Supreme Court Upholds Striking Off Defence for Non-Payment of Rent: Asha Rani Gupta vs. Vineet Kumar (2022)

Date of the Judgment: July 11, 2022

Citation: Civil Appeal No. 4682 of 2022 (Arising out of SLP(Civil) No. 1319 of 2019)

Judges: Dinesh Maheshwari, J. and Aniruddha Bose, J.

Can a tenant avoid paying rent by simply denying the landlord-tenant relationship? The Supreme Court of India recently addressed this critical question in a case concerning eviction and rent recovery. This judgment clarifies the obligations of tenants under the Code of Civil Procedure, 1908, particularly regarding the deposit of rent during a legal dispute. The Supreme Court bench comprised Justices Dinesh Maheshwari and Aniruddha Bose, with Justice Maheshwari authoring the opinion.

Case Background

The case involves a dispute between Asha Rani Gupta (the plaintiff-appellant), who claims to be the owner of a shop, and Sri Vineet Kumar (the defendant-respondent), who is the tenant of the shop. The plaintiff filed a suit for eviction and recovery of rent, asserting that the defendant had failed to pay rent since May 2010. The defendant, while admitting to being a tenant, denied the plaintiff’s ownership and the landlord-tenant relationship. The defendant also claimed that he had paid rent to the previous owner’s wife, Smt. Sudha Sharma, until August 31, 2010.

The plaintiff contended that she purchased the shop through a registered sale deed dated May 10, 2010, from Shri Rajiv Kant Sharma, the previous owner. The defendant argued that the sale deed was illegal and void, citing discrepancies in property descriptions in another sale deed. The defendant also claimed that he was a tenant under Smt. Sudha Sharma, not Shri Rajiv Kant Sharma, and that Smt. Sudha Sharma had not transferred the property to the plaintiff.

Timeline:

Course of Proceedings

The Trial Court initially struck off the defendant’s defense on March 1, 2017, for failing to deposit the rent as required under Order XV Rule 5 of the Code of Civil Procedure, 1908 (CPC). The Trial Court held that even if the tenant denies the landlord-tenant relationship, the application under Order XV Rule 5 CPC is maintainable. This decision was upheld by the Revisional Court on January 18, 2018. However, the High Court, in its order dated November 2, 2018, reversed these orders, stating that the defendant was entitled to some indulgence, and directed the defendant to deposit the arrears of rent.

Legal Framework

The core of this case revolves around Order XV Rule 5 of the Code of Civil Procedure, 1908, as applicable in Uttar Pradesh. This provision mandates that in a suit for eviction and rent recovery, the tenant must deposit the entire amount of rent admitted to be due at or before the first hearing. Additionally, the tenant must regularly deposit the monthly rent throughout the continuation of the suit. Failure to comply with these requirements may result in the court striking off the tenant’s defense.

Order XV Rule 5 of the CPC states:

“5. Striking off defence on failure to deposit admitted rent. – (1) In any suit by a lessor for the eviction of a lessee after the determination of his lease and for the recovery from him of rent or compensation for use and occupation, the defendant shall, at or before the first hearing of the suit, deposit the entire amount admitted by him to be due together with interest thereon at the rate of nine per centum per annum and whether or not he admits any amount to be due, he shall throughout the continuation of the suit regularly deposit the monthly amount due within a week from the date of its accrual, and in the event of any default in making the deposit of the entire amount admitted by him to be due or the monthly amount due as aforesaid, the court may, subject to the provisions of sub-rule (2), strike off his defence.”

Explanation 1 of Order XV Rule 5 defines ‘first hearing’ as the date for filing the written statement or the hearing date mentioned in the summons. Explanation 2 defines ‘entire amount admitted by him to be due’ and Explanation 3 defines ‘monthly amount due’. Sub-rule (2) allows the court to consider any representation made by the defendant within 10 days of the first hearing or the expiry of the week referred to in sub-section (1).

Arguments

Plaintiff’s Arguments:

• The plaintiff argued that the defendant, being a tenant, was obligated to deposit the rent as per Order XV Rule 5 of the CPC.
• The plaintiff contended that the defendant failed to deposit the rent at the first hearing and throughout the continuation of the suit.
• The plaintiff submitted that even if the defendant denied the landlord-tenant relationship, he was not absolved of the liability to deposit rent.
• The plaintiff relied on the recent precedents to argue that the application under Order XV Rule 5 CPC is maintainable even if the tenant denies the relationship of landlord and tenant.

Defendant’s Arguments:

• The defendant argued that since he denied the landlord-tenant relationship with the plaintiff, he was not liable to deposit rent under Order XV Rule 5 of the CPC.
• The defendant asserted that the plaintiff’s ownership of the property was disputed due to discrepancies in the sale deeds.
• The defendant claimed that he had paid rent to the previous owner’s wife, Smt. Sudha Sharma, until August 31, 2010.
• The defendant submitted that the word “may” in Order XV Rule 5 implies that the court has discretion and is not obligated to strike off the defense in every case of default.
• The defendant relied on various decisions to argue that when the relationship of landlord and tenant is denied, the tenant is not liable to deposit rent.

[TABLE] of Submissions:

Issues Framed by the Supreme Court

The core issue before the Supreme Court was:

1. Whether the High Court was right in reversing the order striking off the defence in terms of Order XV Rule 5 of the Code of Civil Procedure, 1908, as applicable to the present case?

Treatment of the Issue by the Court

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

Authorities

The Supreme Court considered the following authorities:

Cases:

• Miss Santosh Mehta v. Om Prakash and Ors. (1980) 3 SCC 610: The Supreme Court discussed the discretionary power of the Rent Controller under Section 15(7) of the Delhi Rent Control Act, 1957, emphasizing that striking off a tenant’s defense should not be a routine action but an exceptional step for situations of wilful default. (Supreme Court of India)
• Smt. Kamla Devi v. Vasdev (1995) 1 SCC 356: The Supreme Court reiterated that Section 15(7) of the Delhi Rent Control Act grants discretion to the Rent Controller, who may or may not strike off the defense, depending on the facts of each case. (Supreme Court of India)
• Manik Lal Majumdar and Ors. v. Gouranga Chandra Dey and Ors. AIR 2005 SC 1090: The Supreme Court interpreted the expression ‘prefer an appeal’ in the context of Section 20 of the Tripura Buildings (Lease and Rent Control) Act, 1975, stating that the Appellate Authority may not proceed with the hearing of the appeal until the tenant has paid or deposited the arrears of rent. (Supreme Court of India)
• Bimal Chand Jain v. Sri Gopal Agarwal 1981 (3) SCC 486: The Supreme Court held that the word “may” in sub-rule (1) of Rule 5 of Order XV CPC vests power in the court to strike off the defence but does not oblige it to do so in every case of default. The court has a reserve of discretion not to strike off the defense if there is good reason. (Supreme Court of India)
• Ladly Prasad v. Ram Shah Billa and Ors. (1976) 2 ALR 8: The Allahabad High Court held that it is not obligatory for the court to strike off the defense in case of default if circumstances justify granting further time on security. (High Court of Judicature at Allahabad)
• Kunwar Baldevji v. The XI Additional District Judge, Bulandshahar and Ors. (2003) 1 ARC 637: The Allahabad High Court observed that if the tenant denies any rent to be due, the court shall be required to decide the same, which will come subsequent to the ‘first date of hearing’ under Order 15, Rule 5, CPC. (High Court of Judicature at Allahabad)
• Hisamul Islam Siddiqui and Anr. v. Mohd. Javed Barki 2016 (131) RD 135: The Allahabad High Court upheld the order striking off the defense after finding a lack of rent deposit, even though the defendant had not denied his status as a tenant. (High Court of Judicature at Allahabad)

Legal Provisions:

• Order XV Rule 5 of the Code of Civil Procedure, 1908: This provision mandates the deposit of rent by a tenant in a suit for eviction and rent recovery.
• Section 109 of the Transfer of Property Act, 1882: This section deals with the rights of a transferee of a property.

[TABLE] of Authorities:

Judgment

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

How each authority was viewed by the Court?

The Court analyzed the authorities, emphasizing the discretionary nature of the power to strike off the defense, but also highlighting that this discretion should not be used to condone wilful defaults. The Court observed that authorities such as Miss Santosh Mehta v. Om Prakash and Ors. [CITATION] and Smt. Kamla Devi v. Vasdev [CITATION], while discussing the discretionary power, also recognized that the power should be used against tenants who show defiance or gross neglect. The Court also relied on Bimal Chand Jain v. Sri Gopal Agarwal [CITATION] to emphasize that the word “may” in Order XV Rule 5 CPC does not mean that the court has to strike off the defense in every case of default, but it also does not mean that the court should not strike off the defense when there is a wilful default.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the defendant’s consistent failure to deposit rent, despite being a tenant of the suit property. The Court noted that the defendant’s denial of the landlord-tenant relationship was a mere tactic to avoid payment, and his conduct demonstrated a clear defiance of the law. The Court emphasized that Order XV Rule 5 of the CPC was designed to ensure that tenants do not enjoy the property without paying rent, and this provision should not be rendered nugatory by allowing tenants to avoid payment through baseless denials. The Court also noted that the High Court had not provided any cogent reasons for granting the defendant “indulgence,” and this was not supported by any facts or circumstances on record.

Sentiment Analysis of Reasons Given by the Supreme Court:

The following table ranks the sentiment analysis of reasons given by the Supreme Court, based on the emphasis in the reasoning portion:

Fact:Law Ratio:

The following table presents the ratio of fact to law considerations that influenced the Court’s decision:

Logical Reasoning:

ISSUE: Whether the High Court was right in reversing the order striking off the defence?

The Court considered alternative interpretations of Order XV Rule 5 CPC, particularly the argument that the word “may” implies a discretionary power. However, the Court rejected this interpretation as a basis for allowing a tenant to avoid payment. The Court emphasized that while discretion exists, it should be exercised judiciously and not in a manner that renders the provision ineffective. The Court also considered the defendant’s argument that he had paid rent to the previous owner, but found this to be irrelevant to his obligation to pay rent to the plaintiff.

The Supreme Court’s decision was clear: the defendant’s defense was correctly struck off by the Trial Court due to his failure to deposit rent. The Court emphasized that the tenant’s denial of the landlord-tenant relationship was not a valid reason to avoid the obligations under Order XV Rule 5 CPC. The Court also highlighted that the High Court’s order lacked any cogent reasons for granting the defendant “indulgence.”

The Supreme Court’s reasoning included the following points:

• The defendant, being a lessee, was obligated to deposit rent.
• The defendant failed to deposit rent at the first hearing and during the suit.
• Denial of the landlord-tenant relationship does not absolve the tenant from the obligation to deposit rent.
• The High Court’s order lacked any cogent reasons for granting the defendant “indulgence.”
• The provisions of Order XV Rule 5 CPC are designed to ensure that tenants do not enjoy the property without paying rent.

The Court quoted the following from the judgment:

“The present one has clearly been the case of volitional non-performance with nothing left to guess about the defendant’s mood of defiance.”

“The expected circumspection would require the Court to be cautious of all the relevant facts and the material on record and not to strike off the defence as a matter of routine.”

“However, when a case of the present nature is before the Court, disclosing deliberate defiance and volitional/elective non-performance, the consequence of law remains inevitable, that the defence of such a defendant would be struck off.”

Key Takeaways

• A tenant cannot avoid the obligation to deposit rent by simply denying the landlord-tenant relationship.
• Order XV Rule 5 of the Code of Civil Procedure, 1908, mandates that tenants must deposit rent at the first hearing and regularly during the continuation of the suit.
• Courts have discretion in striking off a tenant’s defense, but this discretion should be exercised judiciously and not in a manner that condones wilful default.
• Tenants who show defiance or gross neglect in paying rent may forfeit their right to be heard in defense.
• The High Court’s decision to grant “indulgence” to the tenant without valid reasons was not upheld by the Supreme Court.

Directions

The Supreme Court directed the Trial Court to expedite the suit, keeping in view the observations made in the judgment and the High Court’s earlier direction for expeditious disposal. The Trial Court was also instructed to consider the fact that the suit, filed in 2011, had been pending for a long time.

Development of Law

The ratio decidendi of this case is that a tenant cannot avoid the obligation to deposit rent by simply denying the landlord-tenant relationship. The Supreme Court clarified that while the court has discretion in striking off a tenant’s defense, this discretion should not be used to condone wilful defaults. The Court emphasized that Order XV Rule 5 of the CPC is designed to ensure that tenants do not enjoy the property without paying rent, and this provision should not be rendered nugatory by allowing tenants to avoid payment through baseless denials. This judgment reinforces the importance of compliance with procedural requirements and the obligations of tenants in rent recovery and eviction suits.

Conclusion

The Supreme Court’s judgment in Asha Rani Gupta vs. Sri Vineet Kumar clarifies the obligations of tenants under Order XV Rule 5 of the Code of Civil Procedure, 1908. The Court held that a tenant cannot avoid paying rent by simply denying the landlord-tenant relationship, and the failure to deposit rent as required by law can lead to the striking off of the tenant’s defense. This decision reinforces the importance of compliance with procedural requirements and the need for tenants to fulfil their obligations during legal disputes. The Supreme Court set aside the High Court’s order and restored the Trial Court’s order, emphasizing that the discretion to not strike off defense should not be exercised in cases of wilful default.