M/S Chi Yang Chinese Restaurant and E.K. Antony v. Rajeendran P

``` IN THE HIGH COURT OF KERALA AT ERNAKULAM ``` ``` PRESENT ``` ``` THE HONOURABLE MR. JUSTICE ANIL K.NARENDRAN ``` ``` & ``` ``` THE HONOURABLE MR. JUSTICE G.GIRISH ``` ``` FRIDAY, THE 23[RD] DAY OF FEBRUARY 2024 / 4TH PHALGUNA, 1945 ``` # **`OP (RC) NO. 42 OF 2023`** ``` AGAINST THE ORDER DATED 10/1/2023 IN I.A.1/2022 IN RCP 36/2022 OF III ADDITIONAL MUNSIFF AND RENT CONTROL COURT, ERNAKULAM ``` ## **`PETITIONERS/RESPONDENTS:`** ``` 1M/S.CHIYANG CHINESE RESTAURANT, 37/712, SAHODARAN AYYAPPAN ROAD, KADAVANTHARA, KOCHI REP.BY MANAGING PARTNER E.K.ANTONY, PIN - 682020 2E.K.ANTONY, AGED 87 YEARS, S/O.E.K.KOCHAPPU, MANAGING PARTNER, M/S.CHIYANG CHINESE RESTAURANT 37/712, SAHODARAN AYYAPPAN ROAD,KADAVANTHARA, KOCHI, PIN - 682020 BY ADVS. P.T.JOSE S.ASHITHA JAYASANKAR S.S. ABEY AUGUSTINE ALTHAF P.A. ``` ## **`RESPONDENT/PETITIONER:`** ``` RAJEENDRAN P, AGED 52 YEARS, S/O.KUNHAPPA NAIR HOUSE NO.76, KUMARANASAN ROAD, KADAVANTHARA P.O., PIN:682020 NOW RESIDING AT SPARTA 1006, PRESTIGE ACROPOLIS, KORAMANGALA BANGALORE, PIN - 560029 ``` ``` BY ADVS. A. Balagopalan; ``` ``` A A.RAJAGOPALAN(K/339/1994) M.N.MANMADAN(K/198/1998); ``` ``` M.S.IMTHIYAZ AHAMMED(K/151/1999); P.SEENA(K/000546/2000) ``` ``` THIS OP (RENT CONTROL) HAVING COME UP FOR ADMISSION ON 23.02.2024, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ``` 2 O.P.(R.C) No.42 of 2023 ## **J U D G M E N T** ## G. Girish, J. The tenants/respondents in R.C.P.No.36/2022 of the Rent Control Court, Ernakulam have filed this writ petition under Article 227 of the Constitution of India, challenging the order passed by the Rent Control Court under Section 12(1) of the Kerala Buildings (Lease and Rent Control) Act, 1965 (for short 'the Act'). 2. The landlord has instituted the rent control proceedings under Section 11(2)(b) and 11(3) of the Act for the eviction of the tenants from the building which they have been in occupation for their hotel business. It is stated that the rent agreed was Rs.1,00,000/- per month, even though it was shown as Rs.75,000/in the lease deed as requested by the tenants. The tenants are also said to have agreed periodical enhancement of rent at the rate of 5% every year. According to the landlord, the tenants committed default in payment of rent, and a total amount of Rs.56,21,059/stood due as arrears of rent. The landlord would further contend that the petition schedule building is required for him for the conduct of his business which is presently located at Bangalore. Aggrieved by the pendency of huge arrears of rent, the landlord filed I.A.No.1 of 2022 before the Rent Control Court under Sections 12(1) and (3) of the Act for the payment of admitted arrears of rent. 3 O.P.(R.C) No.42 of 2023 3. The tenants (petitioners in this writ petition) filed counter affidavit in which they sought adjustment/set off of the various amounts which they are said to have expended in connection with the building of the landlord where they are conducting hotel business. According to the tenants, they spent Rs.21,69,000/- for the additional construction and renovation of the petition schedule building in accordance with the rental agreement with the landlord. It is their further contention that an amount of Rs.11,17,333/- was spent by them towards arrears of building tax, one-time tax to Village Office, payment of electricity bills etc. Thus, it is claimed that the total amount of Rs.32,86,333/- expended by the tenants are liable to be deducted from the arrears of rent which stood due to the landlord. Another substantial objection raised by the tenants is that as per the prevailing lease deed dated 16.01.2017, executed in between the petitioners and the respondent, the monthly rent payable for the petition schedule building is only Rs.40,000/-. Thus it is stated that an amount of Rs.14,00,000/- is overdue to the tenants from the landlord, and therefore, the claim of arrears of rent is not sustainable. 4. The Rent Control Court, in the impugned order dated 10.01.2023 in I.A.No.1 of 2022, directed the petitioners to remit rent arrears at the rate of Rs.1,00,000/- per month along with interest at 4 ## O.P.(R.C) No.42 of 2023 the rate of 6% per annum from March 2022 onwards, and also the past rent arrears from 01.05.2018 to 28.02.2022. The above order is seen passed upon the premises that the rate of rent which the petitioners are liable to pay is Rs.1,00,000/- per month from May, 2018 onwards. The above order is totally silent as to the records which the court relied on to arrive at the finding about the rate of rent payable by the petitioners. It seems that the rent deed dated 16.01.2017, the copy of which the petitioners have produced in this writ petition as Ext.P5, was not placed before the Rent Control Court at the time of adjudication of the petition filed under Section 12 of the Act. As it is stated in Ext.P5 that the agreed rate of rent between the petitioners and the respondent is Rs.40,000/- per month, it is highly necessary in the interests of justice to afford an opportunity to the petitioners to produce before the Rent Control Court, admissible documentary evidence pertaining to the said rent deed claimed to have been executed in between the petitioners and respondent on 16.01.2017. The Rent Control Court is expected to base its conclusions on the rate of rent and the period of default of payment of rent upon a preliminary enquiry on the materials and evidence available before it. 5. In **Gopala Panicker Baiju and Another v. Mallika** **[2018 (5) KHC 95]** , a Division Bench of this Court held that the 5 ## O.P.(R.C) No.42 of 2023 relevant factors from which ‘arrears of rent’ can be inferred are the ## rate of rent and period of default. It has been observed in paragraph No.7 of the aforesaid decision as follows: “………… Normally, the rent deed executed by the tenant is a document which contains admission as to the rate of rent made by the tenant. The periodical enhancement in the rate of rent is evident from the rent receipts, in case the rent deed is not current. Similarly, the rent receipts, postal receipts or bank records contemplated under Section 9(2) of the Act produced by the tenant, are the documents which would suggest the period for which the rent is paid. According to Section 9(1) of the Act, the tenant is entitled to get receipt, on payment of rent and in case of refusal, an alternative remedy for payment of rent is also provided in Sub Section (2) of Section 9 of the Act……………” 6. As far as the present case is concerned, the impugned order of the Rent Control Court would reveal that the learned Presiding Officer had no occasion to go through any rent deed, receipts of rent or any other relevant document to ascertain the rate of rent or the period during which the rent became arrears. Therefore, it is highly necessary to provide an opportunity to the petitioners and the respondent to place before the Rent Control Court the relevant admissible evidence which would enable the said court to ascertain the actual arrears of rent which the petitioners are liable to pay the respondent. After ascertaining the quantum of arrears of rent due to the respondent-landlord on the basis of the 6 O.P.(R.C) No.42 of 2023 relevant records available, the Rent Control Court has to pass the order under Section 12(1) of the Act. 7. In this context, it is apposite to state here that the contention of the petitioners-tenants regarding their entitlement to have adjustment/set off of the amount said to have been expended for the reconstruction and renovation of the petition schedule building and the payment of various statutory dues, does not have support of the settled principles of law in this regard. It has been held in **Gopala Panicker Baiju [2018 (5) KHC 95]** that neither Section 11(2)(b) nor Section 12 of the Act recognises or permits any kind of set off, adjustment or counter claim by the tenant towards arrears of rent or admitted arrears. Paragraph 8 of the said decision reads as follows: “8. In this context, it is to be borne in mind that any kind of set off or adjustment towards arrears of rent cannot be accepted, while considering an application under Section 12 of the Act, as such counter claims require enquiry and adjudication. Neither Section 11(2)(b) nor Section 12 recognises or permits any kind of set off, adjustment or counter claim by the tenant towards arrears of rent or admitted arrears. The enabling provision which permits set off towards rent is Section 17(2) of the Act and the same is permissible, where an order to that effect is passed by the Accommodation Controller, on satisfaction of the failure on the landlord to attend to maintenance and necessary repairs of the building.” 7 O.P.(R.C) No.42 of 2023 8. Following the aforesaid decision, a Division Bench of this Court, in which one among us [Anil K. Narendran, J.] was a party, has held in **Nandanam Tiles & Sanitaries (P) Ltd. v. Abdul Gaffur [2022 (4) KHC 201]** that the only enabling provision which permits set off towards rent is Section 17(2) of the Act and the same is permissible where an order to that effect is passed by the Accommodation Controller on satisfaction of the failure of the landlord to attend to maintenance and necessary repairs of the building. 9. Thus the Rent Control Court is not expected to embark upon an adjudication upon the claim of the petitioners-tenants regarding their entitlement to have set off/adjustment of the amount said to have been expended for the reconstruction and renovation of the petition schedule building and the payment said to have been made on the statutory dues of the building. 10. The learned counsel for the respondent-landlord pointed out that a huge amount stands due from the petitioners-tenants as arrears of rent even if Ext.P5 rent deed is admitted, for the sake of arguments, as the prevailing rent deed, and hence it is highly necessary to direct the tenants to pay atleast a portion of the said amount, if the order of the Rent Control Court is set aside and the matter remanded for fresh disposal. There is substance in the above 8 ## O.P.(R.C) No.42 of 2023 argument advanced by the learned counsel for the respondent. As it is seen that rent of the petition schedule building is admittedly in arrears for several years, we are of the view that the petitionerstenants are liable to remit an amount of Rs.5,00,000/- as a token payment of a portion of the arrears of rent, notwithstanding the order under challenge being set aside. In the result, the writ petition is disposed of as follows: - (i) Ext.P6 order dated 10.01.2023 in I.A.No.1 of 2022 in R.C.P.No.36 of 2022 of the Rent Control Court, Ernakulam will stand set aside subject to payment of an amount of Rs.5,00,000/- (Rupees five lakhs only) out of the rent arrears, by the petitioners to the respondent, or deposit of the said amount before the Rent Control Court, Ernakulam, within a period of two weeks from today, the 23[rd] February, 2024. - (ii) The matter is remanded back to the Rent Control Court, Ernakulam for fresh disposal of I.A.No.1 of 2022 in R.C.P.No.36 of 2022 after taking into consideration all the available relevant records pertaining to the rate of rent of the petition schedule building and the period of rent arrears. - (iii) The Rent Control Court shall afford opportunity to both sides to bring on record admissible evidence which could be relied on while disposing of an application under Section 12 of the Act. - (iv) It is made clear that the claim of adjustment/set off raised by the petitioners-tenants cannot be looked 9 O.P.(R.C) No.42 of 2023 into by the Rent Control Court while dealing with the petition filed by the tenants under Section 12 of the Act. - (v) In the event of failure of the petitioners-tenants to make payment as directed in clause (i) above, Ext.P6 order passed by the Rent Control Court in I.A.No.1 of 2022 will survive, and the Rent Control Court shall proceed with the matter in continuation of the said order. (sd/-) **G. GIRISH, JUDGE** jsr 10 O.P.(R.C) No.42 of 2023 ``` APPENDIX OF OP (RC) 42/2023 ``` ``` PETITIONER EXHIBITS ``` ``` Exhibit P1TRUE COPY OF THE I.A. 1/2022 IN RCP 36/2022 FILED BY THE RESPONDENT BEFORE RENT CONTROL COURT ERNAKULAM DATED 20/9/2022 ``` - `Exhibit P2 TRUE COPY OF THE COUNTER IN I.A. 1/2022 IN RCP 36/2022 FILED BY THE PETITIONER BEFORE RENT CONTROL COURT DATED 25/11/2022` - `Exhibit P3 TRUE COPY OF THE LAWYER NOTICE ISSUED BY THE RESPONDENT DATED 1/11/2021` ``` Exhibit P4TRUE COPY OF REPLY NOTICE SENT BY THE PETITIONER DATED 19/11/2021 Exhibit P5TRUE COPY OF THE LEASE DEED EXECUTED BETWEEN PETITIONERS AND THE RESPONDENT DATED 16/1/2017 ``` ``` Exhibit P6TRUE COPY OF THE ORDER IN IA 1/2022 IN RCP 36/2022 PASSED BY THE III ADDITIONAL MUNSIFF( RENT CONTROL COURT )ERNAKULAM DATED 10/1/2023 ``` ``` Exhibit P7TRUE COPY OF THE RCP 36/2022 FILED BY THE RESPONDENTS BEFORE THE HON'BLE III ADDITIONAL MUNSIFF (RENT CONTROL) COURT ERNAKULAM DATED 14/3/2022 ``` - `Exhibit P8 TRUE COPY OF THE COUNTER FILED BY THE PETITIONER IN RCP 36/2022 DATED 19/8/2022 BEFORE THE HON'BLE III ADDITIONAL MUNSIFF (RENT CONTROL) COURT ERNAKULAM DATED 14/3/2022` - `Exhibit P9 TRUE COPY OF THE LEASE DEED DATED 1/12/2015 EXECUTED BETWEEN THE PETITIONER AND THE RESPONDENT` ``` Exhibit P10TRUE COPY OF THE ACCOUNT STATEMENT SHOWING THE PAYMENT MADE TO THE RESPONDENT THROUGH BANK FROM 4/10/2016 TO 16/3/2022 ```