect of any over payment of rent made to him.
In giving the
direction that "the landlord do render an account of the over
payments made to him'', the Assistant Judge acted jllegally and
with material irregularity.
The High Court had full power to
revise this decree under sec. 115 and to give such direction in the
matter as it thought fit.
Mr. Chagla then contended that there was no valid notice
under sec. 12 (2). He argued that this point arose on the pleadings and the issues.
But we find that in the Trial Court the con
tention was that there was no valid notice to quit. It was not
argued that there was no valid notice under sec. 12(2). The
point regarding the validity of the notice was not raised before
the Assistant Judge. The High Court properly refused to allow
the point to be taken for the first time in revision.
We are of
the opinion that the point about the absence pf a proper notice
under sec. 12(2) is not now open.
The crucial point in the case was whether the defendant paid
or was ready and willing to pay the standard rent due from him.
According to the defendant he was compelled to pay Rs. 15,224/2/
between March 14, 1950 and August 4, 1954. The courts below
found that between those two dates he paid Rs. 14,169/2/-
on account of rent from October 1, 1948 at Rs. 300/- per month.
From the plaint in Suit No. 34 of 1957 it appears that until
March 14, 1957 the defendant did not make any other payment.
As the High Court pointed out, no further payment was made
by the defendant till the disposal of suit No. 5092 of 1955.
Thus upto August 4, 1954 the defendant paid Rs. 14,169/2/-
on account of rent due upto that date at Rs. 300/- per month.
The payments were in excess of the standard rent.
He did not
pay rent falling due after August 4, 1 ~54 .• The question is wh~
ther the rent was in arrear or whether it should be treated as paid
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SUPREME COURT REPORTS
[1969] I S.C.R.
by adjustment or deduction o[ the over payments.
The right of
a tenant to recover the over-paid rent is
regulated by sec.
20.
That sect ion reads :-
"Any amount paid on account
of rent after the
date of the coming into operation of this Act shall,
except in so for as payment 1hereof is in accordance
with the provisions of lhis Act. he recoverable by the
tenant from tlie
landlord to whom it was paid or on
whose behalf it was received or from his legal representative at any lime within a period of six
months
from the date of payment and rnay, without prejudice
to any other
remedy for recovery, . be deducted by
such tenant
from any rent payable by him to such
landlord."
The section gives ·the knant a general right of recovery of the
overpaid rent within six months f1om the date of payment. Without prejudice to any other mode of recovery, he may deduct tl1e
overpayment from any rent payable by him io the landlord. Deduction is one mode of recovery. lf the amount is incapable of
recovery because of the bar of limitation. it cannot be recovered
by deduction.
In other words. the right of recovery by deduction is barred at the same time as the riμht of recovery by suit.
If the tenant seeks recovery of the overpaid amount he must bring
the suit or make the deduction within six months.
In Karamesy Kanji v. Velji Virji(1) the learned Chief Justice
of the Bombay High Court repelled the tenanrs c01rtention that for
deduction of rent no period of limitation was provided by sec. 20.
He observed :-
"It seems to me clear on a plain and na-tural construction of the section itself that if a tenant could not
recover any excess amount paid by him
beyond
six
months from the date of payment and if such amounts
became irrecoverable_ it is difiicult to understand how
ii tenant could deduct what he could not recover am!
what was irrecoverable in law.
The same view of the
law has been taken in a parallel piece of legislation in
England in Bayley v. Walker(').
I sec no reason 10
take a view different from that taken by the appellate
court that the interpretation put by the English Court
on a similar provision of law is the correct interpretation."
Jn Bayley v. Walker(') the tenant on discovering that he had overpaid considerable SU111S in excess of the standard rent stopped pay__ ... ____ _
(I) .16U0m.1..ll.1,19. 616.
(2) [1915] I K.B.447 .
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MAGANLAL V, CHANDRAKANT (Bachaivat, !.)
6J.
ment of rent retaining the amounts as they .fell due by way of
deduction under the provisions of s. 14, sub-sec. 1, of the Increase
of Rent and Mortgage Interest (Restriction) Act, 1920. He
continued to deduct his rent after expiry of the period of limitation prescribed by sec. 8, sub-sec. 2 of the Rent and Mortgage
Interest
Restrictions
Act,
1923.
The
landlord
contended that the tenant had no right to so continue to deduct and that
consequently his rent was in arrear and on that ground brought
an action for possession.
The question was whether the rent was
in arrear or not. The matter turned on the construction of s. 14
of the Act of 1920, and sec. 8 of the Act of 1923. Section 14,
sub-section 1 gave the tenant a general right of recovery of overpaid rent and the amount recoverable might without prejudice
to any other mode of recovery be deducted by the tenant from
any rent payable by him. Section 8 sub-sec. 2 provided that any
sum which under sub-sec. 1 of sec. 14 of the principal Act (of
J 920) is recoverable by the tenant. . . . . . shall be recoverable at
any tin1e within six months from the date of payment, but not
afterwards or in the case of a payment made before the passing
of this Act, at any time within six months from the passing of this
Act but not afterwards." Salter, J. held that the period of linlitation prescribed by sec. 8 of the Act of 1923 applied to recovery
by deduction as well as recovery by action. As the_ amount was
incapable of recovery by ac.tion, it could not be recovered by
deduction.
The rent was therefore in arrear and the landlord
was entitled to recover possession on that ground.
In Sohrab
Tavaria v. Jafferali(') a Division Bench of the Bombay High
Court approved of these decisions.
Now the right of recovery of the excess rent paid before
August 4, 1954 became barred on and after February 4, 1955.
Within that period the defendant took no steps for recovery of the
amount by filing a suit or making a deduction.
As 1he claim for
recove1y of the amount became barred after February 4, 1955,
he could not thereafter deduct it from the rent falling due.
As
a matter of fact, he did not deduct it from rent at any time.
Instead of making any deduction he filed a suit for its recovery. The
overpayments callllot now be deducted from or adjusted against
the rent falling due since August 4, 1954. It follows that . the
rent was in arrear.
·
In these circumstances, the defendant could not claim protection of s. 12 (1) of the Rent Act.
During the pendency of the
suit he did not pay the standard rent due from him from August
4, 1954 nor was he ready or willing to pay it. Instead of showing
his readiness and willingness to pay the ren~ due he claimed iliat
he was not liable to pay any amount at all.
(I) 58 Boni. L.R. 680, 687-88.
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SUPREME COURT REPORTS
[1969] 1 s.c.R.
Likewise he could not claim the protection
under sec.
12 ( 3 )( b).
Before the first hearing of the suit on December 26,
1957 or any other date fixed by lhe trial court he did not pay or
tender in court the standard rent then due from him.
Nor did
he thereafter continue to pay or deposit in court such rent till
'!he suit was finally decided.
It follows that the defendant cannot
claim protection from eviction under the Rent Act.
The High
CoUrt therefore rightly decreed the suit for eviction.
In the result, the appeal is dismissed.
We direct !hat execution of the decree for eviction be stayed for a period of one year
from today.
In all the circumstances of the case, we make no
Qrder as to cost~.
V.P.S.
Appeal di.,missed .
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