Supreme Court Eviction Order: Tenant Defaults on Rent Payments (2024)

Date of the Judgment: 25 September 2024

Citation: 2024 INSC 941

Judges: Hon’ble Mr. Justice J.K. Maheshwari and Hon’ble Mr. Justice Rajesh Bindal

Can a tenant be protected from eviction if they fail to pay rent on time, even if they are covered under the Uttar Pradesh Urban Buildings (Regulation of Letting, Rent and Eviction) Act, 1972? The Supreme Court of India recently addressed this question in a case concerning a long-standing dispute between a landlord and a tenant. The core issue revolved around the tenant’s repeated failure to pay rent, despite the protections afforded to tenants under the UP Rent Act. The bench comprised of Hon’ble Mr. Justice J.K. Maheshwari and Hon’ble Mr. Justice Rajesh Bindal, who delivered the judgment.

Case Background

The appellant, Prakash Bhalotia (now deceased), owned a shop in Gorakhpur. The respondent, Indra Chandra Goyal (also deceased), was inducted as a tenant on a monthly rent of ₹330. The tenancy began on July 1, 1985, for a fixed period of five years, ending on June 30, 1990. The agreement allowed for a 15% rent increase per month if the tenancy was extended with the owner’s consent.

After the initial five-year period, the tenancy was not formally renewed. The landlord contended that the tenant became an unauthorized occupant and was liable to pay ₹1,000 per month for overstaying. The landlord issued a notice for termination of tenancy due to non-payment of rent, which the tenant did not respond to. The landlord also alleged subletting, but this was not pursued during the hearing.

The tenant claimed protection under Section 20 of the UP Rent Act, arguing that he had been a tenant since 1977 and was thus entitled to the Act’s protections. He also claimed that he had deposited the rent in court as per Section 30 of the UP Rent Act.

Timeline

Course of Proceedings

The Trial Court noted that the tenancy was not for a definite period of five years and held that the tenant was entitled to protection under Section 20(4) of the UP Rent Act. It also concluded that the tenant was not in default of rent payment and dismissed the suit.

The High Court dismissed the revision filed against the Trial Court’s judgment, stating that re-appraisal of evidence was not permissible in revisional jurisdiction. The High Court affirmed the Trial Court’s findings.

Legal Framework

The case primarily revolves around the interpretation and application of the Uttar Pradesh Urban Buildings (Regulation of Letting, Rent and Eviction) Act, 1972 (UP Rent Act). Key provisions include:

• Section 3(a) defines ‘tenant’ as “a person by whom its rent is payable, till his death.”
• Section 7 deals with ‘Liability to pay taxes’, stating, ‘subject to any contract in writing to the contrary, but notwithstanding the provisions of Section 149 of the Uttar Pradesh Municipalities Act, 1916, the tenant shall be liable to pay to the landlord the taxes i.e. water tax, house tax, in addition to the part of the rent.’
• Section 20 outlines the grounds for eviction of a tenant, providing protection to tenants except on specified grounds.
• Section 20(2)(a) states that a suit for eviction can be instituted if the tenant is in arrears of rent for not less than four months and fails to pay the landlord within one month of receiving a notice of default.
• Section 20(4) provides that in a suit for eviction due to non-payment of rent, if the tenant pays or tenders the entire amount of rent, including damages and interest, at the first hearing, the court may relieve the tenant from eviction liability.
• Section 30 specifies the procedure for depositing rent in court if the landlord refuses to accept it.

These provisions of the UP Rent Act are intended to balance the rights of landlords and tenants, ensuring that tenants are not unfairly evicted while also protecting the landlord’s right to receive rent.

Arguments

Landlord’s Arguments:

• The tenancy was for a fixed period of five years, ending on 30.06.1990.
• The tenancy was monthly, and rent was payable on a month-to-month basis.
• Clause 14 of the agreement allowed for extension only with the landlord’s consent and a 15% rent increase, which was not done.
• Clause 6 of the agreement stipulates that upon expiry of the lease, the tenant would be an unauthorized occupant liable to pay ₹1000 per month as penalty for overstay.
• The tenant did not deposit the agreed rent or penalty, even after receiving notice.
• The tenant defaulted on rent payments even during the pendency of the proceedings.
• The findings of the Trial Court were vague and contrary to the record.

Tenant’s Arguments:

• The tenant was protected under Section 20 of the UP Rent Act.
• The tenant had been in continuous tenancy since 1977 and could not be evicted.
• The tenant had deposited the rent in court under Section 30 of the UP Rent Act.
• The Trial Court’s findings should not be re-appraised under Article 136 of the Constitution.
• The affidavit filed was regarding arrears of rent and taxes during the pendency of the case.
• The rent due had already been deposited.

[TABLE] of Submissions:

Innovativeness of the argument: The landlord’s argument was innovative in highlighting the tenant’s continuous default in payment of rent, even during the pendency of the proceedings, which is a ground for eviction under the UP Rent Act.

Issues Framed by the Supreme Court

The Supreme Court considered the following key issues:

1. Whether the tenant was in default of rent payment as per the provisions of the UP Rent Act.
2. Whether the High Court was justified in dismissing the revision petition without re-appraising the evidence.

Treatment of the Issue by the Court

The following table demonstrates as to how the Court decided the issues:

Authorities

The Supreme Court relied on the following authorities:

On the nature of statutory tenancy:

• Gian Devi Anand vs. Jeevan Kumar and Ors. [(1985) 2 SCC 683] – Supreme Court of India: This case clarified that Rent Control Legislation converts contractual tenancies into statutory tenancies, obliterating the distinction between the two.

On the Revisional Jurisdiction of the High Court:

• Shankar Ramchandra Abhyankar Versus Krishnaji Dattatreya Bapat [(1969) 2 SCC 74] – Supreme Court of India: This case established that revisional jurisdiction is similar to the appellate jurisdiction of a superior court, allowing it to rectify errors of the lower court.
• Babulal Nagar and others Versus Shree Synthetics Ltd. and others [(1984) Supp SCC 128] – Supreme Court of India: This case held that the revisional court has the same jurisdiction as the original authority to come to a different conclusion on the same set of facts.
• Nalakanth Sainuddin versus Koorkikadan Sulaiman [(2002) 6 SCC 1] – Supreme Court of India: This case clarified that a High Court, in its revisional jurisdiction, can examine the records of subordinate authorities and correct any illegality, irregularity, or impropriety.

Legal Provisions Considered:

• Section 3(a) of the UP Rent Act: Definition of tenant.
• Section 7 of the UP Rent Act: Liability to pay taxes.
• Section 20 of the UP Rent Act: Bar of suit for eviction of tenant except on specified grounds.
• Section 20(2)(a) of the UP Rent Act: Grounds for eviction based on arrears of rent.
• Section 20(4) of the UP Rent Act: Relief against eviction on payment of arrears.
• Section 30 of the UP Rent Act: Procedure for depositing rent in court.

[TABLE] of Authorities:

Judgment

How each submission made by the Parties was treated by the Court?

How each authority was viewed by the Court?

• Gian Devi Anand vs. Jeevan Kumar and Ors. [(1985) 2 SCC 683]*: The Court used this case to establish that the contractual tenancy had become a statutory tenancy under the UP Rent Act, but the tenant was still bound to pay rent regularly.
• Shankar Ramchandra Abhyankar Versus Krishnaji Dattatreya Bapat [(1969) 2 SCC 74]*: The Court relied on this case to highlight that the High Court’s revisional jurisdiction is akin to appellate jurisdiction, and it should have re-appraised the evidence.
• Babulal Nagar and others Versus Shree Synthetics Ltd. and others [(1984) Supp SCC 128]*: The Court used this case to support the view that the revisional court has the same jurisdiction as the original authority to come to a different conclusion.
• Nalakanth Sainuddin versus Koorkikadan Sulaiman [(2002) 6 SCC 1]*: The Court cited this case to emphasize that the High Court should examine the records and correct any impropriety or illegality in the lower court’s decision.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the tenant’s consistent failure to adhere to the provisions of the UP Rent Act regarding timely rent payments. The Court emphasized that despite the protections afforded to tenants, they are still obligated to pay rent regularly. The following points weighed heavily in the mind of the Court:

• Default in Payment: The tenant’s repeated delays and defaults in rent payments, both before and during the legal proceedings, were a significant factor.
• Non-compliance with UP Rent Act: The tenant did not comply with Sections 20(4) and 30(1) of the UP Rent Act, which require timely and regular rent payments.
• Revisional Jurisdiction: The High Court’s failure to re-appraise the evidence and correct the errors of the Trial Court was a key consideration.
• Statutory Tenancy: While the tenancy became statutory under the UP Rent Act, it did not absolve the tenant of the responsibility to pay rent regularly.

[TABLE] of Sentiment Analysis:

Fact:Law Ratio:

The Court’s reasoning was a blend of factual analysis and legal interpretation, with a stronger emphasis on the factual aspects of the tenant’s payment defaults.

Logical Reasoning:

The Court considered the alternative interpretation that the tenant was protected under the UP Rent Act, but rejected it due to the tenant’s failure to comply with the Act’s provisions regarding timely rent payments. The final decision was based on the consistent default in payment and the High Court’s failure to properly exercise its revisional jurisdiction.

The Supreme Court stated, “In a suit seeking eviction on the ground of arrears of rent, if the rent is not paid during the pendency, it can be a ground for directing eviction for non-payment of the rent.”

The Court also noted, “the findings recorded by the Trial Court and confirmed by the High Court are completely perverse and without appreciating the real intent of provisions of Sections 20 and 30 of UP Rent Act, therefore, liable to be set-aside.”

Further, the Court observed, “the tenant has not paid rent regularly during the pendency of the suit, revision and appeal, and was in default in payment of rent, tax and interest due.”

There were no minority opinions in this case.

Key Takeaways

• Tenants must pay rent regularly, even if they are protected under rent control laws.
• Default in rent payment during the pendency of a suit can lead to eviction.
• High Courts must re-appraise evidence in revisional jurisdiction in eviction matters.
• Statutory tenancy under rent control laws does not absolve tenants from their obligation to pay rent.

This judgment reinforces the importance of timely rent payments and clarifies the scope of protection available to tenants under the UP Rent Act. It also sets a precedent for High Courts to exercise their revisional jurisdiction more effectively in eviction cases.

Directions

The Supreme Court directed the following:

• The tenant was granted time until 31.03.2025 to vacate the premises.
• The tenant must pay all due rent and arrears within one month, after adjusting for amounts already deposited.
• The tenant must continue to pay regular monthly rent for the permissible period of occupation.
• The tenant must hand over vacant possession of the premises on or before 31.03.2025.
• The tenant must not create any third-party rights in the property.
• The tenant must file an undertaking on affidavit before the Registrar, High Court of Judicature at Allahabad, within nine weeks.
• Violation of these terms would be treated as non-compliance with the Court’s order.

Specific Amendments Analysis

This judgment does not discuss any specific amendments.

Development of Law

The ratio decidendi of this case is that a tenant’s failure to pay rent regularly, even during the pendency of a suit, is a valid ground for eviction under the UP Rent Act. This judgment also clarifies that High Courts must exercise their revisional jurisdiction effectively by re-appraising the evidence in eviction matters. There is no change in the previous position of law but an emphasis on the strict compliance with the provisions of the UP Rent Act.

Conclusion

The Supreme Court allowed the appeal, setting aside the orders of the Trial Court and the High Court. The Court decreed the eviction suit filed by the landlord due to the tenant’s non-payment of rent. The Court emphasized that tenants must adhere to the provisions of the UP Rent Act and pay rent regularly, even during legal proceedings. The tenant was given time until March 31, 2025, to vacate the premises, subject to certain conditions.