Case: Ramkarandas Radhavallabh Vs. Bhagwandas Dwarkadas

1. The appellant was the tenant of the respondent of a third floor flat in Bombay. The tenancy was governed by the Bombay Rents, Hotel and Lodging House Rates (Control) Act, 1947, hereafter referred to as the Rents Act. We will refer to the appellant as the tenant and the respondent as the landlord.2. The landlord obtained a decree in ejectment against the tenant in a suit filed under O. 37 of the Code of Civil Procedure and the present appeal arises out of an application made by the tenant to set aside that decree under R. 4 of that Order. The question is, should the decree be set aside?3. There were various proceedings between the parties before the judgment under appeal came to be passed but it will be unnecessary to refer to all of them. The suit was filed in the Court of Small Causes, Bombay on November 1, 1960 for ejectment on two grounds, namely, (1) a certain default in payment of rent and (2) unlawful sub-letting of the demised premises. The Rents Act permits ejectment if these grounds are proved. The tenant entered an appearance to the suit on December 3, 1960. On March 23, 1961, the landlord took out a summons for judgment under O. 37 R. 2 and the tenant opposed that summons by an affidavit, setting out various defences to the claim for ejectment to the details of which it is unnecessary to refer. On May 2, 1961, an order was made by consent of parties on that summons directing the tenant to deposit moneys in Court by certain instalments on account of the arrears of rent and providing that if it made a default in making the payments on the dates mentioned, the suit was to be set down for disposal in accordance with law. The effect of this order clearly was to give a conditional leave to defend so that on failure to perform the conditions the tenant would under the provisions of O. 37, R. 2 no longer have the right to defend the action.4. Now the first instalment under the consent order was payable on June 1, 1961. It was not however paid. The tenant thereafter made an application for extension of time and this was rejected on June 22, 1961. It filed an appeal against the order refusing extention of time but this was rejected. The tenant then appealed against the consent order of May 2, 1961 but this also failed. Thereafter the suit was placed on the list on June 28, 1961, and a decree in ejectment was passed on that date under the provisions of O:37 on the basis of the statements made in the plaint and without permitting the tenant to appear and oppose. This is the decree which the tenant sought to set aside. These are all the proceedings between the parties that need be mentioned for the purpose of this judgment.5. On September 12, 1961, the application under R. 4 of O. 37 to set aside the ejectment decree was made to the trial Court. The trial Court dismissed the application holding that no special ground had been made out by the tenant as required by R. 4 of O. 37 to set aside the decree. The tenant then appealed from this Order to a bench of the Court of Small Causes under S. 29 of the Rents Act which is said to have treated the appeal as a revision. That bench agreed with the trial Court that no special circumstances as required under R. 4 of O. 37 had been made out to justify the setting aside of the decree, but it observed that the Court had not considered whether relief could be given to the tenant under S. 151 of the Code and itself set aside the decree acting under that section. The landlord appealed to the High Court from the judgment of the bench. The High Court agreed with the Courts below that no special circumstances justifying the setting aside of the decree existed. It however held that there was no scope for applying S. 151 to the present case as R: 4 of O. 37 of the Code had made special provision for it. It also rejected the other contentions raised by the tenant, to one of which we will refer later. In the result the High Court allowed the appeal and hence the present appeal to this Court.

Court's reasoning:
We are unable to accept this contention,. It has been observed by this Court in Manohar Lal v. Hiralal, AIR 1962 SC 527   at p. 534 : "The inherent powers are to be exercised by the Court in very exceptional circumstances, for which the Code lays down no procedure". This is a well recognised principle. Rule 4 of O. 37 expressly gives power to a Court to set aside a decree passed under the provisions of that Order. Express provision is thus made for setting aside a decree passed under O. 37 and hence if a case does not come within the provisions of that rule, there is no scope to resort to S. l5l for setting aside such a decree. We, therefore, agree with the High Court that the appellate bench of the Court of Small Causes was in error in setting aside the ex parte decree in exercise of powers under S. l5l. Again all the Courts have taken the view, and we think rightly, that no circumstances justifying the setting aside of the decree under R. 4 of O. 37 existed in the present case. We did not also understand learned advocate for the tenant to rely on any such circumstances in this Court. No question of setting aside the decree under that Order, therefore, arises.The first difficulty that appears to us to arise on this line of argument is that even if the contention is right, we cannot in the present appeal make an order setting aside the decree. The appeal has come to us out of an application originally filed in a Court of Small Causes under the provisions of O. 37 R:4 by the tenant itself. If the present contention it right, then the tenants application was wholly incompetent. The result of that however would not be to set aside the decree; it would only cause the dismissal of the tenants application. The tenant has to take other appropriate proceedings to show that the decree was ineffective in case it wants to contend that the suit had not been brought according to the procedure permissible in law, and that it had been illegally deprived of a hearing. It itself having resorted to O. 37, it scarcely lies in it now to contend that that Order is wholly inapplicable. Furthermore, by consenting to the Order of May 2, 1961, it had in this case clearly agreed that the suit had been rightly brought under O. 37. It cannot be allowed to change its position in the proceedings arising out of that very suit. For that reason alone we think no relief can be granted to it in this appeal based on the present contention.10. On the merits too, we think that the contention is fallacious. It proceeds on the basis that when leave to defend has been refused to a defendant, the Court is bound to pass a decree. It seems to us that what sub-rule (2) of R. 2 of O. 37 contemplates is that the Court will accept the statements in the plaint as correct and on those statements pass such decree as the plaintiff may in law be entitled to. If, for example, the plaint discloses no cause of action, the Court cannot pass any decree in favour of the plaintiff. If this were not so, the words "allegations in the plaint shall be deemed to be admitted" in sub-rule(2) of R. 2 of O. 37 would have been unnecessry. The Court in making a decree under sub-rule (2) of R. 2 of O. 37 has to keep the law in mind. If the law requires the Court to exercise a discretion on the facts deemed to be admitted, it will have to do so.In the procedure laid down under O. 37 the defendant may not be allowed at the hearing to place his side of the case for assisting the Court in the exercise of that discretion, but that does not create any conflict with the Rents Act. A rule can be made quite consistently with the Act that the defendant will have to adopt a certain procedure and to act within a certain time in order to be heard in that matter. Suppose a defendant does not put in an appearance in a suit for ejectment not brought under O. 37, can he say that the Act gave him a right to appear at the hearing and place his case before the Judge? We feel no doubt that such a thing is not contemplated by the Act and cannot be permitted. Rules of procedure may be framed for the exercise of rights and such rules are not ultra vires only because the right has to be exercised in accordance with them.Therefore we do not think that R. 8 is ultrais a well recognised principle. Rule 4 of O. 37 expressly gives power to a Court to set aside a decree passed under the provisions of that Order. Express provision is thus made for setting aside a decree passed under O. 37 and hence if a case does not come within the provisions of that rule, there is no scope to resort to S. l5l for setting aside such a decree. We, therefore, agree with the High Court that the appellate bench of the Court of Small Causes was in error in setting aside the ex parte decree in exercise of powers under S. l5l. Again all the Courts have taken the view, and we think rightly, that no circumstances justifying the setting aside of the decree under R. 4 of O. 37 existed in the present case. We did not also understand learned advocate for the tenant to rely on any such circumstances in this Court. No question of setting aside the decree under that Order, therefore,vires.12. In what wein the preceding paragraph we have proceeded on the assumption that the Court has a discretion. Certain provisions in Ss. 12 and 13 of the Rents Act had been read to us and it had been contended that they conferred that discretion on the Court. In the view that we have taken, it is unnecessary to express any opinion on that contention and we do not do so.