J.C. Patel vs N.R.M. Ponnayya Nadar and Another

P.V. Rajamannar, C.J.—The tenant is the Appellant and the Respondents are the landlords. The Appellant was in occupation of the ground

floor of the premises, No. 76, Gollavar Agraharam, Tondiarpet, Madras, from 1st January 1947. He was paying rent at varying rates. In the

beginning it was Rs. 400 per month. Subsequently it was reduced to Rs. 350 and again to Rs. 275 at which rate he was paying from 1st January

1949. The Appellant made default in payment of rent and the landlords filed against him a petition for eviction. The Rent Controller made an order

of eviction on 13th September 1949. The landlords filed an execution petition and eventually obtained possession on 17th January 1952.

Meanwhile the Appellant filed an application u/s 4 of the Madras Act XXV of 1949, the Madras Buildings (Lease and Rent Control) Act, 1949,

for fixing fair rent. The Rent Controller by an order, dated 25th April 1951, fixed the fair rent at Rs. 125 per month. The landlords filed an appeal

and the Appellate Authority fixed the fair rent at Rs. 187-8-0 per month on 28th November 1951. A few days before the date of the appellate

order the Respondents filed a suit, Original Suit No. 1653 of 1951, in the City Civil Court at Madras for recovery of the arrears of rent and

electric charges up to 31st October 1951. The claim was for Rs. 3,695 out of which Rs. 3,475, represented arrears of rent and Rs. 220 arrears of

electric charges. The main plea of the Appellant was that having regard to fixation of fair rent the Respondents'' claim was not sustainable and on

the other hand he had become entitled to refund of the amount paid by him in excess of the fair rent from 1st January 1947, onwards and that on a

proper calculation, the Respondents, that is, the Plaintiffs themselves would be liable to pay him Rs. 4,381-4-0, after deducting Rs. 100 for electric

charges. The Appellant thus made a counter-claim for which he paid requisite court-fee and he prayed for a decree for the said sum of Rs. 4,381-

4-0. The Plaintiffs-Respondents filed a reply statement in which they stated that it was only in November 1951, that fair rent had finally been fixed

at Rs. 187-8-0, per month and that the tenant could claim refund or adjustment of the excess amount paid only for a period of twelve months

anterior to the date of the final order fixing fair rent. According to the Plaintiffs the Defendant would be liable to pay Rs. 2,831-4-0. Along with the

reply statement a statement of account was filed giving details of calculation. At the time of the trial it was agreed that the statement of account may

be accepted as correct so far as figures were concerned. The subject-matter of the dispute between the parties was narrowed down to a single

question, namely, whether the Defendant was entitled to refund of rent paid in excess of the amount computed on the basis of the fair rent fixed by.

the Rent Controller and as modified by the Appellate Authority, calculated from 1st January 1947, the date of the commencement of the tenancy

or whether the Defendant''s claim should be restricted to the period of one year prior to the date of the fixation of fair rent. To understand the

controversy between the parties it is necessary to refer to the material provisions of the two Acts, Madras Acts XXV of 1949 and VIII of 1951.

Section 6 of the Madras Act XXV of 1949, as it originally stood ran as follows:

When the Controller has determined the fair rent of a building--

(a) The landlord shall not claim or receive any premium or any other like sum in addition to fair rent or any rent in excess of such fair rent, but the

landlord may stipulate for and receive as advance, an amount not exceeding one month''s rent ;

(b) any agreement for the payment of any sum in addition to rent or of rent in excess of such fair rent, except in cases falling u/s 5 or Clause (a) of

this section shall be null and void in respect of such addition or excess and shall be construed as if it were an agreement for payment of the fair rent;

(c) any Bum paid in excess of the fair rent whether before or after 1st October 1946 in respect of the use of the building after that date shall be

refunded to the person by whom it was paid or, at the option of such person, otherwise adjusted.

This section was amended by the Madras Act VIII of 1951. By Section 7 of that Act, the following section was substituted:

Where the Controller has determined the fair rent of a building--(a) the landlord shall not claim, receive or stipulate for the payment of (i) any

premium or other like sum in addition to such fair rent, or (ii) save as provided in Section 5 or Section 5-A, any thing in excess of such fair rent:

Provided that the landlord may receive, or stipulate for the payment of, an amount not exceeding two months'' rent, by way of advance ;

(b) save as provided in Clause (a), any premium or other like sum or any rent paid in addition to, or in excess of such fair rent, whether before or

after the commencement of this Act, in consideration of the grant, continuance or renewal of the tenancy of the building after such commencement

shall be refunded by the landlord to the person by whom it was paid or at the option of such person shall be otherwise adjusted by the landlord:

Provided that where before the determination of the fair rent, rent has been paid in excess thereof, the refund or adjustment shall be limited to the

amount paid in excess for a period of one year immediately before such determination.

The amending Act came into force on 1st May 1951, that is to say, after the order of the Rent Controller and when the appeal preferred by the

landlords against the decision of the Rent Controller was pending before the Appellate Authority. The Appellant''s contention was that before the

Amending Act came into force he had obtained a vested right to get refund of the amounts paid by him in excess of the fair rent from 1st January

1947, and that right was not and cannot be deemed to have been taken away by the amending Act. The Respondents, Plaintiffs, on the other hand,

relied upon Section 20 of the Amending Act VIII of 1951, which runs thus:

Any application made, appeal preferred or other proceeding instituted under the said Act, and pending at the commencement of this Act shall be

disposed of as if this Act had been in force at the time when such application, appeal or proceeding was made, preferred or instituted.

The learned Judge of the City Civil Court held that the right to claim excess sums paid over and above the fair rent was vested in the Defendant

(Appellant) on 25th April 1951 when the Rent Controller determined the fair rent and that the Amending Act had not disturbed that right

retrospectively. On this conclusion he dismissed the Plaintiffs'' suit and passed a decree in favour of the Defendant for a sum of Rs. 4,239-15-3.

The landlords filed an appeal to this Court, City Civil Court Appeal No. 2 of 1953, and the Defendant preferred a memorandum of cross-

objections. Both were heard together and disposed of by BASHEER AHMED SAYEED J. He allowed the Plaintiff''s appeal and dismissed the

memorandum of cross-objections of the Defendant and passed a decree in favour of the Plaintiffs for a sum of Rs. 2,831-4-0, as claimed by them

in the statement of account appended to their reply statement. The appeal now before us is from the judgment of BASHEER AHMED SAYEED

J.

Mr. G.T. Ramanujachariar, learned Counsel for the Defendant-Appellant, contended that a vested right to recover sums paid in excess of the

fair rent from the commencement of the tenancy had accrued to the tenant from the date of the Rent Controller''s order, that is, from 25th April

1951, and that the Amending Act, did not take away that vested right expressly or impliedly. Besides relying on general rules of statutory

construction he also relied on Section 19(a) of the Madras Act XXV of 1949, which says that the expiration of the Act shall not render

recoverable any sum which, during the continuance, was irrecoverable or affect the right of a tenant to recover any sum which during the

continuance of this Act was recoverable by him thereunder. He also cited to us a decision of a Division Bench of this Court in Abdulla v. Dorai

ILR (1956) Mad. 846, as a direct authority in favour of his contention.

Much time need not be taken to deal with the argument based on Section 19(a) of the original Act. The Act is a temporary one, that is, the Act

ex-facie is for a limited duration. The general rule is that after the expiration of a statute, in the absence of any provision to the contrary, no

proceedings can be taken on it, and proceedings already commenced ipso facto determine. It is apparently to save rights which had become finally

vested when legal proceedings had been instituted from lapsing that Section 19 was enacted. It is not correct to say that the Act as such has

expired because some of its provisions have been amended by the later Act. There is, however, the general rule that a vested right is not deemed

to be taken away by an amending Act unless a contrary intention appears expressly or by necessary intendment. The question is, did any vested

right accrue to the Defendant-Appellant, when the Rent Controller fixed the fair rent at Rs. 125.

Obviously the Appellant was not entitled to obtain a refund under the general law. His right is entirely founded on a statutory provision contained

in Section 6(c) of the original Act. That right itself depends on two conditions, namely, that the Rent Controller has determined the fair rent and that

the fair rent is less than the rent which was being paid by the tenant. Even then it is a limited right as it is confined to the rent falling due after the

commencement of that Act, Act XXV of 1949. The right to refund is one of two alternatives, the other alternative being an adjustment otherwise at

the option of the tenant. It is clear, therefore, that till the fair rent has been fixed and it is found that it is less than the rent being paid no right to

refund can arise. It is not as if there is a hypothetical vested right in the sense that if and when an application for fixing fair rent is made and the fair

rent is fixed at a rate lower than the contract rate, the tenant will be entitled to refund. Mr. Ramanujachariar, learned Counsel for the tenant, placed

very great reliance on the following clause in Section 6 of the Act, namely:

Where the Controller has determined the fair rent of a building.

His argument was that there is mention only of fixation of fair rent by the Controller and that was done in this case on 25th April 1951. He had,

however, to admit that he would not be entitled to refund on the basis of the rate fixed by the Controller, namely, Rs. 125 per month, because the

Appellate Authority had fixed it at a higher figure, namely, Rs. 187-8-0. He conceded that he would be entitled to refund on a calculation based on

the fair rent of Rs. 187-8-0 only. Section 12 of the original Act confers a right on any person aggrieved by the order of the Controller to prefer an

appeal to the Appellate Authority. The Appellate Authority is given wide powers. He can give the parties an opportunity of being heard and, if

necessary, he can make a further enquiry either personally or through the Controller. Sub-Section 4 of Section 12 is important ;

The decision of the Appellate Authority, and subject to such decision, an order of the Controller shall be final and shall not be liable to be called in

question in any Court of Law except as provided in Section 12-B.

It follows that though only the Controller is mentioned in Section 6, his fixation of fair rent is subject to any variation which may be made by the

Appellate Tribunal. A literal construction of the clause where the Controller has determined the fair rent of a building may lead to startling results in

a case like that decided by VISWANATHA SASTRI J., namely, Rama Rao v. Venkata Rajeswara Sastry (1958) 2 And. W.R. 928. In that case

the Rent Controller dismissed the application filed by the tenant for the fixation of fair rent, but on appeal the Appellate Authority set aside the

dismissal and fixed the fair rent at a rate less than what was being paid. A literal construction in that case would lead to the result that in spite of the

Appellate Authority fixing the fair rent at a rate less than the contract rate, the tenant would not be entitled to a refund because the Rent Controller

himself had not determined the fair rent. The learned Judge held that such a construction would be anomalous and would not give effect to the

obvious intention of the Legislature. The following observations of the learned Judge are opposite:

On such appeal being preferred, the Appellate Authority has to decide the appeal and the decision of the Appellate Authority and subject to such

decision, the order of the Controller, is made final. This provision gives effect to the well-established rule that an appeal destroys the finality of the

decision appealed against and the decision appealed against is superseded by the decision of the Appellate Authority which alone should be

looked to in order to determine the rights of the parties. The Appellate Authority has the same power and performs as nearly as possible the same

duties as are conferred on the Kent Controller in the matter of fixing a fair rent. Therefore, by imposing a severe but not an unbearable strain on the

language of Section 6(1), it has to be held that even where an Appellate Authority in reversal of the order of the Rent Controller dismissing an

application for fixing the fair rent fixes the fair rent, the tenant would be entitled to a refund of the excess in accordance with Section 6(1)(b).

We can add another instance of a case. Where the Rent Controller fixes a rate less than the rate in force but the Appellate Authority sets aside

the decision of the Rent Controller and holds that the current rate is the fair rent, can it reasonably be contended that though the Appellate

Authority has not fixed a rate less than the rate in force, nevertheless the tenant would be entitled to obtain a refund because the Rent Controller

had determined the fair rent at less than the current rate ? We think not. Mr. Ramanujachariar, when confronted with these anomalies, tried to

draw a distinction between the right to obtain refund in the abstract and the fixing of any particular amount as the fair rent. He said that it is the Rent

Controller who has jurisdiction to fix the fair rent but the quantum would be what is finally determined by the Appellate Authority. We are unable to

follow this distinction. The right to refund depends upon the quantum of the fair rent as finally fixed. The Appellate Authority has as much

jurisdiction to fix the fair rent as the Rent Controller has.

In the case before us, before the Amending Act of 1951 came into force, an appeal had been preferred to the Appellate Authority by the

landlords against the decision of the Rent Controller fixing the rent at Rs. 125 per mensem. The matter was, therefore, at large and it was quite

possible that the Appellate Authority might hold that the rent that was being paid is the fair rent in which case undoubtedly the tenant would have

no right to obtain any refund. Pair rent must be taken as having been fixed by the Appellate Authority. The Appellant''s right to obtain refund arose

only on the final order of the Appellate Tribunal and when that right arose, the law applicable was contained in Section 6 as amended by the

Madras Act VIII of 1951. It cannot be held that, before the Amending Act came into force, the Appellant had obtained any vested right to obtain

a refund.

The very decision relied on by Mr. Ramanujachariar in Abdulla v. Dorai ILR (1956) Mad. 846, is on principle against his contention. In that

case the tenant filed an application for fixation of fair rent and the Rent Controller fixed the fair rent at Rs. 30 per mensem, that is, by reducing the

agreed rate of rent of Rs. 35 by Rs. 5 a month. The tenant preferred an appeal against the order of the Rent Controller claiming a further reduction

but the landlord did not file any appeal. The tenant''s appeal was dismissed on 2nd November 1951, by which time the Amending Act VIII of

1951, had come into force. In an action brought by the tenant to recover the amount of rent paid by him in excess of the fair rent as fixed by the

Rent Controller, it was contended on behalf of the landlord that the refund should be limited to a period of one year applying the proviso to Section

6 which was introduced by the Amending Act of 1951. The lower Court had held that refund could be claimed by the tenant in respect of the

amount paid in excess of the fair rent for a period of only one year relying upon Section 20 of the Amending Act, but the learned Judges took a

different view and held that the tenant was entitled to refund from 1st October 1946, in accordance with the provisions of Section 6(c) of the

original Act as it stood before the amendment. The reasoning on which this conclusion was based is very important. It is contained in the following

passage in the judgment of RAMASWAMI GOUNDER J., who delivered the judgment of the Court on behalf of the Division Bench:

The learned Judge thought that though the order fixing the fair rent was passed under the provisions of the earlier Act of 1949 and, therefore, the

Plaintiff''s right to claim refund had accrued with effect from 1st October 1946, as under that Act, by reason of the amendment of 1951, the

Plaintiff could not claim refund for more than the said period of one year, because, by Section 20 of the Amendment Act VIII of 1951, any

application made, appeal preferred or other proceeding instituted under the said Act of 1949, and pending at the commencement of the

Amendment Act shall be disposed of as if the Amendment Act had been in force at the time when such application, appeal or proceeding was

made, preferred or instituted. The learned Judge thought that the decision as regards the fixation of the fair rent became final only on the dismissal

of the appeal on 2nd November 1951. We have no doubt that the learned Judge was erroneous in that view, if it is remembered that the appeal

was one preferred by the Plaintiff and not by the Defendants and which related to a further reduction of the rent as the Plaintiff was not satisfied

with the reduction of rupees five ordered by the Kent Controller. In other words the appeal had no relation to the reduction of rupees five already

made by the Kent Controller and that was not the subject-matter of the appeal, so that, so far as the reduction of rupees five ordered by the Rent

Controller was concerned, his order, dated 16th January 1951, was final. The learned Counsel for the Respondents contended that when once the

appeal was preferred the entire matter was at large and that it became as well the duty of the Appellate Court to fix the fair rent. But Section 12(3)

of the Act, which defines the powers of the Appellate Court only states that the appellate authority shall send for the records of the case from the

Controller, after giving the parties an opportunity of being heard, and, if necessary, after making such further enquiry as he thinks fit either

personally or through the Controller, shall decide the appeal; that is to say, the appellate authority has only to decide the subject-matter of the

controversy covered by the appeal and not fix the fair rent even to prejudice the tenant when no appeal has been preferred by the landlord. We,

therefore, hold that the Plaintiff was entitled to a refund of the excess rent paid by him for the period commencing from 1st October 1946 and that

right which had accrued to him before the Amendment Act of 1951 came into force cannot be taken away as we were not shown any provision in

the said Act expressly or by implication taking away such a right.

The basis of the decision, therefore, was that, as there was no appeal by the landlord against the decision of the Rent Controller reducing the

agreed rent by Rs. 5, the reduction to that extent had become final as against the landlord and the tenant had obtained an indefeasible right to get

refund on that basis. By implication the view of the learned Judges would possibly have been different if the appeal had not been by the tenant but

by the landlord and there had been an enhancement of the rate over that fixed by the Rent Controller. In that case the appeal by the tenant was

actually dismissed. Supposing it had not been but it was allowed and there was a further reduction of the agreed rent, say by another Rupees five,

it is difficult to be certain of what should happen. The difficulty is envisaged in the following comment by VISWANATHA SASTRI J., in Rama

Rao v. Venkata Rajeswara Sastry (1956) 2 And. W.R. 928, 931:

In the view that I have taken of the case, it is unnecessary for me to consider whether Abdulla v. Dorai I.L.R (1956) Mad. 846, was correctly

decided in so far as it held that the amending Act of 1951 did not affect the right of the tenant to a refund of excess rent paid by him in a case

where an appeal against the order of the Rent Controller fixing the fair rent preferred by the tenant was decided after the Amending Act VIII of

1951 came into force. On what basis the refund should be worked out in case the Appellate Authority fixes the fair rent at a rate lower than that

fixed by the Rent Controller, is a matter which would arise for consideration if the principle laid down by the learned Judges in that case has to be

followed.

Mr. Ramanujachariar cited to us the decision of the Supreme Court in Keshavan Madhava Menon Vs. The State of Bombay, That related to

the scope of Article 13 of the Constitution of India and it has no bearing on the facts before us.

That there cannot be a vested right as a result of any legal proceedings until they are finally concluded is also clear from the following passages

from two well-known text-books on statutory construction.

In Craies on Statute Law (fifth edition) at page 322, we have the following statement of law:

The effect of a repeal without any express savings is thus stated by TINDAL C.J., in Kay v. Goodwin (1830) 6 Bing. 576, 582, where he says: I

take the effect of repealing a statute to be to obliterate it as completely from the records of the Parliament as if it had never been passed; and it

must be considered as a law that never existed except for the purpose of those actions which were commenced, prosecuted and concluded whilst

it was an existing law. And in Surtees v. Ellison (1829) 2 B. & C. 750, 752., LORD TENTERDEN says: It has long been established that when

an Act of Parliament is repealed, it must be considered (except as to transactions past and closed) as if it had never existed.

In Crawford''s book on Statutory Construction, the rule is stated thus:

A repeal will generally, therefore, divest all inchoate rights which have arisen under the repealed statute, and destroy all accrued causes of action

based thereon. As a result, such a repeal, without a saving clause, will destroy any proceeding, whether not yet begun, or whether pending at the

time of the enactment of the repealing Act, and not already prosecuted to a final judgment so as to create a vested right. (P. 599-600.)

As the application filed by the tenant for fixation of fair rent had not been concluded by any final order till the disposal of the appeal by the

Appellate Authority there was no vested right before that date.

A question then arises as to the application of the proviso introduced by the Amending Act regarding the period for which the tenant is entitled

to claim refund or adjustment. The words used are

... the refund or adjustment shall be limited to the amount paid in excess for a period of one year immediately before such determination.

The determination of the fair rent by the Appellate Authority was, no doubt, on 28th November 1951, but the determination, in our opinion,

will date back to the order of the Rent Controller because in effect the order of the Appellate Authority is the order which the Rent Controller

ought to have passed. In our opinion, the period of one year must count from the date of the order of the Rent Controller. Calculated on that basis

it was agreed before us that the Respondents-landlords, would be entitled to a decree for a sum of Rs. 2,393-12-0. The decree ill be modified

accordingly. But for this modification, the appeal is hereby dismissed with costs.