Holding

The Supreme Court held that the tenant's repeated non‑compliance with the statutory deposit procedure and failure to furnish required particulars amounted to wilful default, thereby justifying eviction.

Summary

The tenant, N.D. Thandani (deceased), repeatedly failed to make monthly rent deposits as required by the A.P. Buildings (Lease, Rent & Eviction) Control Rules and did not furnish the prescribed deposit particulars to the landlord. Despite a Supreme Court order directing the tenant to clear arrears within two months and thereafter deposit rent monthly, the tenant deposited a large lump sum without the required challan details and continued to default. The landlord sought eviction under Section 10(2)(i) of the Act, alleging wilful default; the Rent Controller and the Andhra Pradesh High Court upheld the eviction. On appeal, the tenant argued that the arrears had been cleared and that the landlord’s acceptance extinguished the cause of action. The Supreme Court held that the tenant’s conduct—failure to comply with the detailed procedural requirements and repeated procrastination—constituted wilful default, justifying eviction, and dismissed the appeal with costs, granting the tenant time to vacate by 31 May 2004 subject to compliance with specific conditions.

Issues considered

The tenant's failure to make regular monthly rent deposits and to provide required deposit particulars amounts to 'wilful default' under Section 10(2)(i) of the A.P. Buildings (Lease, Rent & Eviction) Control Act.
Whether the landlord's acceptance of arrears paid after default extinguishes the landlord's right to seek eviction.
The proper interpretation and application of Rule 5 of the A.P. Buildings (Lease, Rent & Eviction) Control Rules, 1961 regarding deposit procedures.

Subjects

evictionwilful defaultrent controlleaserent depositlandlord-tenant disputeRule 5Supreme Court

Judgment

... N.D. THANDANI (DEAD) BY LRS. A
v.
ARNA VAZ RUSTOM PRINTER AND ANR.

NOVEMBER 24, 2003

(R.C. LAHOTI AND.ASHOK BHAN, JJ.] B
A.P. Buildings (Lease, Rent & Eviction) Control Act, 1960; Section
10(2)(i)-A.P. Buildings (Lease, Rent and Eviction) Control Rules, 1961;
Rule 5-Tenant defaulting in payment of rent every month and depositing
the arrears in lumpsum with Rent Controller contrary to earlier order by C
Supreme Court-Failure of the tenant to give the particulars of rent .
deposds to landlord under the Rules-Eviction on wilful default in payment
of rent-Justification of-Held, on facts, is justified since there is wilful
default in payment of rent every month by tenant.

This Court, in an earlier round of litigation, directed appellant- D
tenants to deposit the arrears of rent within two months and to deposit
future rents by IOth of every month with the Rent Controller. On
default of the direction, respondent-landlords issued a legal notice to
the appellants to furnish details of rent of deposited with the Rent
Controller. The appellants replied to the notice stating that the arrears E
of rent of Rs. 6,300 was deposited with the Rent Controller, but without
giving the details of deposits. The respondents moved an application
before the Rent Controller for withdrawing the amount deposited by
the appellants. The Rent Controller replied that an amount of only
Rs. 216.25 was lying in deposit. The respondents filed a suit for eviction F
of the appellants before the Rent Controller under section 10(2)(i) of
A.P. Buildings (Lease, Rent & Eviction) Control Act, 1960 on the
ground of wilful default in payment of rent. During the _eviction
proceedings, the appellants made available .the challans showing deposit
of Rs. 6300 with the Rent Controller. The Rent Controller allowed the G
suit of the respondents and it was upheld by High Court in revision.

In appeal, the appellant-tenants contended that a mere default
does not invite liability for eviction since the default was not a 'wilful
default'; and that the cause of action for seeking eviction based on
preceding default does not survive since the arrears of rent have been H
141
142 SUPREME COURT REPORTS [2003] SUPP. 6 S.C.R.
't
A deposited and the respondents accepting the same.

Dismissing the appeal with certain directions, the Court

HELD : 1.1. A perusal of Rule 5 of the A.P. Buildings (Lease, Rent
and Eviction) Control Rules, 1962 shows that the rule making authority
B has taken care to meticulously frame the rule and lay down a detailed
procedure so as not to leave room for any controversy to arise between
the landlord and the tenant as to payment of rent. The object of
framing such rule is that merely because of litigation or a strained
relationship existing between the landlord and the tenant, the landlord
c may not be harassed for realising the rent and he must be able to collect
and receive the rent reg~larly. (144-H, 145-A; 146-F-G)

1.2. Not only the law itself require the appellant-tenants to pay
or tender, the rent month by month, the order of this Court mandated
the appellants to clear all the arrears of rent within two months and
D
thereafter to deposit the rent month by month and strictly observe
compliance with the orders of the Supreme Court. The appellant did
not even comply with the provisions of Rule 5 of the A.P. Buildings
Control Rules. Huge amount of arrears accumulated and were cleared
in one go. Even other deposits were not regularly made. The respi:>n«!ents
E did not keep the appellants informed of the deposits either directly or
by complying with the provision of the Rule. The obligation of the
tenant to pay or tender the rent cannot be said to have been discharged
unless and until the landlords were posted with the information along
with particulars enabling them to withdraw the amount. The legal
F notices served by the respondents were not respcmded to in the desir~d
manner so as to put an end to their grievance. A claim for eviction
founded on the simple ground of default in payment remained pending
for years, obviously because of the reluctance and the procrastinating
tactics of the appellant. This is a clear case of'wilful default'. The High
G Court has rightly held the appellant to be a chronic wilful defaulter.
The decree for eviction is fully justified. [147-H; 148-A-D)

Mangilal v. Suganchand Rathi, [1964] 5 SCR 239; S. Sundaram
,,.
Pillai & Ors. v. V.R. Pattabiraman & Ors., [19851 1 SCC 591; Dakaya
A/las Dakaiah v. Anjani, [1995] 6 SCC 500 and KA. Ramesh & Ors. v.
H
N.D. THANDANI v. ARNA VAZ RUSTOM PRINTER [LAHOTI, J.] 143

. Susheela Bai (Smt.) & Ors., (1988) 3 SCC 58, referred to. A
Vinukonda Venkata Ramana v. Mootha Venkateswara Rao & Anr.,
AIR (2002) AP 52 (FB) and Pallapothu Narasimha Rao & An/·. v. Kidanbi
Radhakrishnamacharyulu, AIR (1978) AP 319, referred to.

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 7371 of B
2002.

From the Judgment and Order dated 8.6.2001 of the Andhra Pradesh
High Court in C.R.P. No. 2658 of 1997.

A. Subba·Rao and A. Chandra Mohan for the Appellants.
c
P.S. Narasimha, P. Sridhar, Ananga Bhattacharya, G. s~shagiri for
M/s P.S.N. & Co., for the Respondents .
.. <

The Judgment of the Court was delivered by
D
R.C. LAHOTI, J. The tenant is in appeal, by special leave, feeling
aggrieved by the judgment of the High Court holding the tenant liable to
be evicted from the suit premises on the ground available to the landlord-
respondents under Section 10(2)(i) of A.P. Buildings (Lease, Rent &
Eviction) Control Act, 1960 (hereinafter 'the Act', for short). The said E
provision entitles a landlord to evict the tenant on the latter's failure to pay
or tender the rent within the specified number of days on its becoming due.
The proviso appended to sub-section (2) provides for the Controller
allowing the tenant a reasonable period of time not exceeding fifteen days
to pay or tender the rent due by him to the landlord calculated up to the F
date of such payment or tender, and upon such payment or tender being
made the prayer for eviction may be refused if the Controller is satisfied
that the tenant's default to pay or tender the rent was not wilful. It is
conceded at the Bar that the tenant shall incur the liability for eviction only
on a finding arrived at by the Controller of 'wilful default' on the part of G
the tenant.

This litigation has a histor)! ·of around thirty years broken into three
rounds of litigation, each time the landlord having sought for the eviction,
~"'" ··.
of the tenant on the ground of wilful default and twice the tenant having
successfully escaped the threat of eviction. In the third round he is struck H
144 SUPREME COURT REPORTS (2003] SUPP. 6 S.C.R.
,.
...
A by the findings arrived at and recorded in very many details by the learned
Rent Controller in his Order dated August 25, 1993, which has been upheld
by the High Court in revision.

In an earlier round of litigation the tenant had come up to this Court
B and this Comt had, vide its order dated 12.1.1980, directed him to deposit
the then arrears within a period of two months.and continuously deposit
the rent falling due thereafter, month by month, by the I 0th day of every
month, with the Rent Controller. Complaining of the default once again
having been committed by the tenant, the landlords in the first instance
served through their counsel a notice dated 28. l 0.81 on the tenant, calling
C upon him to furnish details of the rent deposited by him with the Controller.
The tenant through his advocate gave a reply that all the arrears of rent
were cleared. However, no particulars as to challans by which the rent
was deposited with the Controller were furnished. On 12.11.1981, the
landlord moved an application before the Controller for withdrawing the
D amount deposited by the tenant, and his application was returned with an
endorsement by the office of the Controller that an amount of Rs. 216.25
paise only was lying deposited. In a communication dated 12.11.1981, the
landlord was informed by the tenant that there were arrears to the tune of
Rs. 6,300 which were all deposited in one go. Here again, the details of
E challans were not furnished and in fact the Controller also gave credit for
the amount of deposit made by tenant on the basis of a letter of the State
Bank of Hyderabad ce1tifying the amount of deposit. In the proceedings
initiated by the landlord seeking eviction of the tenant under Section
I 0(2)(i) of the Act, the plea taken by the tenant was that the challans,
evidencing the deposit of rent with the bank, were sent to the Controller
F from time to time through registered post. He made a statement to that
effect on 21.8.1989 when he was examined in the Court of Controller. On
a prayer made by the landlord, 4 years after the date of the said statement,
the tenant was recalled for further cross-examination and on 13.7.1993 he
made available the challan showing deposit of Rs. 6,300 and other challans
G also which he had kept with himself until then. Even these challans, when
scrutinized, did not support the plea of the tenant that the entire amount
in arrears up to date had been cleared.
"'
In exercise of the pow~ conferred by Section 30 of the Act, the
1

H Governor of Andhra Pradesh has framed the Rules called 'The Andhra
N.D. THANDANI v. ARNA VAZ RUSTOM PRINTER [LAHOTI, J.] 145

Pradesh Buildings (Lease, Rent and Eviction) Control Rules, 1961' A
(hereinafter 'the Rules', for short). Rule 5 of the Rules is relevant which
reads as under :

"5.(I) A tenant desirous of depositing the rent under sub-section
(5) of Section 8 or Section 9 or Section 11 shall deposit the B
same, if the building concerned is in the City of Hyderabad,
in the State Bank of Hyderabad and if the building is
elsewhere, in the Controller's office or in the nearest treasury,
whichever is convenient, after obtaining permission for the
deposit of the rent from the controller.
c
(2) The challan accompanying the deposit of the rent shall be
in the Andina Pradesh Treasury Code in Form No. l 0 in
triplicate and shall specify :-

(a) the name and address of tenant by whom or on whose D
behalf the rent is deposited;

(b) the name and address of the landlord entitled to receive
the rent deposited;
E
(c) the rent at which and the period for which the rent is
deposited;

(d) the description of the building in respect of which the
rent is deposited;
F
(e) the provision of the Act including the circumstances
under which the rent is deposited; and

(f) the head of account to which the rent is credited,
namely:- G
"P.ll Deposits and Advances - (Deposits and bearing
... interest - C. Other Deposit Accounts - Civil Deposits -
Personal Deposits - Personal Ledger Account of the
Controller or appellate authority, as the case may be". H
146 SUPREME COURT REPOR -,-s [2003) SUPP. 6 S.C.R.

A (3) One copy of the challan for the deposit of rent returned by
the State Bank of Hyderabad Controller·s Officer or treasury,
as the case may be, after endorsing thereon the receipt of the
amount deposited, shall be delivered in the office of the
Controller or the appellate authority as the case may be .
......
B (4) On delivering one copy of the chal\an the Controller or the
appellate authority, as the case may be, shall acknowledge
its receipt on the back of the challan retained by the tenant
and take necessary action for the service of the notice of
deposit on the person or persons concerned within seven
c days of the delivery thereof. The notice of deposit shall be
served on the person or persons concerned in one or other
of the modes specified in Rule 16.

(5) Every Controller and every appellate authority shall cause
D proper accounts to be maintained in their offices for the rents
deposited under sub-section (5) of Section 8 or Section 9 or
Section 11.

(6) A tenant against whom an application for eviction has been
made before the Controller shall deposit all the arrears of
E rent due by him, if any, in respect of the building within such
reasonable time, not exceeding 15 days, as may be specified
by the Controller."

A perusal of the above said Rule shows that the rule making authority
F has taken care to meticulously frame the rule and lay down a detailed
procedure so as not to leave room for any controversy to arise between
the landlord and the tenant as to the payment of the rent. The object of
framing such rule is that merely because of litigation or a strained
relationship existing between the landlord and the tenant, the landlord may
G not be harassed for realising the rent and he must be able to collect and
receive the rent regularly. The tenant has to deposit the rent through a
chal/an as prescribed accompanying the deposit wherein all the particulars
provided for by sub-rule (2) have to be given. The challan is in triplicate.
One copy is to be delivered to the Controller, after securing acknowledgment •
on another copy which is to be retained by the tenant. Such delivery of
H
N.D. THANDANI v. ARNA VAZ RUSTOM PRINTER [LAHOTI, J.] 147

'· · copy of the challan containing particulars specified in sub-rule (2) enables A
the Controller to maintain proper accounts and also to give notice of the
deposit to the landlord who can thereafter withdraw the amount so
deposited. A failure to comply with the provisions of the rule will result
either in the deposit being lost in the jumble of hundreds of transactions
which take place in the treasury or bank everyday, or would result in failure B
by the Controller in. maintaining the accounts and giving notice to the
landlord. Whatever be the situation, the landlord would be deprived of the
opportunity of receiving the rent regularly in spite of the tenant having
deposited the same. The whole purpose behind enacting the Rule will be
frustrated because of the tenant's negligence.
c
Placing reliance on the decisions of this Court in S. Sundaram Pillai
& Ors. v. VR. Pattabiraman & Ors., [1985] l SCC 591, and a Full Bench
decision of Andhra Pradesh High Court in Vinukonda Venkata Ramana v.
Mootha Venkateswara Rao & Anr., AIR (2002) A.P. 52, the learned
counsel for the tenant-appellant submitted that a mere default by the tenant D
does not invite liability for eviction; the scheme of the Act draws a
distinction between 'default' and a 'wilful default'. The inference as to
'wilful default' cannot be drawn unless the default is intentional, deliberate,
calculated and conscious, with full knowledge of legal consequences
flowing therefrom. However, the same decision which has been relied on E
by the learned counsel for the appellants states that where a tenant commits
default after default despite oral demands or reminders and fails to pay the
rent without any just or lawful cause, it cannot be said that he is not gui~ty
of wilful default because such a course of conduct manifestly amounts to
'wilful default'.
F
The case at hand projects a picture where in spite of the leaning of
the law in favour of the tenant, if anyone deserves sympathy it is the
landlord and not the tenant. As already noticed, this is the third round of
litigation complaining of default in payment of rent by the tenant. In the
first round of litigation the rate of rent was alleged by the landlord to be G
Rs.160 per month which was denied by the tenant who pleaded the rate
of rent to be Rs. 80 per month only. In the litigation which ended in the
apex court, the rate of rent was finally adjudged to have been Rs. 160 per
• month and not Rs. 80 as was pleaded by the tenant. Not only does the
law itself require the tenant to pay or tender the rent month by month, the H
148 SUPREME COURT REPORTS [2003] SUPP. 6 S.C.R.

A order of this Court mandated the tenant to clear all the an-ears ofrenrwithin
two months and thereafter to deposit the rent month by month and strictly
observe compliance with the orders of the Supreme Court. The tenant did
not even thereafter comply with the provisions of Rule 5. Huge amount
of arrears accumulated, which were cleared in one go. Even other deposits
B were not regularly made. The tenant did not keep the landlords informed
of the deposits either directly or by complying with the provision of the
Rule. The obligation of the tenant to pay or tender the rent cannot be said
to have been discharged unless and until the landlords were posted with
the information along with particulars enabling them to withdraw the
C amount. The legal notices served by the landlords were not responded to
in the desired manner so as to put an end to their grievance. A claim for
eviction founded on the simple ground of default in payment remained
pending for years, obviously because of the reluctance and the procrastinating
tactics of the tenant. If this is not 'wilful default' then what else can it
D be? We are clearly of the opinion that the High Court has rightly held the
tenant to be a chronic w,ilful defaulter. The decree for eviction is fully
justified.

Before parting, and, in fairness to the learned counsel for the parties,
we may place on record a submission made on behalf of the appellant that
E in spite of the tenant having defaulted in payment of rent for any period
prior to the institution of the suit, if the arrears have been cleared (though
belatedly) and the landlord has accepted the same, the default, ifany, stands
wiped out and the cause of action for seeking eviction of the tenant based
on the preceding default does not survive. Reliance was placed on a Full
F Bench decision of Andhra Pradesh High Court in Vinukonda Venkata
Ramana v. Mootha Venkateswara Rao and Anr;, AIR (2002) AP 52. This
decision takes notice of two decisions of this Court (both by two judges
benches) reported as Dakaya Alias Dakaiah v. Anjani, [1995] 6 SCC 500
and KA. Ramesh and Ors. v. Susheela Bai (Smt.) and Ors., [l 998] 3 SCC
G 58. An earlier decision by a Five-judges Bench of the Andhra Pradesh
High Court, namely, Pallapothu Narasimha Rao and Anr. v. Kidanbi
Radhakrishnamacharyulu, AIR (l 978) AP 319 was brought to the notice
of the Full Bench deciding Vinukonda Venkata Ramona's case (supra) but
the Full Bench commented that the Five-Judges Bench decision in
H Pallapothu Narasimha Rao and Anr. (supra) is not good law because it fails
N.D. THANDANI v. ARNA VAZ RUSTOM PRINTER [LAHOTJ, J.] 149

to take note of the Supreme Court's decision in the case of Dakaya Alias A
Dakaiah (supra). The learned counsel for the respondent pointed out that
the Five-Judges Bench decision of Andhra Pradesh High Court in Pallapothu
Narasimha Rao and Anr. 's case (supra) is based on a Constitution Bench
judgment of this Court in Mangilal v. Suganchand Rathi; (1964] 5 SCR
239, which was not noticed in the two Supreme Court.decisions noted and B
followed by the Full Bench in Vinukonda Venkata Ramana 's case (supra).
The learned counsel for the respondent further submitted that this Cou1t
should hold the decision of the Andhra Pradesh High Court in Vinukondp
Venkata Ramana 's case not to be good law in view of the larger Bench
decision of that very Court in Pallapothu Narasimha Rao and Anr. The C
issue is substantial and we would have certainly gone into it but we find
the present case is not an appropriate case for doing so. It is not the finding
arrived at either by the trial court or by the High Court that the amount
of arrears had stood paid by the tenant to the landlord prior to the initiation
of proceedings for eviction by the latter.' The question of examining the D
effect of such payment does not, therefore, arise in the present case. On
the contrary, the finding is that the tenant was and has continued to remain
in arrears upto the date of the initiation of the proceedings, and the only
question arising for decision in the present case is whether the default can
be said to be 'willful' or not.·
E
The appeal is dismissed with costs throughout.

Still, to save the tenant from sudden eviction, we allow him time upto
31.5.2004 for vacating the premises, subject to his filing an undertaking
on affidavit within four weeks from today, incorporating the following F
terms and strictly complying therewith :

(i) that on or before 31st May, 2004, the tenant shall deliver
vacant and peaceful possession to the landlord and shall not
induct anyone else in possession or create any third party G
interest in the tenancy premises;

(ii) that the statement of the deposits made by the tenant with
all the relevant particulars, so as to satisfy the Rent Controller
and the landlord that all the arrears have been cleared up to H
150 SUPREME COURT REPORTS [2003) SUPP. 6 S.C.R.

A date, shall be filed within four weeks from today; and

(iii) the amount equivalent to rent calculated upto 31.5.2004 shall
be deposited in advance within a period of four weeks from
today.

B Failing compliance with any of the terms, the' decree for eviction
shall be available for e;viction of the tenant-appellant forthwith.

B.S. Appeal dismissed.