Case Note & Summary
The dispute arose out of a tenancy of premises No. 43, Prithvi Raj Road, New Delhi, held by the appellant advocate from Seth Kirorimal Luhariwala at a monthly rent of Rs.300 commencing July 28, 1957. The landlord was in arrears of income tax, and the Income-tax Officer issued a notice under Section 46(5A) of the Indian Income-tax Act, 1922 to the tenant on October 31, 1957 directing deposit of rent. The tenant did not reply. Earlier, the landlord had written a letter dated October 15, 1957 adjusting Rs.1800 towards professional fees for the period October 1957 to March 1958. Subsequently, litigation in Calcutta led to appointment of a receiver over the property on May 1, 1958. The receiver demanded rent, but the tenant refused citing the income-tax notice and later claiming a larger fee adjustment of Rs.23,500. The landlord was appointed receiver by the Calcutta High Court on December 19, 1960 and served a notice. On January 4, 1961, the landlord applied under Section 14 of the Delhi Rent Control Act, 1958 before the Rent Controller, Delhi. The tenant filed a written statement pleading lack of locus standi due to court custody and receiver appointment, the income-tax notice, and an alleged agreement to adjust rent against fees. The Rent Controller recorded the tenant's statement and heard arguments, then by order dated July 22, 1961 directed deposit of back rents at Rs.300 per month from July 1, 1957, observing that the amount would not be paid to the landlord without a clearance certificate from the Income-tax Department and that the tenant's fee adjustment claim lacked proof. The Rent Control Tribunal affirmed, and the Punjab High Court dismissed the tenant's appeal, holding that the interim deposit order was proper because rent had admittedly not been paid from April 1, 1958. The High Court also noted that the tenant had not mentioned any fee adjustment agreement in his reply to the receiver dated July 19, 1958. On appeal by special leave, the Supreme Court considered whether an order under Section 15(1) could be made at an interlocutory stage, the effect of the income-tax notice, the tenant's claim of fee adjustment, and the landlord's locus standi. The tenant argued that full trial was necessary before ordering deposit and that the notice under Section 46(5A) barred deposit. The Court held that Section 15(1) is preliminary to trial and not a final order, requiring deposit of arrears and future monthly rent, and could be made without a full trial. The notice under Section 46(5A) was not a garnishee order, and deposit with the Rent Controller was safe because the amount would not be released without clearance. The tenant's claimed fee adjustment agreement was not proved; the letter of October 15, 1957 showed only a one-time adjustment, and the plea was an afterthought. The Court observed that the tenant had avoided paying any of four claimants—Income-tax Officer, receiver, landlord in person, and landlord as receiver—by pointing to the others. The Supreme Court dismissed the appeal and confirmed the High Court order directing deposit of back rents at Rs.300 per month from July 1, 1957.
Headnote
A) Rent Control - Interim Order Under Section 15(1) - Delhi Rent Control Act, 1958, Section 15(1) - An order under Section 15(1) is not a final order but preliminary to trial and can be made where rent has in fact not been paid without full trial; the latter part of sub-section (1) requires deposit of arrears and future monthly rent by the 15th of each succeeding month. Held that the Rent Controller's direction to deposit back rents at Rs.300 per month from 1 July 1957 was proper and could be made at the interlocutory stage. Nalinakhya Bysack and Anr. v. Shyam Sunder Halder, A.I.R. 1952 Cal. 198, distinguished. (Paras Not mentioned) B) Income Tax - Notice Under Section 46(5A) - Indian Income-tax Act, 1922, Section 46(5A) - Notice under Section 46(5A) did not amount to a garnishee order; the tenant could deposit rent with the Rent Controller without incurring personal liability because the Rent Controller stated the amount would not be paid to anyone until a clearance certificate was obtained from the Income-tax Department. Held that the income-tax notice did not bar the deposit of rent with the Rent Controller. (Paras Not mentioned) C) Landlord and Tenant - Adjustment of Rent Against Professional Fees - Delhi Rent Control Act, 1958, Section 14 read with Section 15(1) - Tenant claimed an oral agreement to adjust rent towards professional fees; the letter dated October 15, 1957 showed only a one-time adjustment of Rs.1800 and stated the balance of fees would be paid later at final settlement. Held that the plea of agreement was an afterthought and the tenant was not entitled to retain rent in his hands. (Paras Not mentioned) D) Civil Procedure - Locus Standi of Landlord When Receiver Appointed - Delhi Rent Control Act, 1958, Section 14 - Tenant contended that the landlord had no locus standi because the property was in custody of the court and a receiver had been appointed. Held that after the High Court appointed the landlord as receiver, he could maintain the application under Section 14 and the deposit order was valid. (Paras Not mentioned) E) Natural Justice - Opportunity of Being Heard Before Interim Order - Delhi Rent Control Act, 1958, Section 15(1) - Appellant argued that a proper opportunity to lead evidence should have been given before ordering deposit; the Court held that for an interim order full trial was not necessary and the Rent Controller had recorded the appellant's statement and heard arguments. Held that the order was made after sufficient hearing and was valid. (Paras Not mentioned)
Issue of Consideration
Whether an order under Section 15(1) of Delhi Rent Control Act, 1958 for deposit of rent can be made at an interlocutory stage before full trial; whether notice under Section 46(5A) of Indian Income-tax Act, 1922 bars deposit with Rent Controller; whether tenant was entitled to adjust rent against professional fees; whether landlord had locus standi when property was in custody of court and receiver appointed
Final Decision
Supreme Court dismissed the appeal and confirmed the High Court order; held that an order under Section 15(1) of Delhi Rent Control Act, 1958 is preliminary to trial and not final, and could be made at the interlocutory stage; notice under Section 46(5A) of Indian Income-tax Act, 1922 did not amount to a garnishee order and did not bar deposit with Rent Controller; tenant was not entitled to retain rent on the basis of unproved oral agreement to adjust professional fees; directed deposit of back rents at Rs.300 per month from 1 July 1957.
Law Points
- Order under Section 15(1) of Delhi Rent Control Act
- 1958 is preliminary and not final
- interim order can be made without full trial where rent not in fact paid
- provision requires deposit of arrears and future monthly rent by 15th of each succeeding month
- notice under Section 46(5A) of Indian Income-tax Act
- 1922 is not a garnishee order
- deposit with Rent Controller does not incur personal liability when clearance certificate required
- tenant cannot retain rent on unproved oral agreement to adjust professional fees
