KASTURBHAI MANIBHAI Vs. HIRALAL DAHYABHAI AND SRDAVAR

JUDGEMENT

(1.) The plaintiffs who are merchants and mill agents doing extensive business have their office in a building situated in Church Gate Street in the City of Bombay which building has been acquired by the Municipality for the purpose of widening the said Street and the Municipality have asked the plaintiffs to vacate the said building. On the correspondence between the plaintiffs and the Municipality, the situation appears to be that the plaintiffs are in their present office on sufferance and are under an obligation to vacate on a fortnight s notice from the Municipality. The plaintiffs are owners of a building situated at Esplanade Road in the City of Bombay. A portion of the second floor of this building is occupied by the defendant in Suit No. 3671 of 1919 who is an attorney of this Court, for the purposes of his office, and the rest of the said floor is occupied by the defendant in Suit No. 3672 of 1919 for the purposes of his College of Commerce. The defendants have been tenants of the plaintiffs for many years. In the beginning of the year 1918, the defendants who were then paying Rs. 250 each as monthly rent, offered to take a lease for three years from the beginning of February 1918, of the portions of the said premises occupied respectively by them for a monthly rent of Rs. 400 to be paid by each of them and the said offer was accepted by the plaintiffs. The leases were, however, not actually executed till the 3rd of July 1918. During the interval, the Bombay Rent (War Restrictions) Act II of 1918 came into force on the 10th of April 1918. The defendants did not pay any rent between the date of the agreement to lease and the actual execution of the leases. Although they had each offered to pay Rs. 400 as the monthly rent and had induced the plaintiffs to agree to give them a lease on that footing, they decided to take advantage of the provisions of the Rent Act but kept discreetly quiet from February to July and did not manifest their intention to do so, because they evidently apprehended that if the plaintiffs realised that the defendants were not going to pay the rent agreed upon, they might in some way decline to give the defendants the leases. But soon after the leases were executed on the 3rd of July and they were secure in their tenancy for three years, the defendants on the 23rd of July 1918 sent to the plaintiffs the amount of the rent for February to June 1918 inclusive calculated at the rate of Rs. 275 in each case, being the standard rent payable under the Rent Act. The plaintiffs received the amounts so sent by the defendants without prejudice to their rights and remedies under the respective leases. After that, for the rent for the months from July 1918 to August 1919, the plaintiffs themselves made out bills at the rate of Rs. 275 in each case and on presentation the same were paid by the defendants. The plaintiffs by their attorney s letter of 20th September 1919 informed the defendants that by their failure to pay Rs. 400, the rent reserved under the leases, they had committed a breach of their covenant to pay the said rent and that the plaintiffs had, by virtue of the provision in that behalf in the said leases, determined the said leases and were therefore entitled to re-enter upon the premises which, it was stated, they required for their own use and occupation and called upon the defendants to vacate the said, premises. Further correspondence ensued between the parties, in which the plaintiffs maintained their right to determine the leases and the defendants denied such right. No bills were made out and presented by the plaintiffs for the rent for the month of September 1919, but in the course of the correspondence above referred to, the defendants offered rent at the rate of Rs. 275 each for September and the same was accepted by the plaintiffs without prejudice to their rights and contentions on the 8th October 1919. Rent for the months of October and November 1919 was offered by the defendants at the rate of Rs. 275 but the plaintiff declined to accept the same, saying that they had already determined the leases. On the 12th of December 1919, the present suits were filed by the plaintiffs praying for possession of the premises and for damages for wrongful occupation by the defendants. It appears from the above facts, which are undisputed, that the plaintiffs by their act in making out the rent bills for the months from July 1918 to August 1919 at the rate of Rs. 275 per month and accepting the said rent waived their right to forfeit, the leases by reason of non- payment of the stipulated rent. But that does not preclude them from treating the non-payment by the defendants of the rent for September and the stipulated rate as a breach of the covenant of the lease in that behalf as the non-payment of rant at the stipulated rate month after month was a continuing breach. Their having waived their right to forfeit on such a breach for any particular month or months does not destroy their right to forfeit on similar breaches in subsequent months. The rent for September 1919 at the rate of Rs. 275 was, as already stated, accepted without prejudice. The rent for October and November 1919 tendered by the defendants was not accepted by the plaintiffs. In para. 5 of the plaint the facts about the payment of rent from July 1918 to September 1919 are set out and in para. 6 it is stated that by reason of the failure of the defendants to pay the stipulated rent the plaintiffs had become entitled to re-enter. Para. 10 refers to the plaintiffs letter of the 20th September 1919 determining the lease and para. 11 says that the lease had become forfeited and determined. The failure to pay the stipulated rent for October and November 1919 has not been specifically set out in the plaints but such failure is admitted. And I think it is open to the plaintiffs to rely on such failure to establish their claim, to determine the lease as claimed in para. 6 of the plaints Penton v. Barnett [1898] 1 Q.B. 276. An application was made at the hearing by the plaintiffs for leave to amend the plaint by setting out at the end of para. 5 of the plaint the failure to pay the stipulated rent for the months of October and November 1919. I do not think in;view of the admitted facts of the case it is necessary to amend the plaint. But if I had considered it necessary I would have allowed the amendment. The additional facts sought to be pleaded by the proposed amendment are admitted and do not come as a surprise on the defendants. It was contended that even if the plaintiffs are allowed to rely upon the failure by the defendants to pay the stipulated rent for October and November 1919, that would not avail them as they had not declared their intention to determine the lease by reason of such failure, but the presentation of the plaints is I think, a conclusive declaration of intention to determine the leases Serjeant v. Nash, Field & Co. [1903] 2 K.B. 304. But the real and substantial question in these suits is whether the payment by each of the defendants of Rs. 275 being the standard rent under the Rent Act instead of Rs. 400, the stipulated rent, is a breach of the covenant in the leases to pay the said stipulated rent. Section 2 of the Act defines the expression "standard rent" and Section 3 enacts that when the rent of any premises has been or is increased above the standard rent, the excess of the rent payable over the standard rent shall be irrecoverable, notwithstanding any agreement to the contrary. Section 12 enacts that where any sum has been paid on account of rent, being a sum irrecoverable as aforesaid, such sum shall, under certain restrictions as to time, be recoverable by the tenant from the landlord and may be deducted by the tenant from future rent payable by him. It is true that the Act does not make the payment by the tenant of the stipulated rent, being in excess of the standard rent, illegal and does not purport to affect the contract between the parties contained in the lease regarding the right of the lessor to determine the lease on failure to pay the stipulated rent, although a landlord seeking possession of the premises on such determination will, under Section 9, be not decreed possession unless he brings himself within the proviso to that section. There is nothing in the Act to prevent the tenant from paying the stipulated rent and thus preventing the determination of the lease. And it is contended that if he does not choose to do so, he cannot prevent the determination of the lease but that he can claim only the limited protection that Section 9 affords to a tenant whose tenancy has expired and that, therefore, if the landlord requires the premises reasonably and bona fide for his own occupation the tenant, who has failed to pay the stipulated rent and thereby brought about the forfeiture of the lease, must give up the premises or avoid the forfeiture by complying with the provisions of Section 114 of the Transfer of Property Act by payment of the stipulated rent, interest and colls. If this were the correct legal, position, it will enable the landlord to determine the lease for the failure of the tenant to pay the excess rent which the Rent Act makes irrecoverable and which the tenant is not bound to pay and thus ultimately compel the tenant to pay the said excess in order to avoid forfeiture of the lease by availing himself of the provisions of Section 114 of the Transfer of Property Act; and it is extremely doubtful whether a tenant under these circumstances paying the excess rent through the intervention of the Court can recover it back under Section 12 of the Rent Act. This would wholly, defeat the object of the Rent Act. Moreover, it would be open to the tenant to pay to the landlord the rent stipulated under the lease and thus fulfil the covenant to pay that rent and then under Section 12 of the Rent Act recover back the excess so paid. If it is open to him to do so, it is difficult to say that In commits a breach of the covenant by paying the standard rent in the first instance. The right of reentry on failure to pay the stipulated rent is an auxiliary provision to secure the payment of rent Howard v. Fanshawe [1895] 2 Ch. 581 at p. 588. The Legislature by the Rent Act has cut down the stipulated rent and enacted that the standard rent is the only rent that the tenant is bound to pay. When, therefore, the principal obligation is thus modified by reducing the stipulated rent, it is difficult to hold that the auxiliary provision to secure the payment of the whole amount of the stipulated rent is still left unaffected. In my opinion this auxiliary right is, after the passing of the Rent Act, available only for the purpose of securing the payment of the rent which is payable under the law, viz., the standard rent. I am fortified in the view I have taken by the judgment of Scrutton J. in Durell v. Gread (1914) 84 L.J.K.B. 130 where that learned Judge held that the right of re-entry consequent on the failure of the tenant to pay rent by reason of his taking advantage of the provisions of the. Postponement of Payments Act, 1914, was destroyed by the postponement of the due date of payment of the rent.

(2.) Even if the plaintiffs right to determine the leases is held to be unaffected the defendants are entitled to be relieved of the forfeiture under Section 114 of the Transfer of Property Act on payment of rent, interest and costs and that they have offered to do by their written statement. But in the view I have taken it is not necessary for them to invoke in their favour the provisions of that section.

(3.) That being the position, it is not necessary to go into the question whether the plaintiffs require the premises bona fide for their own occupation within the meaning of the proviso to Section 9 of the Rent Act. But I think there is no doubt on the evidence that the premises are so required by the plaintiffs. T hold that the tenancy has not been validly terminated and the plaintiffs are not entitled to eject the defendants. The result is that the suits must be dismissed with costs.