A Dispute Must Be Real and Not a Moonshine: Supreme Court Restores Eviction, Denies Tenant’s Belated Dispute Over Standard Rent

 “Mere Reply to Legal Notice Does Not Substitute Statutory Requirement of Filing Application Under Explanation I to Section 12” - In a significant decision Supreme Court of Indiarestored an eviction decree against the tenant by holding that a belated and superficial dispute over standard rent cannot defeat a landlord’s right to evict when the tenant fails to comply with the mandatory procedure under the Bombay Rent Act.

Justice M.M. Sundresh and Justice Rajesh Bindal while allowing the appeal, observed:
“It is very clear that the respondent no.1 merely raised the dispute pertaining to the standard rent in order to avoid eviction. A dispute must be real and, therefore, shall not be a moonshine.”

Consent Rent of ₹50 Accepted for Six Years — Tenant's Subsequent Dispute Held as “Afterthought”

The case arose from a dispute relating to a rental premises in Surat. In 1976, by consent, the parties had agreed on a standard rent of ₹50 per month, which was recorded in an order passed by the Additional Small Causes Court, Surat in HRP Application No. 600/1976. The tenant (Respondent No.1) complied with this rent until 1982, when he defaulted. Only after receiving the landlord’s notice on 9th December 1983 did the tenant, for the first time, dispute the standard rent, merely by sending a reply and without filing any statutory application for rent fixation.

The Supreme Court remarked, “It is not in doubt that such a compliance has not been made by the respondent no.1.” The Bench further commented that the tenant had, without any protest, paid the rent fixed in 1976 for nearly six years and that the subsequent denial was only an afterthought, aimed at resisting eviction.

Court Declares: “Filing an Application Before the Court Is Mandatory; Mere Reply Is Insufficient”

The tenant argued that replying to the legal notice with a denial of rent sufficed under Explanation I to Section 12 of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947. However, the Supreme Court firmly rejected this argument, holding:

“The contention that a reply given by the tenant to the legal notice amounts to compliance cannot be countenanced as there must be an application made by him before the jurisdictional Court within the time prescribed under Explanation I to Section 12 of the Act.”

The Court emphasized that under the statutory scheme, to legally dispute the rent, a tenant is duty-bound to apply to the court within one month of the notice and deposit rent as per the court’s order. Failure to do so attracts eviction under Section 12(3)(a) of the Act.

Supreme Court Criticizes High Court's Approach: “Revisional Jurisdiction Is Limited, Not Appellate”

The High Court, while setting aside concurrent findings of the Trial Court and Appellate Court, had relied on the decision in Devkaran Nenshi Tanna vs. Manharlal Nenshi, (1994) 5 SCC 681, to hold that the dispute could be raised anytime. The Supreme Court disapproved this approach, stating: “The law is quite settled that in a rent control proceeding, the revisional jurisdiction of the High Court is rather limited.”

The Court also pointed out a vital distinction — in Devkaran Nenshi, the tenant had indeed filed an application for fixation of rent, but in the present case, no such application was ever filed. The Court observed that the High Court not only misapplied the law but also ignored material factual findings of the lower courts.

Consent Orders Are Binding Unless Shown to Be Vitiated — Supreme Court Reinforces Finality of Settlements

The Court strongly upheld the sanctity of the consent order of 1976 fixing the rent. The Bench clarified: “A decision rendered by the Court is binding on the parties to the lis whether obtained by consent or otherwise, so long as the said decision is arrived at consciously by the parties.”

Since the tenant had acted upon the consent order by paying the agreed rent for several years, the Court found no merit in the tenant’s plea that he should be allowed to question it at a belated stage.

Restoring the eviction decree, the Court concluded: “Thus, looking at it from any perspective, the impugned judgment cannot be sustained in the eyes of law.”

The appeal was allowed and the eviction order passed by the Trial Court and confirmed by the First Appellate Court was restored in full.

Date of Decision: 20th March 2025