S. Venkataramanaswami Ayyar vs S. Abdul Wahab

M. Natesan, J.—This Second Appeal has been filed, by the defendant in a suit for recovery of a sum of Rs. 2,562-50 as arrears of rent due

in respect of the defendant''s tenancy of a building.

The defendant has been a tenant of the building in question, except for two upstairs rooms, for a number of years, running a coffee and meals

hotel in the premises. It is the common case of the parties that the agreed rent till 8th February, 1960, was Rs. 112-50 per month. There is

evidence on record that, in the middle of 1959 itself, the plaintiff had been seeking to evict the defendant and had been refusing to receive the rent

at the rate of Rs. 112-50 per month. The plaintiff would have it that it was not his intention to get an enhanced rent, but to secure vacant

possession of the building for the purpose of repairs and improvements.

It is the plaintiff''s case that, on 8th February, 1960, there was an agreement between him and the defendant at the intercession of one Natesan

Pillai, P. W. 2 in this case whereunder the defendant agreed to pay rent at the rate of Rs. 200 per mensem from 1st of Masi, 1960, that

notwithstanding this agreement, the defendant failed to pay the agreed rent of Rs. 200 even in the first month and that he sent only a Bank draft for

Rs. 112-50. The plaintiff returned this draft for Rs. 112-50 sent for Masi 1960, protesting against the conduct of the defendant in sending that

amount only. This protest letter has not been produced by the defendant. On the refusal of the plaintiff to accept rent at Rs. 112-50 per month, the

defendant paid the rents into the Karur Vysia Bank Ltd., without any reference to the plaintiff. For about a year after this rejection we find no

correspondence between the parties.

On the plaintiff issuing a notice in February, 1961, the defendant, along with his reply notice Exhibit A-2, sent a draft for Rs. 1,350/- being the

accumulated rent at Rs. 112-50 per month which had been put into the Bank. The plaintiff accepted this draft for Rs. 1,350 without prejudice to

his contention and the defendant continued to send rent at Rs. 112-50 per month thereafter. The plaintiff accepted the subsequent rents also of

course without prejudice to his claim. This suit was instituted on 5th February, 1963, claiming the balance of rent on the basis that the agreed rent

was Rs. 200/- per mensem. Proceedings for eviction were also started under the Madras Buildings (Lease and Rent Control) Act, on the basis

that there was wilful default in the payment of the balance of rent.

The defendant denied any agreement on 8th February, 1960, to pay rent from 1st Masi, 1960 at the rate of Rs. 200 per mensem. He would

state that he never agreed to pay rent at Rs. 200 per month unequivocally as alleged, and that there was no concluded agreement in this regard,

much less a completed contract. There is no denial that there were talks on 8th February, 1960, between the plaintiff and the defendant. Nor is

there any denial of the intercession of Natesan Pillai, P. W. 2, in the matter. According to the defendant, he wanted the two upstairs rooms also to

be made available to him and his case is that he did not accept to a rent of Rs. 200 per month, as such without reference to the two upstairs

rooms. In the written statement it is stated that the defendant expressly informed the plaintiff that the question of paying enhanced rent will arise

only after the tenants occupying the two upstairs rooms vacated and the rooms were given delivery to the defendant. It is the defendant''s case that

everything was kept in suspense and the plaintiff proposed to take suitable steps to have the tenants in the upstairs rooms evicted outside or

through Court.

From the records it is seen, and it is the finding of the Courts below, that the plaintiff had asked for arrears of rent prior to 1960 at Rs. 175 per

month, but that the matter was settled between the parties on 8th February, 1960, the defendant agreeing to pay, along with the arrears of rent, a

further sum of Rs. 150. It is the admitted case of the plaintiff that there was an advance of Rs. 500 left with the plaintiff, and that the defendant had

paid the arrears of rent due prior to the date of the fresh agreement, together with a sum of Rs. 150 immediately after the agreement on 8th

February, 1960. On the plaintiff''s side, the plaintiff, besides himself, examined Natesan Pillai as P. W. 2, and the defendant was the sole witness

for the defence. Admittedly there was none else present at the time of the agreement. The Courts below have concurred in upholding the plaintiff''s

case of an agreement to pay rent at Rs. 200 per month from Masi, 1960. They overruled the legal plea put forward for the defendant that, even if

the agreement was established as a fact, the agreement to pay enhanced rent was void and unenforceable in view of the provisions of the Madras

Buildings (Lease and Rent Control) Act (XVIII of 1960).

Counsel for the defendant challenges before me the finding of the Courts below as to the agreement between the plaintiff and the defendant to

pay rent at Rs. 200 per month. He also contends that the agreement, even if it is true, is void under the provisions of Madras Act (XVIII of 1960).

The finding of the Courts below as to the truth or otherwise of the agreement is essentially a question of fact and the matter is now before me in

second appeal. Learned Counsel for the defendant urges that certain essential and important pieces of evidence have not been given consideration,

and that their materiality has been ignored, x x x x x (After discussing the evidence, his Lordship proceeded). In the circumstances, when the

Courts below accept the evidence of P. Ws. 1 and 2 and hold that there was a clear agreement to pay rent at Rs. 200 per month, sitting in second

appeal, I have to accept the finding. The appellate Court concludes the matter thus:

Taking all the circumstances into consideration, certainly the evidence of P. Ws. 1 and 2 is preferable to that of the defendant and the conclusion

of the learned District Munsif that the agreement set up by the plaintiff is true, cannot be seriously challenged"".

I shall now take up the next question that the agreement entered into on 8th February, 1960, enhancing the then prevailing rent is void in law

and, therefore, unenforceable. The contenti n of learned Counsel for the appellant is that except under the provisions of the Madras Buildings

(Lease and Rent Control) Act, no landlord is entitled to increase the rent, and that, even if the parties voluntarily enter into an agreement to

increase the rent, the agreement is unenforceable jn law. Reliance is placed on Section 7 of the Madras Act (XVIII of 1960) and the general

scheme of the Act, to protect the unreasonable eviction of tenants and the regulation and control of rents of buildings. Admittedly no fair rent has

been fixed for the building in question and the relevant provisions are Sub-sections (2) and (3) of Section 7 of the Act:

(2) Where the fair rent of a building has not been so fixed --

(a) the landlord shall not claim, receive or stipulate for the payment of, any premium or other like sum in addition to the agreed rent:

Provided that the landlord may receive, or stipulate for the payment of an amount not exceeding one month''s rent, by way of advance.

(b) Save as provided in Clause (a), any sum paid in excess of the agreed rent, whether before or after the date of the commencement of the Act, in

consideration of the grant, continuance or renewal of the tenancy of the building after the date of 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.

Any stipulation in contravention of Sub-section (2) shall be null and void"".

I fail to see how anything hi the above sub-sections can invalidate an agreement between a landlord and tenant for a rent different from the then

prevailing rent. The fresh agreement need not necessarily be for enhancement of rent. It can equally se for a reduced rent. What Sub-section (2)

prohibits is the receipt by the landlord of any amount as premium or like sum in addition to the agreed rent. The expression ""agreed rent"" has not

been defined in the Act and its ordinary meaning is, rent agreed between the parties, not any unilateral demand to which the tenant has not

consented. The contention of Counsel for the appellant that there can be no fresh agreement for rent after coming into force of the Act, cannot

stand, as the Act deals with tenancies commenced before the Act and those which may come into existence after the Act. When a tenant, for the

first time after the Act, is inducted into a building, the landlord and tenant, it is not contended, cannot agree for the rent payable for occupation. The

Act does not define ""rent,"" but makes a clear distinction between ""rent"" and ""premium or other like sum"". Section 105 of the Transfer of Property

Act defines that the price paid or promised in consideration of a lease is called the premium, and that the money, share of crops, service or other

things paid periodically or on specific occasions or to be rendered at such times by the tenant is called the rent. Clause (b) of Section 7(2) brings

out clearly the meaning of the words ""premium"" or ""other like sum"". They are sums paid in excess of the agreed rent in consideration of the grant,

continuance or renewal of the tenancy. In A. Abdul Rahim Vs. State of Madras by Accommodation Deputy Tahsildar, , Veeraswami J., points out

that ""premium"" as ordinarily understood is a lump sum payment made outright as price for a lease. Referring to the words ""other like sum"", the

learned Judge observes:

The question then is whether such an amount is within the scope of ""other like sum"". The scope of those words has to be understood in the light of

the doctrine of ejusdem generis. Only a sum which has some resemblance to what is comprehended by the word ""premium"" will come within the

scope of the words ""other like sum"".

In King v. Earl of Cadogan, (1915) 3 KB 485 , which the learned Judge has cited, Warrington, L. J., said:--

Now the Legislature in expressing Its Intention has chosen to use two words--""rent"" and ""premium""--both of which in connection with leases have

perfectly well known, legal meanings. I need not say anything about the meaning of the word rent, but ""premium"", as I understand it, used as it

frequently is in legal documents, means a cash payment made to the lessor, and representing, or supposed to represent, the capital value of the

difference between the actual rent and the best rent that might otherwise be obtained. It is a very familiar expression to everybody who knows the

forms and powers of granting leases. It is in fact the purchase money which the tenant pays for the benefit which he gets under the lease.

The question, in fact, is not res integra and has been considered at length by Venkataraman, J., in P. Subbiar v. Madurai Sowrashtra Sabha, C.

R. P. No. 2319 of 1965 (Mad), and again by Sada-sivam, J., in Ranganayaki Ammal Vs. M. Chockalingam, . In Jamuna Bai and Others Vs.

Gampina Narayanamurthy and Others, Chandra Reddy, Officiating Chief Justice, and Srinivasachari, J. considered this question and held that,

where fair rent has not been fixed, it is open to the parties to come to an agreement with regard to an increase in the rent. The matter was again

considered by the Andhra Pradesh High Court in D.K. Aswathanarayanaiah Vs. Nallapula Sanjeeviah, . Referring to the Madras Buildings (Lease

and Rent Control) Act (25 of 1919), it was held in that case that, subject to what was specifically provided in the Act, the freedom of contract had

not been taken away, that what Section 6 in that Act stipulated was that in case a fair rent was fixed, the landlord was not permitted to charge an

increased rent except as provided in the Act, and that in case the landlord entered into an agreement with the tenant to get an increased rent over

and above the fixed rent, such a contract was not enforceable in law. However, it was held that, so long as the fair rent was not fixed, the parties

were at liberty to enter into a contract as regards the rent. In C. R. P. No. 2319 of 1965 (Mad), Venkataraman, J., refers to these cases of the

Andhra Pradesh High Court, and distinguishing the two earlier decisions of this Court in A. Moses Pillai Vs. M.K. Govindan, and In Re :

Swamikannu Padayachi and Others, as not applicable after Act (25 of 1949) was amended, where the fair rent had not been fixed, upheld the

validity of a fresh agreement for enhanced rent. In Ranganayaki Ammal Vs. M. Chockalingam, Sadasivam, J. examined at length the nature of

premium"" or ""other like sum"", and, pointing out that there is a clear distinction between ""rent"" on the one hand and ""premium"" or ""other like sum

on the other, holds that ""premium"" does not include ""rent"". The learned Judge observes:--

There is nothing illegal in a landlord asking for higher rent so long as fair rent has not been fixed. If the tenant does not agree to pay it, the remedy

of the landlord may be only to file a petition for fixation of fair rent.

I am in entire agreement with the learned Judge, Venkataraman, J. in C.R.P. No. 2319 of 1965 (Mad) and with the learned Judge Sadasivam, J.,

in Ranganayaki Ammal Vs. M. Chockalingam, . My attention has not been drawn to any specific provision in Madras Act (25 of 1949),

particularly its amendment in 1951, or in Madras Act (18 of 1960), prohibiting the parties to agree between themselves and vary the prevailing

rent, so long as the fair rent has not been fixed for the premises under the provisions of the Act. Restrictions on the rights of parties to enter into a

contract cannot be imposed, purely by implication, particularly when the existence of such rights is not inconsistent with the provisions of the Act.

The Act makes a distinction between a case where the fair rent has been fixed and the one where the fair rent has not been fixed under the Act.

Section 5 of the Act provides against an increase of rent, where the fair rent has been fixed. Provision for an increase or decrease in the fair rent

would be unenforceable. Similarly, Section 6 provides for an increase in the rent when taxes are increased. The provisions for variation of rent in

Sections 5 and 6 are, it must be appreciated, such that if the tenant is not willing and agreeable to an increase in accordance with the provisions,

the landlord could have the rent revised under the provisions of the Act. Section 7 (1) (a) provides for the landlord claiming excess in terms of the

provisions of Sections 5 and 6 and the only provision which has to be considered where the fair rent has not been fixed is Section 7 (2): and this

section does not prohibit any agreement between the parties increasing the rent. It is needless to point out that any unilateral action of the landlord

increasing the rent will not avail him, as, in the absence of an agreement with the tenant, he cannot recover the same in a Court of law.

The second appeal fails and is dismissed with costs. No leave.