Mohammed Basheer Ahmed Vs. Hakeem Noorulla Sherief - Court Judgment

Excerpt:
(a) karnataka rent control act, 1961 (karnataka act no. 22 of 1961) - section 18(2) -- landlord accepting rs. 50,000/- as 'advance-deposit' in respect of new building -- tenant demanding adjustment of excess amount more than two months' advance towards arrears of rents --terms of agreement made prior to applicability of part iii of act, held, cannot be interpreted to interfere with original fixation of rent terms, which are not unlawful, not attracting penal provision. ; in all such cases, the monthly rent would be minimal. even financial institutions, including banks, enter into such transactions. such advances/deposits are part of the agreed rent capitalized and paid in a lumpsum at the time large is granted. there is nothing in the act which provides that rents should be received monthly or that agreed rent should not be received in a lumpsum for the part or whole of the lease period, except where fair rent has been fixed for the premises, in which case, not exceeding two months rent by way of advance could only be received by the landlord in terms of the proviso to clause (a) of section 18(1).... ; (b) karnataka rent control act, 1961 (karnataka act no. 22 of 1961) section 29(4) - where first application under was disposed off on payment of arrears, second ia under, considered on merits, held, attracted, the provision. - section 100: [d.v.shylendra kumar,j] second appeal by defendant - suit for recovery - concurrent findings recorded by the trial court as well as the appellate court - held, if the concurrent findings of courts below is contrary to pleading and evidence on record, it is a concurrent error committed by the courts below and in such circumstances, high court can interfere under section 100 cpc to avoid miscarriage of justice. on facts held, it is evident on record that the courts below have not considered the documentary evidence, pleadings and admissions which are against to the plaintiffs case. judgments and decree passed by the courts below were set aside. orderg.p. shivaprakash, j.1. this revision petition is presented by the tenant against the order passed by the trial court on the application filed by the landlord under the provisions, of section 29(4) of the karnataka rent control act, 1961. the trial court had previously allowed the application filed by the landlord under section 29(1) of the act while dismissing the application filed by the tenant under section 18(2) of the said act. the main petition before the trial court was filed by the landlord under section 21(1) (h) and (p) of the act for seeking eviction of the tenant.2. during the pendency of the main petition, an application was filed by the landlord under section 29(1) of the act. the said application was disposed off by the trial court by order dated 7.3.1991 on the ground that the tenant had after filing o the said application paid all the arrears of rent. however, on a second application filed by the landlord under the aforesaid provision the court allowed the application holding that the tenant was in arrears of rent amounting to rs. 4,200/- for the period august, 1990 to february 1991. since the tenant did not comply with the order in terms thereof, the landlord filed the application under section 29(4) of the act.3. in defence to the second application filed by the landlord under section 29(1) of the act, besides the objections, the tenant had filed an application under section 18(2) of the act, contending that the landlord had received a sum of rs. 50,000.- as 'advance deposit' at the time of inception of the tenancy in september 1988 and in terms of the said section he was entitled to adjust the rents payable to the landlord and also ask for refund of the amount collected by the landlord contrary to the provisions of section 18(2) of the act. section 18 of the act is reproduced below:'18. unlawful charges not to be claimed or received.-(1) where the fair rent of a building has been determined-(a) no person shall claim, receive or stipulate for the payment of any sum as premium or pugree or any consideration whatsoever in cash or kind, in addition to such fair rent or save as provided in sections 16 and 17 any rent in excess of such fair rent;provided that the landlord may receive or stipulate, for the payment of an amount not exceeding two months' rent by way of advance;(b) save as provided in clause (a), any premium or pugree or other consideration or any rent paid in addition to such fair rent whether before or after the commencement of this part in consideration of the grant or continuance or renewal of the tenancy of the building after such commencement shall be refunded or returned by the landlord or other person to the person by whom it was paid or at the option of such person otherwise adjusted by the landlord or other person;provided that where before the determination of the fair rent any amount has been paid in excess thereof, the refund or adjustment shall be limited to the amount paid in excess after the date of application for fixing the fair rent.(2) where the fair rent of a building has not been so determined.(a) no person shall after the commencement of this part receive or stipulate for the payment of any sum as premium or pugree or any consideration whatsoever in cash or kind, in addition to the agreed rent;(b) save as provided in clause (a) any sum or consideration paid in excess of the agreed rent whether before or after the commencement of this part in consideration of the grant, continuance or renewal of the tenancy of the building after such commencement shall be refunded or returned by the landlord or other person to the person by whom it was paid or at the option of such person otherwise adjusted by the landlord or other person.(3) any stipulation in contravention of sub-section (1) or sub-section (2) shall be null and void.(4) ..... ..... ....(5) ...... ...... ......' 4. sri v. tarakaram, learned senior counsel for the petitioner-tenant submitted that there was no dispute between the parties that at the inception of the tenancy, the respondent-landlord had received a sum of rs. 50,000/- as 'advance-deposit' and therefore in terms of section 18(2)(b) of the act, the landlord was obliged, to refund or return any sum or consideration paid in excess of the agreed rent to the person by whom it was paid or at the option of such person otherwise adjusted by the landlord.5. section 18 of the act enjoins that no unlawful charges shall be claimed or received by either the landlord or the tenant. the provisions of sub-section (1) of section 18 are applicable to a building where the 'fair rent' has been determined; whereas the provisions of sub-section (2) of section 18 are applicable to a building where 'fair rent' has not been so determined.6. there is no dispute that in respect of the commercial shop in question no 'fair rent' had been determined. therefore, it is only the provisions of sub-section (2) of section 18 which are relevant having a bearing on the rival contentions of the parties. clause (a) of sub-section (2) of section 18 provides that after the commencement of part iii of the act, no person shall receive or stipulate for the payment of any sum as premium or pugree or any consideration whatever in cash or kind, in addition to the agreed rent. clause (b) of sub-section (2) enjoins that any sum or consideration paid in excess of the agreed rent whether before or after the commencement of part iii of the act in consideration of the grant, continuance or renewal of the tenancy, after such commencement shall be refunded or returned by the landlord or other person to the person by whom it was paid or at the option of such person otherwise adjusted by the landlord or other person.7. the premises in question was new at the time when it was leased to the tenant. in the affidavit in support of the application filed under section 29 of the act, the landlord has stated in clear terms that the respondent-tenant was the first one to occupy the newly constructed premises. this is not disputed in the objections filed by the tenant.8. in the proviso to sub-section (2) of section 2 of the act, it is stated that parts ii and iii of the act would not apply to a building constructed after the first august 1957 for a period of five years from the date of construction of such building. if the year of construction of the premises in question were to be taken as 1988 (the respondent being the first tenant having occupied the premises in the year 1988) then the provisions of parts ii and iii would not be applicable to the said building till the year 1993, because section 18 of the act on which the tenant relies occurs in part iii of the act9. however, the learned counsel for the tenant submitted that even though as on the date when the order under revision was made the provisions of section 18 were inapplicable to the premises, as on date the said provisions are attracted and therefore the landlord is obliged to refund/return the excess amount collected by him from the tenant at the time of inception, of the tenancy or at the option of the tenant adjust the same towards rents. this contention of the learned counsel is based on the provisions of clause (b) of sub-section (2) which as noticed above stipulate that except as provided in clause (a) any sum or consideration paid in excess of the agreed rent whether before or after the commencement of the part shall be refunded etc. the learned counsel, therefore, submitted that even though as on the date of inception of the tenancy the receipt of rs. 50,000/- by the landlord by way of 'advance deposit' was not contrary to the provisions of section 18, as on date it would be contrary to the provisions of the said section.10. sri p. shivanna, learned counsel appearing for the landlord submitted that from the conduct of the tenant it is evident that he is a chronic defaulter in payment of rent during the pendency of the petition. he submitted that on the previous application filed by the landlord under section 29(1) of the act demanding arrears of rent of rs. 3,600/-, the tenant paid the entire arrears as demanded and consequently, the court disposed of the said application without passing any further orders thereon immediately thereafter the tenant again defaulted in paying the arrears of rent and therefore a second application was filed under the said provision. he submitted that the defence taken by the tenant for not continuing to pay the rents is totally untenable. he contended that it is not open for the tenant to take up the defence in the manner it is done in the instant case pleading that he paid 'advance-deposit' of rs. 50,000/- to the landlord at the inception of the tenancy and that he is entitled to adjust that amount towards arrears of rent, since on the first application no such defence was taken by the tenant. in this regard he invited my attention to the decision of this court in sudhakar v. lakshamma, : ilr1990kar2269 , wherein this court held that after the court had determined the rate of rent there remains nothing to be determined again, as and when tenant chooses to abstain himself/from paying the rent in terms of provisions of section 29 of the act. section 29(1) of the act directs the tenant to pay all the arrears of rent and continue to pay or deposit any rent which may subsequently become due in respect of the premises. the continuity in the payment of the rent will have to be maintained by the tenant because the payment of rent is a 'must' to participate in the proceedings. this court has observed that there was no question of giving one more opportunity to the tenant because question of any determination of rent due did not arise, when the tenant had not challenged either the quantum of arrears or rate of rent payable by him because the rate of rent had already become determined. the above observation of the court was made in the context of a contention taken by the tenant that whenever there is an application under section 29(4) of the act, the court should go into the question of arrears once again, granting time or 'adjourning' the matter to enable the tenant to explain the cause for delay.11. in the instant case, as already noticed above, on the first application filed by the landlord, the court merely disposed of the application as not pressed and did not give any finding on the said application. it was only on the second application that the court passed a considered order giving its findings.12. section 18(2)(a) of the act forbids a person from receiving or stipulating for the payment of any sum as premium or pugree or any consideration whatsoever in cash or kind, in addition to the agreed rent. whereas section 18(2)(b) provides that any sum or consideration paid in excess of the agreed rent shall be refunded or returned by the landlord to the person by whom it was paid or at his option otherwise adjusted by the landlord irrespective of the facts such excess payment was made whether before or after the commencement of part iii.13. in chunilal parasram v. bom. misc. p. ltd., (1982) 2 k.l.j. 585 this court while construing the aforesaid provisions held that the terms 'in addition to the agreed rent' in clause (a) of sub-section (2) of section 18 and 'in excess of the agreed rent' in clause (b) of the said sub-section have different connotations. so construing, this court ruled that the provisions of clause (b) would not be applicable to a case where the landlord had received any amount in 'addition to the agreed rent' before the applicability of the provisions of part iii of the act.14. the aim of section 18 of the act is to forbid collection of unlawful charges either by the landlord or the tenant. if the parties voluntarily and freely agree to certain terms, which are not unlawful, and enter into a contract in terms of which the landlord receives a considerable amount by way of advance-deposit, as in the instant case, and reduces the monthly rent payable by the tenant, it would be incongruous to hold that such a transaction would be contrary to the provisions of clauses (a) or (b) of sub-section (2) of section 18 of the act. it is a matter of common knowledge that some of the parties would prefer to deposit a big sum with the landlord in consideration of a small sum fixed as monthly rent. in the absence of the deposit, the monthly rent would be very much higher.15. there are any number of instances where the prospective tenants would advance money to the landlords to enable them to construct/modify houses according to their requirements, which money would be treated as advance payment of rent to be adjusted according to the terms agreed upon. in all such cases, the monthly rent would be minimal. even financial institutions, including banks, enter into such transactions. such advances/deposits are part of the agreed rent capitalized and paid in a lumpsum at the time lease is granted. there is nothing in the act which provides that rents should be received monthly or that agreed rent should not be received in a lumpsum for the part or whole of the lease period, except where fair rent has been fixed for the premises, in which case, not exceeding two months rent by way of advance could only be received by the landlord in terms of the proviso to clause (a) of section 18(1).16. such transactions between the parties freely entered into, in my view, cannot be considered as tainted to attract the penal provisions of section 18 of the act because such deposit has to be construed as forming an integral part of the agreed rent.17. in the view i have taken, i hold that stopping of further proceedings and directing the tenant, in the circumstances of the case, to vacate and deliver vacant possession of the petition schedule premises to the landlord are in accordance with law.18. revision petition rejected. however, one month's time is granted to the petitioner-tenant to vacate and deliver vacant possession of the premises to the respondent-landlord subject to payment of all arrears of rent upto date and continuing to pay the rent till the premises are vacated.

Judgment:
ORDER

G.P. Shivaprakash, J.

1. This Revision Petition is presented by the tenant against the order passed by the Trial Court on the application filed by the landlord under the provisions, of Section 29(4) of the Karnataka Rent Control Act, 1961. The Trial Court had previously allowed the application filed by the landlord under Section 29(1) of the Act while dismissing the application filed by the tenant under Section 18(2) of the said Act. The main petition before the Trial Court was filed by the landlord under Section 21(1) (h) and (p) of the Act for seeking eviction of the tenant.

2. During the pendency of the main petition, an application was filed by the landlord under Section 29(1) of the Act. The said application was disposed off by the Trial Court by order dated 7.3.1991 on the ground that the tenant had after filing o the said application paid all the arrears of rent. However, on a second application filed by the landlord under the aforesaid provision the Court allowed the application holding that the tenant was in arrears of rent amounting to Rs. 4,200/- for the period August, 1990 to February 1991. Since the tenant did not comply with the order in terms thereof, the landlord filed the application under Section 29(4) of the Act.

3. In defence to the second application filed by the landlord under Section 29(1) of the Act, besides the objections, the tenant had filed an application under Section 18(2) of the Act, contending that the landlord had received a sum of Rs. 50,000.- as 'advance deposit' at the time of inception of the tenancy in September 1988 and in terms of the said Section he was entitled to adjust the rents payable to the landlord and also ask for refund of the amount collected by the landlord contrary to the provisions of Section 18(2) of the Act. Section 18 of the Act is reproduced below:

'18. Unlawful charges not to be claimed or received.-

(1) Where the fair rent of a building has been determined-

(a) no person shall claim, receive or stipulate for the payment of any sum as premium or pugree or any consideration whatsoever in cash or kind, in addition to such fair rent or save as provided in Sections 16 and 17 any rent in excess of such fair rent;

Provided that the landlord may receive or stipulate, for the payment of an amount not exceeding two months' rent by way of advance;

(b) save as provided in Clause (a), any premium or pugree or other consideration or any rent paid in addition to such fair rent whether before or after the commencement of this Part in consideration of the grant or continuance or renewal of the tenancy of the building after such commencement shall be refunded or returned by the landlord or other person to the person by whom it was paid or at the option of such person otherwise adjusted by the landlord or other person;

Provided that where before the determination of the fair rent any amount has been paid in excess thereof, the refund or adjustment shall be limited to the amount paid in excess after the date of application for fixing the fair rent.

(2) where the fair rent of a building has not been so determined.

(a) no person shall after the commencement of this Part receive or stipulate for the payment of any sum as premium or pugree or any consideration whatsoever in cash or kind, in addition to the agreed rent;

(b) save as provided in Clause (a) any sum or consideration paid in excess of the agreed rent whether before or after the commencement of this Part in consideration of the grant, continuance or renewal of the tenancy of the building after such commencement shall be refunded or returned by the landlord or other person to the person by whom it was paid or at the option of such person otherwise adjusted by the landlord or other person.

(3) Any stipulation in contravention of Sub-section (1) or Sub-section (2) shall be null and void.

(4) ..... ..... ....

(5) ...... ...... ......'

4. Sri V. Tarakaram, Learned Senior Counsel for the petitioner-tenant submitted that there was no dispute between the parties that at the inception of the tenancy, the respondent-landlord had received a sum of Rs. 50,000/- as 'Advance-deposit' and therefore in terms of Section 18(2)(b) of the Act, the landlord was obliged, to refund or return any sum or consideration paid in excess of the agreed rent to the person by whom it was paid or at the option of such person otherwise adjusted by the landlord.

5. Section 18 of the Act enjoins that no unlawful charges shall be claimed or received by either the landlord or the tenant. The provisions of Sub-section (1) of Section 18 are applicable to a building where the 'fair rent' has been determined; whereas the provisions of Sub-section (2) of Section 18 are applicable to a building where 'fair rent' has not been so determined.

6. There is no dispute that in respect of the commercial shop in question no 'fair rent' had been determined. Therefore, it is only the provisions of Sub-section (2) of Section 18 which are relevant having a bearing on the rival contentions of the parties. Clause (a) of Sub-section (2) of Section 18 provides that after the commencement of Part III of the Act, no person shall receive or stipulate for the payment of any sum as premium or pugree or any consideration whatever in cash or kind, in addition to the agreed rent. Clause (b) of Sub-section (2) enjoins that any sum or consideration paid in excess of the agreed rent whether before or after the commencement of Part III of the Act in consideration of the grant, continuance or renewal of the tenancy, after such commencement shall be refunded or returned by the landlord or other person to the person by whom it was paid or at the option of such person otherwise adjusted by the landlord or other person.

7. The premises in question was new at the time when it was leased to the tenant. In the affidavit in support of the application filed under Section 29 of the Act, the landlord has stated in clear terms that the respondent-tenant was the first one to occupy the newly constructed premises. This is not disputed in the objections filed by the tenant.

8. In the proviso to Sub-section (2) of Section 2 of the Act, it is stated that Parts II and III of the Act would not apply to a building constructed after the first August 1957 for a period of five years from the date of construction of such building. If the year of construction of the premises in question were to be taken as 1988 (the respondent being the first tenant having occupied the premises in the year 1988) then the provisions of Parts II and III would not be applicable to the said building till the year 1993, because Section 18 of the Act on which the tenant relies occurs in Part III of the Act

9. However, the Learned Counsel for the tenant submitted that even though as on the date when the order under revision was made the provisions of Section 18 were inapplicable to the premises, as on date the said provisions are attracted and therefore the landlord is obliged to refund/return the excess amount collected by him from the tenant at the time of inception, of the tenancy or at the option of the tenant adjust the same towards rents. This contention of the Learned Counsel is based on the provisions of Clause (b) of Sub-section (2) which as noticed above stipulate that except as provided in Clause (a) any sum or consideration paid in excess of the agreed rent whether before or after the commencement of the Part shall be refunded etc. The Learned Counsel, therefore, submitted that even though as on the date of inception of the tenancy the receipt of Rs. 50,000/- by the landlord by way of 'Advance deposit' was not contrary to the provisions of Section 18, as on date it would be contrary to the provisions of the said Section.

10. Sri P. Shivanna, Learned Counsel appearing for the landlord submitted that from the conduct of the tenant it is evident that he is a chronic defaulter in payment of rent during the pendency of the petition. He submitted that on the previous application filed by the landlord under Section 29(1) of the Act demanding arrears of rent of Rs. 3,600/-, the tenant paid the entire arrears as demanded and consequently, the Court disposed of the said application without passing any further orders thereon Immediately thereafter the tenant again defaulted in paying the arrears of rent and therefore a second application was filed under the said provision. He submitted that the defence taken by the tenant for not continuing to pay the rents is totally untenable. He contended that it is not open for the tenant to take up the defence in the manner it is done in the instant case pleading that he paid 'Advance-deposit' of Rs. 50,000/- to the landlord at the inception of the tenancy and that he is entitled to adjust that amount towards arrears of rent, since on the first application no such defence was taken by the tenant. In this regard he invited my attention to the decision of this Court in SUDHAKAR v. LAKSHAMMA, : ILR1990KAR2269 , wherein this Court held that after the Court had determined the rate of rent there remains nothing to be determined again, as and when tenant chooses to abstain himself/from paying the rent in terms of provisions of Section 29 of the Act. Section 29(1) of the Act directs the tenant to pay all the arrears of rent and continue to pay or deposit any rent which may subsequently become due in respect of the premises. The continuity in the payment of the rent will have to be maintained by the tenant because the payment of rent is a 'Must' to participate in the proceedings. This Court has observed that there was no question of giving one more opportunity to the tenant because question of any determination of rent due did not arise, when the tenant had not challenged either the quantum of arrears or rate of rent payable by him because the rate of rent had already become determined. The above observation of the Court was made in the context of a contention taken by the tenant that whenever there is an application under Section 29(4) of the Act, the Court should go into the question of arrears once again, granting time or 'adjourning' the matter to enable the tenant to explain the cause for delay.

11. In the instant case, as already noticed above, on the first application filed by the landlord, the Court merely disposed of the application as not pressed and did not give any finding on the said application. It was only on the second application that the Court passed a considered order giving its findings.

12. Section 18(2)(a) of the Act forbids a person from receiving or stipulating for the payment of any sum as premium or pugree or any consideration whatsoever in cash or kind, in addition to the agreed rent. Whereas Section 18(2)(b) provides that any sum or consideration paid in excess of the agreed rent shall be refunded or returned by the landlord to the person by whom it was paid or at his option otherwise adjusted by the landlord irrespective of the facts such excess payment was made whether before or after the commencement of Part III.

13. In CHUNILAL PARASRAM v. BOM. MISC. P. LTD., (1982) 2 K.L.J. 585 this Court while construing the aforesaid provisions held that the terms 'in addition to the agreed rent' in Clause (a) of Sub-section (2) of Section 18 and 'in excess of the agreed rent' in Clause (b) of the said Sub-section have different connotations. So construing, this Court ruled that the provisions of Clause (b) would not be applicable to a case where the landlord had received any amount in 'addition to the agreed rent' before the applicability of the provisions of Part III of the Act.

14. The aim of Section 18 of the Act is to forbid collection of unlawful charges either by the landlord or the tenant. If the parties voluntarily and freely agree to certain terms, which are not unlawful, and enter into a contract in terms of which the landlord receives a considerable amount by way of advance-deposit, as in the instant case, and reduces the monthly rent payable by the tenant, it would be incongruous to hold that such a transaction would be contrary to the provisions of Clauses (a) or (b) of Sub-section (2) of Section 18 of the Act. It is a matter of common knowledge that some of the parties would prefer to deposit a big sum with the landlord in consideration of a small sum fixed as monthly rent. In the absence of the deposit, the monthly rent would be very much higher.

15. There are any number of instances where the prospective tenants would advance money to the landlords to enable them to construct/modify houses according to their requirements, which money would be treated as advance payment of rent to be adjusted according to the terms agreed upon. In all such cases, the monthly rent would be minimal. Even financial institutions, including Banks, enter into such transactions. Such advances/deposits are part of the agreed rent capitalized and paid in a lumpsum at the time lease is granted. There is nothing in the Act which provides that rents should be received monthly or that agreed rent should not be received in a lumpsum for the part or whole of the lease period, except where fair rent has been fixed for the premises, in which case, not exceeding two months rent by way of advance could only be received by the landlord in terms of the proviso to Clause (a) of Section 18(1).

16. Such transactions between the parties freely entered into, in my view, cannot be considered as tainted to attract the penal provisions of Section 18 of the Act because such deposit has to be construed as forming an integral part of the agreed rent.

17. In the view I have taken, I hold that stopping of further proceedings and directing the tenant, in the circumstances of the case, to vacate and deliver vacant possession of the petition schedule premises to the landlord are in accordance with law.

18. Revision petition rejected. However, one month's time is granted to the petitioner-tenant to vacate and deliver vacant possession of the premises to the respondent-landlord subject to payment of all arrears of rent upto date and continuing to pay the rent till the premises are vacated.