Appeal No 1041 of 1963
Appeal by special leave from the judgment and order dated September 2 1963 of the Punjab High Court Circuit Bench at Delhi in LPA No 119 D of 1963
ST Desai J B Dadachanji O C Mathur and Ravinder Narain for the appellant
HN Sanyal Solicitor General of India and B P Maheshwari for the respondent
183 January 9 1964
The Judgment of the Court was delivered by HIDAYATULLAH J
This is an appeal by special leave against the order of the High Court Punjab dated August 14 1963 by which an order of the Rent Controller under section 151 of the Delhi Rent Control Act 1958 directing the appellant to deposit back rents at Rs 300 per month from 1st July 1957 was confirmed
The High Court granted the appellant one month s time from the date of its own order as the original time had already run out
The appellant is an advocate who is practising at Delhi
He is occupying No 43 Prithvi Raj Road New Delhi as a tenant and his landlord Seth Kirori Mal Luhariwala is the respondent in this appeal
The tenancy commenced on July 28 1957 and the memorandum of tenancy dated July 1 1957 produced in the case shows that the premises were taken on a monthly tent of Rs 300
The memorandum also contains other terms which need not be mentioned here because they are not relevant to the present appeal
It appears that Seth Kirori Mal was in arrears in payment of his income tax and a sum of Rs 3900000 was outstanding from him
On October 31 1957 the Income tax Officer Central Circle New Delhi to whom all cases of Seth Kirori Mal were transferred issued a notice to the appellant under section 465A of the Indian Income fax Act directing him to deposit with the Income tax Officer all sums due by way of rent as also future rents
The appellant sent no reply to this notice
He had howeveron September 29 1957 addressed a letter to the respondent Seth Kirori Mal
The reply of Kirori Mal dated October 15 1957 figured in the arguments a great deal and as it is brief it may be quoted here From TO Dated Faigarh the 15th October 1957 184 Dear Sir With reference to letter No M 17 58 dated 29th September 1957 1 am to write that you may please adjust six months rent of 43 Prithviraj Road New Delhi ie Rs 1800 rent from 1 10 57 to 31 3 1958 towards your professional fee in part payment thereof
The balance of your fee will be paid later at the time of final settlement
Yours faithfully Sd Paluram Dhanania For Kirorimal Luhariwala
Kirori Mal also sent a receipt dated October 16 1957 or the amount and is item 23 in the record
Kirori Mal had litigation in Calcutta
He had brought a suit against four defendants claiming the present property as his absolute and exclusive self acquired property
The case was pending in the High Court and on May 1 1958 an order was made appointing one Chakravarti as a Receiver of the properties including No 43 Prithvi Raj Road
Chakravarti also sent a notice on July 8 1958 to the appellant demanding rent already due and also as and when due
To this notice the appellant sent a reply on July 19 1958
He referred to the payment of rent by adjustment towards fees for the period 1st October 1957 to 31st March 1958 which was the subject of the letter above
He stated that as regards rent after 1st April 1958 he had no objection to pay the amount to the Receiver or any other claimant but regretted that it was not possible for him to make the payment because of the notice served upon him by the Income tax Officer
He asked the Receiver to get the notice withdrawn and stated that he would be glad to remit the amount of rent to him when that was done
He also raised the question of certain other expenses which he had incurred in connection with the house which he claimed he was entitled to deduct from the rent and informed that a few repairs were required in the house
A second letter was sent by the Official Receiver on September 5 1959 making another demand
In his reply dated September 14 1959 to this letter the appellant raised the 185 question that a sum of Rs 23500 was payable to him for _professional services rendered by him to Seth Kirori Mal
He stated You will therefore appreciate that I am entitled to adjust the rent payable against the fees due to me and the amount due to me will absorb the rent for a little over six years
Even before this Seth Kirori Mal had paid me a sum of Rs 1800 by way of adjustment of rent towards my professional fees due
You will therefore kindly agree that the rent payable is adjustable against the professional fee due to me
 With this letter he enclosed a copy of a statement of fees amounting to Rs 23500 which he had submitted to his client on February 4 1959
The Official Receiver then in formed the appellant that the party concerned had denied the claim for fees as absolutely false and observed in his letter that the professional fees should be the subject of some other proceeding but the rent should be paid without delay
He enquired if the amount of rent had been paid to the Income tax department in response to the notice
In his reply to this letter on July 5 1960 the appellant for the first time stated that there was an agreement between him and Seth Kirori Mal to adjust the rent towards his professional fees until the fees were fully paid
He offered to reduce the fees if Seth Kirori Mal had any objection but stated that till the professional fees were recouped no rent could be considered to be due from him
On November 25 1960 Seth Kirori Mal applied to the High Court at Calcutta for directions to the Official Receiver to take appropriate proceedings to realise the arrears of rent from the appellant and on December 19 1960 the High Court appointed Seth Kirori Mal receiver in the case
Seth Kirori Mal then served a notice on December 23 1960 on the appellant to pay the arrears of rent
To this notice the appellant sent a detailed reply which in substance has been his defence in the proceedings before the Rent Controller from which the present appeal has arisen
186 On January 4 1961 Seth Kirori Mal made an application under section 14 of the Delhi Rent Control Act before the Rent Controller Delhi
In his written statement in reply to that application the appellant pleaded that Seth Kirori Mal had no right to recover rent from him inasmuch as a notice under section 465A of the Indian Income tax Act had
been issued by the Income tax Officer Central Circle V New Delhi
He pleaded that the property was in the custody of the Court and that inasmuch as a receiver had been appointed Kirori Mal had no locus stands to maintain the petition denying at the same time that Kirori Mal had informed him that he had been appointed a receiver of the property
The appellant also contended that under the Rent Control Act a receiver had no right to act on behalf of the landlord
He referred to the alleged agreement by which fees were to be recouped from rent as and when it fell due pointing out that on an earlier occasion a sum of Rs 1800 was allowed to be adjusted towards fees
Some other please were raised but it is not necessary to refer to them because they were not raised before us
The notice to quit which the appellant alleged was not issued to him was filed in the Court of the Controller on May 17 1961
The appellant was ordered to inspect it and to be ready for his statement as to the correctness of the notice
On the next date a statement of the appellant was recorded and he denied the notice and also its receipt
The case was then set down for arguments and after hearing the arguments the Rent Controller passed his order on July 22 1961
The Rent Controller held that there was no proof on the file to show that the respondent had any right to make an adjustment of the rent against his professional dues
He held that the rent was not paid after March 31
With regard to the plea that a notice under section 465A of the Income tax Act 1922 had been issued
the Rent Controller observed that the amount if deposited in his court would not be paid to Kirori Mal unless he produced a clearance certificate from the Income tax Department
The Rent Controller also said that if in the enquiry to be subsequently made the tenant proved that the amount of fees had to be recouped from rent
the amount would not be paid to Kirori Mal 187 Against the decision of the Rent Controller the appellant filed an appeal before the Rent Control Tribunal
The Rent Control Tribunal affirmed the decision of the Controller observing that the plea taken by him that his professional fees were to come out of rent was an after thought and there was no evidence to prove that there was such an agreement between the parties
On other matters the Tribunal expressed its agreement with the Rent Controller
The appellant then appealed to the High Court of Punjab
The High Court upheld the orders so far made and pointed out that in the letter dated July 19 1958 to the Receiver the appellant had not mentioned the agreement
The High Court hi Id that the order made under section 151 of the Act was proper because it was an admitted fact that rent had not been paid to anybody from April 1 1958
The High Court endorsed the view of the Tribunals below that the notice of the Income tax Officer did not come in the way of making the deposit of the rent in the office of the Rent Controller because the amount was not to be paid to anyone till the Rent Controller had decided who was entitled to receive it
The appeal was therefore dismissed
In this court emphasis is laid upon the letter of October 15 1957 by Kirori Mal in which there was an adjustment of Rs 1800 towards fees
It was contended that there was an oral agreement to use the rent to pay the professional fees
The letter itself does not show that there was any such agreement
In fact it shows the contrary where it says The balance of your fees will be paid later at the time of final settlement
 This shows that the appellant was not entitled to retain the rent in his hands and the Tribunals below were justified in saying that the plea about the so called agreement was an after thought because till September 14 1959 the appel lant had not mentioned such an agreement
We are also satisfied that the plea was a mere device to retain the money and to avoid paying the rent
It must be remembered that there were as many as four claimants viz the Income tax Officer the Receiver and Kirori Mal in person and Kirori 188 Mal as Receiver but the appellant avoided each of these in turn by pointing to the others and in this way continued to occupy the premises without payment of any rent
It was contended however as a matter of law that a proper opportunity ought to have been given to the appellant to prove his plea by leading evidence before ordering that the rent be deposited
Mr section T Desai contended that under section 151 of the Delhi Rent Control Act an order for deposit of arrears of rent can only be made after the tenant has been given an opportunity of being heard because if the tenant makes a payment or deposit as required of him the landlord is entitled to take the amount of the deposit and the Controller can award such costs as he may deem fit to the landlord and the case comes to an end
By way of contrast he pointed out that the case proceeds if the tenant fails to make the payment or deposit as required of him
In other words it was contended that an order under section 151 for deposit of rent should only be made at the end of the case and not at an interlocutory stage
Mr Desai contended that the present order was made at an interlocutory stage and it was wrong because if the tenant deposited the money there would be no further hearing and his plea that there was an agreement between the parties that the rent as and when it fell due should be set off against the professional fees would remain untried
In our opinion this reading is not permissible
Section 15 omitting such parts as are unnecessary for the present purpose reads as follows Section 15
1 In every proceeding for the recovery of possession of any premises on the ground specified in clause a of the proviso to subsection 1 of section 14 the Controller shall after giving the parties an opportunity of being heard the an order directing the tenant to pay to the landlord or deposit with the Controller within one month of the date of the order an amount calculated at the rate of rent at which it was last paid for the period for which the arrears of the rent were legally recoverable from the ten 189 ant including the period subsequent thereto up to the end of the month previous to that in which payment or deposit is made and to conti nue to pay or deposit month by month by the fifteenth of each succeeding month a sum equivalent to the rent at that rate
3 If in any proceeding referred to in subsection 1 or sub section 2 there is any dispute as to the amount of rent payable by the tenant the Controller shall within fifteen days of the date of the first hearing of the proceeding fix an interim rent in relation to the premises to be paid or deposited in accordance with the provisions of sub section 1 or subsection 2 as the case may be until the standard rent in relation thereto is fixed having regard to the provisions of this Act and the amount of arrears if any calculated on the basis of the standard rent shall be paid or deposited by the tenant within next month of the date on which the standard rent is fixed or such further time as the Controller may allow in this behalf
6 If a tenant makes payment or deposit as required by sub section 1 or sub section 3 no order shall be made for the recovery of possession on the ground of default in the payment of rent by the tenant but the Controller may allow such costs as he may deem fit to the
landlord
7 If a tenant fails to make payment or deposit as required by this section the Controller may order the defence against eviction to be struck out and proceed with the hearing of the application
 It will be noticed that sub section 3 also contemplates 190 payment of interim rent determined by the Controller before the entire dispute is settled
Sub section 6 puts the case under sub section
1 and sub section
3 on the same footing and makes no distinction between them
It is also possible to visualise cases in which the tenant may deposit the amount of rent under protest and claim that his defence be tried
It is not that even on the deposit of the arrears of rent in these circumstances the case would come to an end
The latter part of sub section 1 further shows that not only the arrears have to be deposited but rent as it falls due has to be deposited month by month by the 15th of each succeeding month
This also shows that the order under sub section 1 is not a final order but is preliminary to the trial of the case and is made only where the rent has in fact not been paid
For the purpose of an interim order it was not necessary that there should have been a full trial
The Rent Controller had the affidavit of the appellant and he could judge whether in the circumstances of the case an interim order ought or ought not to be made
He came to the conclusion that the rent was not paid and the plea that it was being withheld under an agreement was an afterthought and not true
The High Court and the Rent Control Tribunal have agreed with this view of the Rent Controller and the conclusion appears to us to be sound
Once such a conclusion is reached it is quite manifest that the order was made after affording an opportunity to the appellant to be heard
No doubt the appellant is entitled to lead oral evidence in regard to the agreement he alleges but for that he will have an opportunity hereafter
At the moment he is being asked to deposit the arrears in court which admittedly are outstanding
Mr Desai next contended that the notice under section 465A amounted to a garnishee order and the appellant could not while the notice stood make any payment without incurring personal liability
There was no question of a personal liability because the Rent Controller had stated in his order that the amount would not be paid to anyone till the clearance certificate was obtained from the Income tax Department
The Rent Controller had informed the income tax authorities and the appellant ran no risk in depositing the arrears of rent in the circumstances
191 It was contended that the notice under section 465A amounted to an attachment of the rent in the hands of the appellant and reference was made to the provisions of section 46 sub section
5A para 5
The argument overlooks the next para which provides Where a person to whom a notice under this subsection is sent objects to it on the ground that the sum demanded or any part thereof is not due to the assessee or that he does not hold any money for or on account of the assessee then nothing contained in this section shall be deemed to require such person to pay any such sum or part thereof as the case may be to the Income tax Officer
 If there was an agreement between the parties and Kirori Mal was indebted for such a large amount the appellant could have objected on the ground that he did not hold any money for or on account of the assessee and then he would not have been required to pay any sum to the Income tax Officer
The appellant did nothing in the matter except to deny the payment to everyone
He paid nothing to the Income tax Officer declined to deposit the money before the Rent Controller and refused to recognise the demands by the Receiver and his landlord
In other words be was trying to take full advantage of the law when lie could have informed the Income tax Officer about his own position and paid the money to the Rent Controller subject to its being paid to the Income tax Department
Reference was made in this connection to a decision of the Calcutta High Court reported in Nalinakhya Bysack and another vs Shyam Sunder Halder and others1 in which Harries C J observed that before making an order for the deposit of the rent a full enquiry should be made
That was a case in which the tenant had pleaded that there was an agreement between him and the landlord that any amount spent on repairs would be set off against the rent
Harries CJ held that without ascertaining the 1 AIR 1952 Cal
192 truth of the plea that a large sum had been spent on repairs an order to deposit the entire arrears of rent ought not to have been made
It is quite clear that the facts there were entirely different
Payment by the landlord for repairs was a part of the tenancy agreement and rent under that tenancycould not be calculated without advertence to every term of the agreement of tenancy
Here the special agreement which is pleaded is outside the tenancy agreement and the allegation about the special agreement has been held to bean after thought and false
It is therefore difficult to apply the ruling to the present circumstances
The appeal is wholly devoid of merit and it is dismissed with costs
By the consent of parties a period of two months from the date of hearing 20 12 1963 was granted to the appellant to deposit the arrears of rent from 1st
April 1958 in the Court of the Rent Controller


Summary:
The respondent made an application against the appellant under section 14 of the Delhi Rent Control Act
In reply the appellant pleaded 182 that the respondent had no right to recover rent from him as a notice under section 465A of the Indian Income tax Act had been issued by the Income tax Officer that the respondent had no locus standi as the property was in the custody of the Court and a receiver had been appointed and that his professional fees were agreed and be adjusted towards the rent dues
The Rent Controller recorded the statement of the appellant and after hearing arguments directed the appellant under section 151 of the Delhi Rent Control Act 1958 to deposit back rents at Rs 300 per month
On appeal the decision of the Rent Controller was affirmed and a further appeal to the High Court also failed
The appellant contended that the order under section 151 for deposit of rent could only be made at the end of the case and not at an interlocutory stage
Heldi that the order under sub section
1 of section 15 is not a final order but is preliminary to the trial of the case and is made only wherer the rent has in fact not been paid
For the purpose of an interim order it was not necessary that there should have been a fun trial and that this was clear from the latter part of sub section
1 of section 15 because under it not only the arrears have to be deposited but rent as it falls due has to be deposited month by month by the 15th of each succeeding month
Nalinakhya Bysack and Anr
vs Shyam Sunder Halder AIR  distinguished
iiThe notice under section 465A of the Income tax Act did not amount to a garnishee order and the appellant could make payment to the rent controller without incurring personal liability because the rent controller had stated in his order that the amount would not be paid to any one till a clearance certificate was obtained from the Income tax Department