044-NLR-NLR-V-58-K.-N.-MEERA-Appellant-and-C.-D.-P.-W.-JAYAWARDENE-Respondent.pdf
1956Present : T. S. Fernando, J.K. N. MEEBA, Appellant.,.and C. D. P. W. JAYA -WARDEJJE, Respondent
S. C. 243— C. R. Colombo, 54.S39
Landlord and tenant—Advance rent received by landlord—Right of tenant to set offunpaid rent—“ Receipt ” of money—Rent Restriction Act, Xo. 20 of 1048, ss. 8,13 (1).
Where a landlord accepts from his tenant a sum of money in advance to bsaccounted as and for rent-, the tenant is entitled to set off unpaid rent against■the sum so held by the landlord.
David Apptthainy a. Subramaniam (7053) 55 X. L. R. SOT, distinguished.
A settlement in account may bo equivalent to a receipt of a sum of money,although no money may pass.
A
Xat-PPEAL from a judgment of the Court of Requests, Colombo.
– •
.. .C. Ranganathan, with S. C. Crossette-Thambinh, for the defendant-appellant.'
II. IK. Jayetcardene, Q. C., with D. R. P. Coonclilleke, for the plaintiff-respondent.
Cur. adv. vuli.
4 GO
T. S. FERXAXDO, J.—A/eera v. Ja>,
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September 25, 1956. T. S. Fernando, J.-
Tho facts giving rise to this appeal may bo stated as follows :—
The plamtiff and her husband (since deceased) leased to the defendant-the premises, the subject of this action, for a period of five years com-..mencing from 1st April 1946 at a monthly rental of Rs. 125, each month’srent to be payable before tho 10th day of the month following. On the•day of the execution of the lease tho defendant paid to his lessors a sum•of Rs. 750 and it was a term of tho lease that this sum .was “ to be takenand accounted as and for the rent of the last six months of the term ”•of the lease, i.c. 1st October 1950 to 31st March 1951. In spite of thisterm of tho lease the sum of Rs. 750 referred to above was not accounted for•as rent for tho last six months of tho lease, and the defendant paid andtho lessors accepted rent for each month during the entire period of thelease so that on 31st March 1951 there remained in the hands of the• lessors the sum of Rs. 750 which had been accepted by them to beaccounted as rent.
No fresh lease was drawn up after the end of March 1951, but the■defendant continued in occupation of the premises paying for eacli monththe same rent of Rs. 125 before the 10th day of the month following.The learned Commissioner of Requests lias inferred from the evidence—•and this inference is not canvassed by the plaintiff—that there was anunderstanding between the parties that the sum of Rs. 750 should continueto remain as an advance to bo sot off against the last six months of occu-pation of the premises by the plaintiff. In August 1951 one of thelessors, the husband of the plaintiff, died but the defendant continuedto pay to the plaintiff each month’s rent as usual until he had paid thorent for Ajn-il 1954. The' sums payable as rental in respect of themonths of May, June and July not having been received by the plaintiff,she caused to be sent to the defendant a letter of demand dated 4thAugust 1954 demanding tho payment of rent for May to July 1954 and•also requesting the defendant to quit the premises on or before 30thSeptember 1954. The defendant thereupon sent a cheque for Rs. 375which was accepted without prejudice to any rights of the plamtiff topursue her legal remedy to obtain the ejectment of the defendant. This•action was instituted in October 1954 on the allegation that the defendantwas in arrears of rent for May, June and July 1954. The defendantpleaded in his answer that he was not in arrears within the meaning of■section 13 (1) of tho Rent Restriction Act, No. 29 of 194S as at the timehe became the tenant of the plaintiff the latter held in her hands a sum ofRs. 750 as six months’ rent in advance,'and that out of this sum he wasIn any event entitled to set off at least a sum of Rs. 375 against re^»Jpayable by him. The learned Commissioner held that the defendantwas in arrears of rent for the month of May 1954 and that the plaintiffwas therefore entitled to a decree ordering the ejectment of the defendant.
In reaching this finding the learned Commissioner has purported to.apply to this case the decision of this Court in the case of David Appu-Jiamy v. Subramaniam1 in which it was held that, where a monthly tenant■deposits a sum of money with the landlord on the agreement that it is-to be held by the landlord and paid back to the tenant when the premises
T. S. FEliXAKDO, J.—.1/ro a t’. Jayaicardcne
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are handed over to him, ifc is not open to the tenant to set off the rent,,as it fell due each month, against the deposit held by the landlord. If he-docs so set off, he is liable to be held in arrears of rent. This decision isclearly inapplicable to the facts in the case now under appeal as we are-not hero concerned with a sum of money agreed to be received as a depositbut with a sum of money accepted to bo accounted as and for rent. Anexamination of the judgment of Pulle J. in David Apjmhamy v. Subra-inaniatn (supra) will reveal that there were two sums of money which.thetenant claimed could be used for setting off the rent, viz.—(i) a.sum of"money being two months’ rent in advance, and (ii) a sum of Rs.500 beingK deposit to be returned on the vacation of the premises, and that thelearned Judge only stated that the rent could not be set off against thesum agreed on as a deposit which was to bo returned to the tenant whenthe premises were handed back by the tenant and that he refrained fromsaying anything which could be interpreted as meaning that the rentcould not be set off against the sum received as advance rent.
Even if the legal position at the date of the death of the plaintiff’shusband in August 1951 was that a half of the sum of Rs. 750 whichup to that date was in the hands of the lessors had to be treated as a debtowing from the estate of the plaintiff’s husband to the defendant, it isundeniable that the plaintiff continued to hold the other half, viz., a sumof Rs. 375, on the same terms as were set out in the lease of 1940.Mr. Jayewardene argued that on the expiry of the lease there was no-money of the defendant with the plaintiff, and all that existed was adebt owing from the plaintiff to the defendant which could have beenrecovered by action. This argument is not entitled to weight in theface of the finding of the learned Commissioner that on the 1st of April1951 and again in August 1951 the parties had agreed that the sum ofRs. 750 should continue to remain as advance rent to be applied as statedin the written lease which had expired.
In support of an argument that there could be no set-off as the sum ofRs. 750 or Rs. 375 (whichever may be the sum considered) was neverreceived by the plaintiff within the meaning of section S of. the RentRestriction Act, Mr. Jayewardene next contended that, there being nophysical passing of 11101103'- in Ajnil or August 1951, an agreement betweenthe plaintiff and the defendant that m01103' in the hands of the plaintiffshould continue in her hands does not constitute a receipt of the moneyby the plaintiff. I am unable to agree that I should take such a narrowand technical view as that which Mr. Jayewardene invites me to take.
If I were to accede to his argument I would be transforming the truenature of the agreement reached between the jiarties. On the other hand,applying some of the tests indicated in the following observations of LordLindlcy in GrcsTiam Life Assurance Society, Ltd. v. Bishop1 to determinewhether there lias been a receipt of a particular sum of 11101103', I find nodifficulty in agreeing with Mr. Ranganathan that a sum of Rs. 375 was“received ” b3T the plaintiff from the defendant:—
.“ First, let us consider what is meant by the receipt of a sum of
mone3'. M3- Lords, I agree with the Court of Appeal that a sum of1 L. Ii. (1001) A. C. 296.
money may be received in more ways than one, e.g. by tlie transfer of acoin or a negotiable instrument or other document which representsand produces coin, and is. treated as such by business men. Even asettlement in account may be equivalent to a receipt of a sum ofmoney, although no money may pass; and I am not myself preparedto say that what amongst business men is equivalent to a receipt of asum of money is not a receipt within the meaning of the statute whichYour Lordships have to interpret.”
As a final argument, Mr. Jayewardene contended that the defendant,not having pleaded a set-off is not entitled to defeat the plaintiff's claim.In regard to this, it must be observed that the plea of set-off has beentaken in the answer, although not specifically raised as an issue, and itseems to mo is embraced in Issue No. 1 which raised the question whetherrent was in arrear for May 1954. Pul even if no plea of set-off had beentaken, as the finding of the learned Commissioner is that the sum of31s. 750 was acce|3ted “ as and for rent ”, the defendant can invoke in hisaid the judgment of this Court in Wijemanne tC- Co., Ltd. v. Fernando1in the course of which Soertsz S. P. J. dealing with an argument that thetenant had not pleaded a set-off or a counter claim and was, consequently,debarred from asking that the overpaid amount be applied in payment ofthe rent alleged to be still due, said that the answer to that argumentis that the overpaid amount in the hands of the respondent overpaid asrent, and not for any other purpose, extinguished pro tanto by operationof law, the rent as it fell due. In other words, the law secured for theappellant what, in other circumstances, the appellant would have had toachieve for himself. The principle so enunciated by Soertsz S. P. J. hasbeen followed recently by He Silva J. in the case of Munida-sa v. RichardAppuJiamy 2. This argument also therefore fails.
Por the reasons set out above, I am of opinion that the defendant wasnot in arrears of vent and, therefore, tho appeal must be allowed and theplaintiff’s action dismissed with costs in both courts.
-1 ppectl allowed.