Sahil Singal vs. M/S Goyam Paper Mart And Another

Facts

The petitioner, a landlord, filed a rent petition seeking eviction of the respondents from an industrial shed due to non-payment of rent. The tenancy was governed by a lease deed dated 18.08.2018, stipulating annual rent increases. The petitioner alleged that the respondents failed to pay rent from April 2020, despite issuing dishonoured cheques. The respondents contested the petition, denying the landlord-tenant relationship and the petitioner's locus standi, claiming the petitioner lacked authority from the owner. The Rent Controller initially framed issues and deferred evidence. Subsequently, the petitioner applied for the assessment of provisional rent, which was allowed by the Rent Controller on 30.05.2023, directing the respondents to pay rent from April 2020. The respondents appealed this order, and the Appellate Authority set aside the Rent Controller's order on 31.08.2023. The landlord has now filed a revision petition before the High Court.

Held

The High Court held that the Rent Controller has a dual duty: first, to determine if a landlord-tenant relationship exists. If it does not, the petition must be dismissed. If it does exist, the Rent Controller must then determine the quantum of rent payable. The Court noted that the respondents had admitted the execution of the lease deed, but their denial of the landlord-tenant relationship was considered evasive. The Court acknowledged the precedent set in Rakesh Wadhawan's case, which mandates the assessment of provisional rent when rent is due but not paid, especially when the tenant denies liability. However, the Court also emphasized that the tenant's denial of title must be bona fide. In this case, the Appellate Authority had set aside the Rent Controller's order assessing provisional rent. The High Court, considering the circumstances, including the pendency of an appeal before the Appellate Authority and a request for interim stay, decided to restore the order of the Rent Controller dated 30.05.2023, but modified it. The respondents were granted an opportunity to tender the rent assessed as per the Rent Controller's order. The Court clarified that further proceedings on merits would commence only after the respondents are afforded an opportunity to tender the rent due.

Key Issues

1. Whether the Rent Controller, upon denial of the landlord-tenant relationship, could proceed to assess provisional rent without first determining the existence of such a relationship, as per Section 13 of the East Punjab Urban Rent Restriction Act, 1949, and the principles laid down in Rakesh Wadhawan vs. Jagdamba Industrial Corporation (2002) 5 SCC 440? Petitioner's arguments: The petitioner contended that the respondents' denial of the landlord-tenant relationship was evasive and that the execution of the lease deed was admitted. They argued that in cases of denial of title, the Rent Controller must first determine if a landlord-tenant relationship exists, and if so, then proceed to assess provisional rent. They relied on the Rakesh Wadhawan case for the proposition that provisional rent assessment is necessary when rent is due but not paid. Respondents' arguments: The respondents argued that the Rent Controller should not have proceeded with the provisional rent assessment without first conclusively establishing the landlord-tenant relationship. They contended that if the landlord-tenant relationship is denied, the Rent Controller's primary duty is to determine its existence, and only if it is found to exist should the quantum of rent be assessed. They argued that the Rent Controller erred by not considering the denial of title as a ground to dismiss the eviction petition outright.