Holding

A default under Section 10(2)(i) becomes wilful only if it continues for two months after the landlord’s notice, and where the eviction petition is filed before that period the tenant cannot be held a wilful defaulter.

Summary

Chordia Automobiles, a long‑time tenant, disputed an enhanced rent of Rs 1,000 per month that was conditioned on the landlord providing additional facilities, which the landlord failed to do. The landlord issued a notice on 9 August 1989 demanding the enhanced rent and, before the two‑month period prescribed in Explanation I to the proviso of Section 10(2)(i) of the Tamil Nadu Buildings (Lease and Rent Control) Act, 1960, filed an eviction petition on 20 September 1989 alleging wilful default. The tenant deposited arrears after the Rent Controller fixed interim rent under Section 11 and continued to pay the earlier rent regularly. The lower courts held the tenant a wilful defaulter and dismissed the appeal. The Supreme Court held that a default becomes wilful only after it persists for two months from the notice; since the eviction suit was filed before that period, the tenant could not be deemed a wilful defaulter. The Court also clarified that wilful default requires a conscious, deliberate refusal to pay rent.

Issues considered

Whether the eviction petition under Section 10(2)(i) of the Tamil Nadu Buildings (Lease and Rent Control) Act, 1960 can be based on wilful default when the two‑month notice period has not elapsed.
What is the meaning of "wilful default" under the Act.
Whether payment of arrears after fixation of interim rent under Section 11 defeats a finding of wilful default.
Whether the landlord's failure to provide agreed additional facilities affects liability for the enhanced rent.

Legislation cited

Tamil Nadu Buildings (Lease and Rent Control) Act, 1960s. 10(2)(i), s. 11

Subjects

rent controlevictionwilful defaultnotice periodlandlord‑tenant disputerent enhancementinterim rentTamil Nadu Buildings (Lease and Rent Control) Act

Judgment

---- CHORDIA AUTOMOBILES
v.
S. MOOSA AND ORS.
A

FEBRUARY 29, 2000

[A.P. MISRA AND N. SANTOSH HEDGE, JJ.] B

Rent Control and Eviction :

Tamil Nadu Buildings (Lease and Rent Control) Act, 1960: Explanation
I to proviso to Section 10(2)(i).
c
Payment of rent-Default in-Notice-Period of-Landlord issued no-
tice demanding payment of enhanced rent-However, before expiry of 60 days .
from the date of notice landlord filed suit for eviction on ground of default in
payment of rent-Rent Controller fixed interim rate of rent-Tenant deposited
arrears of rent promptly and continued to pay old rent regularly-However, D
Rent Controller decreed the suit-Appellate Court dismissed appeal-High
Court dismissed revision-Correctness of-Held : Explanation I to proviso to
Section 10(2)(i) gives a benefit to the tenant so that default matures into a
wilful default only when it continues for a period of two months from the date
of notice-Since the eviction suit was filed before default matured into wilful
de.fault, the High Court erred in dismissing the revision-Even if there is E

- default it is not wilful default.

Payment of rent-Wilful de.fault in-Meaning of-Held : Means an act
consciously or deliberately done with open defiance and intention not to pay the
rent.
F
Words and Phrases :

"Default" and "wilful de.fault"-Meaning of-In the context of Explana-
tion I to proviso to S.10(2)(i) of the Tamil Nadu Buildings (Lease and Rent
Control) Act, 1960.
G
The appellant was inducted as a tenant in the suit premises belong-
ing to the respondent-landlord. The rent was enhanced several times and
the last enhancement was subject to provision of certain additional facili-
ties in the suit premises by the respondent to which he orally agreed.
However, the respondent failed to provide these additional facilities. The H1
13
14 SUPREME COURT REPORTS [2000] 2 S.C.R.
A appellant then filed a suit against the respondent contending that he was
not entitled to pay the enhanced rent.

The respondent-landlord instead of complying with the oral agree-
ment issued a notice to the appellant-tenant demanding the· said enhanced
rent. However, the respondent filed an eviction Petition before the expiry
B of 60 days from the date of notice against the appellant under Section
10(2)(i) of the Tamil Nadu Buildings (Lease and Rent Control) Act,, 1960
on the ground of default in payment of rent. The appellant contested the
claim on the ground that the enhanced rent was payable only after the
additional facilities were provided. Regarding ~efault in payment of previ-
c ous rate of rent the appellant claimed tha.t the agent of the respondent did
not come to collect it as was the practice for a longtime.

Since there was a dispute in respect of the previous rate of rent, the
Rent Controller passed an order under Section 11 of the Act directing the
appellant to deposit a certain sum for the period in question, which the
D appellant duly deposited. Thereafter, the appellant initially deposited the
rent in the court and subsequently paid it directly to the respondent who
accepted the same. However, the Rent Controller decreed the suit. The
Appellant Authority confirmed the said order and the High Court dis-
missed the Revision. Hence this appeal.
E On behalf of the appellant it was contended that the Rent Controller
wrongly held the appellant to be a wilful defaulter; that Explanation I to
proviso to Section 10(2)(i) of the Act was ~isconstrued; that filing of the
eviction petition was premature since it was filed ~efore expiry of 60 days
from the date of notice as provided in the said Explanation; that the
F appellant had been paying the rent regularly and the default was commit-
ted because the respondent's agent did not come to collect the rent; and
that if at all there was default, it was not wilful default.

On behalf of the respondent it was contended that fixation of rent
under Section 11 and payment thereafter was no defence for default.
G
Allowing the appeal, this Court

HELD : 1. Explanation I to proviso to Section 10(2)(i) of the Tamil
Nadu Buildings (Lease and Rent Control) Act, 1960 has given a benefit to
a tenant viz., if there is default in payment of rent and a notice is sent by
the landlord of such default, then the default would mature into a wilful
CHORDIA AUTOMOBILES v. S. MOOSI;\ 15
default only if the default continues; in other words the defaulted amount A
is not paid within a period of two months from the date of notice. In other
words, in case the tenant could have paid the said amount within this
period, it would not be a case of wilful default. In the present case, after
sending the said notice, the landlord without waiting for the expiry of the
said period filed the eviction petition alleging wilful default, if the suit itself
B
was filed before the said period there could be no question of sending any
reply to the said notice. Admittedly there was dispute in the rate of rent
and it is not this reason that during pendency of the eviction petition, a
proceeding to fix interim rent under Section 11 of the Act was initiated.
The tenant reasonably thought to pay the same after its adjudication and
in fact deposited the same the moment it was adjudicated. So far the c
earlier period the case of the appellant is that tenant's long dependency in
the past on the agent of the landlord to collect the rent and as he did not
come, thus rent could not be tendered; thus this could not be a case of
wilfully not paying the rent. It may be, as enhancement of rent came in
dispute, that the agent did not come to collect the rent. This submission for D
the appellant has force, which has not been adverted to by any of the three
courts below. This coupled with Explanation to the proviso to Section
10(2)(i) of the Act as two months did not expire from the date of notice
when suit was filed it could not be a case of wilful default. [20-B-C]

2. Wilful default means an act consciously or deliberately done with E
open defiance and intent not to pay the rent. In the present case the
amount of rent defaulted firstly is on account of fact that the agent of the
landlord did not come to collect the rent for some reason. Further, notice of
default contained disputed rent. This fact coupled with the fact that evic-
tion suit was filed before maturing a case of wilful default in terms of the F
Explanation I to the proviso to Section 10(2)(i). The dispute of rent admit-
tedly was genuine. Further, the conduct of the appellant throughout in the
past being not of a defaulter or irregular payer of rent. Thus, all these
circumstances cumulatively come to only one conclusion that the appellant
cannot be held to be a wilful defaulter. [120-H; 21-A-B]
G
S. Sundaram Pillai v. V.R. Pattabiraman, [1985] 1 SCC 591, relied on.

L.B. Curzon: "A Dictionary of Law" P.361, Words and Phrases, Vol.
11-A (Permanent Edition) p.268 and Block's Law Dictionary, (Fourth Edn.)
pp.1773 and 2617, referred to. H
16 SUPREME COURT REPORTS [2000] 2 S.C.R.
A 3. All the three courts below committed error in law in holding the -·
tenant to be a wilful defaulter. Even if he was in default it is not a case of
wilful default. [23-A]

CIVIL APPELLATE WRISDICTION : Civil Appeal No. 14762 of
1996.
B
From the Judgment and Order dated 24.6.96 of the Madras High Court
in C.R.P. No. 1412 of 1996.

Sunil Gupta, A. Mariarputham, Maninder Singh, Ms. Pratibha, M.
C Singh and Ms. Kavita Wadia for the Appellant.

K. Parasaran, K. Rajendra Chowdhary, Rakesh K. Sharma, A.J. Abdul
Rzak and D. Prakash for the Respondents.

The Judgment of the Court was delivered by
D
MISRA, J. This appeal is directed against the eviction of the appellant
on account of default of payment of rent under Section 10(2)(i) of the Tamil
Nadu Buildings (Lease and Rent Control) Act, 1960.

E The appellant took the disputed shop situated at 71, Usman Road, T.
Nagar, Madras on rent in the year 1972 from the erstwhile owner who sold
this property to the present respondents in the year 1977. The rent then paid
by the appellant was at the rate of Rs.275 p.m. Thereafter, it was raised to
Rs. 343.75 p.m. from 1.4.1979. Next enhanced to Rs.500 p.m. w.e.f. 1.9.1985.
In the year 1988 the appellant desired to change his business from spare parts
F
of two-wheelers to sale of tyres, then the rent was again increased to Rs.750
p.m. The appellant desired that for selling of tyres he needs to install air-
conditioner and compressor with water connection for checking of tubes and
fitment of tyres. This also requires additional electricity load, a water tap and
a separate lavatory. For doing these, the appellant offered and respondent
G agreed on condition that the rent be further enhanced from Rs.750 to Rs.1,000
p.m. On this oral agreement the appellant spent about Rs.1,00,000 on
renovation. However, the respondent failed to discharge their obligations for
providing the aforesaid additional facilities despite repeated requests. On
respondent's failure to do so, the appellant filed a suit against him tht'l the
H landlord was not entitled to claim this enhanced rent of Rs.1,000 p.m. In
CHORDIA AUTOMOBILES v. S. MOOSA [MISRA, J.] 17
support he stated that on the ground floor there are nine shops including the A
one with the appellant, similarly situated, but none of these shops have any
rental of Rs. l ,000 p.m.

Instead of complying with the said conditions, the appellant received
respondent's notice dated 9.8.1989 through his advocate that the agreed rent
of Rs.1,000 p.m. from 1.4.1989 has not been paid in spite of demands. Before B
any reply could be sent the appellant was served with a copy of the eviction
proceedings dated 27.9.1989 under Section 10(2)(i) of the aforesaid Act. The
appellant contested this claim that enhancement agreed to pay Rs. 1,000 was
on a clear understanding that the respondent would provide separate toilet,
water connection, additional electricity load etc. In fact, during the pendency c
of the said petition the counsel for the appellant wrote a letter dated 17 .1.1990
to the counsel of the respondent for getting the three-phase electric connection
for the shop in question.

Since there was a dispute in respect of rate of rent the Rent Controller
passed an order under Section 11 on 30.7.1990 directing the appellant to D
deposit Rs.17,250 towards the rent for the period 1.1.1989 to 31.7.1990. The
aforesaid amount was directed to be paid by 16.8.1990. The appellant
deposited the said amount in the treasury of the court on 13.8.1990 and
thereafter continued to pay/deposit the rent at the rate of Rs.750 p.m. initially
in the court and then directly to the respondents who thereafter accepted the
E
same. Thus, there has been no conceivable default. However, the Rent
Controller decreed the petition of the respondent. The Rent Controller held
that the respondent did not pay the arrears of rent even till filing of the
counter in the said petition and it was paid only when Order under Section
11 was passed which constitutes to be wilful default. On appeal, the Appellate
Authority confirmed the said order. The Appellate Authority records, 'in spite F
of receiving the aforesaid notice, Ex. P-2, the appellant did not sent any reply
to contradict the contents of the said notice'. Finally the revision was also
dismissed by the High Court against which the present appeal has been
preferred.

Learned counsel for the appellant submits that the Rent Controller
G
without application of mind held, appellant to be wilful defaulter. The
Appellate Authority also fell into the same error, while confirming the order.
It records not sending any reply to the said notice dated 9.8.1989 amounts to
non-controverting the facts and not depositing the rent within the time stated
therein constitute a case of wilful default. Submission is, the authorities did H
18 SUPREME COURT REPORTS [2000] 2 S.C.R.
A not properly construe Explanation I to Section 10 (2)(i) of the Act. The said
notice is dated 9 .8 .1989, thus wilful default under the aforesaid provisions
could only mature after expiry of 60 days from the date of the notice and
since before the expiry of that period, the landlord filed eviction petition on
20.9.1989, hence on that date the appellant could not be said to be a wilful
defaulter nor it was possible for the appellant to send any reply, as the eviction
B
suit itself was filed before the expiry of the said 60 days. For ready reference
Section 10(2)(i) is quoted hereunder:-

"10. Eviction of tenants.( I) A tenant shall not be evicted whether
in execution of a decree or otherwise except in accordance with the
c .provisions of this Section or Sections 14 to 16:

(2) A landlord who seeks to evict his tenant shall apply to the
Controller for a direction in that behalf. If the Controller, after giving
the tenant a reasonable opportunity of showing cause against the
application, is satisfied -

(i) that the tenant has not paid or tendered the rent due by him in
respect of the building, within fifteen days after the expiry of
the time fixed in the agreement of tenancy with his landlord or
E in the absence of any such agreement, by the last day of the
month next following that for which the rent is payable, or

Provided that in any case falling under clause (i) if the
F Controller is satisfied that the tenant's default to pay or tender
rent was not wilful, he may, notwithstanding anything contained
in Section 11, give the tenant a reasonable time, not exceeding
fifteen days, to pay or tender the rent due by him to the landlord
up to the date of such payment or tender and on such payment
or tender, the application shall be rejected.
G
Explanation I: For the purpose of this sub- section, default to
pay or tender rent shall be construed as wilful, if the default by
the tenant in the payment or tender of rent continues after the
issue of two months' notice by the landlord claiming the rent.... "
H [Emphasis supplied]
CHORDIA AUTOMOBILES v. S. MOOSA [MISRA, J.] 19
In support that there was no default, it is submitted that always in the past, A
the rent was regularly collected by the agent of the landlord as for some
reasons he did not come to collect the amount fell in arrears. Further, as
dispute arose of the hike of the rent with effect from 1.4.1989, the arrears fell
due, thus on these facts, it would not constitute to be a case of wilful default.
Further, Explanation to Proviso of Section 10(2) makes it clear that the wilful B
default could only be if the tenant defaults after the expiry of two months
from the date of the notice, and as this period did not expire when the suit
was filed, the finding of wilful default is liable to be set aside. However, when
an order was passed under Section 11(4) fixing tentative rent the amount so
determined was paid within the period granted. For all these reasons, even if
it could be said that there was default, it would not a wilful default. This c
aspect had not been considered by any of the authorities including High
Court, which summarily dismissed the revision. He has also taken us to the
chart filed by the appellant, to show that he never defaulted in the past except
the disputed one since the year 1972. The default referred to in the notice is
for the period l.1.1989 to 31.3.1989 at the rate of Rs.750 p.m. and from D
l.4.1989 to 31.7.1989 at the rate of Rs.l,000 p.m. So far arrears for the
second period l.4.1989 to 31. 7.1989, admittedly there was a dispute of rate
of rent. For the first period, i.e., from l.l.1989 to 31.3.1989, for a period of
three months, the case is that as rent was being collected regularly earlier by
the agent of the landlord and as he did not come to collect the same, the E
arrears fell due. It is further submitted, the chart shows for the subsequent
period also that appellant has been paying rent regularly without any default.

On the other hand, learned counsel for the respondent submits that
fixation of rent under Section 11 and payment thereafter is no defence for the
default. This adjudication is interim in nature and is subject to the final
F
decision by the court. Further, in spite of notice, neither any reply was sent
by the appellant nor the amount was tendered. Even thereafter he took number
of adjournments before the Rent Controller, hence all this constitute to be a
case of a wilful default.
G
We have heard learned counsel for the parties and examined their
submissions and made overall assessment to judge, whether any wilful default
was committed or not by the tenant. It is not disputed by the landlord lhat
the appellant is a tenant of this accommodation since 1972 and was regularly
paying the rent in the past. The only default is, as aforesaid, for the disputed H
20 SUPREME COURT REPORTS (2000) 2 S.C.R.
A period from 1.1.1989 to 31.3.1989 at the rate of Rs.750 p.m. and from
1.4.1989 to 31.7.1989 at the rate of Rs. 1000 p.m. These facts reveal that there
is a default towards payment of rent by the tenant for the aforesaid period.
The only question is, whether this default on these facts would constitute to
be or could be construed to be a wilful default? We proceed to examine the
B law on these facts. The statute has given a benefit to a tenant viz.; if there
is default in payment of rent and a notice is sent by th~ landlord of such
default, then the default would mature into a wilful default only if the default
continues in other words the defaulted amount is not paid within a period of
two months from the date of notice. In the present case, notice was sent on
9.8.1989, thus the said two months would have expired only on the 9.10.1989.
c In other words, in case the tenant could have paid the said amount within this
period, it would not be a case of wilful default. We find in the present case
after sending the said notice, the landlord did not wait for the expiry/of the
said period and before that filed the eviction petition R.C.O.P. No. 2963 of
1989 on 20.9 .1989 alleging the wilful default and further if the suit itself was
D filed before the said period there could be no. question of sending any reply
to the said notice. Next, we find notice contained amount which fell into
arrears is of two periods. The amount for the period 1.4.1989 to 31.7.1989
was admittedly in dispute. In fact for this reason during pendency, a proceed-
ing to fix int~rim rent under Section 11 was initiated. The tenant reasonably
E thought to pay the same after its adjudication and in fact deposited the same
the moment it was adjudicated. So far the earlier period, i.e. 1.1.1989 to
31.3,1989 for three months, the case of the appellant is that tenant's long
dependency in the past, on the agent of the landlord to collect the rent 'and
C7 as he did not come, thus rent could not be tendered, thus this could not be
a case of wilfully not paying the rent. It may be, as enhancement of rent came
F in dispute, the agent did not come to collect the rent. We have given our full
consideration, and find submission for the appellant has force, which has not
been adverted to by any of the three courts below. This coupled with
Explanation to the proviso of Section 10 (2)(i) as two months did not expire
from the date of notice when suit was filed it could not to be a case of wilful
G default.

Wilful default means an act consciously or deliberately done with open
defiance and intent not to pay the rent. In the present case the amount of rent
defaulted firstly is on account of fact that the agent of the landlord did not
H come to collect the rent for some reason. Further, notice of default contained
CHORDIA AUTOMOBILES v. S. MOOSA [MISRA, J.] 21

disputed rent. This fact coupled with the fact that eviction suit was filed A
before maturing a case of wilful default in terms of the Explanation to the
proviso of Section 10(2). The dispute of rent admittedly was genuine. Further,
we find conduct of the appellant throughout in the past being not of a
defaulter or irregular payer of rent. Thus, all these circumstances cumulatively
come to only one conclusion that the appellant cannot be held to be a wilful B
defaulter.

In S. Sundaram Pillai and Ors. v. V.R. Pattabiraman and Ors., [1985]
SCC 591, this Court had occasion to consider the word 'Wilful default'
under Section 10(2) of the aforesaid Tamil Nadu Buildings (Lease and Rent
Control) Act, 1960 which is reproduced below:- C

" Before, however, going into this question further, let us find out
the real meaning and content of the word 'wilful' or the words 'wilful
default'. In the book A Dictionary of Law by L.b. Curzon, at page
361 the words 'wilful' and 'wilful default' have been defined thus: D

1 1 'Wilful' - deliberate conduct of a person who is a free agent,
knows that he is doing and intends to do what he is doing.

'Wilful default' - Either a consciousness of negligence or
breach of duty, or a recklessness in the performance of a duty. E

In other words, 'wilful default' would mean a deliberate and
intentional default knowing fyll well the legal consequences thereof.
In Words and Phrases, Volume 11-A (Permanent Edition) at page 268
the word 'default' has been defined as the non-performance of a duty, F
a failure to perform a legal duty or an omission to do something
required. In volume 45 of Words and Phrases, the word 'wilful' has
been very clearly defined thus:

'Wilful' - intentional; not incidental or 'involuntary;
G
done intentionally, knowingly, and purposely, without

-
justifiable excuse as distinguished from an act done care-
lessly; thoughtlessly, heedlessly or inadvertently;

in common parlance word 'wilful' is used in sense of H
22 SUPREME COURT REPORTS [2000] 2 S.C.R.
A intentional, as distinguished from accidental or involun-
tary.

P. 296 - 'Wilful' refers to act consciously and deliberately done
and signifies course of conduct marked by exercise of volition
rather than which is accidental, negligent or involuntary.
B
In Volume III of Webster's Third New International Dictionary
at page 2617, the word 'wilful' has been defined thus :

governed by will without yielding to reason or without regard to
reason; obstinately or perversely self-willed.
c
The word 'default' has been defined in Vol. I of Webster's Third
New International Dictionary at page 590 thus :

to fail to fulfil a contract or agreement, to accept a responsibility;
D to fail to meet a financial obligation.

In Black's Law Dictionary (Fourth Edn.), at page 1773 the word
'wilful' has been defined thus:

'Wilfulness' implies an act done intentionally and designedly; a
E conscious failure to observe care; conscious; knowing; done with
stubborn purpose, but not with malice.

The word 'reckless' as applied to negligence, is the legal
equivalent of 'wilful' or 'wanton'.

F Thus, a consensus of the meaning of the words 'wilful default'
appears to indicate that default in order to be wilful must be
intentional, deliberate, calculated and conscious, with full knowledge
of legal consequences flowing therefrom. Taking for instance a case
where a tenant commits default after default despite oral demands or
G reminders and fails to pay the rent without any just or lawful cause,
it cannot be said that he is not guilty of wilful default because such
a course of conduct manifestly amounts to wilful default as contem-
plated either by the Act or other Acts referred to above."

For the foregoing reasons and as per our findings we come to the
-
H irresistible conclusion that all the three courts below committed error in law
CHORDIA AUTOMOBILES v. S. MOOSA [MISRA, J.] 23
in holding tenant to be a wilful defauiter. So, we hold even if he was in default A
it is not a case of wilful default. We hold that the appellant committed no
wilful default. Accordingly, the impugned orders and judgments of all the
three courts are hereby set aside. The appeal is allowed. However, on the facts
and circumstances of the case, the costs on the parties.

v.s.s. Appeal allowed. B