# SUSHILA KASHINATH DHONDE & ORS v. HARILAI. GOVINDJI BHOGANI & ORS

- **Citation:** [1970] 2 S.C.R. 950
- **Court:** Supreme Court of India
- **Decided:** 1968-12-02
- **Bench:** J.M. Shelat, C. A. Vaidial!Ngam, I. 0. Dua
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/sushila-kashinath-dhonde-ors-v-harilai-govindji-bhogani-ors-4889
- **Pages:** 21

## Headnote

Bombay Rent• llo!el and Lodgin' Houses Rates Control Act 1947
(Bom. 57 of 1947), ss. 18(3) and 28(1)-Loan advanced by prospective tenant for· construction of building-Deed of charge as contemplated
by's. 18(3) executed between partie~Premtses not Jet out to persun ad.
vancing money-Suit for money advanced whether one under s. 28 of
Act-Relationship of landlord and tenant whether necesrory-Meaning of
lVords "any claim or question arising out of this A ct br any of it.r provisions"-lurtsdiction of Court of S1nall Causes.
Respondeni no. 1 us plaintiff instituted a suit in the court of Small
Ciit1'eS at Bombay against respondent no. 2 and its three partners respondents 3 to 5. The appellants herein were also impleaded as defendants.
!\CCording to the ~:a!nt respondents 2 to .s were con;itru~ a building
In Greater Bombay with the purpose of letting out portions of It to tenanls.
Desiring to take a partion of the building on a monthly tenancy respondent no. 1 advanced a sum of Rs. 12,500 as a loan towards tho construction· of the- building. A deed of charge as c:>ntemplated by s. 18(3) of
the· Bombay Rents, Hotel and Lodging Home Rates Control Act,
1947
was e~~ut~d between the parties and registered with the Sub-Registrar of
Bombay. · However after the bttllding was comple~ respondents 2 to S
did not let any portion to respondent no. 1 and, further, they sold the
building to .the appellants. The appellants having purchased the building
burdened with the charge for the loan advanced by respondent no. 1 w"e
also·. according to respondent no. 1, liable to repay the said amount with
4% interest thereon. The Court df Small Causes decreed the suit; so did
the first appellate court. The High Court rejected the appellant's pe.tition under Art. 227 of the Constitution. Appeal in this Court was filed
by special leave. The contentions of the appellants were (i) that the relationship between the parties was not one of landlord and tenant and there·
fore the suit was outside ~he jurisdiction of the court of Sma11 Causes
under s. 28 of the Act; (ii) that the charge created by the deed executed
between respondent no. I and respondents 2 ro 5 did not give rise to "any
claim or question arising out of this Act or any of its provisions" but was
based on contract. and 'for this reason also the court of Sma11 Causes had
no juri"Sdiction under s. 28 of the Act to entertain and deal with the pro~
ceedings.
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HELD: (i) Having regard to the relevant aspects and the provisions
of s. 18(3) ands. 28( I) it is not necessary that there should be a relationship of landlord and tenant in res(>C'.'t of all the matters covered by
s. 28(1) of the Act, so as to give jurisdiction to the Court of Small Causes.
One type of action contemplated under that section viz., a suit or proceeding for recovery of rent or possession df any premises to which any of the
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provisions of Part II apply may be between a landlord and a tenant; but
in respect of·the other matters dealt with in that sub-section,:it is not
nece:isary that the relationship of landlord and tenant shoul<l exist between
the parties before the court. [958 B-C]
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SUSH!LA V. HA RI LAL
951
Shivaling Gangadhar v, Navnitlal Amritlal, I.L.R. ( 1958) Bom. 890,
Bishan' v. Maharashtra W. & G. Co. (1967)
B.L.R.
229 and Bombay
Grain Dealers v. Lakhmichand, (1967) 71 Bom. L.R. 179, referred to.
lnzpJrters and Manufacturers Ltd. v. Pheroze Frarnrose Taraporewala,
[1955] S.C.R. 226, applied and explained.
(ii) A perusal of the various clauses elf the agreement in the present
case clearly showed that the loan given by the first respondent to :respondents 2 to 5 was for the purpose of financing the erection of the building
on the land in question held by the landlards as owners and that the agreement was in writing and had been registered.
It also included the various
conditions in s. 18(3). Therefore it was clear that the arrangement by
way of an adv·.111ce of the construction loan and conditions impos

## Text

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950
SUSHILA KASHINATH DHONDE & ORS.
v.
HARILAI. GOVINDJI BHOGANI & ORS.
October 1 7, 1969
[J.M. SHELAT, C. A. VAIDIAL!NGAM AND I. 0. DUA, JJ.]
Bombay Rent• llo!el and Lodgin' Houses Rates Control Act 1947
(Bom. 57 of 1947), ss. 18(3) and 28(1)-Loan advanced by prospective tenant for· construction of building-Deed of charge as contemplated
by's. 18(3) executed between partie~Premtses not Jet out to persun ad.
vancing money-Suit for money advanced whether one under s. 28 of
Act-Relationship of landlord and tenant whether necesrory-Meaning of
lVords "any claim or question arising out of this A ct br any of it.r provisions"-lurtsdiction of Court of S1nall Causes.
Respondeni no. 1 us plaintiff instituted a suit in the court of Small
Ciit1'eS at Bombay against respondent no. 2 and its three partners respondents 3 to 5. The appellants herein were also impleaded as defendants.
!\CCording to the ~:a!nt respondents 2 to .s were con;itru~ a building
In Greater Bombay with the purpose of letting out portions of It to tenanls.
Desiring to take a partion of the building on a monthly tenancy respondent no. 1 advanced a sum of Rs. 12,500 as a loan towards tho construction· of the- building. A deed of charge as c:>ntemplated by s. 18(3) of
the· Bombay Rents, Hotel and Lodging Home Rates Control Act,
1947
was e~~ut~d between the parties and registered with the Sub-Registrar of
Bombay. · However after the bttllding was comple~ respondents 2 to S
did not let any portion to respondent no. 1 and, further, they sold the
building to .the appellants. The appellants having purchased the building
burdened with the charge for the loan advanced by respondent no. 1 w"e
also·. according to respondent no. 1, liable to repay the said amount with
4% interest thereon. The Court df Small Causes decreed the suit; so did
the first appellate court. The High Court rejected the appellant's pe.tition under Art. 227 of the Constitution. Appeal in this Court was filed
by special leave. The contentions of the appellants were (i) that the relationship between the parties was not one of landlord and tenant and there·
fore the suit was outside ~he jurisdiction of the court of Sma11 Causes
under s. 28 of the Act; (ii) that the charge created by the deed executed
between respondent no. I and respondents 2 ro 5 did not give rise to "any
claim or question arising out of this Act or any of its provisions" but was
based on contract. and 'for this reason also the court of Sma11 Causes had
no juri"Sdiction under s. 28 of the Act to entertain and deal with the pro~
ceedings.
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HELD: (i) Having regard to the relevant aspects and the provisions
of s. 18(3) ands. 28( I) it is not necessary that there should be a relationship of landlord and tenant in res(>C'.'t of all the matters covered by
s. 28(1) of the Act, so as to give jurisdiction to the Court of Small Causes.
One type of action contemplated under that section viz., a suit or proceeding for recovery of rent or possession df any premises to which any of the
H
provisions of Part II apply may be between a landlord and a tenant; but
in respect of·the other matters dealt with in that sub-section,:it is not
nece:isary that the relationship of landlord and tenant shoul<l exist between
the parties before the court. [958 B-C]
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SUSH!LA V. HA RI LAL
951
Shivaling Gangadhar v, Navnitlal Amritlal, I.L.R. ( 1958) Bom. 890,
Bishan' v. Maharashtra W. & G. Co. (1967)
B.L.R.
229 and Bombay
Grain Dealers v. Lakhmichand, (1967) 71 Bom. L.R. 179, referred to.
lnzpJrters and Manufacturers Ltd. v. Pheroze Frarnrose Taraporewala,
[1955] S.C.R. 226, applied and explained.
(ii) A perusal of the various clauses elf the agreement in the present
case clearly showed that the loan given by the first respondent to :respondents 2 to 5 was for the purpose of financing the erection of the building
on the land in question held by the landlards as owners and that the agreement was in writing and had been registered.
It also included the various
conditions in s. 18(3). Therefore it was clear that the arrangement by
way of an adv·.111ce of the construction loan and conditions imposed therein
and the mannor in which the deed of charge had been executed were in
accordance with s. 18(3) of the Act and the arran~ement was one permissible under that sub-section. [964 D-E]
Having due regard to the nature of the transaction entered into be~
tween the parties viz., the deed of charge and the provisions of s. 18(3)
read with s. 28 of the Act, it must be held that the subject matter of the
proceedings invited by the plaintiff related to claims and questions arising
out of the Act.
The question regarding the nature of the
transaction,
whether it is saved bys. 18(3) of the Act, and the ru.ture of the reliefs
to be granted to the plain tiff are all claims or questions arising out elf the
Act and can be dealt with only by the special court constituted under
s. 28 of the Act.
No doubt the deed of charge furnishes the cause of
action; but its legality, validity and binding nature and other incidental
matters connected therewith
are all questions
arising
out of the Act.
Accordingly the contention of the appellants that the 'rights of the plaintiff
did not flow from the Act or any of it. provisions but from the contract,
could not be accepted.
[965 B-DJ
In re Hawke. Ex. Parte Sott, L.R. 16 Q.B.D. 503, Thompson cl Sons
v. North Eastern Marine Engineering Company,
L.R. [1903]1 K.B.D.
428 and Government of Gihra/ter v. Kenney, L.R. [1956] 3 All. E.R. 22,
referred to.
Union of India v. S.T. cl C. Co. A.J.R. 1969 S.C. 488, followed and
applied.
C1v1L APPELLATE JuRrso1cTION : Civil Appeal No. 1341 of
1969.
Appeal by special leave from the judgment and order dated
December 2, 1968 of the Bombay High Court in Special Civil
Application No. 2545 of 1968.
R. D. Hattangadi. S. P. Oka, S. V. Tambvekar and A, G.
Ratnaparkhi, for the appel)ants.
H
N F. S. Nariman, S. H. Bhojani and /. N. Shroff, tor respondent
0, 1.
R. R. Kapur, for respondents Nos, 2 to 5.
952
SUPREME COURT REPORTS
[1970] 2 S.C.R.
The Judgment of the Court was delivered by
A
Vaidialingam, J.
This appeal, by special leave, by defendants
5 to 7, is directed against the order dated December 2, 191i8 of
the Bombay High Court in Special CiVJ1 Application No. 2545 of
1968 filed by the appellants under Art. 227. The circumstances
lead~'lg up to the fihng by the appe!lants of the Special Civil
B
Application in the High Court may be briefly mentioned.
Respondent N,, 1, as plaintiff, instituted Rent Act Suit No.
I 784/6206 of 1963 in the Court of Small Causes at Bombay
against Jayantilal Dayalal & Co., respondent No. 2 herein and its
three partners, respoindents 3 to 5 who were defendants 1 to 4.
The appellants herein were impleaded as defendants 5 to 7.
According to the plaintiff, respondents No. 2 to 5 were the owners
· oi an open plot of land known as Jalaram Nagar, situate in Greater
Bombay and were do\ng business of construction. The said defendants represented to the plaintiff that they were putting up a
building in the said property accordin!l to the plans and specificati"ns submitted to the Bombay Mumcipality.
The plaintiff. applied to the defendants to let to him, on .the basis of a monthly
tqnancy, a portion of the building to be constructed as soon as the
building was ready for occupation.
Defendants 1 to 4 agreed to
do so on the plaintiff advancing a sum of· Rs. 12,500 as Joan
towards construction and on his executing a deed of charge, in
accordance with the provisions of the Bombay Rf\lltS, Hotel and
Lodging House Rates Control Act, 1947 (Bombay Act No. LVII
of 1947) (hereinafter called the Act}.
The plaintiff agreed to
those conditions and accordingly advanced a sum of Rs. 12,500 to
defendants 1 to 4 on August 12, 1959 and the said defendants
executed a deed of charge in favour of the plaintiff on the said
date, which deed of charge was also registered with the Sub Registrar of Bombay on the same day.
Defendants 1 to 4 srarted construction of the building in question and though it was completed
they failed to Jet out the said premises to the plaintiff in spite of
the provisions to that effect in the deed of charge of Au~ust 12,
l.959. On the other hand, the said defendants let out the same
to some third parties. co1ntrary to and in breach of the provisions
contained in the deed of charge. According to s. 18 of the Act.
defendants I to 4 were bound and liable 10 complete the construction of the building within a period of 2 years from the date of
the agreement and were also bound to Jet out the said premises to
the plaintiff within the said period.
As dcleindants 1 to 4 had
failed to carry out the obligation cast 011. them by the Act, the
plaintiff had become entitled to the return of the sum of Rs. 12,500
with interest at 4% per an'.num from August 12, 1959 till the date
of ·payment.
The deed of charge complies with all the requirements of s. 18 of the Act and under the said Act, the loan for
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StJSHILA r. HARILl\L CV11idi11/ingam, J.)
953
coustruction of Rs. 12,500 together with 4t1teresl due is a charge
on the entire building as well as on the entire interest of the said
defendants in the land on which the building has been put u131
The appellants, who are defenda1nts 5 to 7 in the suit had purchased
the property from defendants 1 to 4 and as the amount repayable
to the plaintiff with interest is a charge on the property, · those
defendants are also bound and liable to pay the amount together
with interest.
As the disputes between the parties arose out of
the ·provisions of the Act, the Court of Small Causes where the
suit has beet11 instituted has jurisdiction to try and entertain. the
suit.
On these averments, the plaintiff prayed for a declaration
that the sum of Rs. 12,500 given by him as construction loan shall
be a charge on the loan as well as the buildings put up thereon
and that the plaintiff is entitled to recover from the defendants
the amoll/!l.ts mentioned in the plaint together with further interest
and that in default the property be sold under the direction of the
Coun and that liberty be given to obtain a personal decree against
the defendants in case the full amount is not recovered by sale of
properties.
The plaintiff also asked for certain other consequential reliefs by way of injunction and appointment of receiver.
Respondents 2 and 3 did not file any written statement, but
respondeints 4 and 5 contended tllat the Court of Smal! Causes has
no jurisdiction to try the suit in view of the pecuniary value given
in the plaint.
They had also denied the receipt of the slllll of
Rs. 12,500.
They further pleaded that the deed of charge referred
to by the plaintiff had been executed only by respondent No. 3
in collusion with the plaintiff and that it is a sham and colourable
document.
They further contended that the plaintiff was
not
entitled to any reliefs by way of charge or for recovery of the
nmounts.
The appellants in their original written statement pleaded that
there was no privity of cqIJ.tract between them and the plaintiff in
respect of the suit claim.
While admitting that they had purchased
the property from defendants 1 to 4 on October 24 1960 they
pleaded that their vendors had already Jet out the property to
various tenants and that they were not aware of any deed of charge
having been executed in favour of the plaintiff.
They further
contended that the plai1ntiff was aware of these facts, and nevertheless, he has filed the suit without any bona fides.
In an additional
written statement filed by them, they raised the objection that the
Court of Small Causes has no jurisdiction to entertain the suit
The plaintiff seeks a declaration of charge over the suit propertie~
and such a declaration relating to immovable property cannot be
gran~ed by a Court of Small Causes, by virtue of s. 19 of the
Pres1de~cy Small Ca~ses Court Act.
The various avennents in
the plamt and the reliefs asked for do not establish any cause of
954
SUPREME COURT REPOR rs
(1970] 2 S.C.R.
action arising under any of the provisions of the Act, as such. The
reliefs asked for are on the basis of an agreement of charge stated
to have been executed by defendants I to 4 and the cause of action
is on the basis of such agreement and not under any provisions
of the Act.
The Court of Small Causes, Bombay, by its judgmclll dated
March 23, 1968 overruled the objections raised on behalf of the
defendants and decreed the suit as prayed.
That Court found
that the plaintiff had advanced as construction loan the sum of
Rs. 12,500 and that the deed o~ charge, dated August 12, 1959
had been properly executed by de.fendants I to 4.
The trial Court
iurther held that defendants 5 to 7 who are the purchasers of the
property from defeindants I to 4 were also bound by the registered
deed of charge, dated August 12, 1959. The Court further held
that even assuming that defendants 1 to 4 did not disclose the
transaction between them and the plaintiffs, defendants 5 to 7, as
purchasers of the property over which a charge had been created
by registered document, were bound by the said charge and their
plea that they had 1no notice cannot be accepted.
Regarding the
objection raised by defendants 5 to 7 to the jurisdiction of the
Court to entertain the suit, the trial Court after finding that the
deed of charge dated August 12, 1959 complies with all the
requirements of s. 18 ( 3) of the Act held that the suit for recovery
of the construction loan is cognizable under s. 28 of the Act, being
a claim arising out of the provisiwis of s. 18 ( 3) of the Act.
Finally, that Court granted a decree as against all the defendants.
The appellants challenged this decision by filing an appeal
under s. 29 of the Act before the Full Court of Small Causes,
being Appeal no. 400 of 1968. The Full Court agreed with all
the findings aind conclusions arrived at by the Trial Judge and by
its judgment dated August 12. I 968 dismissed the appeal.
The
appellants challenged both the judgments by filing Special Civil
Application No. 2545 of 1968 before the Bombay High Court
. under Art. 227.
The learned Single Judge, by his order dated
December 2, 1968 summarily rejected the same.
Mr. Hattangadi, learned counsel for the appellants, raised two
contentiO/llS ; (i) An application or a claim to be cognizable by
the Special Court which had been conferred jurisdiction under
s. 28 of the Act, must be a proceeding between a landlord and a
tenant.
In this case, that relationship does not exist between the
partfos and hqnce the Court of Small Causes had no jurisdiction
to entertain the suit.
(ii) The ~!aim for a charge over the properties made by the plaintiff in the suit arises under a deed o~
contract evidenced by the charge dated August 12,
19 5 9 and
hence the proceedings initiated by the plaintiff before the Court
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SUSHILA v. HARILAL (Vaidialingam, /.)
955
of Small Causes cannot be considered to relate to "any claim or
questiotn arising out of this Act or any of its provisions" and therefore the Court of Small Causes has no jurisdiction under s. 28 to
entertain and deal with the proceedings.
Mr. Nariman, learned counsel for the plaintiff-first respondent,
on the other hand, pointed out that there is intriinsic evidence in
the Act itself to show that it is not necessary that every proceeding
contemplated under s. 28 of the Act should be between a landlord
and a tenant.
Counsel also urged that a claim for enforcing a
charge in respect of. a construction loan advanced by a party and
for the recovery thereof arises out of the provisions of the Act
because without such provisions such a claim could never have
been made and the transaction on which the claim is based could
never have been entered into.
Mr. Nariman further referred us
to s. 18 ( 1) of the Act which prohibits a landlord or any person
acting (10 his behalf from receiving the various kinds of amounts
mentioned therein, but permits, under s. 18 ( 3) the type of arrangement evidenced by the deed o.f charge dated August 12, 1959.
The reliefs asked for by his client in the suit, counsel pointed out,
relate to claims arising out of the Act viz., s. 18 ( 3) and therefore
the Court of Small Causes was the proper Court under s. 28 where
such proceedings could be initiated.
Both the cou,nsel have referred us to certain decisions in respect
of the two aspects referred to above which will be adverted to
later.
In support of his first contention, Mr. Hattangadi drew our
attention to the absence of any reference to a 'tenant' in s. 18 ( 3)
o.f the Act.
In this case, according to the counsel, the relationship betweo0 the parties can only be that of a debtor and a creditor
and not that of a landlord and tenant.
Proceeding further the
counsel urged that under s. 28 the parties must be in the relationship of landlord and tenant.
That relationship not existing in
this case, the ju,isdiction conferred on a Court of Small Causes,
under s. 28, cannot be invoked.
It is now necessary to refer to certain provisions of the statute
which will have a bearing on the question as to whether the
relationship of landlord and tenant should exist to
invoke the
jurisdiction of the Court of Small Causes under s. 28 as also on
the question as to whether the claim made by the plaintiff in the
suit is a claim arising out c.f the Act.
Section 5 defines the various expressions. Clauses ( 3) and ( 11)
of s. 5 define the expressions 'landlord' and 'tenant'.
Particularly,
sub-cl. ( c) of cl. 11 takes in even any member of the tenant's
family residing with him at the time of 'Or within three months
956
SUPREME COURT REPORTS
[1970] 2 S.C.R.
immediately preceding his death as may be decided in default of
agreement by the Court.
Sub-s. (2) of s. 18 gives a right to
"any person", who has paid one or other of the types of amounts
mentioned therein, to recover from the landlord those amounts.
That sub-section again gives a right to a te>nant who may have paid
any of those amounts to deduct such amounts from the rent payable by him to a landlord.
"Any person", mentioned in sub-s.
(2) of s. 18, will not have the relationship Gf a tenant to the Iaindlord from whom he seeks to recover the amount.
Nevertheless,
he can certainly seek to recover the amount as a claim arising out
of the Act in a Court of Small Causes, under s. 28. Sub-s. (3)
of s. 18 which permits a payment being made to a landlord for
the pu·pose mentioned therein, refers to '·any payment made under
any agreement. ... by any person to a landlord by way of a Joan".
If such person seeks to recover back the construction Joan provided
the relief can be considered to be a claim arising out of. the Actwhich question will be <lealt with by us later-he C!\D. approach
the Court of Small Causes under s. 28. The two other material
provisions which require to be noted are s. 18(3) ands. 28(1)
of the Act, which are set out below :
"18 ( 3). Nothing in this section shall apply to any
payment made under any agreement entered into before
the first day of September 1940 or to any payment made
by any person to a landlord by way of a loan, for the
purpose of financing the erection of the whole or part of
a residential building or a residential section of a building on the land held by him as an owner, a lessee or in
any other capacity, entitling him to build o,n such land,
under an agreement which shall be in writing and shall,
notwithstanding anything contained i:n the Indian Registration Act, 1908, be registered.
Such agreement shall
inter alia include the following conditions, namely :-
(i) that the landlord is to let to such person the
whole or part of the building when completed for the
use of such person or any member of his family;
(ii) that the rate of interest on such loan shall not
be less than four per cent, per annum;
(iii) that such loan shall be repayable by the landlord within a period of tein years from the date of the
execution of the agreement or within a period of six
months from the date of the termination of the tenancy
by the landlord, whichever period expires earlier;
(iv) that the amount of the loan shall be a charge
on the entire building and the eintire interest of the
landlord in the land on which such building is erected :
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SUSHILA v. HARILAL (Vaidialingam, J.)
957
Provided that if the Joan has been advanced by more
than one person, all such persons shall, potwithstanding
anything contained in any law for the time being in force,
be entitled to a charge on the entire building aind the
entire interest of the landlord in such land rateably
according to the amount of the Joan advanced by each
of such persons;
( v) that the landlord shall use the amount of the
loa,n for the purpose of erecting the whole or part, as
the case may be, of the residential building and for no
other purpose; and
(vi) (a) that the erection of the building shall be
completed within a period of two years from the date
of the execution of the agreement or if the agreements
executed are more than one, from the date of the execution of the first of such agreements :
Provided that the said period of two years may be
extended to a further period 111ot exceeding one year with
the sanction of the Collector;
(b) that if the erection of the building is not completed within the period of two years or within the
extended period specified in the proviso to clause (a),
the loan shall be repayable forthwith to the person
advancing the same with interest at the rate of four per
cent per ann:um."
"28 ( 1). Notwithstanding anything contained in any
law and notwithstanding thar by reason of the amount
of the claim or for any other reason, the suit or proceedi:ng would not, but for this provision, be within its
jurisdiction, (a) in Greater Bombay, the Court of Small
Causes, Bombay;
(aa) in any area for which a Court of Small Causes
is established under the Provincial Sma]] Cause Courts
Act, 1887, such Court and
(b) elsewhere, the Court of the Civil Judge (Junior
Division) having jurisdiction, in the area in which the
premises are situate or, if there is no such Civil Judge
the Court of the Civil Judge (Senior Division) having
ordinary jurisdiction,
shall h~ve jurisdiction to entertain and try any suit
or proceedmg between a landlord ·and a tenant relating
to ~he recovery of re~t .°~ possession of any premises to
which any of the prov1s10ns of this Part apply and to
decide any application made under this Act and to deal
958
. SUPREME COURT !!.EPORTS
[1970] 2 S.C.R .
with any claim or question arising out of this Act or
any of its provisions and subject to the provisions . of
sub-section (2) no other Court shall have jurisdicti(\Jl
to entertain any such suit, proceeding or application or
to deal with such claim or question."
Having due regard to the aspects mentioned above and the
provisions of ss. 18(3) and 28(1), in our opinion it is not necessary that there should be a relationship of landlord and tenant in
respect of all the matters covered by s. 28 ( 1) of the Act, so as to
give jurisdiction to the Court of Small Causes.
No doubt, one
type of action contemplated under that section, viz., a suit or
proceeding for recovery of rent or possession of any premises to
which any of the provisions of Part II apply may be between a
landlord and a tenant; but in respect of the other matters dealt
with ih that sub-section, it is not necessary that the relationship
of landlord and tenant should exist between the parties before the
Court.
Mr. Hattangadi referred us to certain decisions which, according to him, will support his contention that the essential requisite
to attract s. 28 ·is the relationship of landlord and tenant.
He
referred us to the decisio,n of Chagla, C.J., in Shivaling Gangadhar
v. Navnitlal Amrit/a/('). That was a suit by a landlord against
his tenant in the City Civil Court complaining that the tenant had
used the residential J)(emises let to him as business premises by
installing cutting and rU!ing machines: · The landlord prayed for
damages as also for a mandatory injunction for removal of the
machines.
The trial Court granted to the plaintiff the reliefs
asked for by him.
On appeal by the tenant, the Assistant Juc!ge,
Poona, held that the City Civil Court had μo jurisdiction to try
the suit as the claim fell under the Act and therefore the Special
Court set up under s. 28 alone could entertain the suit.
In this
view the Assistant Judge directed the return of the plaint to the
proper Court.
In the revision filed by the landlord before the
.High Court, the learned Chief Justice held that the claim or question ~n the suit instituted by the plaintiff related to the liability of
the tenant for damages and for an injunction and that such a claim
could never arise out of the Act and therefore the City Civil Court
had jurisdiction to entertain the suit. The question as to whether
under s. 28 it is necessary that the relationship between the parties
to the proceedinl! should be that of a landlord and tenant did not
arise for consideration at all in the decision dealt with above.
Admittedly the suit was by a landlord against his tenant, and the
oinly question was regarding the jurisdiction of the Civil Court to
entertain the suit, as instituted by the landlord.
(I) I.L.R. [1958] Born. 890.
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SUSHILA v. HARILAL (Vaidialingam, J.)
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Tue next decision referred to by Mr. Hattangadi is Bishan v.
Maharashtra W. & G. Co. (1)
That, again, was a suit by certain
tenants in the City Civil Court against their landlords for
an
i:njunction restraining the latter from causing obstruction to a
passage leading to the shops occupied by the tenants.
The landlords contended that the suit being essentially between the landlords and tenants for recovery of possession of the premises let
out to the tenants, it related to claims or questio.ns arising out of
the Act.
On this basis they contended that the Court of Small
Causes, Greater Bombay, was exclusively entitled to entertain and
try the suit under s. 28 o~ the Act and the City Civil Court had
no jurisdiction.
The Trial Court over-ruled the objection of the
landlords and held that it had jurisdictio.11 to try the suit as it did
not fall under s. 28 ot the Act, and as it did not relate to any
claim or question arising out of the Act, as contemplated by that
section.
When the matter came up before the High Court in
revision, at the instance of the laindlords, the learned Judge, after
referring to the relevant part of s. 28 of the Act, states at p. 231
as follows :
"It is manifest that the following conditions must be
satisfied in order that a suit or proceeding should be
triable by the Courts of exclusive jurisdiction mentioned
in cl,<;. (a), (aa) and (b) of sub-s. (1) of s. 28:
( 1) The suit or proceedi:ng must be between a landlord and tenant.
Unless this condition is satisfied, s. 28
can have no application. If this condition is satisfied,
it is further necessary that either
( 2) the suit or proceeding must relate to the recovery
of ( i) rent or (ii) possession of premises to which the
provisions of Part II of the Act apply, or
( 3) Some application must have been made under
the Act, or the suit or proceeding must involve a claim
or question arising out of the Act or out of any of its
provisions.
If in addition to the first condition either of the two
other conditions is satisfied, the suit would lie in the
Court of exclusive jurisdiction."
Having stated as above, the learned Judge held that the first co:ndition in that case was satisfied because the suit was between landlords and tenants.
The third condition, mentioned in the above
extract,· did not further arise for consideratiqn and the learned
Judge discussed the second contention mentioned above.
That
(1) (1967) B.L.R. 229.
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discussion is not really necessary.
The learned Judge ultimately
held that the City Civil Court had jurisdiction to entertain the
suit.
Mr. Hattangadi quite ~aturally placed considerable reliance on
the statement of the learned Judge, extracted above, particularly
to cqndition no. 1 which, according to the learned Judge must be
satisfied to attract s. 28. · We are not inclined to agree with the
reasoning of the learned Judge regarding the first conditi~ extracted above, viz., that the suit or proceeding must in all cases
be between the landlord and the tenant and unless that condition
is satisfied, s. 28 could have ~o application.
We have already
indicated that one type of action contemplated under s. 28 is a
suit or proceeding relating to the recovery of rent or possession
of any premises as between a landlord and tenant.
But there are
various other matters dealt with in s. 28 (1) iin respect of which
also the Special Court referred to therein has been given jurisdiction. · For instance, a clrum or question arising out of the Act or
any of its provisions need not necessarily be one between a l3j11dlord
and a tenant, but nevertheless the Special Court will have jurisdiction to deal with such a claim or question under s. 28 ( 1).
Another decision to which our atte;ntion was drawn is that of a
Division Bench of the Bombay High Court in Bombay Grain
Dealers v. Lakhmichand('). In that decision a tenant of a terrace
filed a suit in the City Civil Court against his landlord alleging
that the latter had prevented him from e,ntering into and occupying
the terrace for the purpose of his business. The tenant asked for
a declaration that he was entitled to possession and occupation of
the terrace and also for an injunction restraining the above laindlord
from obstructing him in the enjoyment of the terrace. Having due
regard to the nature of the suit therein which was treated as one
for possession of the terrace from the l~dlord, it was held that
the claim fell within s. 28 and therefore the City Civil Court had
no jurisdiction to entertain the suit.
Referring to s. 28 the learned
Judges said, at p. 192 :
"It commences with the words "Notwithstanding anything contained ijil any law" and it purports to vest
special jurisdiction in Courts named in els. (a) and (b)
of sub-s. ( 1) in respect of matters enumerated by it.
It
gives jurisdiction to these Courts ( 1 ) to entertain (a)
any snit or (b) proceeding, between a l3j11dlord and a
tenant, (2) relating to the recovery of rent or possession
of any premises to which the provisions annly, (3) to
decide any application made under this Act and ( 4) to
(I) (1967) 71 Born. L.R. 179.
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SUSH!LA v. HARILAL (Vaidialingam, J.)
961
deal with (a) any claim or ( b) question arising out of
the Act or any of its provisions. There is a further
clause which excludes the jurisdiction of any other
Court in respect of any such (a) suit, (2) proceeding,
( 3) application or ( 4) deal with such claim or question."
The observations extracted above, in our opinion, do not support
the co,ntention of the learned counsel that in all proceedings under
s. 28 parties must be arranged on opposite sides as landlord and
tenant.
In fact, the above decision had no occasion to consider
any such question because, admittedly, the parties therein were
landlords and toμants.
We may also refer to a decision o.f this Court in Importers and
Manufacturers Ltd. v. Pheroze Farmrose Taraporewale(').
The
landlord in that case had instituted the suit in the Court of Small
Causes, Bombay, against his tenant and the sub-tenant for recovery
of possessio!ll of the premises and also for compensation. According to the landlord the tenant had sub-let the premises without his
previous consent and contrary to the terms of the tenancy.
The
trial Court granted a decree in favour of the plaintiff.
The defendants filed an appeal under s. 29 o.f the Act ·and before the appellate Court they raised an additional plea that the Court of Smal!
Causes had no jurisdiction to entertain the suit in so far as it
related to the second defendant, the sub-lessee.
The Appellate
Bench of the Small Causes Court dismissed the appeal.
The sublessee moved the High Court unsuccessfully in revision under
s. 115 C.P.C.
He came up to this Court by special leave and the
only contention raised was that the Small Causes Court had no
jurisdiction to entertain the suit under s. 28 of the Act.
The contention of the sub-lessee was that his sub-lease has .not been
recognized by the landlord and there was no relationship of fandlord and tenant between him and the plaintiff and therefore the
Small Causes Court had no jurisdictio11 to entertain the suit.
After
holding that so far as the plaintiff and the first defendant (the
tenant) were concerned, the suit being between a landlord and
tenant, the 011ly Court competent to entertain- the suit under s. 28
was the Court of Smal! Causes, this Court observed, at p, 230 :
"Section 28 confers jurisdiction on the Court of Small
Causes not only to entertain and try any suit or proceeding between a landlord and a tenant relating to the
recovery of rent or possession of the premises but also
"to deal with any claim or question arising out of this
Act or any of its provisions".
There is no reason to hold
that "any claim or question" must necessarily be c0ne .
between the landlord and the tenant.
In any case, once
(!) [19S31 S.C.R. 226.
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there is a suit between a landlord anq a tenant relat1ng
to the recovery of rent or possession of the premises the
Small Causes Court acquires the jurisdiction not only to
entertrun that suit but also "to deal with any claim or
question arising out of the Act or any of its provisions"
which may properly be rrused in such a suit."
In the above extract, this Court, in our opinion, has clearly laid
down that when the Court of Small Causes under s. 28 of the Act
is invited "to deal with any claim or question arising out of this
Act or any of its provisions" the relationship between the parties
to such proceedings need not be that of a landlord and a tenant.
Mr. Hattangadi no doubt stressed the latter part of the observations
in the above extract wherein, according to him, this Court has
emphasised that in that particular case the suit was between the
landlord-plaintiff and the first-defendant tenant and, in consequence, held that the Small Causes Court had jurisdiction. In
our opinion this is not a proper understanding of the principle
enunciated by this Court.
This Court has categorically held that
the claim or question which the Small Causes Court is called upon
to consider need not necessarily be between a landlord and a
tenant.
After having so held, this Court gave cil)]y an additional
reason for upholding ,he jurisdiction of the Sma]] Causes Court on
the ground that the suit was between the landlord and the firstdefendant who was admitted1y a tenant.
·
Having due regard to the aspects discussed above, the first
contention of Mr. Hattangadi cannot be accepted.
The second contention of Mr. Hattangadi, as noted earlier, is
that the subject matter of the ·suit in question does not relate to
"any claim or question arising out of this Act or any of its provisions" so as to give jurisdiction to the Special Court under s. 28
of the Act.
That is, according to the counsel, the reliefs asked for
by way of a charge on the properties as well as for recovery of
the amount advanced by the plaintiff are founded on the deed of
charge dated August 12, 1959. The argument is that the rights
of the plruntiff sought to be enforced in the suit ftow out of the
contract or are based upon the agreement dated August 12, 1959
and there is no clrum or question ·arising out of the Act or any of
its provisions which require consideration by the Special Court.
He further urged that it may be that parties may enter into the
arrangement embodying the various cooditions mentioned in
s. 18 ( 3), but that does not mean that the clrum, when relief is
sought at the hands of a Court, can be considered to arise cut of
the provisions of the Act or any of its provisions.
Mr. Nariman learned counsel for the plaintiff-first respondent,
as already noted, controverts this proposition advanced on behalf
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SUSHILA v. HARILAL (Vaidialingam, J.)
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of the appellant.
Mr. Nariman pressed before us that the deed
of charee dated August 12, 1959 is one permitted bys. 18(3)
provided it satisfies the requirements ~entioned in that sub-se~ti~n.
He further pointed out that any rehef asked for by the plam!IJ!',
thon!!h it may be according to the terms o~ the deed of ch~rge, 1s
reaily the enforcement of a claim arising out of the Act. In SllCh
matters, counsel urged that s. 28 ( 1) .not only specifi7ally conf~rs
jurisdiction on the Special Court but it also categoncally de?1eg
jurisdiction of any other Court to entertain anv such proceedmg.
Mr. Nariman has also referred m to certain decisions bearin~ on
the interpretatia.n of the expression "arising out of" to which we
will presently refer.
Before we refer to those decisions,'it is necessary to advert to
the salient features of the deed of charne dated Aup,ust 12. 1959.
The agreement is dated August 12, 1959 and it has been duly
r_egistered on the same day, under the provisions of the In:iian
Registration Act.
That agre>'!ment is entered into beh,·een the
first respondent herein, described as the tenant, and respondents
2 to 5, described as the landlords.
After stating that the landlords
are the owners of the land !mown as Jalaram Nagar and that the
landlords propose to construct the building on the said bnd
according to the plans submitted to the Bombay Municipality, the
agreement states that the tenant applied to the landlords to let out
to him on the basis of monthly tenancy, the accommodation
specified therein, on its being ready for occupation. The landlords
having agreed to grant to the tenant and the tenant havin~ agreed
to take from the landlords a tenancy of the pi;emises in the building wliich was being constructed, at a monthly rental of Rs. 200,
is recited.
The document further proceeds to state that the landlords have calied uoon the tenant to pav the amount of construction loan of Rs. 12,500 and the tenant having according!v paid the
said amount, the receipt cf which was acknowledged and arlmitted
by the landlords. It is specifically stated that the loan was paid
as construction loan towards the construction of the building
in respect of a portion of which was agreed to be rented to the
tenant and the amount of the loan to be utilised by the landlords
fdr the construction of the building.
The interest on the said laan
is mentioned as 4% per annum and the same is to be adjusted in
the manner mentioned in the agreement.
The agreement further
provides that on completion of the building. the tenant, on being
duly intimated by the landlord, is to take possession of the premises
agreed to be rented to him and the tenant shall become liable to
pav to the landlords the rent according to the further recito.Is in
the document.
There is a stipulation for pavment by the tenant
to the landlord of a monthly rent of Rs. 200.
The landlords
undertake to reoav to the tenant the construction loan of Rs. 12,500
within a period of five years and two and a half months from the
,
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f1970] 2 S.C.R.
date of the agreement and the landlords are to pay in the meanwhile interest at 4% per annum in two six-monthly instalments.
Clause 7 recites that the amount of the Joan shall be a charge
on the entire building and the entire interest of the Iaaidlords in the
land on which the building is constructed in common with other
tenants from whom similar loans have been ta.ken by the landlords
and rateably according to the amounts of loan advanced by each
of such tenants. Till the loan is repaid by the landlords, the tenant
is declared entitled to deduct a sum equivalent to the monthly
rent of Rs.