2007 (10) TMI 606 - SC - Indian Laws

Whether the tenant has a right of possession or whether he has merely an immunity from being dispossessed? Held that - Admittedly, on the date the tenancy was terminated, the tenant (Public Limited Company) was having a paid up share capital of rupees more than one crore. Under clause (b) of Section 3(1) of the Act, therefore, the provisions of the Act were not applicable to the suit-premises. The learned counsel for the respondent- landlord is also right in submitting that the appellant- tenant does not deserve equitable relief under Article 136 of the Constitution. The tenant has not paid 'rent'/'mesne profits' since more than ten years. Even after approaching this Court, it had made part payment pursuant to interim order made in April, 2005. But nothing was paid/deposited thereafter even though two years have passed. These facts have not been disputed by the appellant. We are, therefore, of the view that even on that ground, the appellant-tenant cannot ask for discretionary and equitable relief and we are not inclined to grant such relief. Appeal dismissed.

Issues Involved:
1. Constitutional validity of Section 3(1)(b) of the Maharashtra Rent Control Act, 1999.
2. Jurisdictional fact regarding the tenant's paid-up share capital.
3. Applicability of Section 22 of the Sick Industrial Companies Act, 1985.
4. Consideration of subsequent events.
5. Equitable considerations.

Detailed Analysis:

1. Constitutional Validity of Section 3(1)(b) of the Maharashtra Rent Control Act, 1999:
The tenant contended that the suit filed by the landlord was not maintainable due to the pending question of the constitutional validity of Section 3(1)(b) of the Maharashtra Rent Control Act, 1999. The courts below, however, proceeded to decide the matter on merits, referencing the decision in M/s. Crompton Greaves Ltd. v. State of Maharashtra, which upheld the validity of the provision. The courts noted that the Act exempts premises let to companies with a paid-up share capital of rupees one crore or more. The tenant, being a Public Limited Company with a paid-up share capital exceeding rupees one crore, fell within this exemption.

2. Jurisdictional Fact Regarding the Tenant's Paid-Up Share Capital:
The tenant argued that the fact of having a paid-up share capital of rupees one crore or more is a 'jurisdictional fact' necessary for the court to proceed. The courts found that the tenant's paid-up share capital was indeed more than rupees one crore when the notice was issued and the suit was filed. The tenant's subsequent resolution to reduce the share capital was not approved by the Board for Industrial and Financial Reconstruction (BIFR), and thus, the courts held that the Rent Act did not apply.

3. Applicability of Section 22 of the Sick Industrial Companies Act, 1985:
The tenant claimed that being a 'sick company' under the Sick Industrial Companies Act, 1985 (SICA), all proceedings against it should be suspended under Section 22 of the Act. The courts, however, relied on the precedent set in Shree Chamundi Mopeds Ltd. v. Church of South India Trust Association, which held that eviction proceedings could proceed against a sick company. Thus, Section 22 of SICA did not bar the eviction proceedings in this case.

4. Consideration of Subsequent Events:
The tenant argued that the courts should consider subsequent events, such as the resolution to reduce the paid-up share capital. The courts held that the rights of the parties should be determined based on the date of the institution of the suit. The landlord's right to possession accrued when the tenancy was terminated, and subsequent unilateral actions by the tenant could not nullify this right. The courts referenced the decision in Gajanan Dattatraya v. Sherbanu Hosang Patel, which supported the view that subsequent events should not affect the accrued rights of the landlord.

5. Equitable Considerations:
The courts also considered equitable factors, noting that the tenant had not paid rent or mesne profits for over ten years. Even after approaching the Supreme Court, the tenant made only a partial payment and failed to deposit further amounts as ordered. The courts concluded that the tenant did not deserve equitable relief under Article 136 of the Constitution due to its continued non-payment and lack of compliance with court orders.

Conclusion:
The appeal was dismissed with costs, affirming the eviction decree against the tenant. The courts upheld the constitutional validity of Section 3(1)(b) of the Maharashtra Rent Control Act, confirmed the jurisdictional fact of the tenant's paid-up share capital, allowed the eviction proceedings despite the tenant's status as a sick company, and rejected the consideration of subsequent events and equitable relief due to the tenant's conduct.

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