1 Cra-174.10 Ash IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION CIVIL REVISION APPLICATION NO. 174 OF 2010 Ms Mumtaz M. Khan & Another. .. Applicants Vs The State of Maharashtra & Ors. .. Respondents -- Shri R.A. Thorat i/by Shri A.M. Saraogi for the Applicants. Shri Anil C. Singh i/by Shri Anil Yadav for Respondent Nos.2 to 7. -- CORAM : A.S.OKA, J. DATE : 14TH OCTOBER, 2010 P.C: . Submissions of the learned counsel appearing for the Revision Applicants were heard on the earlier date. The Revision Applicants are the original Defendants/tenants in a suit filed by the Respondents. A suit was filed under the provisions of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947 ( hereinafter referred to as “the said Act”). One of the averments in the suit was that the Applicants were in arrears of rent from 1st August, 1974. A notice of demand was issued on 4th December, 1980 calling upon the Revision Applicants to pay arrears of rent from 1st August, 1974. Notice was duly served which was replied by the Applicants. The suit was contested by the Applicants by filing a written statement. As the decree was sought only on the ground of arrears of rent, the Trial Court 2 Cra-174.10 framed issues mainly as regards the arrears of rent and service of notice of demand. The Trial Court decreed the suit by holding that the Applicants were defaulters. An appeal was preferred by the Revision Applicants before the Appeal Bench of the Court of Small Causes. By the impugned judgment and decree, the appeal was dismissed. 2. The Appeal Bench of the Court of Small Causes noted that a reply was sent by the Applicants to the notice of demand on 16th December, 1980 and an application for fixing the standard rent was filed by the Applicants on 31st March, 1981. Thus, the finding of the Courts below and in particular the Appellate court is that the Applicants were in arrears of rent for a period more than six months and that they were duly served with the notice of demand. The further finding is that the amount of arrears was neither tendered nor paid within a period of one month from the date of service of the notice of demand and even the application for fixing the standard rent was not filed within a period of one month from the date of service of notice of demand. Therefore, it was held that the Applicants were not entitled for protection of Section 12(3)(b) of the said Act. 3. Learned counsel appearing for the Applicants placed reliance on a decision of the Apex Court in the case of Ibrahim Abdulrahim Shaikh (dead) by L.Rs. v. Krishnamorari Sripatlal Agarwal (dead) by L.Rs., (AIR 1994 SC 1609 ). He submitted that even going by the finding of the Appellate Court, the application for fixing the standard rent was filed on 3 Cra-174.10 30th March, 1981. He submitted that in view of what is held by the Apex Court in Paragraph 3, the case was governed by Section 12(3)(b) and therefore, the Applicants ought to have been protected. He submitted that the Apex Court held that there was no requirement of filing an application fixing the standard rent within one month from the date of receipt of the notice of demand, but the same has to be filed expeditiously. He submitted that relief against forfeiture in accordance with Section 12(3)(b) has not been granted to the Applicants only on the ground that the application for fixation of standard rent was not made one month after the date of service of the notice. 4. I have given careful consideration to the submissions. Amendment to Section 12 of the said Act prior to 1987 reads thus:- “12. (1) 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 this Act. (2) No suit for recovery of possession shall be instituted by a landlord against tenant on the ground of non-payment of the 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 106 of the Transfer of Property Act, 1882. (3)(a) Where the rent is payable by the month and there is no dispute regarding the amount of standard rent or permitted increases, if such rent 4 Cra-174.10 increases are in arrears for a period of six months or more and the tenant neglects to make payment thereof until the expiration of the period of one month after notice referred to in sub-section (2), the Court shall pass a decree for eviction in any such suit for recovery of possession. (b) In any other case no decree for eviction shall be passed in any such suit if, on the first day of hearing of the suit or on or before such other date as the Court may fix, the tenant pays or tenders in Court the standard rent and permitted increases then due, and thereafter continues to pay or tender in Court regularly such rent and permitted increases till the suit is finally decided and also pays costs of the suit as directed by the Court. (4) Pending the disposal of any such suit, the Court may out of any amount paid or tendered by the tenant pay to the landlord such amount towards payment of rent or permitted increases due to him as the Court thinks fit. Explanation I - In any case where there is a dispute as to the amount of standard rent or permitted increases recoverable under this Act the tenant shall be deemed to be ready and willing to pay such amount if, before the expiry of the period of one month after notice referred to in sub-section (2), he makes an application to the Court under sub-section (3) of section 11 and thereafter pays or tenders the amount of rent or permitted increases specified in the order made by the Court. [ Explanation II - For the purposes of sub- section (2), reference to “standard rent” and “permitted increase” shall include reference to “interim standard rent” and “interim permitted increase” specified under sub-section (3) or (4) of section 11. ] [ Explanation III - For the purposes of this section, where a tenant has deducted any amount from the rent due to the landlord under section 173C of the Bombay Municipal Corporation Act for recovery of any water tax or charges paid by him to the Commissioner, the tenant shall be deemed to have paid the rent to the extent of deductions so made by 5 Cra-174.10 him.]” 5. In the present case, admittedly, the Applicants were in arrears of rent for a period exceeding six months and within a period of one month from the date of service of the notice, the arrears were neither tendered nor paid by the Applicants. One method by which the Applicants could have avoided the decree is by making a compliance with demand notice. If there was a dispute as regards standard rent, the only mode by which the issue regarding standard rent could have been raised was by filing an application for fixing the standard rent under Section 11 of the said Act. The decree could have been avoided by making compliance with requirements of Section 12(3)(b) read with explanations II and III. The only question is whether the application was required to be filed within a period of one month. This issue was considered by a larger bench of the Apex Court consisting of the Hon’ble Chief Justice and the other two Hon’ble Judges in the case of Harbanslal Jagmohandas & Another v. Prabhudas Shivlal, [(1977)1 SCC 575]. In paragraphs 22 and 23, the Apex court held thus:- “22. The Gujarat High Court in Ambalal’s case held that in order to attract the applicability of Section 12(3)(a) of the Act there must be non-existence of the dispute at the date of the notice and such non- existence must continue right up to the expiration of one month from the date of service of the notice so that if the dispute is raised at any time prior to the expiration of the said period of one month, the operation of Section 12(3)(a) would be excluded. 6 Cra-174.10 The latest point of time when according to Ambalal’s case the dispute in regard to the standard rent must be raised in order to avoid the operation of Section 12(3)(a) of the Act is the expiry of one month from the date of service of the notice. Ambalal’s case did not say that the dispute concerning standard rent must be raised before service of the notice in order to repel the applicability of Section 12(3)(a) of the Act. If the dispute is in existence prior to the expiry of one month after service of the notice though subsequent to the date of the notice that would be sufficient to oust the operation of Section 12(3)(a) of the Act. The decision of this Court in Vora Abbasbhai’s case has not overruled the decision in Ambalal’s case. On Ambalal’s case the conclusion is a single one and it is that in order to exclude the operation of Section 12(3) (a) of the Act the dispute must be in existence latest within one month after service of the notice. 23. The question as to when a dispute is to be raised came up for consideration in Shah Dhansukhlal Chhaganlal v. Dalichand Virchand Shroff. The appellant fell into arrears of rent in that case. The landlord gave a notice to the tenant on April 18, 1955 demanding the arrears of rent and also terminating the tenancy of the defendant with effect from May 31, 1955. The notice was received by the defendant on April 21, 1955. The suit for ejectment was filed on March 15, 1956 on the ground that the defendant was in arrears of payment of rent and permitted increases and as such not entitled to the protection of the Act. This Court held that Section 12(1) of the Act must be read with the explanation and so read it means that the tenant can only be considered to be ready and willing to pay if, before the expiry of the period of one month after notice referred to in sub-section (2), he makes an application to the court under sub-section (3) of Section 11 and thereafter pays or tenders the amount of rent or permitted increases specified by the court. This Court found in Chhaganlal’s case that the tenant made no payment within the period of one month of the notice of ejectment and further that although in his written statement he raised a dispute about the standard rent he made no application in terms of Section 11(3) of the Act. The tenant can claim protection from the operation of Section 12(3) (a) of the Act only if the tenant makes an application within one month of the service of the notice 7 Cra-174.10 terminating the tenancy by raising a dispute as to standard rent.” ( Underline supplied ) 6. The same view has been reiterated by a larger bench of the Apex Court consisting of the three Hon’ble Judges in the case of Arjun Khiamal Makhijani v. Jamnadas C. Tuliani & Others, [(1989) 4 SCC 612 ]. The Apex Court reiterated the requirement of filing an application for fixing the standard rent within a period of one month from the date of service of the notice of demand. 7. The decision in the case of Ibrahim Abdulrahim Shaikh (supra) relied upon by the Applicants is rendered by the Bench of two Hon’ble Judges of the Apex Court. In Paragraph 3, the Apex Court has held thus:- “3. ..... The landlord put the tenant on notice of his negligence and to make payment thereof within one month from the date of the receipt of the notice and on disputation is enjoined to seek remedy under S. 11(3) for determination of the standard rent or permitted increases. If he fails to dispute and omits to pay the arrears within one month from the date of the receipt of the notice, he became liable to be evicted under Section 12(3)(a) of the Act. Admittedly the statute did not prescribe any period of limitation u/s 11(3) to lay the application for fixation of standard rent or permitted increases. Therefore, by necessary construction of Ss. 11 and 12, what this Court appears to have intended was that the tenant should dispute the standard rent or permitted increases within one month from the date of the receipt of the notice and then file the application under under S. 11(3). It would not appear to have been meant that the 8 Cra-174.10 application under S. 11(3) should also be filed within one month from the date of the receipt of the notice. But expeditious action is called for to prove the bona fides of the tenants disputing the right of the landlord in the claim of standard rent or permitted increases.” 8. What is binding on this Court is the ratio laid down by the larger bench of the Apex Court. A consistent view of the larger bench is that, to avail of the benefits under Section 12(3)(b) of the said Act, the application for fixing the standard rent must be filed within one month from the date of service of the notice of demand. In the present case, admitted that is not done. Hence, the Applicant will not get protection of Section 12(3)(b). The decree under Section 12(3)(a) must follow. 9. There is no reason to interfere with the impugned judgment and decree. The Revision Application is accordingly rejected. 10. On the prayer made by the learned counsel appearing for the Revision Applicants, the decree for possession shall not be executed for a period of 12 weeks from today subject to the condition of the Applicants filing usual undertaking in this Court within a period of two weeks from today that they will not create any third party rights in respect of the suit premises and will not part with possession of the suit premises. (A.S.OKA, J)