Importers And Manufacturers Ltd vs Pheroze Framroze Taraporewala

Rewritten Version Notice: This is a rewritten version of the original judgment.

Court: Supreme Court of India

Case Number: Civil Appeal No. 172 of 1952

Decision Date: 10 December 1952

Coram: Mehr Chand Mahajan, Natwarlal H. Bhagwati, DAS

In this matter the Supreme Court of India rendered its judgment on 10 December 1952 in the case of Importers and Manufacturers Ltd. versus Pheroze Framroze Taraporewala and others. The petition was filed by Importers and Manufacturers Ltd., and the respondents were Pheroze Framroze Taraporewala together with additional parties. The decision was delivered by a bench comprising Justices Mehr Chand Mahajan, Natwarlal H. Bhagwati, S. Ranjan Das and the Chief Justice of the Bombay High Court, Chagla. The citation for the judgment is reported in 1953 AIR 73 and 1953 SCR 226, and it has been referenced in subsequent reports such as RF 1971 SC1495 (18), R 1973 SC1099 (3) and R 1980 SC1605 (14). The case concerned the Bombay Rents, Hotel and Lodging Rates Control Act, 1947, specifically section 28, which deals with sub-leasing by a tenant in violation of a lease term, the jurisdiction of the Small Causes Court, the construction of section 28 and the effect of impleading a sub-tenant.

The headnote of the judgment explained that the lease of a flat situated in the City of Bombay contained a covenant prohibiting the tenant from assigning, sub-letting or re-letting the premises without the landlord’s prior consent. The tenant disregarded this covenant and sub-let the flat. The landlord subsequently instituted a suit in the Bombay Court of Small Causes against both the tenant and the sub-tenant, seeking possession of the premises and compensation for its use and occupation. The sub-lessee argued that the Court of Small Causes lacked jurisdiction over him because the suit was not between a landlord and a tenant and did not pertain to rent under section 28 of the 1947 Act. The Court held, first, that the suit was principally for possession and that the claim for compensation was merely incidental; second, that section 28 confers jurisdiction on the Court of Small Causes not only to entertain suits between landlord and tenant for recovery of rent or possession but also “to deal with any claim or question arising out of this Act or any of its provisions,” thereby encompassing the dispute between the plaintiff and the sub-lessee; and third, that although the sub-lessee was not a necessary party, his joinder was proper and did not alter the fundamental nature of the suit as a landlord-tenant proceeding within the ambit of section 28.

The judgment formed part of Civil Appeal No. 172 of 1952, which was entertained by special leave. The appeal challenged the judgment and decree dated 25 January 1952 of the High Court of Judicature at Bombay, delivered by Chief Justice Chagla in Revision Application No. 1119 of 1951. That judgment, in turn, had arisen from the Court of Small Causes’ decree dated 8 August 1951 in Appeal No. 355 of 1950, which was based on the Court of Small Causes’ decision dated 18 December 1950 in Suit No. 1055/7943 of 1948.

H. Lulla appeared as counsel for the appellants, while C. H. Daphtary, the Solicitor-General for India, assisted by B. B. Adhyarujina, represented respondents numbered one, two and three. The judgment under discussion was delivered by Justice Das on 10 December 1952. This appeal was taken by special leave from a judgment and order of the High Court of Judicature at Bombay dated 25 January 1952, which had been rendered in Civil Revision, Application No. 1119 of 1951. The matter originated in a suit presented before the Bombay Small Causes Court invoking section 28 of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947. The suit sought the eviction of the defendants from, and compensation for, the occupation of the second-floor flat of Sunama House located in Cumballa Hill, Bombay. The compensation claimed was fixed at Rs 370 per month commencing on 1 November 1947.

The plaintiffs were the trustees of the estate of the late Framroze D. B. Taraporewala and, in that capacity, owned Sunama House. Two defendants were named. The first defendant, Mrs Dinjai K. Lala, had been granted a lease of the flat by the plaintiffs around 1 September 1942 at a rent of Rs 370 per month. The second defendant, a limited company, had sub-let the flat from the first defendant beginning on 16 November 1947, also at Rs 370 per month. The defendants contested the suit on several grounds. The trial court, by its judgment dated 18 October 1950, rejected every defence raised and issued a decree directing both defendants to vacate the premises by 31 March 1951. It further awarded, solely against the first defendant, compensation of Rs 3,317-10-8 for the period from 1 November 1947 to 31 July 1948, and thereafter stipulated rent of Rs 370 per month from 4 August 1948 until possession was delivered, together with an order for the costs of the suit.

The defendants subsequently filed an appeal under section 29 of the said Act. In addition to reiterating the pleas earlier presented before the trial court, the defendants introduced a new argument before the appellate bench of the Small Causes Court—an argument that had not been included in their written statements. They contended that the Small Causes Court lacked jurisdiction to entertain the suit insofar as it concerned the second defendant. The appellate bench dismissed the appeal and ordered the costs against the appellants. Following that decision, the second defendant initiated a revision proceeding before the High Court under section 115 of the Code of Civil Procedure, which was likewise dismissed with costs.

Having obtained special leave to appeal to this Supreme Court, the second defendant now appears before us. The sole issue raised on this appeal is the claim that the Small Causes Court was without jurisdiction to try the suit. For reference, the relevant excerpts of section 28 of the Act are reproduced: “Notwithstanding anything contained in any law and notwithstanding that, by reason of the amount of the claim or for any other reason, the suit or proceeding would not, but for this provision, be within its jurisdiction, (a) in Greater Bombay, the Court of Small Causes, Bombay, … (b) … shall have jurisdiction to entertain and try any suit or proceeding between a landlord and a tenant relating to the recovery of rent or possession of any premises to which any of the provisions of this Part apply, and to decide any application made under this Act and to deal with any claim or question arising out of this Act or any of its provisions; and no other Court shall have jurisdiction to entertain any such suit, proceeding or application or to deal with such claim or question.”

Section 28 of the Act provided that the Court of Small Causes in Greater Bombay had exclusive jurisdiction to entertain and try any suit or proceeding between a landlord and a tenant that involved the recovery of rent or the possession of premises to which the provisions of the Part applied, and that it alone could decide any application made under the Act or any claim or question arising out of the Act or its provisions; no other court was authorised to entertain such suits, proceedings, applications, or claims. The parties did not dispute that Part II of the Act applied to the premises that were the subject of the dispute. The appellant argued that the suit against him was not a suit between a landlord and a tenant because the claim for compensation for use and occupation did not constitute a claim for recovery of rent; consequently, the appellant maintained that Section 28 was inapplicable and that the Court of Small Causes therefore lacked jurisdiction to entertain the suit. To address this contention, the Court examined the plaint. The plaintiffs, who described themselves as the owners of the Sunama Houses and trustees under the will of Framroze D. B. Taraporewala, alleged that the second-floor flat had been let to the first defendant on or about 1 September 1942 at a monthly rent of Rs 370, on terms printed on the reverse of the rent-bill form which the first defendant had seen and accepted. Paragraph 5 of the plaint reproduced one of those terms, stating that the tenant was prohibited from assigning, subletting, or reletting the premises without the prior written consent of the landlords. Paragraph 7 referred to a notice dated 17 October 1946, in which the plaintiffs asked the first defendant to vacate the flat at the end of November 1946 on the ground that the premises were required reasonably and bona-fide for the use of two beneficiaries under the will. After an unsuccessful attempt by the plaintiffs to obtain a certificate under Section 9 of the Act, the plaint cited a letter dated 16 November 1947, written by the first defendant to the plaintiffs, indicating that from that date the first defendant had sublet the flat to the second defendant. Paragraphs 12 and 13 stated that on 19 December 1947 the second defendant had sent a cheque for Rs 370 covering rent for November 1947, but the plaintiffs refused to accept the cheque or to recognise the second defendant as a lawful occupant, either as a sub-tenant or otherwise. The plaint further alleged that on 23 January 1948 the plaintiffs served a notice to both co-defendants requiring them to vacate the premises by the end of 29 February 1948. In paragraphs 14 and 15 the plaintiffs set out two grounds for ejectment: first, that the alleged sub-letting by the first defendant to the second defendant was wrongful, illegal and in breach of the tenancy terms; and second, that the plaintiffs needed the premises reasonably and bona-fide for the use and occupation of two beneficiaries.

In this case, the plaintiffs alleged two principal grounds for seeking the eviction of the defendants. First, they claimed that the alleged sub-letting by the first defendant to the second defendant was wrongful, illegal and in breach of the tenancy terms. Second, they asserted that the premises were required by the plaintiffs, in a reasonable and bona-fide manner, for the occupation of two of the beneficiaries named in the will. Accordingly, the plaintiffs prayed that both defendants be ordered to vacate the premises and that each of them be directed to pay compensation for the use and occupation of the premises at the rate of Rs 370 per month, commencing on 1 November 1947 and continuing until vacant possession was delivered.

The appellant, who was the second defendant, observed that the plaint itself disclosed that the plaintiffs had refused to recognise him as a lawful occupant, whether as a sub-tenant or otherwise, and had treated him merely as a trespasser lacking any lawful claim to the flat. On that basis, the appellant contended that the suit, insofar as it related to him, could not be characterised as a suit between a landlord and a tenant, and therefore the claim for compensation could not be characterised as a suit for the recovery of rent. The Court, however, did not dwell on this contention because it held that the suit was fundamentally an action for possession of the flat, with the claim for compensation only incidental and ancillary to the primary claim for possession.

The Court explained that jurisdiction to entertain a suit for possession empowers the Court not only to pass a decree granting possession but also to direct the payment of mesne profits until the time of delivery of possession. Such a direction for mesne profits is normally an integral part of a decree for possession. Consequently, the sole question for consideration was whether the suit fell within the definition of a landlord-tenant dispute. The plaintiffs did not argue that the appellant was a “tenant” within the meaning of section 5(11) of the Act. The appellant, on the other hand, could not deny that, as between the plaintiffs and the first defendant, the suit was indeed a landlord-tenant dispute, and that, under section 28 of the Act, the Small Causes Court was the only court competent to entertain the suit.

Section 28 confers on the Small Causes Court jurisdiction not only to try any suit or proceeding between a landlord and a tenant concerning the recovery of rent or possession of premises, but also to “deal with any claim or question arising out of” the Act or any of its provisions. The Court observed that there is no requirement that such a “claim or question” must itself be between landlord and tenant. Once a suit between landlord and tenant relating to rent recovery or possession is pending, the Small Causes Court acquires jurisdiction both to entertain that suit and to adjudicate any ancillary claim or question that arises under the Act.

In this suit the plaintiffs alleged that the first defendant had sub-let the premises to the second defendant in breach of the tenancy agreement. They argued that the sub-letting was illegal not only because it violated the terms of the lease but also because, after the contractual tenancy had been terminated, the first defendant, as a statutory tenant, no longer possessed the authority to create any sub-tenancy. Consequently, the plaintiffs questioned whether the second defendant could claim any protection under the relevant Act. The dispute concerning the respective rights of the plaintiffs and the second defendant, as set out in the plaint, therefore arose directly from the provisions of the Act. The language of section 28 of the Act was deemed sufficiently wide to encompass such a claim or question. Apart from the specific provision, the Court noted that under ordinary law a decree for possession issued against a tenant in an ejectment action is binding on any person who claims title under or through that tenant. Such a decree is enforceable against the claimant even if that person was not a party to the original suit. The lack of joinder of that person does not diminish the binding effect of the decree upon him. Thus, the non-joinder does not make the person a necessary party to an ejectment suit directed at the tenant.

The Court further observed that, although not a necessary party, a person who claims title through the tenant may be joined as a proper party so that the question of whether the lease has been correctly terminated and whether the landlord is entitled to recover possession can be decided in his presence. This allows the party to verify that there is no collusion between the landlord and the tenant and, if applicable, to seek any protection afforded by the Act. Such a party may be joined at the commencement of the proceedings or at any later stage, provided the Court deems it appropriate. The joinder of this proper party does not alter the fundamental character of the suit; it remains a suit between landlord and tenant and continues to fall within the ambit of section 28. To reject such joinder would encourage a multiplicity of separate suits, leading to inconvenience and confusion. In the Court’s view, the decision and reasoning of Chief Justice Chagla were substantially correct, and the appeal therefore failed. Accordingly, the appeal was dismissed with costs. The appeal was dismissed. Agent for the appellants: Rajinder Narain. Agent for respondents Nos 1, 2 & 3: B. A. Gagrat.