MODERN HOTEL, GUDUR REPRESENTED BY M.N. NARAYANAN versus K. RADHAKRISHNAIAH & ORS.

Citation: [1989] 2 S.C.R. 725 · Decided: 26-04-1989 · Supreme Court of India · Bench: RANGANATH MISRA · Disposal: Appeal(s) allowed
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Judgment (excerpt)

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MODERN HOTEL, GUDUR REPRESENTED BY 
M.N. NARAYANAN 
v. 
K. RADHAKRISHNAIAH & ORS. 
APRIL 26, 1989 
~[RANGANATH MISRA AND M.N. VENKATACHALIAH, JJ.] 
A 
B 
Andhra Pradesh Buildings (Lease, Rent and Eviction) Control 
Act, 1960: s. 7-Advance rent refundable at the expiry of lease-
Stipulation-V alidity of-A mount whether adjustable-Tenant whether 
a defaulter. 
C 
The proviso to s. 7(2)(a) of the Andhra Pradesh Buildings (Lease, 
Reut aud Eviction) Control Act, 1960 prohibits payment of any sum 
exceeding one month's rent by way of advance, clause (b) thereto makes 
any such sum refundable or at the option of the tenant otherwise adjust-
D 
able, and sub-s. (3) declares the stipulation for payment of rent in 
advance beyond that of one month as null and void. 
_,~ 
The appellant-tenant took the demised premises on a thirty year 
lease beginning from September 9, 1969 and paid a large amount as 
advance, only a part of whieh was adjustable towards the stipulated 
rent in the subsequent months and the balance was to be paid back 
under a valid receipt after the expiry of the lease period. The lease deed 
did not have a forfeiture clause. The respondent-landlord initiated 
action for eviction in October 1973 on the plea that the tenant had failed 
to pay rent for a certain subsequent period. The tenant advanced the 
E 
!' plea of payment. The landlord placed the account books of the appel-
lant and claimed the benefit of s. 34 of the Evidence Act. All the courts 
-~below found that the payment as claimed had not been established. 
F 
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In this appeal by special leave, it was contended that the balance 
of advance which lay in the hands of the respondent-landlord was either 
refundable to the tenant or adjustable against rent under s. 7 of the Act, G 
and if out of that snm the arrears were available to be adjusted the 
tenant was not at all in default; that the lease of 1969 being for a term of 
thirty years certain, eviction could not be claimed against a contractual 
tenant during the subsistence of the lease, and that the lease did not 
have a forfeiture clause so as to bring the matter within the ambit of 
section 1 ll(g) of the Transfer of Property Act. 
H 
725 
A 
726 
SUPREME COURT REPORTS 
[1989] 2 S.C.R. 
Allowing the appeal by special leave, 
HELD: 1. The stipulation in the lease-deed that the amount of 
advance would be refundable at the end of the tenancy was null and 
void under s. 7(3) of the Act. The said amount became payable to the 
tenant immediately. It was thus held by the landlord on account of the 
B tenant on the date of tiling of the petition for eviction. The tenant could 
"\ 
not, therefore, be considered a defaulter for a smaller amount by not 
c 
paying the rent for some months. [7300, 729BC, 730E] 
' 
Mohd.\ Salimuddin v. Misri Lal & Anr., [1986] I SCR 622 and 
M/s. Sarwan Kumar Onkar Nath v. Subhas Kumar Agarwalla, [1987] 4 
sec 546 referred to. 
· 2. The lease being for a term of thirty years was to expire in 
September, 1999. The deed did not stipulate a forfeiture clause. In the 
absence of such a clause the contractual tenancy was subsisting under 
the provisions of the Transfer of Property Act. There could not, there-
D fore, be any eviction from such a tenancy. l730F] 
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 4108 
of 1982. 
From the Judgment and Order dated 23.12.1981 of the Andhra 
E Pradesh High Court in C.R.P. No. 3547 of 1981. . 
P.P. Rao, R. Venkataramani, V.G. Pragasam and Satya Mitra 
Garg for the Appellant. 
P. Krishna Rao, B. Krishna Prasad and K.K. Gupta for the 
F 
Respondents. 
The Judgment of the Court was delivered by 
RANGANATH MISRA, J. This is a tenant's appeal by special 
leave against the order of eviction from a commercial premises at 
... 
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> ., 
G 
Gudur in Andhra Pradesh. The Controller, the Appellate Authority 
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and the High Court have concurrently found that the appellant was a 
wilful defaulter liable to be evicted. 
Under document No. 1327 of 1969, a thirty-year lease with an 
annual stipulated rent was granted in favour of one Narayanan, a 
H p_artner of the hotel, for a term of 30 years beginning from 9th of 
-
., , 
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,'!; 
y 
-~ 
MODERN HOTEL v. K. RADHAKRISHNAIAH [MISRA, J.] 
727 
September, 1961. For the first 15 years rent was stipulated at the rate 
of Rs.150 per month and for the second span of 15 years rent was to be 
escalated to Rs.200 per month, and the tenant undertook to pay the 
rent by the 9th of every succeeding month. 
The
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