Supreme Court rules on eviction for rent default: Shrikrishna Oil Mill vs. Radhakrishan Ramchandra (2002)

Date of the Judgment: January 9, 2002
Citation: Not Available
Judges: R.P. Sethi, J. and S.N. Phukan, J.
Can a landlord evict a tenant for rent default even if the tenant has cleared all dues before the eviction application is filed? The Supreme Court of India addressed this crucial question in a case involving a tenant running an oil mill. The core issue was whether the tenant was a willful defaulter, despite having paid the rent arrears before the eviction application was filed. This judgment clarifies the rights of tenants and landlords in cases of rent default under the Hyderabad Houses (Rent, Eviction and Lease) Control Act, 1954. The bench comprised Justices R.P. Sethi and S.N. Phukan, with the judgment authored by Justice Phukan.

Case Background

M/S. Shrikrishna Oil Mill (the appellant/tenant) rented premises from M/S. Radhakrishan Ramchandra (the respondent/landlord) for running an oil mill at an annual rent of Rs. 1500. After the initial lease period expired, the tenancy continued. The landlord filed an application on November 25, 1981, under Section 15(2)(ii) of the Hyderabad Houses (Rent, Eviction and Lease) Control Act, 1954, seeking the tenant’s eviction for non-payment of rent from November 1, 1978, until the application date. Prior to this, the landlord had filed a civil suit on August 11, 1981, to recover rent arrears of Rs. 4250 for the period between November 1, 1978, and September 29, 1981. On October 7, 1981, the tenant deposited the amount in court, which was accepted by the landlord. The Rent Controller and the appellate authority ruled in favor of the landlord, ordering the tenant’s eviction. The High Court also rejected the tenant’s revision petition.

Timeline

Course of Proceedings

The Rent Controller and the appellate authority both ruled that the tenant was a defaulter and ordered his eviction. The High Court also rejected the tenant’s revision petition, upholding the lower courts’ decisions. The High Court held that the tenant was a yearly tenant and that the rent was to be paid within one month after the end of the yearly tenancy. The High Court found that the tenant had defaulted on rent payments for the periods from November 1, 1978, to October 20, 1979, and from October 21, 1979, to October 7, 1980. The High Court also noted that the landlord had to file civil suits to recover rent for subsequent periods, which indicated that the tenant was not paying rent when it was due.

Legal Framework

The case revolves around Section 15(2)(ii) of the Hyderabad Houses (Rent, Eviction and Lease) Control Act, 1954, which deals with the grounds for eviction of a tenant. The section states:

“Section 15(2) A landlord who seeks to evict his tenant shall apply to the Controller for a direction in that behalf. If the Controller, after giving the tenant a reasonable opportunity of showing cause against the application, is satisfied-
(ii) that the tenant has not paid or tendered the rent due by him in respect of the house within fifteen days after the expiry of the time fixed in the agreement of tenancy with his landlord or in the absence of any such agreement, by the last day of the month next following that for which the rent is payable”

Arguments

Appellant (Tenant) Arguments:

• ✓ The tenant argued that the eviction application was not maintainable because the rent for the period in question was paid to the landlord before the filing of the eviction application. The tenant had deposited the arrears in the civil suit for recovery of rent and the landlord had accepted it without protest.
• ✓ The tenant relied on the decision in S. Sundaram Pillai & Others versus V.R. Pattabiraman & Others [1985 (1) SCC 591] where it was held that if the entire dues are paid to the landlord, the cause of action for filing of a suit completely vanishes.
• ✓ The tenant also cited K.A. Ramesh & Others versus Susheela Bai & Others [1998 (3) SCC 58], where the court held that if the tenant makes full payment of arrears of rent before filing of the eviction petition, there is no default, and the application for eviction ought to be rejected.

Respondent (Landlord) Arguments:

• ✓ The landlord contended that the tenant was a willful defaulter as the tenant had not paid the rent on the due date. The landlord had to file a civil suit for recovery of rent and even after filing of the eviction petition, the landlord had to file civil suits for subsequent periods.
• ✓ The landlord relied on the decisions in S. Sundaram Pillai & Others versus V.R. Pattabiraman & Others [1985 (1) SCC 591] and Teegala Satyanarayana versus G.S. Bhagwan [1994 Supp (3) SCC 741] to support the claim that the tenant was a willful defaulter.
• ✓ The landlord further argued that even for the month of November 1981, no rent was paid, and therefore the tenant was a defaulter.

Submissions

Issues Framed by the Supreme Court

The core issue framed by the Supreme Court was:

1. Whether the appellant was a willful defaulter of the rent on the date of filing of the application for eviction.

Treatment of the Issue by the Court

Authorities

Cases Relied Upon:

• ✓ S. Sundaram Pillai & Others versus V.R. Pattabiraman & Others [1985 (1) SCC 591] – Supreme Court of India: The court noted that in this case, it was held that if the entire dues are paid to the landlord, the cause of action for filing of a suit completely vanishes.
• ✓ K.A. Ramesh & Others versus Susheela Bai & Others [1998 (3) SCC 58] – Supreme Court of India: The court noted that in this case, it was held that if the tenant makes full payment of arrears of rent before filing of the eviction petition, there is no default, and the application for eviction ought to be rejected.
• ✓ Teegala Satyanarayana versus G.S. Bhagwan [1994 Supp (3) SCC 741] – Supreme Court of India: The court considered this case in light of the other cases.

Legal Provisions Considered:

• ✓ Section 15(2)(ii) of the Hyderabad Houses (Rent, Eviction and Lease) Control Act, 1954: This provision deals with the grounds for eviction of a tenant due to non-payment of rent.

Authority Analysis

Judgment

How each authority was viewed by the Court:

• ✓ S. Sundaram Pillai & Others versus V.R. Pattabiraman & Others [1985 (1) SCC 591]*: The court followed this case, stating that once the entire dues are paid to the landlord, the cause of action for filing of a suit completely vanishes.
• ✓ K.A. Ramesh & Others versus Susheela Bai & Others [1998 (3) SCC 58]*: The court followed this case, stating that if the tenant makes full payment of arrears of rent before filing of the eviction petition, there is no default.
• ✓ Teegala Satyanarayana versus G.S. Bhagwan [1994 Supp (3) SCC 741]*: The court considered this case in light of the other cases.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the fact that the tenant had paid all the rent arrears before the landlord filed the eviction application. The Court emphasized that once the dues are cleared, the cause of action for eviction ceases to exist. The Court also highlighted that the landlord accepted the payment without any protest, further strengthening the tenant’s case. The Court also considered the fact that the tenancy was a yearly one, and therefore, the landlord’s claim for default for the month of November was not sustainable. The court’s reasoning focused on the principle that a tenant should not be penalized for past defaults if all dues are cleared before the eviction process is initiated.

Ranking of Sentiment Analysis of Reasons:

Fact:Law Ratio:

Logical Reasoning

Judgment Analysis

The Supreme Court’s decision was based on the principle that a cause of action for eviction due to rent default ceases to exist once the tenant pays all outstanding dues before the eviction application is filed. The Court reasoned that the landlord’s acceptance of the rent without protest further solidified the tenant’s position. The Court rejected the argument that the tenant was a willful defaulter because they had not paid rent on the due date, emphasizing that the payment before the eviction application was the key factor. The court also clarified that since the tenancy was yearly, there was no default for the month of November, as the rent was not yet due. The court’s interpretation of Section 15(2)(ii) of the Hyderabad Houses (Rent, Eviction and Lease) Control Act, 1954, was that the provision aims to protect landlords from non-payment of rent, but it does not allow for eviction if the tenant has cleared all dues before the eviction process begins. The court also emphasized that once the eviction petition becomes infructuous, for subsequent default, eviction cannot be ordered.

The court stated, “We are of the opinion that in the case in hand at the time of filing of the present eviction petition, landlord had no cause of action as the arrears of rent were paid and accepted by the landlord and, therefore, the petition became infructuous and liable to be rejected.” The court further stated, “For subsequent default also eviction cannot be ordered in view of the stated legal position and in absence of any legal provision in the Act.” The court also observed, “The tenancy was a yearly one and, therefore, there was no question of default of rent for one month as rent for the entire year was to be paid within one month from the end of the yearly tenancy.”

Key Takeaways

• ✓ A tenant cannot be evicted for rent default if all arrears are paid and accepted by the landlord before the eviction application is filed.
• ✓ Landlords must ensure that they have a valid cause of action at the time of filing an eviction application.
• ✓ If the eviction petition becomes infructuous, for subsequent default, eviction cannot be ordered.
• ✓ For yearly tenancies, rent is due at the end of the yearly tenancy period, and a tenant cannot be considered a defaulter for non-payment within the year, unless the agreement specifies otherwise.
• ✓ This judgment provides clarity on the interpretation of Section 15(2)(ii) of the Hyderabad Houses (Rent, Eviction and Lease) Control Act, 1954, emphasizing that the focus is on the payment of dues before the initiation of eviction proceedings.

Directions

The Supreme Court directed the respondent (landlord) to hand over the suit premises to the appellant (tenant) within three months from the date of the judgment.

Development of Law

The ratio decidendi of this case is that a tenant cannot be evicted for rent default if the arrears are paid and accepted by the landlord before the eviction application is filed. This judgment reinforces the principle that the cause of action for eviction due to rent default ceases to exist once the dues are cleared. The judgment also clarifies that for yearly tenancies, rent is due at the end of the yearly tenancy period, and a tenant cannot be considered a defaulter for non-payment within the year unless the agreement specifies otherwise. This decision reaffirms the legal position established in previous cases such as S. Sundaram Pillai & Others versus V.R. Pattabiraman & Others [1985 (1) SCC 591] and K.A. Ramesh & Others versus Susheela Bai & Others [1998 (3) SCC 58].

Conclusion

In conclusion, the Supreme Court allowed the appeal filed by the tenant, setting aside the judgments of the lower courts and the High Court. The Court held that the eviction application was not maintainable because the tenant had paid all rent arrears before the filing of the eviction application. The Court directed the landlord to hand over the suit premises back to the tenant within three months. This judgment clarifies that a tenant cannot be evicted for rent default if the dues are cleared before the eviction process is initiated, and it reaffirms the importance of timely payment of dues to avoid eviction.