PREM KRISHNA Vs. KRISHINCHAND CHELLARAM

JUDGEMENT

(1.) Prior to July 6, 1949 one Zulfikar AH Shah Nawaz Khan Bhutto was the owner of the lease-hold plot No. 200 situate at Backbay Reclamation, Bombay, whereon stands a building in which Astoria Hotel is being conducted. On June 22. 1948 Bhutto gave a lease of these premises to the 2nd Respondents for a period of 35 months. Bhutto was declared an evacuee and on July 6, 1949 the said premises were declared evacuee property and vested in the Union Government under the displaced persons (Compensation and Rehabilitation) Act, 44 of 1954(hereinafter called the compensation Act). On December 31, 1955 the said promises were auctioned as evacuee property by the Regional Settlement Commissioner when. Respondents 1 were declared the highest bidder for Rs 13,04,000. On the Jan. 27, 1956 the Regional Settlement Commissioner accepted the bid of Respondent 1, and as they were displaced persons, he called upon them to file compensation applications for themselves and for their association, if any, within 7 days. Respondents 1 were told that if that was not done, 10% of the bid offered by them would be deducted from the net compensation due to them as provided by the indemnity bond executed by them at the conclusion of the said auction. By a Memorandum dated February 1, 1958 the Settlement Commissioner informed respondents 1 that since the auction price as to be adjusted against compensation due to them an effort was made to determine such compensation. But as it was found that process would take some time it was decided to transfer possession of the property to them on a provisional basis. The Memorandum further stated that as the property was in possession of tenants, Respondents 1 could get physical possession only if the tenants were not protected under Section 29 of the Compensation Act. Memorandum, nevertheless, authorised Respondents 1 to realise arrears of rent as also rent as it became due and to carry out repairs for the maintenance of the premises as may be necessary. It also stated that henceforth Respondents 1 would be responsible for the safety, repairs and maintenance of the property as also for municipal rates and taxes thereon. They were, however, not to them sell, mortgage or lease the property as the transfer was made to them on a provisional basis until net compensation due to them was finally determined and adjusted against the price and "full and final rights of ownership are transferred to you and certificate of sale is issued." The memorandum further stated that if any amount remained due after the net compensation was adjusted against the price, Respondents 1 could have to pay such amount either in cash or by adjustment of other compensation claims and in case of default of such payment or adjustment the deficit would be recovered as arrears o land revenue and the certificate of sale would be withheld until such amount was paid or adjusted. A copy of this memorandum was sent to the Custodian and the Deputy Custodian, Bombay requesting them to inform the tenants to pay henceforth the rent to respondents 1 Accordingly the 2nd respondents started paying rent to Respondents 1. Respondents 1 could get symbolical possession of the premises, as they were in occupation of the appellants, who were said to be in possession as the subtenants of Respondents 2. On December 30, 1958 and again on April 24, 1959, Respondents 1 serve notices on Respondents 2 terminating their tenancy on several grounds including that of subletting. On February 19 1960 they filed the suit, from which this appeal arises, against Respondents 2 in the small Causes Court Bombay, to which later on the appellants were added as party-defendants. During the tendency of the suit the managing officer issued to respondents 1 a certificate of sale dated July 21, 1963 declaring them to be the purchasers with effect from May 1, 1956. The certificate was issued in the form prescribed by the Displaced Persons (Compensation and Rehabilitation) Rules 1955 framed under Section 40 of the Compensation Act. The certificate was accompanied by two annexures, the first giving the names Respondents 1 and their 13 associates against whose claims the auction price of Rs. 13,04,000 was adjusted; and the second giving particulars of adjustments of sale price".

(2.) Before the Trial Court 4 preliminary issues were raised. The principal contention of the appellants was that Section 4 of the Bombay Rents, Hotel and lodging House Rates Control Act LVII of 1947 (hereinafter referred to as the Rent Act) exempted inter alia properties belonging to the Government from the applicability of the Act, that as the property in question still vested in the Cen tral Government on February 19, 1960 when the suit was filed inasmuch as it was only provisionally transferred to respondents 1 by the said memorandum and was finally transferred only when the certificate of the sale was issused, the small Causes Court, as the Rent Court under the Rent Act, had no jurisdiction to entertain or try the said suit.

(3.) Both the Trial Court and Appellate, Bench of the small Causes Court negatived the appellants contention and held that Court had jurisdiction. In so holding the Appellant Bench was of the view that the title to the property was transferred to Respondents 1 with effect from the date when the auction price was adjusted against the compensation payable to them and their said associates, and that therefore, the title passed to Respondents 1 before the date when the suit was filed. The Bench relied on the certificate issued in the form provided in appendix XXII to the said Rules which was the form substituted for the old form with effect from October 29, 1956 and which contained the declaration that Respondents 1 had become purchasers with effect from May 1, 1956, and thus was validly filed in the Small Causes Court. Thereupon the appellants filed the High Court two revision applications against the said order and the High Court rejecting them held that Respondents 1 had become owners as from May 1, 1956 as declared by the certificate of sale, that though the new form in Appendix XXII came into force after the said auction sale, it was nonetheless applicable as it was only procedural, that Respondents 1 must be held to have become the owners before the suit was filed, and consequently, the exemption in Section 4 in 4 of the Rent Act did not apply. Indeed, the High Court held that inasmuch as the verified claims of Respondents 1 and their associates were lying with the Government unpaid, the auction price must be deemed to have been adjusted against the compensation due under these claims even before the auction took place. The rejection of the appellants contention as to the non maintainability of the suit in the Small Causes Court by the High Court is challenged in this appeal filed under special leave granted by this Court.