Bench:
- Sarkar A. K
- Bachawat R. S
Issue:
Should the decree be set aside?
Facts:
• The appellant firm was the tenant and the respondent landlord of the flat in Bombay. The parties were governed by the Bombay Rents, Hotel and Lodging House Rates (Control) Act, 1947.
• The landlord obtained a decree in ejectment against the tenant in a suit filed under Rule 2 of Order 37 of CPC.
• Under that procedure the Trial Court gave leave to the appellant to defend the suit in condition that he paid the arrears of rent in fixed installments. On the failure of the appellant to pay these the Trial Court passed a decree against him without giving him leave to defend.
• His application under Rule 4, Order 37 for setting aside the decree was rejected, for the special circumstances required by that rule were held not to exist.
• In appeal a bench of the Court of Small Causes set aside the decree holding that the Trial Court should have considered the use of inherent powers under Section 151 of the Code.
• On appeal by the respondent-landlord the High Court held that Section 151 was not applicable to the case.
• The appellant came to the Supreme Court by Special Leave.
Appellant's Contentions:
• The High Court was wrong in its view that section 151 had no application with the present case.
• Order 37 was applicable to a decree in ejectment in view of the provisions of the Renst Act in terms which alone such a decree could be passed.
• Under the provisions of the Rents Act the landlord is not entitled to a decree as a matter of right, the Court has to consider the position of the tenant and has a discretion to pass or not to pass a decree.
• Therefore, to a suit governed by the Act the provisions of Rule 2, Order 37 which make it incumbent on the Court to pass a decree in circumstances coming within the sub. rule, are inapplicable. Rule 8 of the Rules made under the Rents Act is ultra vires and void.
Judgment:
• Inherent powers are to be exercised by the Court in very exceptional circumstances for which the Code lays down no special procedures. Rule 4, Order 37 expressly gives power to a court to set aside a decree under the provisions of the Order. If the case does not come within the provisions of that rule there is no scope for resort to Section 151 for setting aside such a decree.
• If the contention of the appellant that Order 37 was not applicable were to be accepted then the result would not be to set aside the decree; it would only cause dismissal of his application as being incompetent.
• It is not correct to say that when leave to defend has been refused to a defendant, the court is bound to pass a decree.( The Court explained sub-rule 2 of Rule 2, Order 37). If the laws requires the court to exercise a discretion on the facts deemed to be admitted, it will have to do so.
• Under procedures of Order 37, the defendant may not be allowed to place his side of the case for assisting the court in exercise of the discretion, but that does not create any conflict with the Rents Act. Rules of procedure may be framed for the exercise of rights and such rules are nor ultra vires only because the right has to be exercised in accordance with them. Thus, Rule 8 is not ultra vires.
• The appeal was said to be failed and was dismissed with costs.
Relevant Paragraph:
On the merits too, we think that the contention is fallacious. It proceeds on the basis that when leave to defend has been refused to a defendant, the Court is bound to pass a decree. It seems to us that what sub-r. (2) of r. 2 of Or. 37 contemplates is that the Court will accept the statements in the plaint as correct and on those statements pass such decree as the plaintiff may in law be entitled to. If, for example, the plaint discloses no cause of action, the Court cannot pass any decree in favour of the plaintiff. If this were not so, the words "allegations in the plaint shall be deemed to be admitted" in sub-r. (2) of r. 2 of Or. 37 would have been unnecessary. The Court in making a decree under sub-r. (2), r. 2 of Or. 37 has to keep the law in mind. If the law requires the Court to exercise a discretion on the facts deemed to be admitted, it will have to do so.
In the procedure laid down under Or. 37 the defendant may not be allowed at the hearing to place his side of the case for assisting the Court in the exercise of that discretion, but that does not create any conflict with the Rents Act. A rule can be made quite consistently with the Act that the defendant will have to adopt a certain procedure and to act within a certain time in order to be heard in that matter. Suppose a defendant does not put in an appearance in a suit for ejectment not brought under Or. 37, can he say that the Act gave him a right to appear at the hearing and place his case before the Judge ? We feel no doubt that such a thing is not contemplated by the Act and cannot be permitted. Rules of procedure may be framed for the exercise of rights and such rules are not ultra vires only because the right has to be exercised in accordance with them. Therefore we do not think that r. 8 is ultra vires.
In what we have said in the preceding paragraph we have proceeded on the assumption that the Court has a discretion. Certain provisions in ss. 12 and 13 of the Rents Act had been read to us and it had been contended that they conferred that discretion on the Court. In the view that we have taken, it is unnecessary to express any opinion on that contention and we do not do so.
