GR ATIAEN J.-—Thangadorai Nadar v. Eemailjee343
1954Present: Gratiaen J, and Fernando A;J.THANGADORAI NADAR et al., Appellants, andG. H.et al., RespondentsS. C. 393—D. C. Colombo, 22.990M
Rent Restriction Act—Payment of rent by cheque—Return of cheque after it becomes“ elate ”—Effect on question of rent being “ in arrear ”—Tender of rent.
When a landlord accepts payment of rent by cheque but does not presentthe cheque at the bank and returns it to the tenant after it becomes “ stale ”,the failure of the tenant to make a fresh payment within a reasonable timeafter the stale cheque is returned does not have the effect of a forfeiture of thetenant’s statutory protection. Rent for any particular month is not “ inarrear ” within the meaning of the Rent Restriction if it was paid or tenderedby the tenant within the stipulated period.
^^.PPEAL from a judgment of the District Court, Colombo.
H. V. Perera, Q.C., with H. W. Tambiah and S. Sharvananda, for thedefendants appellants.
N. E. Weerasooria, Q.C., with V. A. Kandiah and P. Arulambalam,for the plaintiffs respondents.
Cur. adv. vult.
July 20, 1954. Gratiakh J.—
This is an appeal against a decree for the ejectment of two statutorytenants (who are partners) from? business premises protected by theRent Restriction Act, No. 29 of 1948. The grounds for ejectment upheldby the learned District Judge were :
j («) that their rent had been “ in arrears for one month after it becamedue ”, and
that the premises were “reasonably required ” by the landlordsfor the purposes of their own business.
In my opinion, neither of these allegations was established at the trial.
The practice during the relevant period was for the tenants to payrent by cheque at the end of each quarter. Accordingly on 4th July, 1949they forwarded a cheque to the landlords ’ proctor in payment of rent forApril, May and June. Similar cheques were forwarded on 28th September,1949 (for July, August and September) and on 24th January, 1950 (forOctoljer, November and December).
Throughout this period, an earlier tenancy action was pendingbetween the landlords and one of the tenants. For that reason, thecheques referred to were accepted “ without prejudice to the rights of theplaintiffs in these proceedings ”. This was no doubt a wise precautionto take but, instoad of presenting the cheques for payment withoutunreasonable delay as they should have done, the landlords retained thoinin their proctor’s custody without reference to the tenants until theconclusion of the trial.
v •—~a miwKfrut indoor V. JSiHWttJCC
The earlier action was dismissed early in February, 1950 owing to anirregularity resulting from non-joinder of a necessary party. Immediatelythereafter, the cheques dated 28th September, 1949 and 24th .January,1950 were belatedly presented for payment and were realised. Thoearlier cheque dated 4th July, 1949 was however not presented to thebank because tho landlords ’ proctor assumed (perhaps correctly) thatit had become “ stale ” (hiring the long period when it had boon retainedin his hands. This cheque was returned to the tenants on 23rd Fobruary,1950 without any requost that a fresh cheque should be forwarded inplace of it. Four days later, a formal notice was sent to the tenantsterminating tho contractual tenancy with effect from 31st March 1950.The landlords no doubt hoped that the tenants (whose ability and anxietyto avoid the statutory consequences of falling into arrears of rent cannotbe disputed) would make some tactical blunder and thereby lose theprotection of the Act. This (it is now submitted) is precisely what didoccur. No further payments were made until tho present action wasinstituted in May, 1950.
Tho tenants are admittedly also ontitled to credit in a sum of Rs. 269 • f> 1representing rent previously paid in excess of tho authorised rato, and afurther sum of Rs. 400 paid by way of advance at the commencementof tho contract of tenancy in 1945. These sums were more than suffi-cient to discharge tho tonants ’ liability in respect of rent for the monthsof January, February and March, 1950. The learned judgo thorefoiocorrectly took the view that tho tenants could only have lost theirstatutory protection “ if they are not to be given credit for the sum ofRs. 600 which was the amount of the cheque dated 4th July, 1949 sent tothe landlords for the months of April, May and June, 1949 ”. This vitalissue was answered in favour of the landlords in the Court below. Forthe reasons which I shall now sot out, it should clearly have been decidedthe other way.
Apart from their stipulation that its acceptance should not be regardedas a waiver of any rights in the ponding action, the receipt of tlie ehequodated 4th July, 194!) against rent for April, May and .Juno, 1949 wasunconditional. The payees ’ decision not to present this cheque forpayment before it became stale could not therefore retrospectivelyconvert the tenants into defaulters within the meaning of the Act, as itis not suggested that the cheque would have been dishonoured if presentedfor payment within a reasonable time. It would indeed be a remarkabloresult if a landlord, by resorting to the simple device of postponingpresentation of his tenants cheque until the bank refused to honour it(for no reason than that it had become stale), could deprive the tenantof his statutory protection.
Mr. Weerasooria invited us to hold that the tenants at least becamedefaulters when they failed to make a fresh payment within a reasonabletime after the stale cheque was returned to them in February,' 1950.I agree that the debt was perhaps revived. But the revival of indebtednessmust not be confused with the totally independent issue as to tho allegedforfeiture of statutory protection. Rent for any particular month isnot " in arrear ” within the meaning of the Act if it was paid or tendered
Adamjte v. Hadeen345
by the tenant within the stipulated period. Let us take the hypotheticalease whore a valid tender of rent had without justification been rejectedby the landlord. In such a situation, the debt remains unsatisfied,but the tenant’s statutory protection is not thereby forfeited.
If the tenants were not “in arrears of rent ” for April, May or June,1949 within the moaning of the Act, they could not be held to havefullen into arrears in respect of any subsequent months. The landlordshad no right to appropriate any payment (specifically accepted to covera later period) towards satisfaction of a revived debt in respect of anearlier period.
There remains the question whether the premises were “ reasonablyrequired ” by the landlords for their own business. The documentaryand oral ovidence convincingly established that, if they succeeded in thisaction, it was not their intention to occupy the premises in their presentcondition but to demolish the buildings and embark upon a more ambi-tious building programme in accordance with plans previously approvedby the local authority. The third proviso to section 13 (1) of the Actprecludes the Court from sanctioning such a proposal. Deerasooriya v.Masilamany *.
For these reasons, I take the view that the landlords have notestablished their claim to eject their tenants. The judgment underappeal must therefore be set aside, and,- in place of the decree passed inthe lower Coart, a fresh decree must be entered ordering the defendantsto pay to the plaintiffs a sum of Rs. 594-78 which is admittedly dueas rent up to 31st May, 1950. With regard to rents puyable after thatdate, the defendants are entitled to credit in all sums subsequentlydeposited to the credit of the action. Subject to this, the pluintiffs’action must be dismissed with costs in both courts.
Febnando A.J.—I agreed –
THANGADORAI NADAR et al , Appellant , and G. H. ESMAILJEE et al , Respondent
GR ATIAEN J.-—Thangadorai Nadar v. Eemailjee343