Case Note & Summary
The dispute concerned two rooms in Rourkela Town, District Sundargarh, Orissa, let out to the appellant tenant by the predecessor-in-interest of the respondents for running a hotel at a monthly rent of Rs.1,000. The landlord issued a notice to vacate on 24.5.1984 and later unilaterally enhanced the rent to Rs.2,500 per month, refusing to accept money orders sent by the tenant for the agreed rent. The landlord then filed eviction proceedings under Section 7(2)(i) of the Orissa House Rent Control Act, 1967, alleging non-payment of rent and impairment of premises. The tenant was inducted on 15.8.1979. After the landlord's refusal to accept rent, the landlord filed an eviction petition on 14.11.1984. On 6.12.1985, the landlord applied under Section 7(3) to strike off the tenant's defence, contending that the tenant had not paid admitted arrears. The tenant opposed, producing postal receipts showing tender of rent by money order that was refused. The Rent Controller allowed the landlord's application on 17.1.1986, debarring the tenant from contesting. On 27.2.1987, an ex parte eviction decree was passed. The tenant appealed; the appellate authority initially dismissed but later on 24.2.1988 set aside the Section 7(3) order and dismissed eviction, noting the landlord had failed to appear for cross-examination and his evidence was expunged. The landlords (heirs) challenged this in writ petition; the High Court on 5.10.1993 set aside the appellate authority's orders and remanded, holding the Section 7(3) order was correct. On remand, the appellate authority restored the eviction decree on 29.10.1994, and the High Court dismissed the tenant's writ petition on 14.11.1994 confirming eviction. The core issue was whether the Rent Controller's order under Section 7(3) debarring the tenant from contesting was valid when the tenant had tendered rent by money order and the landlord had refused it, and whether there were 'admitted arrears' for the tenant to deposit. The tenant argued that he had continuously tendered rent at the agreed rate, the landlord deliberately refused, and he had produced postal receipts; there were no admitted arrears, so Section 7(3) could not apply. The landlord contended that refusal of one month's rent did not relieve the tenant of the obligation to continue tendering monthly rent including arrears, and since he did not, he was in default. The Supreme Court examined Section 7(3) and noted that it applies only to arrears of rent 'as admitted by him' the tenant. The tenant had not admitted arrears; he had shown tender of rent by money order and refusal by landlord. The landlord's unilateral enhancement was not binding. The Court observed that the Rent Controller could not have concluded that the tenant had not remitted arrears when postal receipts were on record. Therefore, the order debarring the tenant was invalid. As a result, the ex parte eviction decree and subsequent High Court orders confirming it were liable to be set aside. The Supreme Court held that the Rent Controller's order under Section 7(3) was bad, the tenant was not in arrears of admitted rent, and the eviction decree could not stand. The appeals were allowed.
Headnote
A) Rent Control - Eviction for Default in Payment of Rent - Tenant's Tender of Rent by Money Order and Landlord's Refusal - Orissa House Rent Control Act, 1967, Section 7(2)(i), Section 7(3) - The tenant had been remitting monthly rent at the agreed rate of Rs.1,000 by money order, but the landlord refused to accept, claiming unilateral enhancement to Rs.2,500. The Rent Controller debarred the tenant from contesting under Section 7(3), treating him as in arrears of admitted rent. The Supreme Court held that no admitted arrears existed because the tenant disputed the arrears and produced postal receipts evidencing tender and refusal; hence the order debarring him was invalid. Held that Section 7(3) cannot be invoked where the tenant disputes the arrears and shows valid tender. B) Rent Control - Scope of Section 7(3) - Meaning of 'Admitted Arrears of Rent' - Orissa House Rent Control Act, 1967, Section 7(3) - The provision requires remittance of only such arrears as are admitted by the tenant; if the tenant denies liability and establishes tender of rent, there are no admitted arrears to deposit. The landlord's unilateral enhancement was not binding, and the tenant's obligation was limited to the agreed rent. The Court emphasised that the Rent Controller should have considered the tenant's evidence of money order refusal before striking off the defence. Held that the order under Section 7(3) was based on a misreading of 'admitted arrears'. C) Civil Procedure - Ex Parte Decree - Effect of Wrongful Striking Off of Defence - Orissa House Rent Control Act, 1967, Section 7(3) - Once the tenant's defence was wrongly struck off, the ex parte eviction decree and subsequent orders confirming it were vitiated. The appellate authority had earlier set aside the ex parte order, but the High Court erroneously reversed it. The Supreme Court indicated that because the foundational order under Section 7(3) was bad, all consequential orders including the eviction decree would fall through. Held that the eviction decree could not stand.
Issue of Consideration
Whether the Rent Controller's order under Section 7(3) of the Orissa House Rent Control Act, 1967 debarring the tenant from contesting the eviction proceedings was valid when the tenant had tendered rent by money order which the landlord refused to accept, and whether there were any admitted arrears of rent for the tenant to deposit.
Final Decision
The Supreme Court held that the Rent Controller's order under Section 7(3) was invalid because the tenant was not in arrears of admitted rent; he had tendered rent by money order which the landlord refused. Consequently, the ex parte eviction decree and the impugned orders of the High Court confirming it were liable to be set aside. The appeals were allowed.
Law Points
- Section 7(3) of Orissa House Rent Control Act
- 1967 requires tenant to remit only arrears of rent admitted by him
- if tenant disputes arrears and proves tender of rent by money order refused by landlord
- no admitted arrears exist and tenant cannot be debarred from contesting eviction proceedings
- unilateral rent enhancement by landlord not binding on tenant
- ex parte eviction decree vitiated if based on wrongful striking off of defence
