Holding

Non‑payment of rent caused by a statutory prohibitory order does not constitute wilful default, payment to the Tax Recovery Officer discharges the tenant’s rent liability, and an eviction order under Section 10(3)(c) is invalid unless the required proviso findings are recorded.

Summary

The tenant J. Jermons stopped paying rent to his landlord after a Tax Recovery Officer issued a prohibitory order under the Income Tax Act, directing him to pay the rent to the tax authority instead. He later complied with a notice under Section 226(3) of the Income Tax Act and paid the rent for the entire period to the Tax Recovery Officer. The landlords sought eviction on the grounds of wilful default and personal requirement; the Rent Controller dismissed the petition, but the Appellate Authority ordered eviction on wilful default. Both parties appealed, and the High Court allowed the landlords to raise an additional ground under Section 10(3)(c) of the Tamil Nadu Buildings (Lease and Rent Control) Act without recording the required findings, and ordered eviction. The Supreme Court held that non‑payment of rent caused by the prohibitory order does not constitute wilful default, that payment to the Tax Recovery Officer fully discharges the tenant’s rent liability, and that the High Court’s order under Section 10(3)(c) was unsustainable for failing to record the proviso findings. It also clarified that raising additional grounds based on existing material does not require amendment of pleadings. The Court set aside the High Court order and restored the Rent Controller’s decision, allowing the appeal.

Issues considered

The effect of a prohibitory order and notice under the Income Tax Act on the tenant's obligation to pay rent to the landlord.
Whether non‑payment of rent under such order amounts to 'wilful default' under Section 10(2)(i) of the Tamil Nadu Buildings (Lease and Rent Control) Act, 1960.
Whether payment of rent to the Tax Recovery Officer discharges the tenant's liability to the landlord for eviction purposes.
The validity of the High Court's eviction order under Section 10(3)(c) without recording findings under its proviso.
Whether raising additional grounds in revision constitutes a new pleading requiring amendment.

Legislation cited

Code of Civil Procedure, 1908s. 60
Income Tax Act, 1961s. 222(1)(a), s. 226(3)
Tamil Nadu Buildings (Lease and Rent Control) Act, 1960s. 10(2)(i), s. 10(3)(a), s. 10(3)(c)

Subjects

rent controlevictionwilful defaultIncome Tax Actprohibitory orderpayment to tax authorityadditional groundamendment of pleadingslandlordtenant

Judgment

J. JERMONS A
v.
ALIAMMAL AND ORS.

AUGUST 16, 1999

[V.N. KHARE AND SYED SHAH MOHAMMED QUADRI, JJ.] B

Rent Control and Eviction.

Tamil Nadu Buildings (lease and Rent Control) Act, 1960.

S.10(2)(1)-Arrears of rent-'Wilful default'-Determination of-Tax
c
Recovery Officer-Prohibitory order under S.222 (!)(a) rlw R.26(/)(a) of
Second Schedule to Income Tax Act-Stoppage ofpayment of rent by tenant-
Subsequent notice under S.226(3) of Income Tax Act-Payment of rent for
entire period to Tax Recovery Officer-Eviction petition on the ground of
'wilful default' in payment of rent-Validity of-Held, non-payment of rent D
due to prohibitory order does not amount to 'wilful default' in payment of
rent-Payment of rent by tenant to Tax Recovery Officer would fully discharge
him from his obligation to pay rent to the landlords-Eviction not
sustainable-Income Tax Act, 1961-S.222 (/)(a) r/w R. 26(l)(a) of Second
Schedule and S.226 (3). E
S.10(3)(a) and (b)-Eviction petition-Filed on the ground of bona
fide requirements under S. lO(J)(a)-Dismissed by Rent Controller-On appeal.
Appellate Authority rejecting the plea qf bona fide requirements-Pending
proceedings, landlords securing two non-residential buildings-Revision-
Application for raising additional grounds under S. JO(J}(c)-High Court F
allowing the application and passing eviction order under S. I O(J)(c) without
recording findings regarding comparative hardship to parties-Validity of-
Held, requirements for eviction under clause (c) are different from those
under clause (a)-lt is incumbent upon the authority considering application
for eviction under clause (c) to record finding under proviso to S.10(3)(c)- G
Order of High Court unsustainable.

Practice and Procedure.

Revision-Additional grounds-Raising of-Amendment ofpleadings-
Necessity of -Difference between raising a new plea and raising additional
467
468 SUPREME COURT REPORTS (1999] SUPP. 1 S.C.R.

A grounds on the basis of material already on record-Held, new plea cannot
be raised without amending the pleadings and after giving reasonable
opportunity to parties to file further pleadings and adduce necessary
evidence-However, additional grounds raised on the basis of pleadings and
material already on record can be allowed without amendment of pleadings.

B Eviction petition-Application for amendment-Allowed by Appellate
Authority or the Revisional Authority-Held, the appropriate course will be
to remand the matter to the Rent Controller-However, in the instant case,
since the application was only to raise additional grounds and not amendment
of pleadings, it is not a fit case to remand the matter to the Rent Controller.
c Words &Phrases.

'Wilful default '-Meaning of in the context of proviso to S. I 0(2)(i) of
Tamil Nadu Buildings (Lease and Rent Control) Act, 1960.

'Debt '-Meaning and scope of
D
Appellant-tenant took the premises in question on a monthly rent from
predecessor-in-interest of the respondents. There was certain default in
payment of tax by predecessor-in-interest of respondent-landlord. Consequently,
Tax Recovery officer issued a prohibitory order under S.222(1)(a) r/w Rule
E 26(1)(a) of Second Schedule of the Income Tax Act and appellant-tenant
stopped payment of rent. However, pursuant to a subsequent notice under
S.226(3) of the Income Tax Act, appellant tenant paid the rent for the entire
period to the Tax Recovery Officer. Respondent-landlord's eviction petition
on the ground of 'wilful default' in payment of rent and for bona fide
requirement was dismissed by Rent Controller. On appeal, the Appellate
F Authority while rejecting the ground of bona fide requirement, passed eviction
order on the ground of wilful default in payment of rent. Aggrieved, both the
parties filed revision petition before High Court. During the pendency of
eviction proceedings, respondent-landlords secured possession of two non-
residential buildings. Consequently, landlords filed an application for raising
G additional grounds for eviction under S.10(3)(c) of the Act. High Court
allowed the said application and passed eviction order under S.10(3)(c) of the
Act. Hence the present appeal.

On behalf of appellant-tenant it was contended that by virtue of the
prohibitory order issued by the Income Tax Department, the appellant was
H prevented from paying the rent to the landlord and, therefore, non-payment
J. JERMONS v. ALIAMMAL 469

of rent to the landlord after that date could not be termed as 'wilful default'; A
after receiving notice under S.226(3) of the Income Tax Act the rent for the
entire period was paid to the Income Tax Department and thus there was no
obligation to pay rent to the landlord; having lost on the plea of bona fide
personal requirement under S.10(3)(a)(iii), the landlord could not have been
permitted to make out an entirely new case by way of additional ground under
S.10(3)(c) of the Act; the High Court erred in not considering the requirements B
of the proviso to S.10(3)(c) of the Act before passing the eviction order.

On behalf of the respondent-landlords it was contended that wilful
default in payment of rent by the appellant related to various periods, whereas
the prohibitory order was confined to the rent that was due on that date and C
as it did not require the appellant to pay future monthly rent to the Ipcome
Tax Department nothing prevented him to disch.arge his obligation of payment
of rent to the respondents thereafter. Thus, the plea of payment of rent to
the Income Tax Department long after the rent became due will not relieve
him of the consequences of the wilful default in payment of rent; that, in any
case, the provisions of the Rent Control Act and payment of rent to the D
Income Tax Officer would not relieve the appellant of his obligation to pay
the rent to the landlords.

Allowing the appeal, the Court
HELD: 1.1. Non-payment of rent by appellant-tenant after receiving E
prohibitory order and notice under S.226(3) of the Income Tax Act, 1961
does not amount to 'wilful default' in payment of rent. (473-El

1.2. Under S.10(2)(i) of the Tamil Nadu Buildings (Lease and Rent
Control) Act, 1960, default simplicitor in payment of rent is not a ground
to order eviction of the tenant because the tenant is entitled to satisfy the F
Court/Rent Controller that his default in paying or tendering the rent was
not wilful. If the Court/Rent Controller is satisfied that non-payment/
tendering of rent was not wilful, it has to give the tenant a reasonable time
which should not exceed fifteen days, for payment/tendering of the rent due
up _to the date of such payment to the landlord and on the tenant so paying/
tendering it has to reject the application seeking eviction of the tenant. G
(475-D-E)
1.3. 'Wilful default' implies intentional or conscious violation of
obligation to pay the rent due; it may also be on account of supine indifference
or callous or recalcitrant conduct. But if the default has occasioned on
account of ignorance, accident or compulsion or circumstances beyond the H
470 SUPREME COURT REPORTS [1999] SUPP. 1 S.C.R.

A control of the tenant it cannot be termed as 'wilful default'. This has to be
determined as a question of fact on the facts and in the circumstances of each
case. In the instant case, there was reasonable ground for the appellant-
tenant to believe that he was prohibited and restrained from paying the rent
under the prohibition order/notice. Thus, non-payment of rent after receiving
B prohibitory order/notice would not give any cause of action to the landlords
. to file eviction proceedings against the appellant on the ground of 'wilful
default'. [478-H; 479-A-B-C)

2. The word 'debt' is used in the order/notice issued under the Income
Tax Act in the same meaning in which it is used in S.60 C.P.C. Ordinarily,
C 'debt' means money that is owed; an existing obligation to pay certain amount;
a sum .of money due from one person to another. Debts can be classified,
having regard to criteria for payment, into three categories; (i) debt which
has become due and is payable at present (Debitum in presenti); (ii) debt
which has be.come due but is payable at a future date (Debitum in presenti,
solvendum in future); and (iii) contingent debt which becomes payable on the
D happening of certain event which may or may not occur. Thus, rent that has
not become due is not debt. It follows that rent for the unexpired period of
lease is not debt. In the instant case, the word 'debt' in the prohibitory order
is used in the first and the second sense. In that sense of the word, rent that
would become due and payable in future is in the nature of contingent debt
E and will not be covered by it. (478-B-C-D, Fl

3. There is nothing in the Act which comes in the way of the tenant
in complying with the prohibitory order/notice under S.226 of the Income
Tax Act issued by the Tax Recovery Officer without exposing himself to the
risk of being treated as wilful defaulter. Under the rental agreement as well
F as under the Act the tenant is bound to pay the rent to the landlord. By virtue
of the statutory notice of the Tax Recovery Officer the tenant is directed to
pay the rent to the Tax Recovery Officer instead of paying it to the landlord
in discharge of his liability to pay the income tax due by him. Clause (viii)
of sub-section (3) of S.226 of the Income Tax Act declares that the person
paying any amount in compliance with a notice issued under that Section
G shall be fully discharged from his liability to the assessee to the extent of
the a mount so paid. In view of this provision, payment of rent by the tenant
to the Tax Recovery Officer instead to the landlord is indeed a payment not
only in discharge of his contractual obligation and statutory obligation under
the Act but also under the said provision of the Income Tax Act.
H [482-F-G-H; 483-A)
J. JERMONS v. ALIAMMAL [SYED SHAH MOHAMMED QUADRI, J.] 471
1 A
• Dhunsari Tea & Industries Ltd v. The Hanuman Estates Pvt. Ltd, AIR
(1976) Calcutta 328, disapproved.

4.1. High Court was not justified in allowing the application of
respondent-landlords for raising additional grounds for eviction under
S.10(3)(c) of the Act. The requirements ofS.10(3)(a) are different from the
requirements ofS.10(3)(c). For purposes of clause (c), the following additional B
facts-will be necessary viz. whether landlord is occupying only a part of the
building whether residential or non-residential and whether the tenant is
occupying the whole or any portion of the remaining part of the building and
the facts relevant to the consideration with regard to comparative hardship
to the landlord and tenant. Such facts are to be brought on record because C
they are not subject-matter of consideration in an application filed under
sub-section (3)(a). Thus, it is incumbent upon the authority, considering an
application for eviction ofa tenant under clause (c) of S.10(3), to record a
finding under proviso to S.(3)(c). In this case the High Court while granting
application umier S.10(3)(c) failed to do so. Consequently, the order passed
without considering the proviso is unsustainable and is set aside. D
[473-G; 484-E; 486-H; 487-A-D)

B. Kandasamy Reddiar & Ors. v. 0. Gomati Ammal, (1998) 7 SCC 138,
relied on.

4.2. There is a fundamental difference between a case of raising E
additional ground based on the pleadings and the material available on record
and a case of taking a new plea not borne out by the pleadings. rn the former
case no amendment of pleadings is required whereas in the latter it is
necessary to amend the pleadings. The Court/Rent Controller in its discretion,
with a view to do complete justice between the parties, may allow a party
either to raise additional ground or take a new plea, as the case may be, if
F
the circumstances so justify, like a plea based on subsequent events. Whereas
in the former situation, the case can be disposed on the material on record
but in the latter case the pleadings will have to be amended and for tha\
reason the parties have to be given reasonable opportunity to file further
pleadings and adduce necessary evidence. [484-F-G-H) G

- 5. In a case where original application for eviction is based, inter a/ia,
on the ground in clause (a) ofS.10(3) and an application for amendment of
eviction petition is allowed permitting to raise further ground under clause
(c) either by the Appellate Authority or the Revisional Aut~ority, the
appropriate course will be to remand the case to the Rant Controller for H
472 SUPREME COURT REPORTS [1999] SUPP. 1 S.C.R.

A giving opportunity to the opposite party to file further pleadings and adduce
such evidence relevant to the issue, as they desire. However, in the instant
case, as the petition filed by the respondents and allowed by the High Court
was to raise additional ground in the revision and not to amend the eviction
petition, it is not a fit case to remand the matter to the Rent Controller.
B However, the respondent-landlords are not precluded from seeking eviction
of the tenant under S.10(3)(c) of the Act, if otherwise permissible in law.
(487-A-B-C-E)

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 7346of1997.

C From the Judgment and Order dated 27.3.97 of the Madras High Court
in C.R.P. No. 1582of1983.

Dr. A.F. Julian and A. Mariaputham for the Appellant.

B. Kumar, K.K. Mani and Haja for the Respondent.
D
R.N. Trivedi, Additional Solicitor General, S.W.A. Qadri and S.K. Dwivedi
for the Union of India.

The Judgment of the Court was delivered by

£ SYED SHAH MOHAMMED QUADRI, J. This appeal arises from the
common order of the High Court of Madras in CRP Nos. 1582, 1705/93 and
CMP No. 13064/96 in CRP No.1705/93 passed on March 27, 1997. The appellant
is the tenant and the respondents are the landlords of the cycle shop bearing
No. 70, Main Road, Eruvadi (hereinafter referred to as 'the premises').

F The appellant took the premises on monthly rent of Rs.60/- from one
Shahul Hameed, predecessor-in-interest of the respondents, in 1974. On March
6, 1979, the appellant was served with a prohibitory order by the Tax Recovery
qfficer, Income Tax Department, Tirunelveli, which was followed by another
order issy~d by the same authority under Section 226(3) of the Income Tax
G Act on January 18, 1988. From the date of service of the prohibitory order the
appellant stopped payment of monthly rent to the respondents. But on
receiving the notice on January 18, 1988, he paid rent for the entire period to
the Tax Recovery Officer.

On the ground that the appellant had committed wilful default in payment
H of rent for the periods : (A) March 6, 1979 to February 24, 1988 and (B)
J. JERMONS v. A LIAM MAL [SYED SHAH MOHAMMED QUADRI, J.] 473
February 24, 1988 to February 15, 1990 and on the ground that he required A
the premises for his own use and occupation, the said Shahul Hameed (landlord)
filed R.C.O.P.No. 2 of 1990 for eviction of the appellant (tenant) before the
Rent Controller (District Munsiff Court) Valliyur under Sections 10(2)(i) and
10(3)(a)(iii) of the Tamil Nadu Buildings (Lease and Rent Control) Act, 1960
(for short 'the Act') on August 17, 1990. The appellant contested the petition B
denying the pleas of wilful default in payment of rent as well as of personal
requirement of the landlord. The learned Rent Controller dismissed that petition
on April 30, 1991. Aggrieved thereby, the respondents filed R.C.A. No. 43 of
1991 before t!te Appellate Authority, Tirunelveli. In appeal, it was held that
the ground of bona fide requirement of the respondent-landlords was not
proved; however, the ground of wilful default in payment of rent was found C
against the appellant-tenant and accordingly eviction of the appellant was
ordered on April 12, 1993. Against that order both the appellant and the
respondents filed Revisions before the High Court-CRP No.1582 of 1993 was
filed by the appellant and CRP No.1705 of 1993 was filed by the respondents.
In their C.R.P. the respondents filed CMP No. 13064 of 1996 seeking pennission
to amend the grounds of revision and to raise the additional ground under D
Section 10(3)(c) of the Act for additional accommodation. The petition was
opposed by the appellant. However, the High Court allowed the CMP. In the
CRPs it was held that the appellant committed wilful default in payment of rent
-· and the additional ground under Section 10(3)(c) was established. Thus, the
High Court confirmed the order of eviction by the common order, referred to E
above. It is against that order, the present appeal is filed by special leave.
Dr. A.F. Julian, learned counsel for the appellant, urged that by virtue
of the prohibitory order issued by the Income Tax Department on March 6,
1979, the appellant was prevented from paying the rent to the landlord and,
therefore, non-payment of rent to the landlord after that date cannot be p
termed as 'wilful default'. He submitted that after receiving notice under
Section 226(3) of the Income Tax Act on January 18, 1988, the appellant paid
the rent to the Income Tax Department on Febru~ry 24, 1988. He next contended
that having lost on the plea of bona fide personal requirement under Section
l0(3)(a)(iii), the landlord could not have been permitted to make out an
entirely new case by way of additional ground under Section I 0(3 )(c) of the G
Act and in any event as the High Court did not consider the requirements
of the proviso to Section l0(3)(c) of the Act, the order under appeal deserved
to be set aside.
Mr. B. Kumar, learned counsel for the respondents, argued that wilful
default in payment of rent by the appellant relates to various periods, the H
474 SUPREME COURT REPORTS (1999] SUPP. l S.C.R.

A prohibitory order of March 6, 1979 is confined to the rent that was due on
that date and as it did not require the appellant to pay future monthly reJt
to the Income Tax Department so nothing prevented him to discharge his
obligation of payment of rent to the respondents thereafter. As such the plea
of payment of rent to the Income Tax Department on February 24, 1988, long
after the rent became due will not relieve him of the consequences of the
B wilful default in payment of the rent. He has submitted that the High Court
considered the application of the proviso and found that great prejudice
would be caused to the landlord if their petition was dismissed.

On the above contentions, the following points arise for determination:

C (i) What is the effect of the prohibitory order dated March 6, 1979 and
notice dated January 18, 1988 issued under Section 226(3) of the
Income Tax Act by the Tax Recovery Officer?
IA.
(ii) Whether non-payment ofrent by the appellant to the landlord after
service of the said order/notice of Tax Recovery Officer on him,
D amounts to wilful default within the meaning of the proviso to Section
10(2)(i) of the A.ct?

(iii) Whether the High Court is correct in law in allowing CMP No.13064
of 1996 flied by the respondents and in ordering the eviction of the
appellant under Section 10(3)(c) of the Act?
E
Points (i) and (ii) may be conveniently considered together.

To appreciate the question of wilful default in payment of rent, Section
10(2)(i) and the proviso thereto may be noticed here :
-
"10(2)(i). A landlord who seeks to evict his tenant shall apply to the
F 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
G fixed in the agreement of tenancy with his landlord or in the absence
of any such agreement by the last day of the month next following
· that for which the rent is payable.
Provided that in any case falling under clause (i) if the Controller is
satisfied that the tenant's default to pay or tender rent was not wilful,
H he may, notwithstanding anything contained in Section 11 ~ give the
J. JERMONS v. ALIAMMAL [SYED SHAH MOHAMMED QUADRI, J.] 475

tenant a reasonable time, not exceeding fifteen days, to pay or tender A
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.

Explanation. - For the purpose of this sub-section, default to pay or
tender rent shall be construed as wilful, if the default by the tenant B
in the payment or tender of rent continues after the issue of two
months' notice by the landlord claiming the rent."

A combined reading of the provisions, extracted above, shows that a
tenant will be in default of payment of the rent due by him in respect of the
building if (a) he has not paid or ten_dered the rent due within fifteen days C
after the expiry of the time fixed in the agreement of tenancy with his landlord;
or (b) in the absence of such agreement he has not paid or tendered the rent
due by him by the last day of the month next following that for which the
rent is payable, e.g., the rent for the month of January is not paid by February
28. But a default simplicitor in payment of rent is not a ground to order D
eviction of the tenant because the tenant is entitled to satisfy the Court/
Controller that his default in paying or tendering the rent was not wilful. If
the Court/Controller is satisfied that non-payment/tendering of rent was not

- wilful, it has to give the tenant a reasonable time which should not exceed
fifteen days, for payment/tendering of the rent due up to the date of such
payment to the landlord and on the tenant so paying/tendering it has to reject E
the application seeking eviction of the tenant. But if the Court/Controller is
not so satisfied, the default will be termed as 'wilful default' and the tenant
will be liable to be evicted on that ground.

The wilful default in payment of rent, complained of against the appellant,
comprises of the following periods : F
(A) from March 6, 1979 to February 24, 1988;

(B) from February 25, 1988 to February 15, 1990; and

(C) February 16, 1990 to February 28, 1991.

The appellant, admittedly, did not pay the rent to the landlord after service G
of prohibitory order issued by the Tax Recovery Officer, Income Tax Department
on March 6, 1979 (Ex.B-2). That order appears to have been issued under
Section 222(l)(a) read with Rule 26(l)(a) of Second Schedule of the Income
Tax Act. Those provisions may be quoted here for ready reference :
'. H
476 SUPREME COURT REPORTS [1999] SUPP. 1 S.C.R.

A "222(l)(a). Certificate to Tax Recovery Officer-

(1) When an assessee is in default or is deemed to be in default in
making a payment of tax, the Tax Recovery Officer may draw up under
his signature a statement in the prescribed form specifying the amount
of arrears due from the assessee (such statement being hereafter in
B this Chapter and in the Second Schedule referred to as "certificate")
and shall proceed to recover from such assessee the amount specified
in the certificate by one or more of the modes mentioned below, in
accordance with the rules lai~ down in the Second Schedule -

(a) attachment and sale of the assessee's movable property."
c Rule 26(l)(a)(i) of Second Schedule of Income Tax Act insofar as it is
relevant for our purpose reads as under :

"26(l)(a)(i). Debts and shares, etc. -

(1) In the case of -
D
(a) a debt not secured by a negotiable instrument,

(b) *** *** ***

(c) *** *** ***
E
the attachment shall be made by a written order prohibiting -

(i) in the case of the debt - the creditor from recovering the debt
and the debtor from making payment thereof until the further
order of the Tax Recovery Officer."

F Section 222(l)(a) of the Income Tax Act speaks of drawing up of tax recovery
certificate and prescribes the modes of recovery of tax specified therein.
Clause (a) deals with the recovery of tax due by an assessee by attachment
and sale of his moveable property in accordance with the rules laid down in
the Second Schedule. Rule 26 which falls in Part II of the Second Schedule,
G takes care of attachment and sale of moveable property being debts and
shares etc. Clause (a) says that in case of debt not secured by negotiable
instrument, the attachment shall be made by a written order prohibiting the 'y

cr~itor from recovering the debt and the debtor from making payment thereof
until further order of the Tax Recovery Officer.

H The relevant extract of Ex.B-2 - the prohibitory order of March 6, 1979
J. JERMONS v. A LIAM MAL [SYED SHAH MOHAMMED QUADRI, J.] 477
- is as follows : A
"Prohibitory order, where the property consists of debts not secured
by negotiable instruments.

Office of the Tax Recovery Officer, Tirunelveli.

To
B
Sri T.M. Gennans Fernandes,
Hire Cycle Shop, ·
70, Main Road,
Eravadi.
c
Whereas Sri S.A. Sahaul Hameed, Eravadi has failed to pay arrears
due from him in respect of certificate No. 47-026-Py.7428 dated 26.3.1978
forwarded by the Income-Tax Officer, Special at Madurai amounting to
Rs. 81,877 and the interest payable under Section 220(2) of the Income-
Tax Act, 1961 for the period commencing immediately after the said
date: D
*** *** ***

It is ordered that T.M.Germans Fernandes, Hire Cycle Shop, Eravadi,
be and is hereby prohibited and restrained until the further orders of
the undersigned from receiving from you a certain debt alleged now E
to be due from you to T.M.Gennans Fernandes, Hire Cycle Shop,
.. Eravadi.

And that you the said T.M.Germans Fernandes, Hire Cycle Shop,
Eravadi be and you are hereby prohibited and restrained, until the
further orders of the undersigned, from making payment of the said F
debt or any part thereof, to any person whomsoever or otherwise than
to the undersigned."

There appears to be some obvious mistake in the penultimate para. Be
that as it may, the purport of the prohibitory order is that the predecessor-
in-interest of the respondents (landlord) was prohibited from receiving and G
the appellant (tenant) was prohibited and restrained from making payment of
'a certain debt alleged now to be due' or any part thereof to any person other
than to the Tax Recovery Officer.

Mr. B. Kumar has contended that the order is confined to "a certain
debt alleged now to be due" from the appellant and that tie was prohibited H
478 SUPREME COURT REPORTS [1999) SUPP. 1 S.C.R.

A and restrained from making payment of the said debt or any part thereof to
any person other than the Tax Recovery Officer; as on 6th March, 1979, if any
rent was due by the appellant to the respondents the said order operated only
in respect of that amount and that it did not cover future rent as and when
it became due as future rent does not fall within the meaning of debt. ...
B The word 'debt' is used in the order/notice issued under Income Tax
Act in the same meaning in which it is used in Section 60 C.P.C. Ordinarily,
'debt' means money that is owed; an existing obligation to pay certain
amount; a sum of money due from one person to another. Debts can be
classified, having regard to criteria for payment, into three categories : (i) debt
C which has become due and is payable at present (Debitum in presenti) e.g.
in monthly tenancy, rent becomes due after the expiry of each month like rent
for the month of January becoming due and payable on February I; (ii) debt
which has become due but is payable at a future date (Debitum in presenti,
solvendum in future); in the above example if under agreement of tenancy rent
is payable on 15th of the following month, the rent for January becomes due
D on February l, but is payable on February 15; and (iii) contingent debt which
becomes payable on the happening of certain event which may or may not
occur; in the above instance the rent for the month of January will not be a
debt in the preceding month of December for the tenant may or may not reside
in the next month. Thus, rent that has not become due is not debt. It follows
E that rent for the unexpired period of lease is not debt. In lachman v.
Jarbandhan, AIR (l 928) Allahabad 193, a Division.Bench of Allahabad High
Court, for the purpose of Section 60 C.P.C. correctly held : "Rent in respect
of a period still in existence is thus not a debt at all as the obligation is not
complete."

F In our view, the word 'debt' in the said prohibitory order is used in the
first and the second sense. In that sense of the word, rent that would become
due and payable in future is in the nature of contingent debt and will not be
covered by it. This conclusion disposes of one aspect, whether there was
default in payment of rent by the appellant for period (A), referred to above.

G But then the more important aspect is, was the default wilful within the
meaning of proviso to Section l 0(2) of the Act? It has already been noted
above that it enjoins upon the Court/Rent Controller to reject the application
for eviction if he is satisfied that the default is not wilful.

Here 'wilful default' implies intentional or conscious violation of
H obligation to pay the rent due; it may also be on account of supine indifference
J. JERMONS v. ALIAMMAL [SYED SHAH MOHAMMED QUADRI, J.] 479

or callous or recalcitrant conduct. But if the default has occasioned on A
account of ignorance, accident or compulsion or circumstances beyond the
control of the tenant, it cannot be termed as 'wilful default'. This has to be

-
determined as a question of fact on the facts and in the circumstances of each
case.

In this case it is true that there is no direction in Ex.B-2 to the appellant B
not to pay future rent to the landlord from that date. But the tenant believed .
that, by virtue of the prohibitory order of the Tax Recovery Officer, he was
directed not to pay the rent to the landlord who was also injuncted from
receiving the rent until further orders of that authority. If there are reasonable
grounds for his belief that he was prohibited and restrained from paying rent C
under Ex.B-2, and so the default has occurred due to statutory compulsion
it cannot be said that he has committed wilful default in paynient of rent. But
if such an assumption is without any basis it would not relieve him of the
consequences of wilful default. Now, we shall examine this facet.

In his deposition as R.W.l the appellant states : D
"I received a letter from the Income Tax Officer that letter is Ex.B-2.
As per Ex.B-2 till further orders I was stopped from paying the rent."

He has further stated :
E
"As per orders of the Government I did not pay the rent."

In his cross-examination he answered that at the time of Ex.B-2 there was no
rent due or arrears from 1979 onwards and that he kept the rents in bank
deposits. Further after Ex.B-2 the respondents also did not demand rent.
However, the appellant paid the rent for the period commencing from the date F
of receipt of Ex.B-2 till the date of receipt of Ex.B-3, notice under Section
226(3) of the Income Tax Act dated January 18, 1988. Ex.B-3 reads thus:

"To
Sri. T. Jermons, S/o. Sri Thommai Fernando,
70, North Main Road, G
Eravadi-627103,
Nanguneri Taluk.

A sum of Rs. 3,91,067 is due from Sri. S.A. Shahul Hameed of 87, 7th
Street, Eravadi on account of Income-Tax/ super-tax/ penalty/ interest/
fine. You are hereby required under Section 226(3) of the Income- tax H
480 SUPREME COURT REPORTS [1999) SUPP. I S.C.R. '--

A Act,· 1961, to pay to me forthwith any amount due from you to, or, held
by you, for or on account of the said S.A. Shahul Hameed of Eravadi ~
upto the amount of arrears shown above, and also request you to pay

B
any money which may subsequently become due from you to him or
which you may subsequently hold for on account of him upto the
amount of arrears still remaining unpaid, forthwith on the money
becoming due, or being held by you as aforesaid as such payment is
- ~

required to meet the amount due by the tax payer in respect of arrears
of income-tax/ super-tax/ penalty/ interest/ fine. I am to say that any
payment made by you in compliance with this notice is in law I
~
deemed to have been made under the authority of the tax-payer and
c my receipt will constitute a good and sufficient discharge of your
,'
liability to the person to the extent of the amount referred to in the
receipt.
(Emphasis supplied) '~'

I am to observe that if you discharge any liability to the tax payer
D after the receipt of this notice, you will be personally liable to me as
Income-Tax Officer I, Tirunelveli, to the extent of the liability discharged,
or to the extent of the liability of the tax-payer for tax/ penalty/
interest/ fine referred to in the preceding para, whichever is less.
.,;

Further, if you fail to make payment in pursuance of this notice
E to me as Income-Tax Officer, you shall be deemed to be an assessee
in default in respect of the amount specified in the notice and further
proceedings may be taken against you for the realisation of the
""'
amount as if it were an arrears of tax due from you in the manner
provided in Sections 222 to 225 of the Income-Tax Act, 1961, and this
notice shall have the same effect as an attachment of a debt by the
F Tax Recovery Officer in exercise of his powers under Section 222 of
the said Act.

The necessary" challans for depositing the money to the c,redit of
the Central Government may be obtained from me.

G A copy of this notice is being sent to Sri. S.A. Shahul Hameed,
87, 7th Street, Eravadi (tax payer).
Sd/-
Ist Income-Tax officer,
Tirunelveli."
H From a perusal of Ex.B-3, it is evident that the appellant was required "'
!

• J. JERMONS v. ALIAMMAL [SYED SHAH MOHAMMED QUAD RI, J.] 481

to pay to the Tax Recovery Officer the amount due (rent) to the landlord and, A
accordingly, he paid the rent due for the period (A) commencing from Ex.B-
2 to B-3 - 107 months.

Section 226(3) of the Income Tax Act is identical to Order 21 Rule 46,
C.P.C.
B
This Court in V.N. Vasudeva v. Kiroi Mal Luhariwala, [AIR 1965 SC
440], while considering effect of notice under Section 46(5A) of the Income-
Tax Act, 1922 which is a precursor of Section 226(3) of the Income-Tax Act,
1961 held that it was in the nature of garnishee orqer and the tenant (the
person on whom the notice was served) could not, so long as the notice C
stood, make any payment whatsoever to the landlord.

On the above facts, we are satisfied that there was reasonable basis for
the tenant to assume that he was prohibited from paying the rent. It is also
strengthened by the fact that during this period the l~ndlord also did not
make any demand. From the above discussion it becomes clear that non- D
payment of the rent due by the appellant during the aforementioned period
is on account of the fact that the appellant believed that under Ex.B-2 he was
prohibited from paying any rent to the respondents. In such a situation, the
default in payment of rent to the landlord during the period 'A', in our view
cannot be said to be wilful default. Therefore, this can not entail in the
appellant's eviction from the suit premises. E
So far as the periods 'B' and 'C' aforementioned are concerned, they
are admittedly after Ex.B-3 under Section 226(3) dated 18.01.1988. Under Ex.B-
3 the right of the respondents/landlord to receive the rent stood suspended
till the entire amount of Income tax due by him was cleared. It is not the case
of landlord that he paid the tax due to the concerned Income-Tax Authority F
and informed the same to the tenant, nor is there any material to the effect
that during the said period the authorities withdrew Ex.B-3. Therefore, non-
payment of rent regularly to the respondents after receipt of Ex.B-3 and while
Ex.B is in force, would not give any cause of action to the respondents/
landlord to file eviction petition against the appellant on the ground of wilful G
default in payment of rent.

It is, however, contended that the rent was not paid to the Tax Recovery
Officer regularly by the appellant, consequently, the respondents were put to
the risk of facing various proceedings under the Income Tax Act, therefore,
they can take advantage of wilful default in payment of rent due by him and H
482 SUPREME COURT REPORTS [1999] SUPP. I S.C.R.

A sue him for eviction. We are afraid, we cannot accede to this contention. The
respondents exposed themselves to the risk of facing various proceedings
under Income Tax Act by their own conduct of not paying the income tax due
by them. On service of Ex.B-3 on the appellant and the respondents (the
assessee in default) the respondents' right to claim or receive the rents from ·,
the appellant stood suspended till the arrears of income tax specified therein
B was paid by them. As on -the date of filing eviction petition also they did not
satisfy the demand of the Tax Recovery Officer. So, they· cannot proceed
against the appellant for irregular payment/non-payment of rent to the Tax
Recovery Officer for his eviction from the suit premises albeit by his conduct
he has made himself liable under the provisions of the Income Tax Act.
c
Mr. B. Kumar next contended that the provisions of the Income-Tax Act
had no overriding effect over the provisions of the Rent Control Act and
paymeht of rent to the Income-Tax Officer pursuant to Ex.B-2 and Ex.B-3
would not relieve the appellant of his obligation to pay the rent to the
landlord. He relied upon a judgment of Calcutta High Court in Dhunseri Tea
D & Industries ltd. v. The Hanuman Estates Private Ltd, AIR ( 1976) Calcutta
328.

We are unable to accept the contention of the learned counsel; first,
because the provisions of Tamil Nadu Buildings (Lease and Rent Control)
E Act, 1960, are not identical with the provisions of the West Bengal Premises
Tenancy Act, 1956 (for short 'the West Bengal Act') and secondly, because
we are not persuaded to accept the view taken by the Calcutta High Court.

We have already pointed out the requirements of Section 10(2)(i) of the ...._
Act. There is nothing in the Act which comes in the way of the tenant in I
I
F complying with the prohibitory order/order under Section 266(3) of the Income
Tax Act issued by the Tax Recovery Officer without exposing himself to the
risk of being treated as wilful defaulter. Under the rental agreement as well as
under the Act the tenant is bound to pay the rent to the landlord. By virtue
of the statutory notice of the Tax Recovery Officer the tenant is directed to
G pay the rent to the Tax Recovery Officer instead of paying it to the landlord
in discharge of his liability to pay the income tax due by him. Clause (viii) of
sub- Section (3) of Section 266 of the Income Tax Act declares that the person
paying any amount in compliance with a notice issued under that section
shall be fully discharged from his liability to the' assessee to the extent of the
amount so paid. In view of this provision, payment of rent by the tenant to
H the Tax Recovery Officer instead of to the landlord is indeed a payment not
J. JERMONS v. ALIAMMAL [SYED SHAH MOHAMMED QUADRI, J.] 483
only in discharge of his contractual obligation and statutory obligation under A
the Act but also under the said provision of the Income Tax Act. In such a
case no landlord can be heard to say that though the tenant has paid the rent
in compliance with the notice of attachment and notice under Section 266(3)
of the Income Tax Act towards the discharge of income tax due by him
covered by the certificate issued under Section 222 of the Income Tax Act, B
yet such payment will have to be ignored for the purpose of the Act and the
tenant will have to be treated as a wilful defaulter.

In Dhunseri Tea & Industries Ltd v. The Hanuman Estates Private Ltd
(supra), the tenant failed to pay rent from June 1970. On that ground the
landlord filed the suit for ejectment of the tenant. Under Section 17(1) of the·.·c
West Bengal Act, the tenant is under an obligation to deposit in Court or with :
the Controller or pay to the landlord the rent due within one month of the
receipt of summons or if he appears in the suit or proceeding without the writ
of summons being served on him, within one month of his appearance, and
shall thereafter continue to deposit or pay month by month if he intends to
get the benefit of protection against eviction under sub-section (4) of Section D
17 of that Act. It is a beneficial provision enacted to provide relief to the
tenant in proceeding taken against him for eviction on the ground of default
in payment of rent to the landlord. After service of summons on the tenant
an application under Section 17(3) of the West Bengal Act was filed by the
landlord to strike out the defence. The tenant contested the petition taking E
the plea that pursuant to the notice under Section 226(3) of the Income Tax
Act, he paid the rent to the concerned authority so he would be deemed to
have discharged his obligation under Section 17(1) of that Act. It was a
common ground that had the tenant deposited the rent in the Court or paid
it to the landlord within the period specified in Section 17( 1), it would have
operated a complete discharge of his liability under that Act. The Trial Court F
did not accept the plea of the tenant and struck out his defence. On revision
a
to the High Court of Calcutta, Division Bench held that the notice under
Section 226(3) of the Income Tax Act could not have the effect of overriding
sub-section (l) or (2) of Section 17 and that the tenant in order to avail
protection against eviction must show that the payment to the Income Tax G
Authority was strictly in accordance with the said provisions of the West
Bengal Act which the tenant failed to do. The revision was thus dismissed.
Once it is concluded that there is no apparent conflict between the provisions
of Sections 222 and 226(3) of the Income Tax Act and sections 17(1) & (2)
of the West Bengal Act and that the said provisions of the Income Tax Act
could not have the effect of overriding sub-Section (I) or (2) of Section 17, H
_4S4 SUPREME COURT REPORTS [1999] SUPP. I S.C.R.

A it becomes necessary for the Court to construe the said provisions
harmoniously. Thus construed it becomes clear that if in compliance ·of the
order of prohibition or notice under Section 226(3) the tenant pays the amount
to the Tax Recovery Officer in discharge of landlords' liability to pay income
tax due and such payment completely discharges the tenant of his obligation
B by virtue of Section 226(3)(viii), it cannot be said that there is non-compliance
of the provisions of the West Bengal Act. The payment to the Income Tax
Authority will have to be treated as payment to landlord for purposes of that
Act as well.

The last point which remains to be considered is the ground of bona
C fide requirement of the respondents.
The learned Rent Controller did not accept the plea under Section
10(3)(a)(iii) of the Act (bona fide requirement of the landlord) with which the
Appellate Authority agreed. In view of the admitted fact that during the
pendency of the eviction proceedings the landlord has secured possession
D of two non-residential buildings, he could not have persuaded the High Court
to grant eviction on the ground of personal requirement under section
10(3)(a)(iii). In this connection it has to be noted that clause (ii) of the Second
proviso to Section (3)(a) impos~s a complete ban upon a landlord who has
obtained possession of a non-residential building under clause (a) of sub-
E section (3) of Section I 0, on applying to the Rent Controller under that clause.
Faced with this situation the respondents filed application for raising additional
grounds in the revision under Section (10)(3)(c) of the Act. That petition was
opposed by the appellant/tenant. However, the High Court allowed the
application for raising additional grounds and proceeded to pass the impugned
order of eviction against the appellant under Section 10(3)(c).
F
It may be noted here that there is a fundamental difference between a
case of raising additional ground based on the pleadings and the material
available on record and a case of taking a new plea not borne out by the
pleadings. In the former case no amendment of pleadings is required whereas
G in the latter it is necessary to amend the pleadings. The Court/Rent Controller
in its discretion, with a view to do complete justice between the parties, may
allow a party either to raise additional ground or take a new plea, as the case
may be, if the circumstances so justify like a plea based on subsequent
events. Whereas in the former situation, the case can be disposed on the
material on record but in the latter case the pleadings will have to be amended
H and for that reason the parties have to be given reasonable opportunity to
J. JERMONS v. ALIAMMAL [SYED SHAH MOHAMMED QUAD RI, J.] 485
file further pleadings and adduce necessary evidence. A
No exception can be taken to the order of the High Court allowing CMP
to raise additional grounds in the C.R.P. But it would be of no consequence
as there has been no application for amendment of the pleadings. The
respondents cannot be permitted to make out a new case by seeking permission
to raise additional grounds in revision. B
Now, we may profitably refer to Section 10(3)(c) and the provisos
thereto to notice as to what is required to be proved by a landlord thereunder.
Section 10(3)(c) is as follows:

"10(3)(c). A landlord who is occupying only a pa~ of a building C
whether residential or non- residential may, notwithstanding anything
contained in clause (a), apply to the Controller for an order directing
any tenant occupying the whole or any portion of the remaining part
of the building to put the landlord in possession thereof, ifhe requires
additional accommodation for residential purposes or for purposes of D
a business which he is carrying on, as the case may be.

Provided that, in the case of an application under clause (c), the
Controller shall reject the application if he is satisfied that the hardship
which may be caused to the tenant by granting it will outweigh the
advantage to the landlord : E
Provided further that the ControUer may give the tenant a
reasonable time for putting the landlord in possession of the building
and may extend such time so as not to exceed three months in the
aggregate."

On an analysis of these provisions the following points emerge :
F

(1) The provisions of clause (c) have overriding effect over clause(a);

(2) Clause (c) applies to a case where,

(i) the landlord is occupying only a part of building;, G
(ii) the tenant is occupying the whole or any portion of the remaining
part of the building;
(iii) the landlord requires additional accommodation for residential or
for non-residential purposes of a business which he is carrying
on; H
486 SUPREME COURT REPORTS (1999] SUPP. I S.C.R.

A (iv) the landlord is seeking an order from the Rent Controller directing
that the landlord be put in possession of that portion or part of
the building which is in possession of the tenant;

(3) if the landlord makes out a case under clause (c) the Controller has
to evaluate the hardship that will be caused to the tenant if he is
B evicted from the portion in his occupation and the advantage that will
be gained by the landlord; if he is satisfied that the hardship to the
tenant will outweigh the advantage to the landlord, the Controller has
to reject the application for eviction of tenant; and

(4) in the event of the Controller ordering eviction he is empowered
C to give the tenant a reasonable time for putting the landlord in
possession of that portion or part of the building of which eviction
is ordered and to extend the same from time to time but not exceeding
three months.

It may be noticed that under Section (3)(a) it is incumbent on the
D landlord to show that he or any member of his family is not occupying any
building (residential or non-residential, as the case may be) for his own
occupation or for the purpose of keeping a vehicle or for purposes of a
business (as the case may be) which he or any member of his family is
carrying on, in the city, town or village concerned which is his own. But for
E the purpose of clause (c) the landlord will indeed be occupying a part of a
building of which the remaining part is in occupation of the tenant. Further
whereas recovery of possession of a non-residential building under Section
(3 )(a) bars a second application under that clause, no such bar exists in case
of clause (c). For granting relief to the tenant under clause (a) the aspect of
hardship to the tenant is alien but under clause (c) the Controller is enjoined
F to reject the application of the landlord for eviction if he is satisfied that the
hardship which may be caused to the tenant by directing the tenant to put
the landlord in possession of the portion of the building in possession of the
tenant, will outweigh the advantage to the landlord. Under clause (c) the
tenant is also entitled to the indulgence of being granted reasonable time for
G putting the landlord in possession of the building, which may be extended
from time to time up to the maximum period of three months.

From the above discussion, it is evident that the requirements of clause
(a) are different from the requirements of clause (c). For purposes of clause
(c), the following additional facts will be necessary viz. - whether the landlord
H is occupying only a part of the building whether residential or non-residential
'\
J. JERMONS v. A LIAM MAL [SYED SHAH MOHAMMED QUAD RI, J.] 487
and whether the tenant is occupying the whole or any portion of the remaining A
part of the building and the facts relevant to the consideration with regard
to comparative hardship to the landlord and tenant. Such facts are to be
brought on record because they are not subject-matter of consideration in an
application filed under sub-section (3)(a). In a case where original application
for eviction is based, inter alia, on the ground in clause (a) of sub-section
(3) and an application for amendment of eviction petition is allowed permitting B
to raise further ground under clause (c) either by the Appellate Authority or
the Revisional Authority, the appropriate course will be to remand the case
to the Rent Controller for giving opportunity to the opposite party to file
further pleadings and adduce such evidence relevant to the issue, as they
desire. Inasmuch as the petition filed by the respondents and allowed by the C
High Court was to raise additional ground in the revision and not to amend
the eviction petition, we are of the view it is not a fit case to remand the matter
to the Rent Controller.

We have already pointed out that it is incumbent upon the authority,
considering an application for eviction of a tenant under clause (c) of Section D
10(3), to record a finding under proviso to Section (3)(c). In this case the High
Court while granting application under Section 10(3)(c) failed to do so. This
Court in B. Kandasamy Reddiar & Ors. v. 0. Gomathi Ammal, [1998) 7 SCC
138 expressed the view that order passed without considering the proviso is
unsustainable and with respect we are in entire agreement with it. E
For these reasons; we set aside the impugned order of the High Court
and the judgment and order of the Appellate Authority and restore the
judgment and order of the Rent Controller. We, however, make it clear that this
judgment does not preclude the landlord from seeking eviction of the tenant
under clause (c) of sub-section (3) of Section 10 of the Act, if otherwise F
permissible in law.

The appeal is accordingly allowed. There shall be no order as to costs.

S.VK Appeal allowed.