Supreme Court Upholds Civil Court Decree Despite Rent Act Applicability: Shankarlal Nadani vs. Sohanlal Jain (2022)

Date of the Judgment: 12 April 2022

Citation: 2022 INSC 390

Judges: Hemant Gupta, J. and V. Ramasubramanian, J.

Can a civil court’s decree for eviction be valid if it is passed after a state Rent Control Act becomes applicable to the area where the property is located? The Supreme Court of India recently addressed this question in a case originating from Rajasthan. The core issue was whether the decree for possession passed by the civil court was valid, given the subsequent applicability of the Rajasthan Rent Control Act, 2001 to the area. The bench comprised Justices Hemant Gupta and V. Ramasubramanian, who delivered the judgment.

Case Background

The appellant’s father was a tenant of a shop in Suratgarh, Rajasthan, since 1982, with the respondent’s father as the owner. The monthly rent was Rs. 583.33. After the appellant’s father’s death, the appellant continued the tenancy. On 18 April 2013, the respondent filed a suit for possession in the civil court after serving a notice of termination of tenancy under Section 106 of the Transfer of Property Act, 1882. At the time, the property was not in an urban area governed by the Rajasthan Rent Control Act, 2001.

During the pendency of the suit, on 11 July 2014, the State Government issued a notification extending the provisions of the Rajasthan Rent Control Act, 2001 to the area, effective from 11 May 2015. The Civil Court passed a decree for possession against the appellant on 28 May 2015, after the Act became applicable to the area.

Timeline:

Course of Proceedings

The appellant filed a first appeal before the Additional District Judge, Suratgarh, which was dismissed on 5 October 2021. In a second appeal before the High Court of Judicature of Rajasthan, Jodhpur, the appellant relied on a Division Bench judgment of the Rajasthan High Court in K. Ramnarayan Khandelwal v. Shri Pukhraj Banthiya, which held that a decree in a civil suit could not be passed after the applicability of the Act to the area. However, the High Court noted that this judgment had been stayed by the Supreme Court and therefore was not binding. The High Court also considered a judgment by another co-ordinate bench of the High Court in Mohd. Rafiq v. Hanuman Sahai & Ors., which held that a decree in a civil suit could be passed. Consequently, the High Court dismissed the appeals filed by the appellants.

Legal Framework

The Rajasthan Rent Control Act, 2001 (the ‘Act’) initially applied to municipal areas comprising District Headquarters and later to other municipal areas with a population exceeding fifty thousand as per the 1991 census, as notified by the State Government under Section 1(2) of the Act. Section 18 of the Act deals with the jurisdiction of the Rent Tribunal, while Section 32 repeals the Rajasthan Premises (Control of Rent and Eviction) Act, 1950. The relevant provisions are:

• Section 1(2) of the Rajasthan Rent Control Act, 2001: “It shall extend in first instance to such of the municipal areas which are comprising the District Headquarters in the State and later on to such of the other municipal areas having a population exceeding fifty thousand as per 1991 Census as the State Government may, by notification in the Official Gazette, specify from time to time.”
• Section 18(1) of the Rajasthan Rent Control Act, 2001: “Notwithstanding anything contained in any other law for the time being in force, in the areas to which this Act extends, only the Rent Tribunal and no civil court shall have jurisdiction to hear and decide the petitions relating to disputes between landlord and tenant and matters connected therewith and ancillary thereto, filed under the provisions of this Act…”
• Section 32 of the Rajasthan Rent Control Act, 2001: This section repeals the Rajasthan Premises (Control of Rent and Eviction) Act, 1950.

The non-obstante clause in Section 18(1) gives the Act overriding effect, indicating that the Rent Tribunal has exclusive jurisdiction over landlord-tenant disputes in areas where the Act applies.

Arguments

Appellant’s Arguments:

• The appellant argued that after the notification of the State Government on 11 July 2014, which became operative from 11 May 2015, only the Rent Tribunal had jurisdiction to hear and decide disputes between landlords and tenants. Thus, the civil court could not have passed the decree for possession.
• The appellant relied on the non-obstante clause in Section 18(1) of the Rajasthan Rent Control Act, 2001, to assert the overriding effect of the Act.
• The appellant contended that the decree of possession could only be passed by the Rent Tribunal, not the civil court, once the Act became applicable to the area.

Respondent’s Arguments:

• The respondent argued that the civil court had the jurisdiction to pass the decree as the suit was filed before the applicability of the Act to the area.
• The respondent contended that there is no express or implied provision in the Act that affects the decrees passed prior to the applicability of the Act.
• The respondent asserted that the notification issued by the State Government cannot have retrospective application.

Innovative Argument: The appellant’s argument was innovative in the sense that it directly challenged the jurisdiction of the civil court to pass a decree after the Rent Control Act became applicable, despite the suit being filed before the Act’s applicability. This argument tried to leverage the non-obstante clause in Section 18(1) of the Act to assert the Rent Tribunal’s exclusive jurisdiction.

Submissions Table

Issues Framed by the Supreme Court

The Supreme Court framed the following issue:

1. Whether the decree passed by the civil court after the Rajasthan Rent Control Act, 2001 became applicable to the area in question can be executed?

Treatment of the Issue by the Court

Authorities

The Supreme Court considered the following authorities:

Judgment

The Supreme Court held that the civil court’s decree for possession was valid and executable, even though the Rajasthan Rent Control Act, 2001 became applicable to the area after the suit was filed but before the decree was passed. The Court emphasized that the Act does not have retrospective application and does not bar the execution of decrees passed by civil courts before the Act’s applicability. The Court also reiterated the principle that the rights of the parties are determined on the date when the legal proceedings commence, i.e., the date of filing the suit.

The Court relied on the principle that “the rights of the parties have to be determined on the date when lis commences i.e., on the date of filing of the suit.” The Court also noted that “the plaintiff is entitled to decree on that day when he initiated the proceedings, therefore, rights of the parties have to be examined as on the said day.” Further, the Court observed that “the Act is applicable to the area in question from the date the notification came into force and it does not bar the decree of the civil court or the pendency of such civil suit.”

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the principle that the rights of the parties are determined on the date when the legal proceedings commence, i.e., the date of filing the suit. The Court emphasized that the Rajasthan Rent Control Act, 2001 does not have retrospective application and does not bar the execution of decrees passed by civil courts before the Act’s applicability.

The Court also considered the legislative intent behind the Rent Control Act, noting that it was not meant to invalidate decrees passed by civil courts before the Act became applicable to an area. The Court’s reasoning focused on maintaining the sanctity of legal proceedings initiated under the existing legal framework at the time of filing the suit.

Fact: The factual aspect of the case mainly involved the timeline of events, such as when the suit was filed and when the Rent Control Act became applicable. These facts were used to establish the sequence of events and determine the applicable law.

Law: The legal considerations included the interpretation of the Rajasthan Rent Control Act, 2001, the non-obstante clause, and the principles of retrospective application. The court heavily relied on established legal principles and precedents to determine the validity of the civil court’s decree.

Final Decision

The Supreme Court dismissed the appeals filed by the appellant. The Court upheld the judgment of the High Court, which had affirmed the validity of the civil court’s decree for possession. The Supreme Court concluded that the decree passed by the civil court was valid and executable, despite the subsequent applicability of the Rajasthan Rent Control Act, 2001 to the area.

Ratio Decidendi

The ratio decidendi of the case is that a civil court’s decree for possession is valid and executable, even if a state Rent Control Act becomes applicable to the area after the suit was filed but before the decree was passed. The rights of the parties are determined on the date when the legal proceedings commence, i.e., the date of filing the suit. The Rent Control Act does not have retrospective application and does not bar the execution of decrees passed by civil courts before the Act’s applicability.

Legal Implications

This judgment has significant implications for cases involving the applicability of rent control laws. It clarifies that:

• The rights of the parties are determined on the date of filing the suit.
• Rent Control Acts generally do not have retrospective application, unless explicitly stated.
• Civil court decrees passed before the applicability of a Rent Control Act remain valid and executable.
• The non-obstante clause in a Rent Control Act does not invalidate decrees passed by civil courts before the Act’s applicability.

This decision provides clarity on the jurisdictional aspects of civil courts and rent tribunals and ensures that legal proceedings initiated under the existing legal framework are not disrupted by subsequent changes in the law. It also emphasizes the importance of legislative intent and the need for explicit provisions for retrospective application of laws.

Flowchart of Events