Supreme Court Upholds Eviction for Tenant’s Failure to Pay Rent to Landlord After Notice: Man Singh vs. Shamim Ahmad (2023)

Date of the Judgment: April 5, 2023
Citation: 2023 INSC 3232
Judges: Aniruddha Bose, J. and Sudhanshu Dhulia, J.
Can a tenant, who was previously depositing rent in court due to the landlord’s refusal to accept it, continue to do so after the landlord demands rent through a notice? The Supreme Court of India addressed this question in a recent case concerning a tenant’s eviction. The core issue revolved around whether the tenant’s deposit of rent in court, after the landlord had issued a notice demanding rent, was valid under the Uttar Pradesh Urban Buildings (Regulation of Letting, Rent and Eviction) Act, 1972. The two-judge bench, consisting of Justice Aniruddha Bose and Justice Sudhanshu Dhulia, delivered the judgment. Justice Sudhanshu Dhulia authored the opinion for the bench.

Case Background

The case involves a shop in Kotla, Gangoh-Town, Nukur-Tehsil, District-Saharanpur, Uttar Pradesh, which was rented to the appellant, Man Singh, on January 6, 1982, at a monthly rent of Rs. 165. The rent was later increased to Rs. 195 and then to Rs. 250 per month from January 1, 1990. The landlord, Shamim Ahmad, claimed that the rent was further increased to Rs. 300 per month, but this was disputed by the tenant. In June 1993, the landlord refused to accept the rent, leading the tenant to deposit the rent in the Court of Civil Judge (Junior Division). The tenant deposited Rs. 750, covering the rent for May, June, and July, and continued to deposit the rent in court.

On April 5, 1995, the landlord sent a notice to the tenant, which was received on April 10, 1995, demanding rent from May 1993 onwards. The landlord claimed that the rent was Rs. 275 per month from May 1, 1993, and Rs. 300 per month from May 1, 1994, due to an oral agreement for a yearly increase of Rs. 25 per month. The tenant denied this oral agreement and stated that the rent was Rs. 250 per month, which he had been depositing in court since May 1993.

Timeline

Course of Proceedings

The landlord filed a J.S.C.C. Suit No. 179 of 1995 in the Court of Judge, Small Causes, Saharanpur, seeking eviction of the tenant and recovery of arrears of rent. The trial court ruled in favor of the landlord, holding that the rent was Rs. 300 per month and that the tenant was in arrears. The tenant’s revision petition before the District Judge, Saharanpur, was dismissed on July 31, 2003. The Allahabad High Court also dismissed the tenant’s writ petition on February 17, 2012, although it set aside the findings of the lower courts regarding the enhanced rent, concluding that the correct rent was Rs. 250 per month. The High Court held that after the notice of demand, the tenant was obligated to pay the rent directly to the landlord, not to deposit it in court.

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). Section 20(2)(a) of the Act allows for the eviction of a tenant if they are in arrears of rent for not less than four months and fail to pay the same to the landlord within one month of receiving a notice of demand. Section 20(4) provides an opportunity for the tenant to avoid eviction by paying the entire amount of rent, damages, interest, and the landlord’s cost of the suit at the first hearing. Section 30 of the Act allows a tenant to deposit rent in court if the landlord refuses to accept it, but this provision is valid only until the landlord expresses willingness to accept the rent.

The relevant sections are:

• Section 20(2)(a) of the Uttar Pradesh Urban Buildings (Regulation of Letting, Rent and Eviction) Act, 1972:
  “(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:”
• Section 20(4) of the Uttar Pradesh Urban Buildings (Regulation of Letting, Rent and Eviction) Act, 1972:
  “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…”
• Section 30(1) of the Uttar Pradesh Urban Buildings (Regulation of Letting, Rent and Eviction) Act, 1972:
  “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 had been depositing the rent of Rs. 250 per month in court since May 1993, after the landlord refused to accept it.
• The tenant contended that he was not in default of rent and therefore, not liable to be evicted.
• The tenant argued that the notice of demand did not change his obligation to deposit the rent in court, as he was already doing so under Section 30 of the Act.
• The tenant relied on the Supreme Court decision in Ajai Agarwal and Ors. v. Har Govind Prasad Singhal and Ors.* [2005] 13 SCC 145, arguing that he should be given the benefit of Section 20(4) of the Act since he had deposited the admitted rent.

Landlord’s Arguments:

• The landlord argued that the tenant was in arrears of rent from May 1993 onwards.
• The landlord contended 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 with the tenant.
• The landlord argued that after serving the notice of demand on April 5, 1995, the tenant was obligated to pay the rent directly to the landlord and not deposit it in court.
• The landlord 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 once the landlord expresses willingness to accept rent through a notice, the tenant cannot deposit the rent in court.

Issues Framed by the Supreme Court

The primary issue before the Supreme Court was whether the tenant, after receiving a notice of demand from the landlord, could continue to deposit rent in court under Section 30 of the Uttar Pradesh Urban Buildings (Regulation of Letting, Rent and Eviction) Act, 1972, or whether the tenant was obligated to pay the rent directly to the landlord.

The sub-issue was whether the tenant was entitled to the benefit of Section 20(4) of the Act by depositing the admitted rent in court.

Treatment of the Issue by the Court

Authorities

The court considered the following authorities:

Judgment

How each authority was viewed by the Court?

• 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] was followed by the Supreme Court. The court agreed with the High Court’s view that once the landlord expresses willingness to accept rent through a notice, the tenant cannot deposit the rent in court.
• The Supreme Court distinguished its earlier decision in Ajai Agarwal and Ors. v. Har Govind Prasad Singhal and Ors.* [2005] 13 SCC 145, stating that the facts were different. In the cited case, the tenant had deposited the admitted rent before the first hearing, which entitled him to the benefit of Section 20(4) of the Act.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the interpretation of Section 30(1) of the Uttar Pradesh Urban Buildings (Regulation of Letting, Rent and Eviction) Act, 1972. The court emphasized that the provision allowing a tenant to deposit rent in court is valid only until the landlord expresses willingness to accept the rent. Once the landlord demands rent through a notice, the tenant is obligated to pay the rent directly to the landlord. The court also 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 clarified this legal position.

Fact:Law Ratio Explanation: The ratio of Fact:Law is 30:70. The court focused more on the legal interpretation of the relevant statutes and precedents than on the specific factual aspects of the case. While the facts of the case were considered, the court’s decision was primarily driven by the legal framework.

The Court reasoned that the tenant’s deposit of rent in court was valid only until the landlord expressed willingness to receive the rent. The notice of demand served by the landlord on April 5, 1995, was interpreted as an expression of the landlord’s willingness to receive the rent. Therefore, the tenant was obligated to pay the rent directly to the landlord, not to deposit it in court. The court rejected the tenant’s argument that he was entitled to the benefit of Section 20(4) of the Act, as he had not paid the rent to the landlord. The court distinguished the case from Ajai Agarwal and Ors. v. Har Govind Prasad Singhal and Ors.* [2005] 13 SCC 145, as the tenant in that case had deposited the admitted rent before the first hearing of the suit. The court held that the tenant was liable for eviction as he had failed to pay the rent to the landlord within one month of receiving the notice of demand.

The Court quoted the following from the judgment:

• “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 High Court dealt with this aspect and held that once the notice of demand was sent to the tenant by the landlord on 05.04.1995 (received by the appellant on 10.04.1995), demanding a rent at the enhanced rate, then the tenant had no option but to deposit the rent before the landlord, as against depositing it in the Court.”

Key Takeaways

• A tenant who has been depositing rent in court due to the landlord’s refusal to accept it, must pay the rent directly to the landlord once the landlord expresses willingness to accept the rent through a notice of demand.
• Failure to pay the rent directly to the landlord after receiving a notice of demand can lead to eviction under Section 20(2)(a) of the Uttar Pradesh Urban Buildings (Regulation of Letting, Rent and Eviction) Act, 1972.
• Depositing rent in court under Section 30 of the Act is only valid until the landlord expresses willingness to accept the rent.

Directions

The Supreme Court did not issue any specific directions in this case. The court dismissed the appeal of the tenant and vacated all interim orders.

Development of Law

The ratio decidendi of the case is that once a landlord expresses willingness to accept rent through a notice of demand, the tenant is obligated to pay the rent directly to the landlord and cannot continue to deposit it in court under Section 30 of the Uttar Pradesh Urban Buildings (Regulation of Letting, Rent and Eviction) Act, 1972. This clarifies the interpretation of Section 30 and its interplay with Section 20(2)(a) of the Act. The Supreme Court upheld 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], and distinguished its earlier decision in Ajai Agarwal and Ors. v. Har Govind Prasad Singhal and Ors.* [2005] 13 SCC 145. This ruling reinforces the obligation of tenants to pay rent directly to the landlord after receiving a notice of demand, even if they were previously depositing rent in court due to the landlord’s refusal.

Conclusion

The Supreme Court dismissed the tenant’s appeal, upholding the eviction order. The court clarified that a tenant cannot continue to deposit rent in court after the landlord has expressed willingness to accept it through a notice of demand. The tenant’s failure to pay the rent directly to the landlord after receiving the notice made him liable for eviction under the Uttar Pradesh Urban Buildings (Regulation of Letting, Rent and Eviction) Act, 1972.