# SHAH DHANSUKHLAL CHHAGANLAL v. DAUCHAND VIRCHAND SHROFF AND OlllERS

- **Citation:** [1968] 3 S.C.R. 346
- **Court:** Supreme Court of India
- **Decided:** 1968-03-01
- **Case number:** Civil Appeal No. 455 of 1965
- **Bench:** J.C. Shah, R. S. Bachawat, ·G. K. Mitter
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/shah-dhansukhlal-chhaganlal-v-dauchand-virchand-shroff-and-olllers-4385
- **Pages:** 8

## Headnote

Bombay Rents Hotel and Lddging House Rates Control Act, 1947-Ss.
12(1) and 12(3)(b)-Conditions for benefit under.
The appeJlant was a tenant of the respondent. Havjng fallen into
arrears of rent he was given a notice (a) demanding arrears of ront and
permitted increases nnder the Bombay Rents. Hotel and Lodging House
Rates Control Act, 1947, and (b) terminating his tenancy in terms of s.
106 of the Transfer of Property Act, Receiving no response to the notice
the respondent filed a suit against the appellant. On the first day of the
hearing of the suit and during its pendency the appellant deposited part
of the arr·,.rs in Court but not the full amonnt due. The trial Court
passed a decr·oe against him which was confirmed by the appellate Court.
The High Court dismissed his revision petition. With special leave he
appealed to this Court and urged that (i) he was entitled to the benefit of
s. 12(1) of the Act and that (ii) even ifs. 12(3)(b) was applied he was
not liable to be ejected.
HELD : (i) Section 12(1) must be read with the Explanation and
so read it means that a tenant can only be considered ''to be ready and
willing to pay" if, before the expiry of the period of one month
after
notice referred to in sub-s. (2), he makes an aPPlication to the court
under sub·s. (3) of section 11 and hereafter pays or tenders the amount
of rent or permitted increases specified by the court. The readiness and
willingness to pay has to be judged in the light of the facts of the case.
Where as in the present case a suit is filed on the ground that the tenant
was in arrears for a period of more than six months and although raising
a dispute· as to the standard rent or permitted increases recoverable under
the Act, the t->nant makes no application in terms of s. 11(3) he cannot
claim the protection of s. 12 (1) by merely offering to pay or even paying
ail arrears due from him when the court is about to pass a decree against
him. [351 H-352 BJ
Shah Bho;rai Kuver;i Oil Mills arrd Ginning Factory v. Subbash
Cha11dra Yograi Sinha, [1962] 2 S.C.R. 159, distinguished.
Vora Ahhasbhai Alimahomed v. Haji Gulamnabi Haji Safibhai, [1964]
5 S.C.R. 157, Mrs. M<norama Masurekar v. Mrs. Dhanlaxmi G. Shah and
another. [1967] 1 S.C.R. 135, applied,
(ii) The case did not come under s. 12(3)(b), To be within the
protection of that provision, the tenant must not only pay alt the arrears
due from him on the first day of the hearing of the suit, but he must
, thereafter continue to pay or tender in court regularly the rent and the
permitted increase till the suit is finally decided. There was a failure on
the part of ti>, appellant to pay or tender in court all the amounts which
fell due, and he could not therefore get the protection o~ s. I2(3)(b)
of the Act. [353 B-El

## Text

SHAH DHANSUKHLAL CHHAGANLAL
v.
DAUCHAND VIRCHAND SHROFF AND OlllERS
March 1, 1968
(J.C. SHAH, R. S. BACHAWAT AND·G. K. MITTER, JJ.)
Bombay Rents Hotel and Lddging House Rates Control Act, 1947-Ss.
12(1) and 12(3)(b)-Conditions for benefit under.
The appeJlant was a tenant of the respondent. Havjng fallen into
arrears of rent he was given a notice (a) demanding arrears of ront and
permitted increases nnder the Bombay Rents. Hotel and Lodging House
Rates Control Act, 1947, and (b) terminating his tenancy in terms of s.
106 of the Transfer of Property Act, Receiving no response to the notice
the respondent filed a suit against the appellant. On the first day of the
hearing of the suit and during its pendency the appellant deposited part
of the arr·,.rs in Court but not the full amonnt due. The trial Court
passed a decr·oe against him which was confirmed by the appellate Court.
The High Court dismissed his revision petition. With special leave he
appealed to this Court and urged that (i) he was entitled to the benefit of
s. 12(1) of the Act and that (ii) even ifs. 12(3)(b) was applied he was
not liable to be ejected.
HELD : (i) Section 12(1) must be read with the Explanation and
so read it means that a tenant can only be considered ''to be ready and
willing to pay" if, before the expiry of the period of one month
after
notice referred to in sub-s. (2), he makes an aPPlication to the court
under sub·s. (3) of section 11 and hereafter pays or tenders the amount
of rent or permitted increases specified by the court. The readiness and
willingness to pay has to be judged in the light of the facts of the case.
Where as in the present case a suit is filed on the ground that the tenant
was in arrears for a period of more than six months and although raising
a dispute· as to the standard rent or permitted increases recoverable under
the Act, the t->nant makes no application in terms of s. 11(3) he cannot
claim the protection of s. 12 (1) by merely offering to pay or even paying
ail arrears due from him when the court is about to pass a decree against
him. [351 H-352 BJ
Shah Bho;rai Kuver;i Oil Mills arrd Ginning Factory v. Subbash
Cha11dra Yograi Sinha, [1962] 2 S.C.R. 159, distinguished.
Vora Ahhasbhai Alimahomed v. Haji Gulamnabi Haji Safibhai, [1964]
5 S.C.R. 157, Mrs. M<norama Masurekar v. Mrs. Dhanlaxmi G. Shah and
another. [1967] 1 S.C.R. 135, applied,
(ii) The case did not come under s. 12(3)(b), To be within the
protection of that provision, the tenant must not only pay alt the arrears
due from him on the first day of the hearing of the suit, but he must
, thereafter continue to pay or tender in court regularly the rent and the
permitted increase till the suit is finally decided. There was a failure on
the part of ti>, appellant to pay or tender in court all the amounts which
fell due, and he could not therefore get the protection o~ s. I2(3)(b)
of the Act. [353 B-El
CIVIL APPELLATE JURISDICTION :
Civil Appeal No. 455 of
1965.
Appeal by special leave from the judgment and order dated
September 11, 1962 of the Gujarat High Court in Civil Revision
Application No. 150 of 1960.
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s. D. CHHAGANLAL v. D. v. SHROFF (Mitter, /.)
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G. L. S.u1ghi, and B. R. Agarwala, (or the appellant.
0. P. Malhotra and Ravi11der Narain, for the respondents
Nos. 1 to 4.
The Judgment of the Court was delivered by
Mitter, 1. This is an appeal by special leave from a judgment of the High Court of Gujarat passed in a Civil Revision
Application arising out of a suit filed by the plaintiff-respondent
against the defendant-appellant to recover possession of certain
premises situate in Surat.
The facts are as follows. The appellant became a tenant of
the respondent under a rent note executed on February 27, 1947
whereby rent was fixed at Rs. 40 per month and the tenancy
was to be for a period of one year from 22nd February, 1947.
After the expiry of the said period, the appellant continued as a
monthly tenant on the same terms and conditions as were to be
found in the rent note. He fell into arrears of payment of rent
and the respondent sued him for eviction some time in 1951.
The suit was eventually compromised by a petition put in court
bearing date September 16, 1952, Under the terms of the compromise, the defendant continued as a tenant from September 1,
l 952 .on the terms and conditions of the rent note dated February 27, 1947: the original conditions in respect of rent also
continued excepting that the rate was lowered from Rs. 40/- -to
quote the words of the compromise-to "standard rent of Rs. 27"
and "'in the matter of taxes and interest also the defendant was
to act in accordance with the conditions of the aforesaid rent
note."
Paragraph 2 of the compromise petition contained an
account of payments made by the defendant the final result
thereof being that it was agreed between the parties that the
defendant had paid Rs. 104-5-3 "which amount was to be reimbursed by the plaintiff to the defendant when accounting the
future payment of rent." It should be noted here that according to the rent note of 194 7 the tenant had agreed to pay the
monthly rent of Rs. 40 together with interest at Rs. 0-12-0 per
cent per annum in respect of any balance due for rent.
Even
after the compromise, the defendant fell in arrears again. The
only payments made thereafter up to the institution of the second
suit out of which the present proceedings ha\'e arisen were a sum
of Rs. 250 on July 19, 1954 and Rs. 200 on March 17. 1955.
The defendant did not make any payment to the plaintiff in respect of the permitted increases under the Bombay Rents, Hotel
and Lodging House Rates Control Act, 194 7 from the I st cf
April. 1954; neither did he pay the taxes agreed upon.
The
plaintiff gave a notice to the defendant on April 18, 1955
demanding the arrears of rent and permitted increases in terms
of the said Act and also terminating the tenancy of the defend-
348
SUPREME COURT REPORTS
(1968] 3 S.C.R.
ant with effect from May 31, 1955 in terms of s. 106 of the
Transfer of Property Act. The notice was received by the detendant on April 21, 1955.
No reply was sent thereto nor was
any payment made to the plaintiff. The suit for ejectment was
filed on March 15, 1956 the ground thereof as laid in the plaint
being that the defendant was in arrears of payment of rent and
permitted increases aitd as such not entitled to the pro.tection
of the Act. In paragraph 6 of the plaint the dues under various
heads were specified showing the arrears of rent, increases permitted thereon, interest in terms of the rent note and taxes for
three years. It was pleaded by the defendant .in the written statement that rent at Rs. 27 had been fixed by the court without
going into the merits of the case and that standard rent or reasonable rent of the property in suit had to be fixed first and a preliminary issue in that respect should be framed.
The defendant
did not admit the claim to the arrears as laid in paragraph 6 of
the plaint.
He also pleaded that the notice of ejectment was not a valid
one as the tenancy was to be reckoned in terms of the Gujarati
calendar and not the Gregorian calendar.
The date fixed for settlement'of issues was September 3, 1956
which can be taken to be the date of the first hearing of the suit
for the purposes of the Act. On that day the defendant deposited in court a sum of Rs. 1,000.
Thereafter the defendant
.made a deposit of a·sum of Rs. 150 on February 25, 1957. The
suit was decreed by the trial Judge on March 25, 1957. The
trial Judge after considering the evidence on record determined
the standard rent of the premises at Rs. 27, exclusive of the permitted increasts and water tax and sanitary tax, payable by the
defendant to the plaintiff.
Holding that the defendant had not
complied with section 12(3)(b) of the Act he passed a decree for
eviction. The defendant went in appeal to the District Judge, Surat.
He raised no contention even at the hearing of the appeal either
in regard to the standard rent of the premises or in regard to
interest on arrears of rent or municipal taxes or permitted increases.
The finding 'of the trial Judge that the standard rent of the premises exclusive of permitted increases and water tax and sanitary
tax was Rs. 27/-
per month was not challenged by the
defendant.
Nor was any question raised as to the finding
that the defendant was liable to pay the plaintiff a sum of
Rs. 123-4-0 as and by · way of interest on arrears of rent,
a sum of Rs. 81 as and by way of water tax and sanitary tax
for a period of three years prior to the date of the suit and a sum
of R,. 2-1-9 per month as and by way of permitted increases
from April 1, 1954.
The point regarding the validity of the
notice of ejectment was however raised fa the appeal. According
to the judgment of the High Court, "the only contention urged
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s. D. CHHAGANLAL v. D. v. SHROFF (Mitter, J.)
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before the learned Assistant Judge was, whether the defendant
had or had not complied with the requirements of section
12(3)(b) of the Rent Act." The Assistant Judge concluded that
there had been no compliance with that section and upheld the
decree for eviction.
In revision three contentions were raised before the High
Court, namely, (1) as to the validity of the notice of ejectment;
(2) whether s. 12(3)(a) or 12(3)(b) of the Act applied; and
( 3) whether the defendant was entitled to protection under
s. 12(1) of the Act. The High Court held that it was not open
to the tenant to raise the question of the validity of the notice
in a revision application. Moreover, there was no substance in
it as the compromise petition expressly recorded that the tenancy
in terms of it should commence on September 1, 1952. With
regard to the second question the High Court held that "it was
' common ground between the parties before the Assistant Judge
that the case of the defendant fell within section 12(3) (b) of the
Rent Act." The learned Judge of the High Court noted :
(a) The trial Judge turned down the applicability of
s. 12(3)(a) of .the Act holding that the defendant
had disputed the municipal taxes and permitted
increases;
(b) The conditions under s. 12(3) (b) of the Act
were not fulfilled;
(c) No contention about the applicability of 12(3)(a)
was raised before the Assistant Judge in appeal
and ·he therefore did not go into the question at all;
and
( d) The conditions necessary for the applicability of
s. 12(3 )(a) were not present, as besides the
amount of Rs. 27 mentioned in the compromise
petition, the tenant had to pay other sums not due
from him every month.
The High Court further found that after the first date of
hearing of the suit on September 3, 1956 rent of the premises
which fell due on !st October 1956, !st November 1956, !st
December 1956, !st January 1957, !st February 1957 and 1st
March, 1957 remained unpaid on March 25, 1957 when the
suit was disposed of. As the defendant did not pay or deposit
.in court regularly the amount of standard rent which became
due on the aforesaid dates barring the lst"of March 1957 (taking
into account the deposit of Rs. 150 on February 25, 1957) there
was default on the part of the defendant attracting the operation
of s. 12(3)(b) of the Act.
350
SUPREME COURT llEPOllTS
[1968] 3 S.C.R.
The High Coun turned down the contention based on
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s. 12(1) of the Act.
At the hearing of the appeal before us, learned counsel for
the appellant raised two points, namely :
( 1) The provisions of s. 12( 1) of the Act were applicable throughout the hearing of the suit and down to
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the date of the final hearing. If at that stage it was
found that the defendant had paid up all arrears due
from him he could not be ejected.
(2) Even applying s. 12{3)(b) there was no default
on the part of the defendant which would render him
liable to eviction.
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In order to appreciate the first contention it is necessary to set out section 12 of the Act as it stood at the
relevant time :
"12( 1) A landlord shall not be entitled to the recovery of possession of any premises so Jong as the
tenant pays, or is ready and willing to pay, the amount
of the standard rent and permitted increases, if any,
and observes and performs the other conditions of the
tenancy, in so far as they are consistent with the provisions of tliis Act.
(2) No suit for recovery of possession shall be
instituted by a landlord against a tenant on the ground
of non-payment of the standard rent or permitted increases due until the expiration of one month next after
notice in writing of the demand of the standard rent or
permitted increases has been served upon the tenant in
the manner provided in section I 06 of the Transfer of
Property A~t, 1882.
(3) (a) Where the rent is payable by the month and
there is no dispute regarding the amount of standard
rent or permitted increases, if such rent or increases are
in arrears for a period of six months or more and the
tenant neglects to make payment thereof until the expiration of the period of one month after notice referred
to in sub-section (2), the Court may pass a decree for
eviction in any such suit for recovery of possession.
(b) In any other case, no decree for eviction shall
be passed in any suit, if, on the first day of hearing of
the suit or on or before such other date as the Court may
fix, the tenant pays or tenders in Court the standard rent
and permitted increases then due and thereafter contiD
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nues to pay or tender in court regularly such rent and
permitted increases till the suit is finally decided and
also pays costs of the suit as directed by the court.
t 4) Pending the disposal of any such suit, the Court
may out of any amount paid or tendered by the tenant
pay to the landlord such amount towards payment of
rent or permitted increases due to him as the Court
thinks fit.
Explanurwn.-ln any case where tnere is a dispute
as to the amount of standard rent or permitted increases
recoverable under this Act the tenant shall be deemed
to be ready and willing to pay such amount if, before
the expiry of the period of one month after notice
referred to in sub-section (2), he makes an application
to the Court under sub-section ( 3) of Section 11 and
thereafter pays or tenders the amount of rent or permitted increases specified in the order made by the
Court."
Learned counsel drew our attention to a judgment of this Court
in Shah Bhojraj Kuverji Oil Mills and Ginning Factory v. Supbash
Chandra Yograj Sinha('). There the landlord had filed a suit
for possession of the premises on April 25, 1957, the period of
tenancy fixed under the rent note having expired on March 14,
1957. Under s. 6 of the Act a notification was issued applying
Part II of the Act to the area where the property was situate.
The appellants claimed protection of s. 12 of the Act and the
main question which engaged the attention of this Court was,
whether by virtue of the fil'St proviso to s. 50 of the Act, all the
provisions in Part II including s. 12 were made expressly applicable to all suits; and secondly, whether by virtue of s. 12(1) of
the Act the suit was rendered incompetent. This Court turned
down the contention of the respondent that the operation of
s. 12( 1) was limited to suits filed after it came into force in a particular area and observed that under s. 12(1) the landlord was
not to be entitled to recover possession and the point of time
when the sub-section would operate was when the decree for recovery of possession would have to be passed.
It appears to us that there is no substance in the contention
put forward on behalf of the appellant. Section 12(1) must be
read with the Explanation and so read it means that a 1enant can
only be considered "to be ready and willing to pay" if, before
the expiry of the period of one month after notice referred to in
sub-section (2), he makes an application to the court under subs. (3) of section 11 and thereafter pays or tenders the amount of
(l) [1962) 2 S.C.R. 159.
352
SUPREME COURT REPORTS
[1968] 3 S.C.R.
rent or permitted increases speciljed by the court.
We have
already noted that the tenant made no payment within the period
of one month of the notice of ejectment and although in his written
statement·he raised a dispute about the standard rent he made'no
application in terms of s. 11(3) of the Act. The readiness and
willingness to pay has therefore to Ile judged in the light of the
facts of the case.
Where as here a suit is filed on the ground
that the tenant was in arrears for a period of more than 6 months
and although raising a dispute as to the standard rent or permitted increases recoverable under the Act, the tenant makes no
application in terms of s. 11(3) he cannot claim the protection
of s. 12(1) by merely offering to pay or even paying all arrears
due from him when the court is about to pass a decree against
him.
In Vora Abbasbhai Alimahomed v. Haji Gulamnabi Haji
Safibhai(') it was pointed out thats. 12(1) of the Act applied
to a tenant who continued to remain in occupation even after
the expiry of·the contractual tenancy so long as he paid or was
ready and willing to pay the amount of the standard rent and
permitted increases. ·The. protection was howsoever available to a
tenant subject . to the provisions of s. 13 .and to the limitations
contained ins. 12(2) and s. 12(3)(a) of the Act.
In Mrs. Manorama Masurekar v. Mrs. Dhanlaxmi G. Shah
and another(') rent was in arrears for a period of more than
six months and the tenant neglected to make payment of the
same within one month of the notice under s. 12(2). There the
rent was payable by the month and there was no dispute regarding the amount of the rent. It was held that if the conditions of
sub-s. (3)(a) of s. 12 were satisfied the tenant could not claim
any protection from eviction by tendering the arrears of rent after
the expiry of one month from the service of notice under sub-s.
(2). It was observed :
"It is immaterial whether the tender was made before
or after the institution of the suit.
In a case falling
within sub-s. (3)(a), the tenant must be dealt with under
the special provisions of sub-s. (3)(a), and he cannot
claim any protection from eviction under the general
provisions of sub-s. (l)."
As already noted, if sub-s. (3)(a) is not attracted, the tenant,
if he is in arrears, cannot sit quiet and offer to pay all the amount
due from him at the time of the hearing of the suit so as to get
the protection of ;;, 12(1). To be within the protection of subs. (1) where he raises a dispute about the standard rent payable,
he must make an application to the court under sub-s. (3) of s. 11
and thereafter pay or tender the amount of rent and permitted
(1) [1964] 5 S.C.R. 157.
(2) [1967] I S.C.R. 135.
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increases, if any, specified in the order made by the Court. If
he does not approach. the court under s. 11 (3), it is not open to
him thereafter to claim the protection of s. 12(1).
The case clearly does not come within s. 12(3)(b).
To be
within the protection of that provision, the tenant must not only
pay all the arrears due from him on the first day of hearing of
the suit, but he must thereafter continue to· pay or tender in
court regularly the rent and the permitted increases till the suit
is finally decided. Before the date of the suit, the appellant was
·entitled to a credit of Rs. 104-5-3; the total payihents up to
the date of the first hearing including the sum of Rs. 1,000 come
to Rs. 1,554-5-3, The. amounts due from him. up to that 'date
were:
(a) rent at the rate of Rs. 27
per month for 48 months.
Rs. 1296-0-0
(b) permitted increases from
1-4-54 to 1-9-56.
61-3-9
(c) taxes.
81-0-0
(d) Interest on arrears at 9% p.a.
123-3-0
making a total of
Rs. 1561-6-9
Moreover, there was failure on the part of the appellant to pay
or tender in court the amounts which fell due from the 1st of
October
1956
to
the
1st
of
March,
1957. Thus,
leaving
out
of
consideration
the
question
of
costs
awarded
against
him
under the decree,
the
appellant
cannot get the protection under s. 12(3)(b) of the Act. A faint
attempt was made to raise the pdint about the invalidity or the
notice of ejectment on the plea that the same had to comply with
s. 12(2) of the Act. This is clearly fallacious as the said section
merely lays down the manner in which a notice· of demand of
standard rent and permitted increases has to be made.
The contentions raised on behalf of the appellants are therefore without any merits and the appeal is dismissed with costs.
G.C.
Appeal dismissed.