Ram Sewak v. Munna Lal
RANGANATHAN, J. The question which has come up for con
sideration in this appeal from judgment of the Allahabad High Court is
H whether the <leposit of rent by a tenant under section 7-C of the Uttar
j
~·I
<
RAM SEWAJ( v. MUNNA LAL [RANGANATHAN ,J.I 419
Pradesh (Temporary) Control of Rent and Eviction Act, 1947
(hereinafter called the 'Act') as such entitles him to resist successfully
eviction under the provisions of the Act on the ground of default in
payment of rent.
2. The appellant, Ram Sewak, was a tenant of the respondent,
Munna Lal in respect of a shop on a rent of Rs.25 per month. The rent
upto 30. 11.66 had been paid by the tenant. The landlord, however.
claimed that the rent for the period from I. 12.66 till 28.2. 1971. less an
amount of Rs.c75 which had been received by him by way of money
order, was due from the appeJ!ant-tenant. This remained unpaid
despite notices of demand dated 22.3.7 ! and 12.4.1971, and a notice of
termination of the tenancy dated 27.4.·1971..0n these allegations. The
landlord instituted a suit for ejectment of the tenant on the ground of
non-payment of rent. He also claimed the recovery of arrears of rent.
mesne profits and certain taxes, which were alleged to be payable by
the tenant. This suit was decreed by the learned Munsif, Jhansi. A first
appeal was unsuccessful insorfar as the decree related to the eviction
of the petitioner was concerned but the claim for arrears of rent was
rejected in part on the ground of limitation. A second appeal was also
dismissed by the High Court and hence the present appeal.
3. The defence of the tenant to the suit was that he had tendered
the rent to the plaintiff-lan9J0rd but the latter had refused to accept it.
The rent was sent by money order but even then it was refused. It was
submitted that the tenant had thereupon made an application on
3 !. 7. 1967 under section 7-C of the Act in the court of the learned
Munsif, Jhansi, for permission to deposit the rent in the court. The
Court issued a notice to the landlord, which was also duly served on
him. On the date of bearing there was no appearance on behalf of the
landlord. Thereupon the learned Munsif passed an order, on
11. l !. 1967, permitting the tenant to deposit the arrears of rent as well
as future rent in court. It was claimed that the tenant had deposited
arrears of rent amounting to Rs.200 for the period from 1. 12. 1966 to
31. 7. 1967 in the court along with application and that he continued to
deposit in court the rent thereafter from month to month. It was,
therefore, submitted that there were no arrears of rent due from the
tenant to the landlord and that, therefore, the suit for eviction was not
maintainable.
4. The learned Munsif and, on appeal, the learned Subordinate
Judge found as a fact that the plaintiff had failed to prove that he had
tendered the rent to the landlord or that the latter had refused to H
420 SUPREME COURT REPORTS [ 1988) 2 S.C.R.
accept it. This being so, they held, the statutory conditions requisite
for a valid deposit under section 7C were not fulfilled. Neither the
application made by the plaintiff under S. 7C nor the order passed by
the learned Munsif on 11.11.67 could therefore, help the plaintiff. In
this view of the matter, both the courts held that the default in pay
ment of rent, within the meaning of sec. 3(1)(a) of the Act, stood
established and the plaintiff was, therefore, liable to eviction. Before
us, as before the courts below, learned counsel for the tenant based his
case solely bn the order under the provisions of S. 7C of the Act. That
section reads as follows:
"7-C-Payment by Deposit of Rent-( 1) When a landlord -~
refuses to accept any rent lawfully paid to him by a tenant
in respect of any accommodation the tenant may in the
prescribed manner deposit such rent and continue to
deposit any subsequent rent which becomes due in respect
of such accommodation unless the landlord in the mean
time signifies by notice in writing to the tenant his willing
ness to accept.
(2) Where any bona fide doubt or dispute has arisen
as to the person who is entitled to receive any rent referred
to in sub-section (1) in respect of any accommodation, the
tenant may similarly deposit the rent stating the circumst
ances under which such deposit is made and may until such
doubt has been removed ·or such dispute has been settled
by the decision of any competent court, or by the settle·
men! between the parties, continue to deposit, in like man
ner, the. rent that may subsequently become due in respect
of such building.
(3) The deposit refei;red to in sub-section (1) or (2)
shall be made in the Court of the Munsif having jurisdiction
in the area where the accommodation is situate.
(4) On any deposit being made under sub-section (1)
the Court shall cause a notice of the deposit to be served on
the landlord, and the_amount of deposit may be withdrawn
by the landlord on application made by him to the Court in
this behalf.
(5) When a deposit has been made under sub-section
(2) the amount of the deposit shall be held by the Court for
{
RAM SEWAK v. MUNNA LAL [RANGANATHAN ,J.] 421
the benefit of the person who may be entitled to it and the A
same shall be payable to such person.
(6) In any case where a deposit has been made, as
aforesaid, it shall be deemed that the rent has been duly
paid by the tenant to the landlord."
Learned counsel submitted that, in the event of a landlord's refusal to
accept the rent, the tenant had no other alternative but to deposit the
same in the court under the above special provision. It was open to the
landlord to have appeared before the learned Munsif at the time of
hearing of the application for deposit and put forward any pleas, which
he might have had. The landlord not having aone this, it was claimed C
that the order passed by the learned Munsif on l l.11. 1967 provides a
complete defence to the action under section 3( l)(a) of the Act against
the tenant particularly in view of the language of sub-section (6) of s.
7C. It was contended that the statute should not be constured as
requiring that a tenant should prove the fact of his having tendered the
rent and the landlord having refused it twice over once while making a D
deposit under s. 7C and, again, in proceedings under s. 3(l)(a). If,
despite a deposit under section 7-C, an action under section 3(1)(a)
were to be permitted, it was urged, section 7-C would be rendered
nugatory and otiose. Learned counsel also made a point that though
the landlord in this case had knowledge that the rent was being
deposited in court since August 1967, he chose to keep quiet for a E
period of four years before issuing a notice calling upon the appellant
to pay the arrears of rent.
6. Prima facie, the arguments of the appellant appear to have
some force. However, after hearing learned counsel for the respon
dent and considering the facts of this case and the relevant statutory F
provisions, we have come to the conclusion that this appeal must fail
both on technicalities as well as on equities.
7. S. 7C is no doubt a provision intended to protect the interests
of the tenant. But there is the authority of this Court holding that the
mere fact of a deposit under this Section, in itself cannot be an answer G
to an action u/s. 3(l)(a). In Brahmanand v. Kaushalya Devi, [!977] 3
SCC I, the relations between the landlord and tenant were highly
strained. The tenant therefore deposited the moneys into court and
pl7aded this as a defence to an action u/s. 3(l)(a). The High Court
reiected this plea on the ground that there was nothing to show that
the tenant had tendered the rent physically to the landlord and so the H
A deposit could not be treated as a valid deposit u/s. 7C( I) so as to
attract the deeming effect in S. 7C(6). This Court held that the High
Court had taken too narrow a view of the words 'paid to' the landlord.
Krishna Iyer J. observed:
"a liberal construction of the expression 'paid to him by a
tenant' in. section 7-C{ 1) is necessary. Physically offering
payment when the relations between the parties are
strained is to ask for trouble and be impractical. But haras
sing the landlord by straight-way depositing the rent in
court without fulfilment of the conditions required by sec
tion 7-C(I) is also unwarranted. Section 7-C{6) by using the
expression 'where the deposit has been made as aforesaid'
takes us back to section 7-C( I). That is to say the deposit is
permissible only when the condition in section 7-C(I) is
complied with. If the landlord refuses to accept rent paid to
him a deposit is permissible. But payment need not be by
physical tender, person to person. It can be by money
order, or through messenger or by sending a notice to the
landlord asking him to nominate a bank into which the
rents may be regularly paid to the credit of the landlord. If
. the landlord refuses under these circumstances, then a
court deposit will be the remedy."
In the present case, on account of the bad blood bet
ween the parties a physical tender of the rent is ruled out.
At the same time the Courts below have not considered
whether the circumstances which drove the appellant into
depositing the rent in court were such as eliminated the
other possibilities of direct payment we have indicated. It is
therefore fair to set aside the finding of the Courts below
and remand the case to the lower appellate Court (which is
the final court of fact under ordinary circumstances) to
ascertain whether any of the alternatives we have indica
ted, or may otherwise be made out by the tenant as equiva
lent to payment of rent, is present in the case. if no such
circumstances is made out by the tenant justifying deposit
of rent in court, the decree for eviction will stand. Other
wise, the petition for eviction will be dismissed."
It is important to note that this Court did not view the deposit u/s. 7C
as conclusive of the issue. On the other hand, it held that if no
H circumstance was made out by the tenant justifying the deposit in
I
RAM SEWAK v. MUNNA LAL [RANGANATHAN ,J.I 423
court, the decree for eviction will stand. In other words, this Court the
view that, irrespective of the fact of deposit u/s. 7C, the tenant has to
show, when a suit is under S. 3(1)(a), that the existence of circumst
ances justifying a deposit under S. 7C. In the present case, the Courts
have been concurrently found that there was no valid tender of rent by
the tenant or refusal thereof by the landlord. There is no ground.
therefore to interfere with the decision of the Courts below.
8. A careful perusal of S. 7C and the rules and forms made
thereunder also supports the above conclusion. The application for a
deposit under this section has to be made in the form prescribed in
Appendix A to the rules framed under the Act. The appellant's appli
cation to the court was filed in this form. Column 6 of the application
form is filled in by the tenant may be extracted:
(A)
6. Whether deposit is made
under sub-section (1)/(2) of
Section 7-C.-In case of
Sub-section (I) briefly
state the circumstances of
refusal by the owner. In
case of sub-section (2),
mention circumstances of
doubt or dispute about
ownership.
(B)
"The deposit is being
made under sub-section ( 1)
of 7-C of the Act. Fact in
brief is that the landlord
has refused to accept the
rent. It is being deposited
under section 7-C of the
UP Act 3 of 1947."
The rules framed under the Act also prescribed the form in which
notice is to be served on the respondent when an application is made
under section 7-C. This form reads as follows:
xxxx xx
"To G
Whereas . . . . . . . . . . has deposited Rs ........ as
rent for the period ...... for the premises ...... -
. . . . of which you have been mentioned as the
landlord.
Notice is hereby given to you under sub-section
(4) of Section 7-C of the U.P. (Temporary) Control
of Rent and Eviction Act, 1947, that the said amount
will be paid to you on an application for withdrawal
being presented to this Court.
Given under my hand seal this day of
Munsif."
Reading section 7-C, the rules framed thereunder and the above
statutory forms together, it would appear that this provision envisages
that where a tenant finds that the landlord refuses to accept the rent or
there is some dispute regarding the ownership, he can, in order to
protect his interests seek the permission of the Court to deposit the
arrears of rent as well as future rent in the court instead of running
after the landlord. Though the applicant is asked to indicate briefly the
circumstances in which he wants to make a deposit, there is no proce-
dure contemplated for an enquiry into those circumstances. The sec-
tion or rules do not seem to contemplate the transmission of this appli-
cation to the landlord, the fixing of a date of hearing on which both the
tenant and the landlord could be heard or the passing of a considered
order by the court after hearing both sides and being satified that there
was in fact a tender of rent by the tenant and a refusal by the landlord
to receive the rent or a dispute regarding the ownership of the prop-
erty which rendered it difficult or impossible for the tenant to send the
money to the landlord straight. The notice which is sent to the landlord
merely sets out that money has been deposited in the court and that
the landlord is at liberty to withdraw it if he so desires. All that the
landlord can do on receipt of the notice is either to withdraw the
moneys deposited 'or stop future deposits by expressing a willingness
directly to the tenant to accept direct payment of rent thereafter. On
the language of the statutory provisions therefore, it is not possible to
say that a deposit u/s. 7C is necessarily a valid one preceded by an
enquiry or satisfaction of the court that the condition precedent set out
in S. 7C(l) is fulfilled.
9. Counsel for the petitioner submits that in Fateh Chand v. Bal
Saroop Goel, [ 1967] 65 ALJ 979 and other cases, the Allahabad High
Court has held that a deposit u/s. 7C is not a mere formality and that
before directing or permitting a deposit the court has to go into the
question whether there has been a tender and a refusal. In fact, the
J.
..,
-k
·-;
~
....
..J,.~
RAM SEWAK v. MUNNA LAL [RANGANATIIAN ,J.) 425
High Court has gone further and held that the Court has to go into that
question, at two stages: one, when an application is presented and
before issuing notice to the landlord; and the other when the landlord
appears before the court and disputes the validity of the procedure
sought to be invoked by the tenant. Perhaps these requirements have
been read into the section on grounds of equity and natural justice.
Whatever that may be, we are constrained to say that .such procedure
does not appear to have been followed in this case. As we have already
mentioned the application in the present case gave no details in the
space against column 6. Instead of setting out the circumstances in
which it was alleged that the landlord had refused to receive the rent,
the application barely asserted that the landlord had refused to accept
the rent. There is no information as to the nature of the notice served
on the landlord but it must have been only in the form of Appendix B
already set out. Again, though the application of the1 appellant under
section 7-C appears to have come up before the Munsif on 11.11.1967,
and the order mentions that the landlord is "absent though. served
sufficiently", the order is only that the landlord may withdraw the
amount deposited on proper application. It does not indicate any
application of mind by the learned Munsif as to whether the conditions
precedent for a valid deposit u/s. 7C were satisfied. There is certainly
no finding at that stage on this vital requirement. The grant of permis
sion to deposit under s. 7C, in the circumstances of the case, cannot
therefore be treated as conclusive that a valid deposit had been made
under that section.
10. Sri Kackar took up the stand that even if S. 7C is interpreted
as providing an opportunity to both parties and even if a clear finding
is recorded in these proceedings, after hearing both parties, that the
preconditions of a valid deposit under that section are satisfied, that
will not constitute res judicata or take away the court's rights in an
action u/s. 3(1)(a), of being satisfied on the evidence before it to the
same effect. He relied in this context on two decisions of the
Allahabad High Court. It is sufficient to refer to extract some portions
from the head note of one of them, viz. Hazi Abdul Karim v. Mohd.
Ismail, [1978] U.P. RentCases691)P.
"A finding merely on a collateral fact of jurisdiction cannot
operate as res-judicata in later proceedings between the
. same parties. It has been stated in Halsbury's Laws of Eng
land, Th.ird Edition (Volume XV) paragraph 367 (at page
192~. It is a fun.damental rule that a judgment is not con
clusive to anythmg but the point decided, or of any matter
426
SUPREME COURT REPORTS [!988] 2 S.C.R.
which came collaterally in question or of any matter inci
dentally cognizable.
The principle behind this rule seems to be that even
though in the previous proceedings a decision on a collat
eral fact about jurisdiction, wrongly given may be binding
on the parties for a limited purpose i.e., only so far as those
proceedings are concerned, yet it would completely defeat
the ends of justice, ifsuch erroneous decision were allowed
to become final and perpetuate itself. It would be con
ducive to the ends of justice that in later regular proceed
ings the parties should not be thwarded by an earlier wrong
finding and should be afforded full opportunity of demon
strating that the condition precedent to the exercise of
jurisdiction were absent.
It cannot, therefore, operate as res-judicata and the
parties must be left free to agitate the same question again
in a subsequent suit for ejectment or other appropriate
proceedings. The whole scheme of Section 7-C is inconsis
tent with any adjudication of the rights of the parties.
Under this section the learned Munsif is not required to
determine the rights and obligations of the landlord and the
tenant in these proceedings. All that he has to do on
deposit of rent under Section 7-C (!) is to issue a notice to
the landlord informing him that such deposit has been
made.
The deposi: made under section 7-C is by itself a
neutral act and it acquires its legal completion only when
the rights of the parties are later determined in appropriate
proceedings. The deposit is thus without prejudice to the
rights of the parties which ought to be determined in the
appropriate proceedings.
x x x x x x
..... the entire scheme of Section 7-C leads to the inescap
able conclusion that it is merely a tentative or provisional
forum provided for the purpose of checkmating any sinister
attempt on the part of the landlord for letting it appear that
no rent had been actually paid to him and thereby procur
ing the ejectment of a tenant. It is a legal fiction operating
~
r
\
--',··
r
.•
.. )c
RAM SEWAK v. MUNNA LAL (RANGANATHAN ,J.I 427
for the benefit of tenant in order to destroy a substerfuge
which may unjustly result in the eviction of the tenant. A
deposit, therefore, per se does not decide the rights of the
parties. Its significance and legal impost actually take shape
according to the tenor and upshot of other subsequent pro
ceedings in which such rights any be actually adjudicated ...
For the purposes of the present case, we need not go into this larger
question. In view of our conclusion regarding the scope of S. 7C and
our finding that, here. there was no enquiry or finding recorded in the
proceedings u. s. 7C which could at all operate as res judicata against
the landlord in the suit uis. 3( l)(a).
11. Learned counsel for the appellant strongly relied on two
decisions of this court in support of his contention. The first was Kaloo
and Others v. Gauri Shanker, [1981] 3 S.C.C. 3 I. 51. Learned counsel
relied on certain passages in paragrphs 13, 19 and 23. In our opinion
this decision is not of much help as the court in that case was concerned
with a clear case of refusal of rent by the landlord fully justifying the
deposit under section 7-C. This is deary from various passages in the
judgment particularly in paragraphs 19 and 20. The other judgment
relied upon is that of this court in Kameshwar Singh Srivastava v. IV
Add!. District Judge, Lucknow and others, AIR 1987 S.C. 138. This
was a decision under a later Act of Uttar Pradesh, namely Act 13 of
1972. Section 30 of the said Act is a provision similar to section 7-C of
the Act presently in question. In this case also it was found as a fact
that there had been a tender of rent to the landlord, who did not accept
the same and this was held to be a complete answer in proceedings for
eviction. There can be no doubt that, by virtue of section 7-C(6) a
deposit properly and justifiably made under section 7-C would be
deemed to be a payment of rent to the landlord himself. Once there is
a proof of a valid deposit, then there can be no eviction of the tenant
under section 3( l)(a) since the section equates such a deposit to a
payment to the landlord, thus negativing the existence of any arrears
of rent or any wilful default. But, at the same time it is necessary for
the courts to ensure that the tenants do not resort to the provisions of
section 7-C merely to harass the landlord. The decision in Kameshwar G
Singh's case emphasises this aspect in paragraph 7:
"7. We should not be understood to have laid down that
the tenant should deposit rent in court instead of paying the
same to the landlord. Primarily, a tenant is under a legal
obligation to pay rent to the landlord as and when due and H
428
if he fails to pay the same on demand from the landlord and
if he is in arrears for a period of more than four months he
would be liable to ejectment. Where there is a bona fide
dispute regarding the landlord's right to receive rent on
account of there being several claimants or if the landlord
refuses to accept the rent without there being any justifica
tion for the same, the tenant would be entitled to take
proceedings under s. 30 of the Act and deposit the rent in
court thereupon he would be deemed to have paid the rent
.,
to the landlord, consequently he would be relieved of his i
liability of eviction. It does not however follow that the .
tenant is entitled to disregard the landlord or ignore his
demand for payment of rent to him. The provisions of the
Act safeguard tenants interest but it must be kept in mind
that the landlord's right to receive rent and in the event of
th.e tenant's being in arrears of rent for a period of more
than four months, his right to evict the tenant is preserved, if
the tenant makes the deposit in court without there being
any justification for the same or it he refuses to pay the rent
. even on the service of notice of demand by the landlord, he
would be liable to eviction. However, the question whether
the tenant is justified in depositing the rent in court and
whether deeming provision of s; 30(6) would be available to
him to relieve him from the liability of eviction would depend
upon facts of each case. As noted earlier on the special facts of
the instant case we have no doubt in our mind that the appellant
had relieved himself from the liability of eviction and he was
not in arrears ofrent for a period of more than four months."
This decision also, incidentally, proceeds on the basis that, despite an
F order u/s. 30, it is open to the Court in the proceedings for eviction, to
consider whether the deposit was a valid one or not. In the light of the
above observations also, were justified, having regard to the facts and
circumstances of the present case, in ordering eviction.
12. Learned counsel for the a_J>Pellant submitted that such an
G interpretation as we have upheld would completely render section 7-C a
dead letter. This is not so. Section 7-C, as we have pointed out earlier,
is only intended as a protection to the tenant to tide-over a particular
genuine difficulty. It enables the tenant to deposit the rent from time
to time in the court so that the arrears of rent do not accummulate and
he is not constrained to pay large sums of money owing to the landlord
H on a future date. Secondly, it safeguards the landlord inasmuch as the
RAM SEWAK v. MUNNA LAL [RANGANATIIAN ,J.J 429
~.
rent from month to month is being deposited in the court and the A
t
landlord is not prejudiced by a huge accummulation of rent which he
may find it later on, difficult to recover. Thirdly, it also protects the
·tenant in this that, if ultimately he is able to show in the eviction
proceedings that the deposit was made because of the refusal of the
landord to accept the rent, it provides a complete answer to the plea of
B eviction under section 3(1)(a). It cannot, therefore, be said that sec-
tion 7-C loses all its meaning and becomes otiose if it is interpreted in
the restrictive manner above discussed.
13. This leaves only the equities of the matter to be considered.
The contention of the learned counsel for the appellant that though
the landlord was aware that the rent was being deposited in the court c ever since August 1967, he waited for a period of four years before
issuing a notice of demand for arrears of rent is seen to be without
substance, Shri Kacker has pointed out that the appellant h.ad filed a
suit (No. 786 of 1968) claiming that he had paid Rs.275 towards rent by
money order and claiming refund of the same. This suit was pending
till April 1971. On 19.4.1971, the suit was dismissed. The Third Addi- D
• tional Munsif, Jhansi found that the sum of Rs.275 had been paid
towards rent for tlie period ending 30.11.1966 and that the appellant
was not entitled to the refund thereof. Shri Kacker rightly points out
that since the appellant had raised a plea in this suit that the sum of
Rs.275 had been paid by him towards the arrears of rent due after
November 1966, the landlord was disabled from instituting proceed- E
ings for eviction until this issue was decided in the suit. In other words,
,,. the delay from August 1967, when the appellant started depositing the
reilt in court till 1971, when the proceedings for ejectment were
,
started, was not due to any !aches on the part of the respondent but
was caused on account of the pendency of the litigation instituted by
the tenant. Indeed it is rather unbelievable that, after having alleged in F
the application under 'section 7-C that the landlord had refused to
accept the amount tendered and deposited the arrears of rent in court,
the tenant would have sent a sum of Rs.275 by money order on
30.11.67, as alleged. In fact the findings in that suit, incidentally, also
_, negative the tenant's allegation that he had sent several money orders
which the landlord had refused to receive. But this aspect need not G
~)... detain us as all the three courts have concurrently found that in the
present case the appellant had not been able to prove that there had
been a tender of the rent by him and refusal thereof by the landlord.
14. In the result we have come to the conclusion that both in law
and in equity the appellant has no case and that the ejectment suit was H
A properly decreed by the courts below. The appeal, therefore, fails and
is dismissed. We, however, make no order as to costs, since the arrears
of rent are available to the landl9rd for being withdrawn from the
court.
P.S.S. Appeal dismissed.
J
1