Supreme Court Clarifies Tenant’s Obligation to Pay Rent After Landlord’s Notice: Man Singh vs. Shamim Ahmad (2023)

Introduction

Date of the Judgment: April 5, 2023
Citation: 2023 INSC 308
Judges: Aniruddha Bose, J., Sudhanshu Dhulia, J.
Can a tenant continue to deposit rent in court after the landlord has issued a notice demanding rent? The Supreme Court addressed this question in a recent case concerning a tenant’s eviction. The core issue was whether the tenant was in arrears of rent, thus liable for eviction, despite depositing rent in court after the landlord had demanded payment. The Supreme Court held that once a landlord expresses a willingness to receive rent by issuing a notice of demand, the tenant must pay the rent directly to the landlord and not continue to deposit it in court.

Case Background

The appellant, Man Singh, was a tenant in a shop in Uttar Pradesh since January 6, 1982, with a monthly rent that eventually reached Rs. 250. In June 1993, the landlord, Shamim Ahmad, refused to accept the rent, leading Man Singh to deposit the rent in the Court of Civil Judge (Junior Division). This continued until April 5, 1995, when the landlord sent a notice demanding rent from May 1993 onwards, claiming an increased rent of Rs. 275 per month from May 1, 1993, and Rs. 300 per month from May 1, 1994, due to an alleged oral agreement. Man Singh denied any such agreement and continued to deposit the rent of Rs. 250 in court. The landlord then filed a suit for eviction based on arrears of rent.

Timeline

Legal Framework

The case is governed by the Uttar Pradesh Urban Buildings (Regulation of Letting, Rent and Eviction) Act, 1972 (Act No. 13 of 1972). According to Section 20(2)(a) of the Act, a tenant can be evicted if they are in arrears of rent for not less than four months and fail to pay the same within one month of receiving a notice of demand. However, Section 20(4) of the Act provides an opportunity for the tenant to avoid eviction by paying the entire rent and arrears, along with interest and costs, at the first hearing of the suit. Additionally, Section 30 of the Act allows a tenant to deposit rent in court if the landlord refuses to accept it, and to continue doing so until the landlord signifies a willingness to accept the rent.

The relevant sections are quoted below:

“20(2) A suit for the eviction of a tenant from a building after the determination of his tenancy may be instituted on one or more of the following grounds, namely: (a) that the tenant is in arrears of rent for not less than four months, and has failed to pay the same to the landlord within one month from the date of service upon him of a notice of demand:”

“20(4). In any suit for eviction on the ground mentioned in clause (a) of sub-section (2), if at the first hearing of the suit the tenant unconditionally pays or [tenders to the landlord or deposits in court] the entire amount of rent and damages for use and occupation of the building due from him (such damages for use and occupation being calculated at the same rate as rent) together with interest thereon at the rate of nine per cent per annum and the landlord’s cost of the suit in respect thereof, after deducting therefrom any amount already deposited by the tenant under sub-section (1) of Section 30, the Court may, in lieu of passing a decree for eviction on the ground, pass an order relieving the tenant against his liability for eviction on the ground:”

“30. Deposit of rent in Court in certain circumstances .- (1)If any person claiming to be a tenant of a building tenders any amount as rent in respect of the building to its alleged landlord and the alleged landlord refuses to accept the same then the former may deposit such amount in the prescribed manner and continue to deposit any rent which he alleges to be due for the any subsequent period in respect of such building until the landlord in the meantime signifies by notice in writing to the tenant his willingness to accept it.”

Arguments

Tenant’s Arguments:

• The tenant argued that he was paying the admitted rent of Rs. 250 per month by depositing it in the court since the landlord refused to accept it.
• He contended that he was not in arrears of rent, as he had been continuously depositing the rent in court under Section 30 of the Act.
• The tenant argued that the landlord’s claim of an oral agreement for increased rent was false.
• The tenant was not required to deposit the rent with the landlord after the notice because he had already been depositing the correct rent in the court.

Landlord’s Arguments:

• The landlord claimed that the rent was increased to Rs. 275 per month from May 1, 1993, and Rs. 300 per month from May 1, 1994, due to an oral agreement.
• The landlord argued that the tenant was in arrears of rent as he did not pay the demanded rent within one month of receiving the notice.
• The landlord contended that once he had expressed his willingness to receive the rent through the notice dated April 5, 1995, the tenant was obligated to pay it directly to him and not to continue depositing it in court.

Issues Framed by the Supreme Court

The Supreme Court addressed the following issue:

1. Whether the tenant was in arrears of rent and liable for eviction, despite depositing the rent in court, after the landlord had issued a notice demanding rent.

Treatment of the Issue by the Court

Authorities

The Supreme Court considered the following authorities:

Cases:

• Gokaran Singh v. Ist Additional District and Sessions Judge, Hardoi and Ors. [2000 SCC OnLine All 174] – High Court of Judicature at Allahabad: This case was relied upon to establish that once a landlord expresses a willingness to receive rent, the tenant must pay the rent directly to the landlord and not continue to deposit it in court.
• Ajai Agarwal and Ors. v. Har Govind Prasad Singhal and Ors. [(2005) 13 SCC 145] – Supreme Court of India: This case was distinguished as it dealt with the benefit of Section 20(4) of the Act, where the tenant had deposited the admitted rent before the first date of hearing. The court clarified that this case was not applicable to the present case.

Statutes:

• Uttar Pradesh Urban Buildings (Regulation of Letting, Rent and Eviction) Act, 1972 (Act No. 13 of 1972): The entire case was decided based on the interpretation of this Act.
  • Section 20(2)(a): This section specifies the grounds for eviction of a tenant, including arrears of rent.
  • Section 20(4): This section provides an opportunity for the tenant to avoid eviction by paying the entire rent and arrears at the first hearing.
  • Section 30: This section allows a tenant to deposit rent in court if the landlord refuses to accept it.

Judgment

How each authority was viewed by the Court?

• The Supreme Court relied on the Full Bench decision of the Allahabad High Court in Gokaran Singh v. Ist Additional District and Sessions Judge, Hardoi and Ors. [2000 SCC OnLine All 174], which held that if a landlord, who had previously refused to accept rent, serves a notice of demand expressing willingness to accept rent, the tenant is obligated to tender the rent directly to the landlord and cannot continue to deposit it in court under Section 30(1) of the Act.
• The Supreme Court distinguished the case of Ajai Agarwal and Ors. v. Har Govind Prasad Singhal and Ors. [(2005) 13 SCC 145], stating that it was not applicable to the present case, as it dealt with the benefit of Section 20(4) of the Act, where the tenant had deposited the admitted rent before the first date of hearing.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the interpretation of Section 30 of the Uttar Pradesh Urban Buildings Act, 1972. The Court emphasized that the provision allowing tenants to deposit rent in court is only applicable until the landlord expresses a willingness to receive the rent directly. The Court’s reasoning was based on the following points:

• The purpose of Section 30 is to protect tenants when landlords refuse to accept rent.
• Once the landlord expresses a willingness to receive rent, the tenant’s obligation is to pay the rent directly to the landlord.
• The notice of demand sent by the landlord signifies a willingness to accept rent, thus ending the tenant’s right to deposit rent in court.
• The tenant’s failure to pay the rent directly to the landlord after the notice made him liable for eviction under Section 20(2)(a) of the Act.

“In other words, the tenant can only deposit rent in the Court, as long as the landlord has refused to accept the rent. Once the landlord expresses his willingness to accept the rent, which in the present case he does by serving the notice dated 05.04.1995 (received on 10.04.1995), the tenant has no option but to deposit the rent to the landlord.”

“Section 30 gives an opportunity to the defendant to deposit the admitted rent in Court, but this arrangement lasts only till the landlord expresses his willingness to receive the rent directly.”

“The ground of non-payment of rent by the tenant therefore has to be for not less than ‘four months’ and which has not been paid within one month of service of demand of the notice.”

Logical Reasoning

Key Takeaways

• A tenant can deposit rent in court if the landlord refuses to accept it, but this right ends when the landlord expresses willingness to receive the rent.
• A notice of demand from the landlord signifies the landlord’s willingness to receive rent directly.
• After receiving a notice of demand, a tenant must pay the rent directly to the landlord and cannot continue to deposit it in court.
• Failure to pay the rent directly to the landlord after receiving a notice of demand makes the tenant liable for eviction under Section 20(2)(a) of the Uttar Pradesh Urban Buildings Act, 1972.

Directions

The Supreme Court vacated all interim orders.

Specific Amendments Analysis

Not applicable as there is no discussion of any specific amendment in the judgment.

Development of Law

The ratio decidendi of this case is that a tenant’s right to deposit rent in court under Section 30 of the Uttar Pradesh Urban Buildings Act, 1972, ceases once the landlord expresses a willingness to receive the rent directly, which is signified by a notice of demand. This clarifies the interpretation of Section 30 and its interplay with Section 20(2)(a) of the Act. This case reinforces the principle that the tenant must comply with the landlord’s demand for rent and cannot rely on previous deposits in court after the landlord has expressed a willingness to receive rent.

Conclusion

The Supreme Court dismissed the tenant’s appeal, holding that the tenant was in arrears of rent and liable for eviction. The Court clarified that once a landlord expresses willingness to receive rent by issuing a notice of demand, the tenant must pay the rent directly to the landlord and cannot continue to deposit it in court. This ruling provides clarity on the obligations of tenants under the Uttar Pradesh Urban Buildings Act, 1972, and reinforces the importance of complying with a landlord’s notice of demand for rent.