JUDGMENT [ENTITY], C.J.
1. This petition has been referred to the Division Bench by the learned Single Judge ([ENTITY], J.), who in his referring order dated November 17, 1983, found that there is a conflict between two judgments of the two learned Single Judges of this Court and his own judgment in [CASE NUMBER] decided on September 8, 1983 ([ENTITY] Deoram Sonawane v. Shri Ganesh Mandir (1983) 86 Bom. L.R. 40). In [ENTITY]'s case, [ENTITY] was a tenant and a decree for eviction was passed against him under the provisions of [SECTION] of the [ACT] (herein after referred to as "the [ACT]"). The decree for eviction was passed on default of payment of the education cess and it was contended on behalf of the tenant that such a decree could not have been made under [SECTION] of the [ACT]. The contention on behalf of the tenant was that the total amount due for the period July 1, 1963 to January 1971 was Rs, 3.185/- and this amount was paid (1) by paying Rs. 2,860/- to the Municipal Council towards the taxes and (2) by sending Rs. 325/- by money order. Thus, according to the tenant, there was no default with regard to payment of rent and no cause of action, therefore, survived to the landlord to file a suit and obtain a decree. Reliance was placed on the decision of [ENTITY], J. in [ENTITY] v. Sumanchand (1983) Writ Petition No. 156 of 1983 decided, July 1, 1983 by [ENTITY] J. (Unrep.) and on the decision of [ENTITY], J. in [PRECEDENT].
2. On behalf of the landlord: the respondent, reliance was placed on the decision of the Supreme Court in [PRECEDENT] the effect of which, according to the learned Counsel for the landlord, was not considered in the two decisions referred to above. The learned Judge found that right from July 1, 1963 to January 21, 1971 rent was in arrears and the tenant was in default and rent was not paid every month but in two lump sums referred to above. It was also found that the tenant paid rent for four months and three months respectively and the education cess for the period from October 1, 1962 to September 30, 1967 worked out to Rs. 42/- and for the further period from October 1967 to December 1970 it worked out to Rs. 32-25 making a total of Rs. 75-25. It was found that the education cess was covered by the term "permitted increases" and the amount of education cess was not deposited inspite of the notice in the Court when the suit was filed nor did the tenant continue to deposit even the stipulated rent every month during the pendency of the suit or during the pendency of the appeal in the appeal court. Taking the view that in such a case [SECTION] of the [ACT] was not attracted, the learned Judge took the view that the tenant had not complied with the condition required for the protection of [SECTION] which must also lead to the conclusion that he was a defaulter in the matter of payment of rent and that he was not ready and willing to discharge his liability. The learned Judge further held that the cause of action for the rent suit is one that arises upon the issuance of notice terminating the tenancy as contemplated by [SECTION] of the Act and once the notice is given a suit can be filed. It was pointed out that in such a suit how the relief of eviction can be granted is provided for by [SECTION] of the Act and even when a decree for eviction cannot be made under [SECTION] of the Act, a decree for eviction can be made if the tenant fails to protect himself by complying with the conditions available in [SECTION]. Thus, it was held that the lower appellate Court was right in making a decree for eviction.
3. In [PRECEDENT]'s case (supra) [ENTITY], J. took the view on the facts in that case that much prior to the notice under [SECTION] of the Act and even before the receipt of that notice the tenant had himself deposited in judicial proceedings between the parties the entire amount of rent which covered not only the entire period of arrears but also period subsequent thereto and thus the tenant had paid the entire amount long before the receipt of the notice and he was entitled to be protected in his possession of the suit premises. In [ENTITY]'s case (supra) [ENTITY], J. took the view that when within one month after the receipt of demand notice under [SECTION] of the Act, the entire amount of rent is paid by the tenant, the tenant must be held to be always ready and willing to pay the rent and the suit of the landlord for possession is liable to be dismissed on the short ground that there was no cause of action for filing the suit and it was not open to the landlord at the end of the trial to take recourse to [SECTION] of the Act "for fishing out a cause of action for getting a decree in a suit which was not properly instituted". The effect of the decision in [ENTITY]'s case, therefore, is that where consequent upon a notice under [SECTION] of the Act the tenant either pays or deposits the entire amount demanded in the Court, no cause of action survives to the landlord for filing a suit for eviction and in such a case, there is no question of considering whether the landlord is entitled to possession on the ground that the tenant has not complied with the provisions of [SECTION] of the [ACT]. A similar view has been taken by one of us ([ENTITY], J.) in [PRECEDENT], decided, December 8, 1981 by [ENTITY] J. (Unrep.) decided on December 8, 1981. On facts it was found in that case that the tenant had complied with the requisition contained in the notice sent under [SECTION] of the [ACT] and, therefore, a suit could not have been filed for possession of the premises on the ground of non-payment of rent. It was held that there was no cause of action for the suit filed in that case. Reliance was placed on the earlier decision of [ENTITY], J. in [PRECEDENT]. In that case [ENTITY], J. held on the facts of that case that if the tenant was ready and willing to pay the rent as required by [SECTION] of the [ACT], the landlords were not entitled to possession under [SECTION] of the Act and that merely because the payment was made by cheque, the Court could not assume that the tenant was not ready and willing to pay rent to the landlords.
4. It is necessary at this stage to refer to the facts of the present case. The findings of both the Courts below which have not been disputed before us, and rightly so, are that when a notice under [SECTION] of the [ACT] demanding arrears of rent from March 1972 upto May 1973 was sent on June 15, 1973 and was received by the tenant on June 21, 1973, the tenant had sent the entire amount of Rs. 75/- by money order on July 17, 1973 which was refused by the landlord. The landlord filed the suit on September 1, 1973 claiming possession under [SECTION] of the [ACT]. The trial Court found that though the plaintiff had refused to accept the entire amount of rent, the defendant-tenant had thereafter not paid the rent regularly, and on the first date of hearing he asked for permission to pay the rent due from October 31, 1974, but that amount of Rs. 305/- came to be deposited only on June 8, 1976. It was found that thereafter also the tenant did not pay rent regularly and, therefore, according to the learned trial Judge the tenant was not entitled to protection under [SECTION] of the [ACT]. In appeal, the lower appellate Court held that the tenant had never been regular in payment of rent after the filing of the suit and he was, therefore, not entitled to protection under [SECTION] of the [ACT]. The decree for possession was, therefore, confirmed.
5. When this petition came up before the learned Single Judge ([ENTITY], J.), it was contended on behalf of the tenant that having remitted the entire amount demanded under [SECTION] and the landlord having declined to receive the amount, the notice under [SECTION] had exhausted itself and no cause of action, therefore, survived which could enable the landlord to file a suit for eviction. In other words, the argument was that the question as to whether the tenant was entitled to protection under [SECTION] or not did not really arise, because the suit itself was not maintainable inasmuch as in so far as the first notice under [SECTION] was concerned, that had exhausted itself and secondly, no further notice was given as contemplated by [SECTION] which the landlord was bound to give if he claimed possession on the ground of arrears of rent other than those which the tenant had already remitted in pursuance of the first notice under [SECTION]. The learned Single Judge felt himself bound by the view which he took in [ENTITY]'s case (cited supra) on the basis of the decisions of the Supreme Court in [ENTITY] v. Dalichand , [ENTITY] v. Prabhudas [1976] A.I.R. S.C. 205 and [PRECEDENT] . These decisions, according to the learned Judge, settled the law that as far as [SECTION] of the [ACT] was concerned, it was for the tenant to satisfy all the conditions, in that he had to pay or tender in Court all the arrears then due on the first day of hearing of the suit or on or before such other date as the Court may fix and continue regularly to discharge such liability till the suit is finally decided, and there is no extinction of the cause of action by reason of payment of existing arrears. According to the learned Judge, to avoid a decree, once the notice is given, the tenant has to fulfil the conditions laid down by [SECTION] of the [ACT]. With respect to the learned Judge, it has to be pointed out that the question involved in the present petition is not whether the provisions of [SECTION] of the [ACT] can be availed of by the tenant. The contention which is raised before us. relates to the maintainability of the suit itself and, as already pointed out, the contention is that on the finding that the entire amount of rent demanded by the notice under [SECTION] was sent by money order within the period of one month of the date of the notice and was refused by the landlord, there is no cause of action for the suit for eviction at all. We are therefore concerned with the limited question as to whether in such a case where the tenant has already remitted the entire amount due and demanded by the notice under [SECTION] of the [ACT], such compliance with the said notice, or alternatively, where the amount so sent by the tenant is refused by the landlord, such refusal, has to be treated as equivalent to payment and whether a cause of action for asking for a relief of eviction at all survives and a suit for eviction can be filed by such a landlord.
6. [SECTION] of the [ACT] creates a positive bar in respect of a suit for recovery of possession and it. expressly provides that no suit for recovery of possession shall be instituted by a landlord against a tenant on the ground of non-payment of standard rent or permitted increases due, until the expiration of one month next after notice in writing of the demand of the standard rent or permitted increases has been served upon the tenant in the manner provided in [SECTION] of the [ACT]. Sub-section (3)(a) undoubtedly provides that if the tenant is in arrears of rent for a period of six months or more and the tenant neglects to make payment thereof within a period of one month after the notice referred to in Sub-section (2), the Court has to pass a decree for eviction in any such suit for recovery of possession. It is well established that [SECTION] applies to a case which does not fall under Clause (a). Attention must also be invited to the provisions of [SECTION] which provides that a landlord shall not be entitled to the recovery of possession of any premises so long as the tenant pays, or is ready and willing to pay, the amount of the standard rent and permitted increases, if any, and observes and performs the other conditions of the tenancy, in so far as they are consistent with the provisions of the [ACT]. The scheme of [SECTION], therefore, is that if a tenant is ready and willing to pay the amount of standard rent and permitted increases, a landlord is not entitled to recovery of possession. The tenant has been given one month's time during which he must pay the rent which is demanded by a notice under [SECTION] and if he does not pay that rent or the amount due, then the consequences specified in Clauses (a) and (b) follow depending upon which clause is attracted to the facts of a given case. One thing which is, however, clear on the face of [SECTION] and its provisions is that if the tenant pays the arrears demanded by the notice under [SECTION], then the landlord is not entitled to file a suit for possession on the ground of arrears in respect of which he has to give or has given a notice under [SECTION]. In such a case, the provisions of Sub-section (1) will also come into operation, because if the tenant pays the amount required to be paid by the notice under [SECTION], then the tenant is a person who is ready and willing to pay the standard rent and the permitted increases, as the case may be, and the landlord is disabled from filing a suit for recovery of possession. In a case where the tenant has paid or must in law be deemed to have paid the amount demanded by the notice under [SECTION], not only are the provisions of [SECTION] not attracted, but there is no occasion to call in aid the provisions of [SECTION], because even the provisions of [SECTION] will be attracted only if there is a claim for recovery of possession. If by the compliance with the requirements of the notice under [SECTION] the landlord is disabled from filing a suit for recovery of possession, there is no question of the provisions of [SECTION] being attracted at all.
7. In the referring judgment reference has been made to the three Supreme Court decisions which, in our view and with respect, were not relevant for the decision of the question which arises before us. In [ENTITY]'s case (supra), the facts show that the tenant was in arrears of rent on the date on which the landlord filed the suit because the tenant had not made payment even though he had received the notice under [SECTION] of the [ACT]. The notice in that case was dated April 18, 1955 demanding the arrears of rent and, as the Supreme Court observed, No reply was sent thereto nor was any payment made to the plaintiff.
The suit for ejectment in that case was filed on March 15, 1956 on the ground that the defendant was in arrears of rent and permitted increases and was, therefore, not entitled to the protection of the [ACT]. The judgment of the Supreme Court shows that in that case, the applicability of [SECTION] was not canvassed and the High Court had found that there being default on the part of the defendant, the operation of [SECTION] of the [ACT] was attracted. Even before the Supreme Court the material question raised was whether applying [SECTION] there was no default on the part of the defendant which would render him liable to eviction. It was while dealing with this contention that the Supreme Court held that to be within the protection of [SECTION], the tenant must not only pay all the arrears due from him on the first day of hearing of the suit, but he must thereafter continue to pay and tender in Court regularly the rent" and the permitted increases till the suit is finally decided. [ENTITY]'s case was, therefore, a case which dealt only with the provisions of [SECTION] on the admitted position that no payment was made in pursuance of the notice under [SECTION].
8. [ENTITY]'s case (supra) dealt with the limited question as to what should be done in order to avoid the operation of [SECTION] and it was held that in order to avoid the operation of [SECTION] of the [ACT], the dispute in regard to the standard rent or permitted increases must be raised at the latest before the expiry of one month from the date of service of notice under [SECTION] of the Act and it was not enough to raise the dispute for the first time in the written statement. In [ENTITY]'s case, the notice dated November 14, 1966 was issued terminating the tenancy on the ground that the tenant had paid rent only up to August 1964. This notice was received by the tenant on December 6, 1966 and the suit was filed on February 2, 1967. In other connected appeal decided by the same judgment, the notice terminating the tenancy was dated April 5, 1963 and the suit was filed on September 11, 1963. The arrears were alleged to be for the period from March 15, 1960 to March 15, 1963 for a period of more than six months. The arrears were not paid within a period of one month from the date of the notice but were paid only on December 23, 1964, that is, long after the suit was filed.
9. [PRECEDENT]'s case (supra) was once again a case which was decided with reference to the provisions of [SECTION] of the [ACT] and the question as to whether the arrears or rent having been paid within the period of one month from the date of service of the notice under [SECTION], a suit for eviction could not be filed did not arise.
10. The learned Judge in the present case has taken the view that once a notice under [SECTION] of the [ACT] is given terminating the tenancy on the ground of non-payment of rent, the landlord is entitled to file a suit and maintain it and in case the conditions of [SECTION] are satisfied, he is entitled to a decree under [SECTION] of the Act, if the tenant has not availed of the protection afforded by that provision.
and that once the notice is issued, what reliefs can be given are provided for by [SECTION] and [SECTION] of the Act.
These observations, in our view, overlook the fact that it is implicit in the provisions of [SECTION] that if within a period of one month specified in [SECTION] the tenant pays the entire amount of rent demanded by the notice, then the landlord does not have a right to file a suit for recovery of possession. Further, once there is no cause of action for a suit for recovery of possession, the question as to whether the tenant claims the protection of [SECTION] cannot also arise.
11. It has to be pointed out that when the tenant pays the entire amount demanded by the notice under [SECTION], the notice becomes ineffective and in case the landlord wants to claim possession on the ground of arrears of rent for the period other than that in respect of which the notice has been given, the provisions of [SECTION] will once again come into operation and the landlord will have to serve a fresh notice because the arrears for non-payment of which possession is now claimed are not arrears in respect of which a notice contemplated by [SECTION] had been earlier given. Service of a notice under [SECTION] is a condition precedent to a claim for possession on the ground of arrears of rent and such a claim cannot be made unless a period of one month is allowed to expire from the date of service of the notice. We are, therefore, unable to agree with the view of the learned Judge that there is no extinction of cause of action by reason of the payment of existing arrears demanded by the notice under [SECTION].
12. While making the reference the learned Judge has referred to his earlier decision in [PRECEDENT] (supra) the facts of which we have already referred to above. The facts of [ENTITY]'s case will show that the tenant was in arrears of education cess which admitedly was covered by the term "permitted increases". To quote from the judgment of the learned Judge in paragraph 5 (at p. 42 lines 46 to 50 of 86 B.L.R. 4O): -
It is also not in dispute that this balance of education cess which was overdue was not deposited in spite of the notice in the court when the suit was filed nor did the tenant continue to pay or deposit even the stipulated rent every month during the pendency of the suit or during the pendency of the appeal in the appeal court.
The judgment shows that the suit was filed on the basis of default in payment of rent and permitted increases after the notice under [SECTION] was served. That was, therefore, a case which expressly fell under [SECTION] of the [ACT] and was, therefore, clearly distinguishable.
13. We must also, therefore, further hold that the view taken in [ENTITY]'s case (supra) and in [PRECEDENT] decided, November 30, 1983 by [ENTITY] J. (Unrep.) is the correct view.
14. On the facts of the present case it must, therefore, be held that on the finding recorded, the refusal of the landlord to receive the entire amount of rent as was demanded by the notice under [SECTION] of the [ACT] must be treated for the purpose of [SECTION] as being equivalent to payment and on this finding, no suit for the recovery of possession for non-payment of those arrears could have been filed by the landlord and no decree for possession could have been asked for by him in his favour.
15. The decree for possession passed by the trial Court and confirmed by the appellate Court as well as the decree for costs against the present petitioner is therefore set aside. Having regard to the uncertain legal position, the proper order for costs, in our view, would be that each party bears its own costs throughout.