Holding

The eviction decree is valid; Section 3(1)(b) applies, the jurisdictional fact of paid‑up capital > Rs. 1 crore existed at the relevant date, and subsequent reduction does not affect the landlord’s accrued right.

Summary

Carona Ltd., a public limited company with paid‑up share capital exceeding Rs. 1 crore, was let a premises by a partnership landlord. After defaulting on rent, the landlord gave notice terminating the tenancy on 31 March 2001 and filed an eviction suit. While the suit was pending, the tenant passed a resolution to reduce its paid‑up capital below Rs. 1 crore, though the reduction was never approved by BIFR. The trial court, appellate Small Causes Court and the Bombay High Court held that Section 3(1)(b) of the Maharashtra Rent Control Act, 1999 exempted the tenant because the jurisdictional fact of paid‑up capital > Rs. 1 crore existed at the date of termination and filing, and that the subsequent reduction did not defeat the landlord’s accrued right. The tenant appealed to the Supreme Court, challenging the constitutional validity of the provision, the jurisdictional fact, and the applicability of Section 22 of the Sick Industrial Companies Act, 1985, and seeking equitable relief under Article 136. The Supreme Court affirmed the lower courts, noting that the constitutional validity of the provision had been upheld in Mis Crompton Greaves Ltd., that the jurisdictional fact existed at the relevant date, that a sick company is not shielded from eviction, and that no equitable relief was warranted. The appeal was dismissed.

Issues considered

The constitutional validity of Section 3(1)(b) of the Maharashtra Rent Control Act, 1999.
Whether the paid‑up share capital of a company is a jurisdictional fact and the effect of its subsequent reduction on the court's jurisdiction.
Whether the eviction proceedings are barred by Section 22 of the Sick Industrial Companies Act, 1985.
Whether the tenant is entitled to discretionary equitable relief under Article 136 of the Constitution.

Legislation cited

Code of Civil Procedure, 1908s. 20 R.12(c)
Constitution of Indias. Article 136
Maharashtra Rent Control Act, 1999s. 3(1)(b)
Sick Industrial Companies Act, 1985s. 22

Subjects

Maharashtra Rent Control Actjurisdictional factpaid‑up share capitalevictionsick companySection 22 SICAconstitutional validityArticle 136equitable relieflandlord‑tenant

Judgment

-~.

A ---<
CARONALTD.
v.
MIS PARVA11IY SWAMINATHAN & SONS

B OCTOBER 5, 2007

[C.K. THAKKERANDP.SATHASIVAM,JJ.]

Maharashtra Rent Control Act, 1999-s. 3(J)(b)-Applicability
c of-Tenant a company having paid up capital share ofmore than Rs.
one crore-Suit for eviction before regular Court-On the ground of
default in payment of rent-Tenant-company reducing its paid up
capital share to less than Rs. one crore, subsequent to institution of
suit-Trial court passing decree, holding thats. 3(J)(b) was not
D applicable-Confirmed by appellate court as well as High Court-
After interim order ofSupreme Court partial payment of rent-Plea
that the trial court did not have the power to decide the case in absence
ofjurisdictional fact of 'paid up capital '-Held: Eviction decree was
rightly passed-Section 3(1)(b) is not applicable to the present case,
E as the jurisdictional fact of 'paid up capital' was existing on the date
of termination of tenancy and institution of suit-The subsequent
unilateral act ofreduction ofpaid up capital by tenant would not take
away the accrued right infavour ofLandlord-In the facts ofthe case,
tenant is also not entitled to equitable relief-Rent Control and ~
F Eviction-Constitution of India, 1950-Article 136.
Code of Civil Procedure, 1908- 'Jurisdictional fact' and
'adjudicatory fact '-Distinction between.
Jurisdiction-Jurisdiction ofCourt/Tribunal-Held: A Court can
G decide the issues ofa case only if the jurisdictional fact exists. A_ ...
Subsequent Events_;_Effect of-Held: An accrued right by virtue
ofexistingfact at the time ofinstitution ofsuit cannot be put at naught
by a subsequent event.

H 656
CARONAL TD. v. MIS. PARVATHYSWAMINATHAN & 657
SONS
Respondent-landlord had let out the premises in question to the A
appellant-tenant (a Public Limited Company having a paid up share
capital of more than rupees one crore). Applicability ofMaharashtra
Rent Control Act, 1999 was exempted to such tenants by Section
3(1 )(b) thereof. Due of default in payment of rent, landlord gave a
notice to the tenant on .23.2.2001 determining the tenancy w.e.f. B
31.3.2001. Since the premises was not vacated, landlord filed a suit
for eviction before Small Causes Court. It also prayed for payment
~
of mesne profits. Subsequent to filing of suit Tenant Company passed
a resolution to reduce the paid up share capital to less than Rs. one
crore. But the said resolution was never approved by BIFR. Trial c
Court passed decree of eviction- holding that provisions of the Act
were not applicable to the suit premises. The same was confirmed
by a Bench of Small Causes Court in appeal and by High Court in
Writ Petition.On interim order of this Court, the tenant deposited
part payment in the Court. D
Appellant-tenant contended that in view of pendency of the
question regarding constitutional validity of Section 3(1 )(b) of the
Act, the matter should not have been decided by the courts below;
that even if constitutionality thereof was assumed, it was not
applicable to the present case, the company having its paid up capital E
less than Rs. one crore; that the landlord should have made out the
grounds under the Act for eviction; that the fact of 'paid up capital'
being a 'jurisdictional fact' and in absence thereof, the Court had
-(
no power to deal with and decide the matter; and that the proceedings
could not have continued as the same stood suspended in view of F
Section 22 of Sick Industrial Companies Act, 1985, the Company
being a sick company.

Respondent-landlord interalia contended that constitutional
- A-- validity had been covered by decision of High Court; that subsequent
G
resolution of the Company reducing the share capital to less than
Rs. one crore would not deprive the owner to the 'right accused' as
the 'jurisdictional fact' was very much in existence at the time of
initiation of the proceedings; and that the appeUant was not entitled
even to any equitable relief.
H
658 SUPREME COURT REPORTS [2007] 10 S.C.R.

A Dismissing the appeal, the Court ---,'
HELD: 1. All the Courts were, right in holding that the
provisions of the Rent Act were not applicable to the present case.
It is an admitted fact that the appellant-tenant is a Public Limited
B Company having a paid up share capital of more than one crore
rupees. The Courts below considered the contention as to
constitutional validity of clause (b) of Section 3(1) of Maharashtra
Rent Control Act, 1999 and observed that the vires of the provision ~
was upheld by the High Court in some other case. It also appears
that as the point was concluded by that decision, the issue as to vires
C was not pressed by the tenant before the Trial Court. The courts
below were, therefore, fully justified in proceeding to decide the
matter on merits.
[Paras 13, 15, 16 and 34] [666-C-D; 669-D, F; 675-H; 676-A]
D Mis Crompton Greaves Ltd. v. State ofMaharashtra, AIR 2002
Bom., referred to
2. The High Court noted that it was not in dispute between the
parties that notice terminating the tenancy was issued by the
landlord on February 23, 2001 and tenancy was determined with
E effect from March 31, 2001. On that day, i.e. March 31, 2001, paid
up share capital of the Company (tenant) was more than rupees one
crore. If it were so, Small Causes Court was right in proceeding with
the matter and in passing the decree of eviction against the tenant.
[Para 18) [670-E-F]
F
3. The Courts were also right in holding that eviction
proceedings initiated by the landlord against the tenant were ·
maintainable even if the Company was 'sick' under SICA and
Section 22 of that Act would not operate as bar to such proceedings.
G [Para 19) [670-G) A__

Shree Chamundi Mopeds Ltd. v. Church of South India Trust
Association, [1992) 3 SCC 1, relied on.
4.1. The fact as to 'paid up share capital' of a Company can be
H said to be a 'preliminary' or 'jurisdictional fact' and said fact would
CARONALTD.v.M/S.PARVATHYSWAMINATHAN& 659
SONS
~- confer jurisdiction on the Court to consider the question whether the A
provisions of the Rent Act were applicable. If the jurisdictional fact
exists, a Court, Tribunal or Authority has jurisdiction to decide other
issues. If such fact does no~ exist, a Court, Tribunal or Authority
cannot act. It is also well settled that a Court or a Tribunal cannot
wrongly assume existence of jurisdictional fact and proceed to B
decide a matter. The underlying principle is that by erroneously
assuming existence of a jurisdictional fact, a subordinate Court or
an inferior Tribunal cannot confer upon itself jurisdiction which it
otherwise does not possess. The existence of a jurisdictional fact is
thus a sine qua non or condition precedent to the assumption of c
jurisdiction by a Court or Tribunal.
[Paras 20, 21and23] [671-A, D, E, H; 672-A]
Halsbury's Laws of England, (4th Edn.), Vol.1, para 55, p.61;
Reissue, Vol.1 (1 ), para 68, pp.114-15, referred to.
D
4.2. There is distinction between 'jurisdictional fact' and
'adjudicatory fact' which cannot be ignored. An 'adjudicatory fact'
is a 'fact in issue' and can be determined by a Court, Tribunal or
Authority on 'merits', on the basis of evidence adduced by the
parties. It is no doubt true that it is very difficult to distinguish E-
'jurisdictional fact' and 'fact in issue' or 'adjudicatory fact'.
Nonetheless the difference between the two cannot be overlooked.
For assumption of jurisdiction by a Court or a Tribunal, existence of
jurisdictional fact is a condition precedent. But once such
jurisdictional fact is found to exist, the Court or Tribunal has power F
to decide adjudicatory facts or facts in issue.
[Paras 24 and 31] [672-B-C; 674-D]
JagdishPrasadv. Ganga Prasad, [1959] Supp 1SCR133;Arun
Kumar v. Union of India, [2007] 1 SCC 732 and Roshanlal v.
~_,.J..
Jshwardas, [1962] 2 SCR 947, referred to. G

R. v. Fulham Rent Tribunal, (1950) 2 All ER 211; Brittain v.
Kinnaird, (1819) 1 Band B 432 and Eversole v. Smith, 159 SW 2nd
35, referred to.
H
660 SUPREME COURT REPORTS [2007] 10 S.C.R.

A Halsbury's Laws of England, (4th Edn.), Vol.1, para 55, p.61; ~,
Reissue, Vol.1(1), para 68, pp.114-15, referred to.
4.3. The basic rule is that the rights of the parties should be
determined on the basis of the date of institution of the suit. Thus, if
B the plaintiff has no cause of action on the date of the filing of the
suit, ordinarily, he will not be allowed to take advantage of the cause
of action arising subsequent to the filing of the suit. Conversely, no
relief will normally be denied to the plaintiff by reason of any ~
subsequent event if at the date of the institutio~ of the suit, he bas
C a substantive rightto claim such relief. [Para 37] (677-D-E]

Gajanan Dattatraya v. Sherbanu Hosang Patel and Ors., (1975]
2 sec 668, relied on.

Pasupuleti Venkateswarlu v. Motor and General Traders, (1975]
D 1SCC770; Goppulal v. Thakurji Shriji Shriji Dwarkadheshji, [1969)
3 SCR 989 : [1969) 1 SCC 792 and Magan/al Narandas Thakkar v.
Arjan Bhanji Kanbi, (1969) 10 Guj LR 837, referred to.
r
4.4. In the instant case, the courts below were right in holding
E that the date on which tenancy was determined, the right in favour
of the landlord got accrued. Such righ(could not have been set at
naught by the tenant by unilateral act by passing a resolution to
reduce 'paid up share capital' of the Company. [Para 38] [677-F]

F 4.5 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. It is true that a resolution was passed by the
G Company to reduce the paid up share capital to less than rupees one
crore, but the said resolution was never approved by BIFR. But even
otherwise, once it is proved that the tenancy was legally terminated
and the Act would not apply to such premises, a unilateral act of
tenant would not take away the accrued right in favour of the
H landlord. Unless compelled, a Court of Law would not interpret a
CARONAL TD. v. MIS. PARVATHY SWAMINATHAN & 661
SONS [C.K. THAKKER, J.]
provision which would frustrate the legislative intent and primary A
object underlying such provision. [Para 44) (682-D-F)

5. The appellant-tenant does not deserve discretionary and
equitable relief under Article 136 of the Constitution oflndia. The
tenant has not paid 'rent'/' mesne profits' since more than ten years. B
Even after approaching this Court, it had made part payment
pursuant to·interim order. But nothing was paid/deposited thereafter
~ even though two years have passed. These facts have not been
_disputed by the appellant. [Para 45) (682-G-H; 683-A)
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2805 of C
2005.
From the Judgment and final Order dated 01.11.2004 of the High
Court of Judicature at Bombay in Writ Petition No. 8781 of2004.
Jaideep Gupta and Chander Shekar Ashri for the Appellant. D
P.H. Parekh, E.R. Kumar, Sanand Ramakrishnan and Rajeev Mishra
(for P.H. Parekh & Co.) for the Respondents.
The Judgment of the Court was delivered by
E
C.K. THAKKER, J. 1. This appeal by special leave is filed by
the appellant-Carona Ltd. (hereinafter referred to as 'the tenant') against
the judgment and order passed by the High Court of Judicature at
Bombay on November 1, 2004 in Writ Petition No. 8781 of2004. By
the said order, the learned Single Judge of the High Court dismissed the F
writ petition filed by the tenant and confirmed the order passed by a Bench
of Small Causes Court at Bombay on August 3, 2004 in Appeal No.
277of2003 which in turn confirmed the judgment and decree of eviction
dated February 11, 2003, passed by a Judge of Small Causes Court at
Bombay in T.E. & R. Suit No. 226/240 of 2001 in favour of the G
respondent-partnership fim1 (hereinafter referred to as 'the landlord').
FACTS
2. To appreciate the controversy raised in the present appeal, few
H
-~
662 SUPREME COURT REPORTS [2007] 10 S.C.R.

A relevant facts may be stated. ~

3. The appellant-tenant was the original defendant whereas the
respondent-landlord was the original plaintiff in the suit instituted in the
Court of Small Causes at Bombay. The landlord is a partnership firm
B registered under the Partnership Act, 1932. It owned a premises, bearing
Shop No. 2, situated at ground floor of Plot No. 3, A.M. Ward, Chembur,
Govind Road, Mumbai (hereinafter referred to as 'the suit premises').
According to the landlord, the suit premises was let out to the tenant. It ~
was alleged that tenant was not paying rent regularly. It also initiated certaill
proceedings against the landlord. The landlord did not want the tenant to
C continue to occupy the suit premises. Accordingly, by a notice dated
February 23, 2001, the landlord determined the tenancy with effect from
March 31, 200 l. In spite of determination of tenancy, the tenant did not
hand over vacant and peaceful possession of the suit premises to the
landlord. The landlord, therefore, filed a suit in the Small Causes Court,
D Bombay on April 2, 2001. In a written statement, dated August 1, 2001,
the tenant disputed the averments made and allegations levelled by the
landlord and contended that it was not liable to be evicted. The Small
Causes Court, Bombay, however, passed a decree of eviction against the
tenant on December 16, 2002 which was confirmed by a Bench of that
E Court as also by the High Court. The said order is challenged in the present
appeal.
INTERIM ORDER BY THIS COURT
4. On February21, 2005, notice was issued by this Court. Status
F quo as regards possession was ordered to be maintained. On April 18,
2005, leave was granted. Pending appeal, stay of dispossession was
continued subject to the tenant depositing a sum of Rs. twenty four lakhs
with the Registry of the Court within eight weeks which was allowed to
be withdrawn by the landlord without furnishing security. The matter was
G ordered to be placed for final hearing and that is how the matter is before
us.
SUBMISSIONS
5. We have heard the learned counsel for the parties.
H
CARONALTD. v. M/S.PARVATHYSWAMINATHAN & 663
SONS [C.K. THAKKER, J.]
6. Mr. Gupta, learned counsel for the appellant-tenant contended A
that all the courts committed an error oflaw and ofjurisdiction in passing
the decree of eviction against the tenant. He submitted that the suit filed
by the landlord was not maintainable and it ought to have been dismissed
by the courts below. He also submitted that the question as to constitutional
validity of clause (b) of sub-section ( 1) of Section 3 of the Maharashtra B
Rent Control Act, 1999 (hereinafter referred to as 'the Rent Act') is
pending before this Court and in view of the said fact, the courts below
ought not to have proceeded to decide the matter. Alternatively, it was
argued that even if it is assumed that the provision is legal, valid and intra
vires, it would not apply to the case on hand inasmuch as tenant's net c
worth/paid up share capital has been substantially eroded and it was not
rupees one crore or more when the proceedings were initiated by the
landlord. The provisions of the Rent Act, therefore, applied to the suit
premises and unless and until one of the grounds of eviction specified in
the Rent Act had been made out, the landlord was not entitled to a decree D
for possession. The learned counsel urged that the fact as to 'paid up
capital' of the Company was a 'jurisdictional fact' and in absence of such
fact, the Court had no power, authority or jurisdiction to consider, deal
with and decide the matter.
7. It was further contended that the proceedings could not have been E
continued in view of the fact that the tenant was a 'sick company' within
the meaning of the Sick Industrial Companies Act, 1985 (hereinafter
referred to as 'SICA'). In accordance with Section 22 of that Act, hence,
all proceedings against a sick company stood suspended. No order of
eviction, therefore, could have been passed by the courts below. On all F
these grounds, it was submitted that all the courts were wrong in passing
a decree of eviction against the tenant and the said order deserves to be
set aside by this Court.
8. Mr. Parekh, learned counsel for the respondent-landlord, on the G
other hand, supported the decree passed by the Small Causes Court,
confirmed by a Bench of that Court as also by the High Court. He
submitted that as far as constitutional validity of Seciion 3(1 )(b) of the
Rent Act is concerned, the point is covered by a decision of the Division
Bench of the High Court of Bombay in Mis Crompton Greaves Ltd v. H
664 SUPREME COURT REPORTS (2007] 10 S.C.R.

A State ofMaharashtra, AIR (2002) Born 65. The Small Causes Court
as well as the High Court were, therefore, wholly justified in proceeding
with the matter and in deciding it on merits. He submitted that tenancy
was terminated in accordance with law. It was, therefore, obligatory on
the tenant to hand over vacant and peaceful possession of the property
B to the landlord, but it failed to do so. The landlord was, therefore,
constrained to approach a Court of law which passed a decree for
possession in favour of the landlord holding that since the paid-up share
capital of the Company was more.than rupees one crore, the provisions
of the Act were not applicable to it. The counsel urged that there was no
c illegality in the said finding and obviously, therefore, the landlord was
entitled to possession of suit-premises and the tenant could not resist
. eviction. An appellate Court confirmed the said decree. Before the High
Court it was contended by the tenant that a unanimous resolution was
passed by the Company to decrease the share capital to less than rupees
D one crore (Rs. 41 lakhs from Rs. 8.20 crores). Such unilateral action at
a subsequent stage, submitted the counsel, would not deprive the owner
of the property to the 'right accrued' in favour of the landlord. The
'jurisdictional fact' (paid up share capital of more than rupees one crore)
was very much in existence at the time when the proceedings were initiated
E against the Company. But even otherwise, considering the factual situation,
the tenant was not entitled to any relief. It was stated that though the so-
called resolution was said to have been passed, it had not been approved
by the Board for Industrial and Financial Reconstruction (BIFR). In the
eye of law, therefore, there was no decrease of share capital. The High
F Court was, hence, wholly right in observing that even on that ground, the
tenant was not entitled to any relief. The counsel also submitted that this
Court is exercising discretionary and equitable jurisdiction under Article
136 of the Constitution. The tenant is not entitled to such equitable relief.
It was submitted that the tenant has not paid rent since several years i.e.
G from January 1, 1995. According to the counsel, the amount due and
payable by the tenant as on August 31, 2007 comes to Rs. 56,22,000/
- pursuant to interim order passed by this Court on April 18, 2005, an
amount of Rs. 24 Iakhs was deposited by the appellant in this Court which
was withdrawn by the landlord, but even excluding that amount, the tenant
H is liable to pay to the landlord an amount of Rs. 32,22,000/-. It was
j_
'

CARONALTD.v.M/S.PARVATHYSWAMINATHAN& 665 ·
SONS [C.K. THAKKER, J.]
)--
further stated that after order dated April 18, 2005 i.e. for more than two A
years, the tenant has not paid even a pie to the landlord. Such tenant,
urged the counsel, does not deserve sympathy and cannot claim equitable
relief. On all these grounds, the counsel prayed for dismissal of the appeal.
CONSIDERATION OF CONTENTIONS
B
9. We have given anxious and thoughtful consideration to the rival
~ contentions of the parties. And in our opinion, no case has been made
out by the appellant-tenant for grant of discretionary and equitable relief
from this Court.
CONSTITUTINAL VALIDITY OF SECTION 3(l)(b)
c
10. As far as constitutional validity of Section 3(1) (b) of the Rent
Act is concerned, in our opinion, the courts below were right in rejecting
the contention raised by the tenant and in proceeding to decide the matter
on merits in view of the decision in Mis. Crompton Greaves Ltd D

"' 11. Our attention has been invited by the learned counsel for the
parties to the relevant provisions of the Act. The Act came into force with
effect from March 31, 2000. It repealed the Bombay Rents, Hotel and
Lodging House Rates Control Act, 1947. The Preamble of the Act
recites; E

An Act to unify, consolidate and amend the law relating to the
control of rent and repairs of certain premises and of eviction and
for encouraging the construction of new houses by assuring a fair
return on the investment by landlords and to provide for the matters F
connected with the purpose aforesaid.
Whereas it is expedient to unify, consolidate and amend the
laws prevailing in the different parts of the State relating to the
control of rents and repairs of certain premises and of eviction and
for encouraging the construction of new houses by assuring a fair G
return and to provide for the matters connected with the purposes
aforesaid.

12. Section 3 grants exemption and enacts that the Act would not
apply to certain premises. Clause (b) of sub-section (1) of the said section H
666 SUPREME COURT REPORTS [2007] 10 S.C.R.

A declares that the Act would not apply "to any premises let or sub-let to 1
Banks, or any Public Sector Undertakings or any Corporation established
by or under any Central or State Act, or Foreign Missions, International
Agencies, Multinational Companies, and Private Limited Companies and
Public Limited Companies having a paid up share capital of rupees
B one crore or more".
(emphasis supplied)
~
13. It is an admitted fact that the appellant-tenant is a Public Limited
Company having a paid up share capital of rupees more than one crore
c (Rs.8.20 crores). The Courts below considered the contention as to
constitutional validity of clause (b) of Section 3(1) of the Rent Act and
observed that the vires of the provision was upheld by-the High Court in
Mis. Crompton Greaves Ltd In that case, constitutional validity of
Section 3(l)(b) was challenged on the ground that it was arbitrary,
D discriminatory and unjust. It was contended that the so-called distinction
between the Companies having a paid up share capital ofless than rupees -,.
one crore and the Companies having a paid up capital of more than rupees
one crore was arbitrary, discriminatory and unreasonable neither founded
on any intelligible differentia nor the so-called classification has rational
E or reasonable nexus to the object sought to be achieved by the Legislation.
It was urged that denial of protection of the Act to the Companies solely
on the basis of 'paid up share capital' was based on irrational criterion
and was hit by Article 14 of the Constitution.
~
14. The Court, however, negatived the contention and upheld the
F validity of the provision. The Court stated;

"10. We do not see any force in any of these contentions. The
Bombay Rent Act was enacted originally as a temporary measure
in order to protect the tenants from eviction from their premises
G and also from arbitrary enhancement of rent. The necessity for the I
~--
control of rents by special legislation for properties located within
the urban areas was felt during World War IL At that time not much
by way of new construction for civil population was possible. A
good proportion of private accommodation was requisitioned by
the authorities for the war effort. In consequence, rents were
H
CARONALTD. v. MIS. PARVATHYSWAMINATHAN & 667
SONS [C.K. THAKKER,J.]
beginning to shoot up.-Landlords were trying to get rid of their A
existing tenants to get better rents. The legislation was undertaken
primarily to save the tenants from harassment of unscrupulous
landlords. To quote the words of Sarkaria J, Nagindas Ramdas
v. Dalpatram Ichharam, [1974] 1 SCC 242 at page 248 : AIR
(1974) SC 471 at page 474. "The strain of the last World War, B
industrial Revolution, the large sCale exodus of the working people
to the urban areas and the social and political changes brought in
their wake social problems of considerable magnitude and
complexity and their concomitant evils. The country was faced with
spiralling inflation, soaring cost of living, increasing urban population C
and scarcity of accommodation. Rack renting and large scale
eviction of tenants under the guise of the ordinary law, exacerbated
those conditions making the economic life ofthe community unstable
and insecure. To tackle these problems and curb these evils the
Legislatures of the States in India enacted "Rent Control D
Legislations".
11. The rent control laws are in force in the State for more
than 60 years. As a result of these legislations a host of problems
have cropped up. These problems have been discussed by various
committees appointed by the Central Government and State E
Governments. The reports of such committees indicate that freezing
of rentals at old historic levels, the excessive protection of tenancy
rights and the extreme difficulties of recovering possession even
for the owner's own use hit hard the house owners of modest
means; rendered investment in housing for rental unattractive; F
inhibited the letting out of available a.ccommodation and thus had
aggravated the acute scarcity of accommodation for hire. It was
felt that the laws were being often abused by the rich tenants a.gainst
the poor or middle class landlords.
G
12 The State of Maharashtra appointed a Committee known
as Rent Acts Enquiry Committee (for short Tembe Committee)
which observed as under :
"........ The result of all this has been that the suppiy ofrental
H
668 SUPREME COURT REPORTS [2007] 10 S.C.R.

A housing in the market is gradually shrinking. Except in the
public sector, the growing tendency is to dispose off houses
on ownership or hire purchase basis. Rental housing has,
therefore, almost come to a halt in cities like Bombay. This
has adversely affected the economically weaker sections of the
B society";
"....The rent law that was enacted for the benefit of the tenants
is thus operating to the detriment of their interest in that the ·~
flow of rental housing is gradually shrinking".
C Tembe Committee had recommended exemption of premises
of floor area more than 65 sq. meters for business, trade or stor<ige
and 125 sq meters for residential purpose".

The Court, therefore, concluded;
D "It is already seen from the Statement of Objects and Reasons
that the object of the Act is not merely, to protect tenants but also
to provide fair returns to the landlords and to encourage housing
activity so as to augment rental housing in the form of construction
of buildings and letting them out. It is also meant to legitimise the
E pagadi or premium system which was prohibited earlier. Thus the
Act has been enacted in order to strike a balance between the
interests oflandlords and tenants and for giving a boost to house
building activity and in doing so the legislature in its wisdom has
decided and thought it fit not to extend the protection of the Rent
F Act to certain class of tenants like multinationals scheduled banks,
public sector undertakings and private and public limited companies
having share capital of more than Rs. 1 crore. This is essentially a
matter oflegislative policy. The legislature would have repealed the
Rent Act altogether. It co·uld also withdraw the protection under
G the Rent Act on rental basis [see D. C. Bhatiya v. Union ofIndia,
[1995] 1 SCC 104] or on income basis [see Delhi Cloth and
General Mills Ltd v. S. Paramjit Singh, [1990] 4 SCC 923]
or any other understandable basis. In our view it is for the
legislature to decide" what should be the appropriate basis for the
H purpose of classification and the legislature as of necessity must
J- .
CARONALTD. v. M/S.PARVATHYSWAMINATHAN & 669
SONS [C.K. THAKKER, J.]
have a lot of latitude in this regard Whether any particular category A
of tenants needs to be protected under the Rent Act is a matter of
legislative determination. There is nothing arbitrary if such protection
is taken away in case of certain categories of tenants having regard
to their position determined on objective and reasonable criterion.
These are essentially matters of policy. Unless the provision is B
shown to be arbitrary, capricious or to bring about grossly unfair
results, judicial policy should be one of judicial restraint. The
prescriptions may be somewhat cumbersome or produce some
hardship in their application in some individual cases; but they
cannot be struck down as unreasonable, capricious or arbitrary". c
15. It also appears that as the point was concluded by a decision in
Mis. Crompton Greaves Ltd, the issue as to vires was not pressed by
the tenant before the Trial Court. This is clear from the following
observations made by the Court;
D
"However, the advocate for Defendant not argued on this issue,
may be in view ofjudgment dated 20. 7.2001 of the Hon 'ble High
Court of Judicature at Bombay. The said judgment is reported in
AIR 2002 Bombay 65 (Mis Crompton Greaves Ltd, v. State
of Maharashtra) (not cited at Bar). In the said ruling, Hon'ble E
High Court upheld the constitutional validity of the provisions of
Section 3(1)(b) of the Maharashtra Rent Control Act. Therefore,
this issue does not survive. Accordingly issue No.2 is answered".

16. The courts below were, therefore, in our opinion, fully justified
in proceeding to decide the matter on merits. F
MERITS OF THE MATTER
17. The Trial Court framed necessary issues and held that the
,_ )._ defendant-Company was the tenant; the Rent Act was not applicable; the
tenancy was legally and validly terminated; and defendant was liable to G
be evicted. A prayer was also made by the plaintiff for payment of mesne
profits. The Court held that the landlord was entitled to a decree for
possession. But since the proceedings were pending before BIFR, Section
22 of SICA was applicable and the landlord could recover amount of
H
670 SUPREME COURT REPORTS [2007] 10 S.C.R.

A mesne profits only after taking requisite pennission from BIFR The Court, 1
in the light of the above findings, issued the following directions;
"The Defendants shall deliver vacant repossession of the suit
premises to the Plaintiffs within 4 months.
B The Defendants shall pay mesne profits to the plaintiffs in
respect of suit premises for the period from the date Operating
Agency suit till the Plaintiffs recover possession ofthe suit premises.
For determination of quantum of mesne profits, enquiry under
0. 20 R. 12(c) of the Code of Civil Procedure is directed.
c
However, the order to pay mesne profits shall be subject to
the Plaintiffs obtain permission of the BIFR to recover mesne profits
against the Defendants.
Preliminary decree be drawn accordingly".
D
18. A Bench of Small Causes Court, Bombay confirmed the above
order and dismissed the appeal. Before the High Court, again all the
contentions were reiterated by the tenant, but the High Court negatived
them and dismissed the writ petition. The High Court noted that it was
E not in dispute between the parties that notice terminating the tenancy was
issued by the landlord on February 23, 2001 and tenancy was determined
with effect from March 31, 200 I. On that day, i.e. March 31, 2001, paid
up share capital of the Company (tenant) was more than rupees one crore.
If it were so, observed the High Court, Small Causes Court was right in
F proceeding with the matter and in passing the decree of eviction against
the tenant.
19. The Courts were also right in relying upon Shree Chamundi
Mopeds Ltd. v. Church of South India Trust Association, [1992] 3
sec 1 and in holding that eviction proceedings initiated by the landlord
G
against the tenant were maintainable even if the Company was 'sick' under
SICA and Section 22 of that Act would not operate as bar to such
proceedings.
JURISDICTIONAL FACT
H
CARONALTD. v. M/S.PARVATHYSWAMINATHAN& 671
SONS [C.K. THAKKER,J.]
>--
20. The learned counsel for the appellant-Company submitted that A
the fact as to 'paid up share capital' of Rs. one crore or more of a
Company is a 'jurisdictional fact' and in absence of such fact, the Court
has no jurisdiction to proceed on the basis that the Rent Act is not
applicable. The learned counsel is right. The fact as to 'paid up share
capital' of a Company can be said to be a 'preliminary' or 'jurisdictional B
fact' and said fact would confer jurisdiction on the Court to consider the
question whether the provisions of the Rent Act were applicable. The
question, however, is whether in the present case, the learned counsel for
the appellant tenant is right in submitting that the 'jurisdictional fact' did
not exist and the Rent Act was, therefore, applicable. c
21. Stated simply, the fact or facts upon which the jurisdiction of a
Court, a Tribunal or an Authority depends can be said to be a 'jurisdictional
fact'. If the jurisdictional fact exists, a Court, Tribunal or Authority has
jurisdiction to decide other issues. If such fact does not exist, a Court,
Tribunal or Authority cannot act. It is also well settled that a Court or a D
·· Tribunal cannot wrongly assume existence ofjurisdictional fact and proceed
to decide a matter. The underlying principle is that by erroneously
assuming existence of a jurisdictional fact, a subordinate Court or an inferior
Tribunal cannot confer upon itselfjurisdiction which it otherwise does not
possess. E

22. In Halsbury's Laws of England, (4th Edn.), Vol.I, para 55,
p.61; Reissue, Vol.1(1), para 68, pp.114-15, it has been stated:
"Where the jurisdiction of a tribunal is dependent on the
existence of a particular state of affairs, that state of affairs may F
be described as preliminary to, or collateral to the merits of the
issue. If, at the inception of an inquiry by an inferior tribunal, a
challenge is made to its jurisdiction, the tribunal has to make up its
mind whether to act or not and can give a ruling on the preliminary
or collateral issue; but that ruling is not conclusive". G

23. The existence of a jurisdictional fact is thus a sine qua non or
condition precedent to the assumption of jurisdiction by a Court or

H
672 ·· SUPREME COURT REPORTS [2007] 10 S.C.R.

A Tribunal.
JURISDICTIONAL FACT AND ADJUDICATORY FACT
24. But there is distinction between 'jurisdictional fact' and
'adjudicatory fact' which cannot be ignored. An 'adjudicatory fact' is a
B 'fact in issue' and can be detennined by a Court, Tribunal or Authority
on 'merits', on the basis of evidence adduced by the parties. It is no doubt
true that it is very difficult to distinguish 'jurisdictional fact' and 'fact in
issue' or 'adjudicatory fact'. Nonetheless the difference between the two
cannot be overlooked.
c 25. In Halsbury's Laws of England, (4th Edn.), Vol.I, para 55,
p.61; Reissue, Vol.1(1), para 68, pp.114-15, it is stated:
"There is often great difficulty in determining whether a matter
is collateral to the merits or goes to the merits. The distinction may
D still be important; for an erroneous decision on the merits of the
case will be unimpeachable unless an error of law is apparent on
the face of the record of the detennination or unless a right of appeal
lies to a court in respect of the matter alleged to have been
erroneously determined. An error of law or fact on an issue
E collateral to the merits may be impugned on an application for an
order of certiorari to quash the decision or in any other appropriate
fonn of proceedings, including indirect or collateral proceedings.
Affidavit evidence is admissible on a disputed issue ofjurisdictional
fact, although the superior courts are reluctant to make an
F independent detennination of an issue of fact on which there was
a conflict of evidence before the inferior tribunal or which has been
found by an inspector after a local inquiry".
26. In R. v. Fulham Rent Tribunal, (1950) 2 All ER 211, it was
held that the question whether premium for renewal of tenancy was or -t ..
G was not paid was ajurisdictional fact and, therefore, was held to be a
condition precedent for the lawful exercise of jurisdiction by a Rent
Tribunal. In Brittain v. Kinnaird, (1819) 1B&B432, however, the factum
as to possession of a 'boat' with gunpowder on board was held to be a
part of the offence charged and thus a finding of fact or adjudicatory fact.
H
)-
CARONALTD. v. MIS. PARVATHY SWAMINATHAN & 673
SONS [C.K. THAKKER, J.]

t-- It was stated: "The logical basis for discriminating between these A
cases and other falling on opposite sides of the line, is not easily
discernible".
(emphasis supplied)
27. Likewise, the fact whether the petitioner was an 'adult' in B
adoption proceedings was not held to be a 'jurisdictional' fact (Eversole
v. Smith, 159 SW 2nd 35).
/
28. InJagdish Prasadv. Ganga Prasad, [1959] Supp 1 SCR 733,
the questin was whether the landlord was entitled to enhancement of rent.
Under the Act, he was not entitled to such rent unless a 'new construction'
c
had been made after June 30, 1946. It was held by this Court that the
question whether construction was new or not was a 'jurisdictional fact'
and if the court wrongly decided the said fact and thereby conferred
jurisdiction not vested in it, the High Court could interfere with the order.
The Court stated that "once it had the power it could determine whether D
the question of the date of construction was rightly or wrongly decided".
[See also Arun Kumar v. Union of India, [2007] -1 SCC 732].
29. But, in Roshanlal v. Ishwardas, [1962] 2 SCR 947, this Court
held that the Rent Controller had jurisdiction to fix standard rent for new E
construction made after March 24, 1947. The question was as to when
the construction was made. The Rent Controller recorded a finding of
fact that the construction was put up after March 24, 1947. The finding
.-:...4, was confirmed by the District Judge. But the High Court interfered in
revision. F
30. Setting aside the decision of the High Court, this Court stated:
"It is clear from the orders of the Rent Controller and of the
District Judge in appeal that the question whether the second floor
• >-
was newly constructed or not was really a question of fact, though G
undoubtedly a jurisdictional fact on which depended the power of
the Rent Controller to take action under s. 7A. If the Rent
Controller had wrongly decided the fact and assumed jurisdiction
where he had none, the matter would be open to reconsideration
in revision. The High Court did not, however, go into the evidence, H
··~
-~
674 - . - SUPREME COURT REPORTS [2007] 10 S.C.R.

A nor did it say that the finding was not justified by the evidence on
record. The High Court referred merely to certain submissions
-<
made on behalf of the landlord and then expressed the opinion that
what was done to the second floor was mere improvement and
not a new construction. We think that the High Court was in
B error in interfering with the finding of fact by the Rent
Controller and the District Judge, in support of which finding
there was clear and abundant evidence which had been
carefully considered and accepted by both the Rent Controller ~
and the District Judge ".
c (emphasis supplied)
31. It is thus clear that for assumption of jurisdiction by a Court or
a Tribunal, existence of jurisdictional fact is a condition precedent. But
once such jurisdictional fact is found to exist, the Court or Tribunal has
D power to decide adjudicatory facts or facts in issue.
:32. As already seen earlier, in the case on hand, the appellant
Company was having 'paid up share capital' of more than Rs. one crore,
not only when the notice was issued and tenancy was determined but also
when the suit for possession was instituted. What was stated was that a
E resolution was passed by the Board of Directors to reduce 'paid up share
capital' from Rs. 8.20 crores to Rs. 41 lakhs (less than Rs. I crore). But
it was not approved by BIFR. The Small Cause Court considered this
aspect and stated;
~
F "The reasons are that the above suit is filed on 4.4.2001.
Whereas undisputed document Ex.B. annual report of the
Defendant Company shows that on 30.9.1999 the paid up shares
capitai of the Defendant Company was more than Rs. I crore. If
the Defendants have moved BIFR by reference of 1997, by that
G time the Defendant ought to have received favourable orders
-l .
reducing the paid-up capital of the Defendants to less than Rs. one
crore. But no such evidence is produced by the Defendants to
rebut the annual report Ex.B of the Defendants showing paid up
capital of more than Rs. 8 crores as on 30.9.1999. There is nothing
H
before the court to show that the paid up share capital of the
_,_'
CARONALTD. v. M/S.PARVATHYSWAMINATHAN& 675
SONS [C.K. THAKKER,J.]
Defendants is brought down to Rs.41 lacs as per para 1.3(1) of A
the revised rehabilitation proposal in BIFR case No. 74/1999
(Ex.4). The advocate for Defendants has not pointed out any order
to show that the said proposal is accepted.
In the absence of such order of the appropriate court or
authority accepting the proposal Ex. I to reduce share capital B
to less than 1 crore rupees, I am unable to accept the case of
the Defendants that the said share capital of the Defendant
Company is reduced to less than Rs. I crore ".

(emphasis supplied) C
33. The High Court also dealt with this aspect and concluded;
"It is not in dispute between the parties that the tenancy of the
petitioners was terminated with effect from 31.3.2001 and on that
day the paid up share capital of the petitioners/Company was more D
than Rupees one crore, no fault can be found with trial Court taking
cognizance of the eviction proceedings initiated against the
petitioners, as the trial Court definitely had jurisdiction to entertain
such proceedings, considering the provisions of law comprised
under Section 3(1 )(b) of the said Act, as rightly submitted by the E
learned advocate for the respondents. The clause (b) of Section
3(1) of the said Act clearly provides that "the said Act shall not
apply to any premises let or sub-let to banks, or any Public Sector
Undertaking or any Corporation established by or under any
Central or State Act, or foreign missions, international agencies, F
multinational companies, and private limited companies and public
limited companies having a paid up share capital of rupees one
crore or more". Undisputedly, the petitioner/Company is a
Public Limited Company having share capital of more than
Rupees one crore ". G

(emphasis supplied)
34. All the Com1s were, therefore, in our considered opinion, right
in holding that the provisions of the Rent Act were not applicable to the
H
676 SUPREME COURT REPORTS [2007] I 0 S.C.R.

A present case.
SUBSEQUENT EVENTS
35. The learned counsel for the tenant then submitted that it was
obligatory on the courts below including the High Court to take into
B consideration subsequent events. In support of the submission, our
attention has been invited by the counsel to a leading decision of this Court
in Pasupul<}ti Venkateswarlu v. Motor & General Traders, [1975] 1
SCC 770. In that case, the plaintiff filed a suit for possession on the ground
of personal requirement for starting business. A decree for possession
c was passed in his favour which was confirmed by the Appellate Court.
At the stage of Revision, however, due to subsequent event of acquisition
of non-residential building by the plaintiff-landlord, an application for
amendment was made by the defendant-tenant. The High Court allowed
the amendment. The plaintiff challenged the said order by approaching
D this Court. It was contended that the High Court committed an error in
taking cognizance of subsequent event which was 'disastrous'. This Court,
however, held that the High Court had not committed any illegality in doing
so.
36. Referring to leading cases on the point, Krishna Iyer, J. stated;
E
"We feel the submissions devoid of substance. First about the
jurisdiction and propriety vis-a-vis circumstances which come into
being subsequent to the commencement of the proceedings. It is
basic to our processual jurisprudence that the right to relief must
F be judged to exist as on the date a suit or institutes the legal
proceeding. Equally clear is the principle that procedure is the
handmaid and not the mistress of the judicial process. If a fact,
arising after the !is has come to court and has a fundamental impact
on the right to relief or the manner of moulding it, is brought
diligently to the notice of the tribunal, it cannot blink at it or be
G
blind to events which stultify or render inept the decretal remedy.
Equity justifies bending the rules of procedure, where no specific
provision or fairplay is not violated, with a view to promote
substantial justice-subject, of course, to the absence of other
disentitling factors or just circumstances. Nor can we contemplate
H
CARONALTD. v. M/S.PARVATHYSWAMINATHAN & 677
SONS (C.K. THAKKER, J.]
any limitation on this power to take note of updated facts to confine A
it to the trial Court. If the litigation pends, the power exits, absent
other special circumstances repelling resort to that course in law
or justice. Rulings on this point are legion, even as situations for
applications ·of this equitable rule are myriad. We affirm the
proposition that for making the right or remedy claimed by the B
party just and meaningful as also legally and factually in accord with
the current realities, the Court can, and in many cases must, take
cautious cognizance of events and developments subsequent
to the institution of the proceeding provided the rules of
fairness to both sides are scrupulously obeyed." c
(emphasis supplied)
37. In our judgment, the law is fairly settled. The basic rule is that
the rights of the parties should be determined on the basis of the date of
institution of the suit. Thus, if the plaintiff has no cause of action on the D
date of the filing of the suit, ordinarily, he will not be allowed to take
advantage of the cause of action arising subsequent to the filing of the
suit. Conversely, no relief will normally be denied to the plaintiff by reason
of any subsequent event if at the date of the institution of the suit, he has
a substantive right to claim such relief E
38. In the instant case, in our opinion, the courts below were right
in holding that the date on which tenancy was determined, the right in
favour of the landlord got accrued. Such right could not have been set at
naught by the tenant by unilateral act by passing a resolution to reduce
'paid up share capital' of the Company. F
39. In this regard, it may be profitable to refer to a decision of this
Court in Gajanan Dattatraya v. Sherbanu Hosang Patel & Ors., [1975]
2 SCC 668. In Gajanan, the Court was called upon to consider clause
(e) of Section 13(1) of the Bombay Rents, Hotel and Lodging House G
Rates Control Act, 1947 which read thus;
13(1)(e). That the tenant has, since the coming into
operation of this Act, unlav.fully sublet, or after the date of
commencement of the Bombay Rents, Hotel and Lodging House
H
678 SUPREME COURT REPORTS [2007] 10 S.C.R.
~-
A Rates Control (Amendment) Act, 1943, unlawfully given on licence, --{
the whole or part ofthe premises or assigned or transferred in
any other manner his interest therein.
(emphasis supplied)
B 40. The tenant took on lease the premises on January 1, 1960. He,
however, sublet a part of the premises in August, 1965. The landlord
issued a notice on April 1, 1967 and terminated the tenancy. The tenant
denied that there was unlawful sub-letting of a part of the premises. It
was further submitted that in any case, the so-called sub-tenant vacated
C the premises on April 14, 1967 i.e. before the suit was instituted by the
landlord and hence, cause 'of action did not survive. It was contended on
behalf of the tenant that Section 13(1)(e) used the expression "has sub-
let", i.e. the present perfect tense which contemplated the event
connected in some way with the present time. Since the sub-tenant had
D already vacated and left the premises, at the most" it could be said that
the tenant 'had sub-let' the premises but it was not a ground for eviction
under the Act and hence no decree could have been passed. Reliance
was also placed on an earlier decision of this Court in Goppulal v.
Thakurji Shriji Shriji Dwarkadheshji, [1969] 3 SCR 989 : [1969] 1
E sec 792.
41. Negativing the contention, upholding the decree of eviction and
distinguishing Goppulal, this Court said; .
"The provisions of the Bombay Rents, Hotel and Lodging
F House Rates Control Act, 1947 indicate that a tenant is disentitled
to any protection under the Act ifhe is within the mischief of the
provisions of Section 13(1)(e), namely, that he has sublet. The
language is that if the tenant has sublet, the protection ceases. To
accede to the contention of the appellant would mean that a tenant
G would not be within the mischief of unlawful subletting if after the I
-".... )
landlord gives a notice terminating the tenancy on the ground of
unlawful subletting the sub-tenant vacates. The landlord will not be
able to get any relief against the tenant in spite of unlawful subletting.
In that way the tenant can foil the attempt of landlord to obtain
H possession of the premises on the ground of subletting every time
CARONALTD. v. M/S.PARVATHYSWAMINATHAN& 679
SONS [C.K. THAKKER,J.]
by getting the sub-tenant to vacate the premises. The tenant's A
liability to eviction arises once the fact of unlawful subletting
is proved At the date of the notice, if it is proved that there
was unlawful subletting, the tenant is liable to be evicted".

(emphasis supplied) B
42. The Court approved the view taken by the High Court of Gujarat
~ in Magan/al Narandas Thakkar v. Arjan Bhanji Kanbi, (1969) 10 Guj
LR 837. In Magan/al, the High Court of Gujarat had an occasion to
consider a pari materia provision under the Saurashtra Rent Control Act,
1951*. c
43. A similar argument was advanced before the Court. However,
considering the scheme of the Act, the Court refuted the contention. The
Division Bench observed;
"So far as the first point is concerned, Mr. Desai laid great stress, D
and relied very heavily, on the grammatical meaning of the words
'has sub-let'. His argument is that the meaning of the words 'has
sub-let' include the element that the subletting must be continuing
on the date when the plaintiff filed his suit. He stated, and there is
no dispute on the point, that the words 'has sub-let' do not use of E
the verb 'sub-let' in the present perfect tense. He referred to page
61 of the Handbook of English Grammar by R.W. Zandvoort. In
paragraph 140 of this Book it is stated that when a verb is used in
present perfect tense, it denotes "a completed past action
connected, through its result, with the present moment". The F
argument of Mr. Desai was that the subletting which started
sometime after 1951, that is after the Act came into operation, must
be connected with the present moment through its result; and his
argument was that once the sub-tenancy was created, it must be
connected with the present moment-the date of filing the suit-by G
its result by the sub-tenant continuing in possession of the premises
* Clause (e) of sub-section (I) of Section 13 of the Act read as under;
"That the tenant has, since the coming into operation of this Act, unlawfully sub-let the
whole or part of the premises or assigned or transferred in any other manner his interest
therein." · H
680 SUPREME COURT REPORTS [2007] 10 S.C.R.

A upto that date. Mr. Desai thus urged before us that unless a sub-
tenant were in possession of the property sublet on the date of the
suit it cannot be said that the tenant 'has sub-let' the premises, even
though a sub-tenancy was in fact created by the tenant. In our
opinion if this interpretation were to be accepted, the result would
B be that a tenant can with impunity put some other person in
possession of the premises as a sub-tenant and avoid an order for
delivery of possession against him by seeing to it that the sub-tenant
departs from the property before the plaintiff files a suit. Having
regard to the scheme of the Rent Control Act, particularly the
c scheme of Sections 12 and 13 of the Act and the context in which
the words 'has sub-let' are used, it appears to us that that is not
the way in which the meaning of the words 'has sub-let' should
be gathered. If the Rent Control Act were not in force and the
parties were left to their ordinary rights under the Transfer of
D Property Act, the landlord will have a vested right to recover
possession in him as soon as he terminates the tenancy of the tenant
in the manner provided in the Transfer of Property Act. After
terminating th~ tenancy he can immediately call upon the tenant to
hand over possession to him. By enacting Section 12 of the Rent
E Control Act, the landlord's right to terminate the tenancy is not
affected, but the enforcement of his right to recover possession
immediately thereafter from the tenant is affected. The provisions
of Section 12 prevent a landlord from recovering possession of
the property from a tenant even after a lawful termination of his
F tenancy, provided the tenant fulfils the conditions mentioned in
Section 12. Section 12 does not take away the right of the landlord
to recover possession of the premises but merely postpones the
enforcement of this right of the landlord so long as the tenant fulfils
the conditions laid down in that section: Having put this impediment
G in the enforcement of the right of possession of the landlord or in
other words, having clothed the· tenant with an immunity from
dispossession, the Legislature proceeds in Section 13 to lay down
those conditions on the fulfillment of which the landlord is entitled
to recover possession of the premises from the tenant. Section 13,
therefore, provides for those contingencies on proof of which the
H
- .)-
CARON~LTD. v. MIS. PARV ATHY SWAMINATHAN & 681
SONS [C.K. THAKKER, J.]
~ tenant loses the immunity from dispossession under Section 12. A
Some discussion took place on the question whether the tenant
has a right of possession or whether he has merely an immunity
from being dispossessed. Whether it be called an immunity from
dispossession or whether it be called a personal right of possession,
the fact remains that by Section 13, the Legislature has provided B
for dispossession of tenant, despite provisions of Section 12, if the
Court is satisfied that any one of the grounds mentioned in Section
~
13 does exist. One of such grounds is the subletting of the premises
or a part thereof by the tenant. In view of this scheme of the
provisions in Sections 12 and 13 of the Act, it is necessary for us c
to construe the meaning of the words 'has sub-let' keeping in mind
that the verb 'sub-let' is used in the present perfect tense. First, it
must be a completed past action, that is the subletting must be
completed. A subletting is complete as soon as the sub-tenant is
put in possession of the premises given to him on sublease. Now, D
this completed act of subletting must have a result. What would
be that result in the context of Sections 12 and 13 of the Act?
The result of suqletting would be removal of the impediment in the
way of the landlord to recover possession of the premises. In other
words, the result of subletting would be to tal<:e away that personal E
right of possession which the tenant enjoyed under the provisions
of the Rent Act. Now, this result must be connected with the
present moment. The present moment will be the moment when
~ the suit is filed. How is this result connected with the filing of the
suit? The answer is quite obvious. It is this removal of the ;
F
impediment in the way of the landlord's recovery of possession
which induces him to go forthwith to the Court and file a suit for
possession. Therefore, the words 'has sub-let' mea..11 that a sub-
letting has taken place and as a result of that subletting the
impediment in the way of the landlord to recover possession has
,~ G
been removed, thus, inducing him to go to Court and ask for
recovery of possession. It is the result of the completed act, i.e.
the removal of the impediment in his way, which permits the
landlord to go to the Court and ask for a decree for possession.
It is not necessary, therefore, that subletting must continue enough
H
-~ ..
682 SUPREME COURT REPORTS (2007] 10 S.C.R..

A if the premises have been sub-let sometime after the coming into
operation of the Act. The provisions of Section 15 of the
Saurashtra Rent Control Act make subletting unlawful. Therefore,
any subletting by the tenant after the Act came into operation
immediately removes the impediment in the way of the landlord to
B recover possession and entitles him immediately to go to the Court
and ask for recovery of possession. In order to convey the correct
meaning of the words 'has sub-let' it is not necessary to show that
the subletting was in existence on the date of suit. It is enough ·~-
that the subletting has taken place sometime after the Act came
c into operation; it does not matter that the subletting came to
an end before the landlord gave notice or before the landlord
filed a suit".
(emphasis supplied)
D 44. In our opinion, the ratio laid down in the above cases applies to
the present case as well. 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
E to the suit-premises. It is true that a resolution was passed by the
Company to reduce the paid up share capital to less than rupees one
crore, but the said resolution was never approved by BIFR. But even
otherwise, once it is proved that the tenancy was legally terminated and
the Act would not apply to such premises, a unilateral act of tenant would ').--
F not take away the accrued right in favour of the landlord. Unless compelled,
a Court of Law would not interpret a provision which would frustrate the
legislative intent and primary object underlying such provision. We,
therefore, see no infirmity in the conclusions arrived at by the courts below.
EQUITABLE CONSIDERATIONS
G
45. 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
H had made part payment pursuant to interim order made in April, 2005.
f-
CARONALTD. v. M/S. PARVATHYSWAMINATHAN & 683
SONS [C.K. THAKKER, J.]
'>--
But nothing was paid/deposited thereafter even though two years have A
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.
B
46. For the foregoing reasons, the appeal deserves to be dismissed
and is, accordingly, dismissed with costs.
K.K.T. Appeals dismissed.

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