[Rent Control] Parties' Legal Rights Fixed At Suit Initiation, Subsequent Events Don't Affect Jurisdiction: Karnataka High Court

The Karnataka High Court recently reiterated that the legal rights of parties become established as of the date the legal action is initiated, such as filing a suit and that subsequent events that occur after the initiation of legal proceedings do not affect the jurisdiction of the court.

Justice H P Sandesh added that events such as the tenant approaching the Rent Controller to fix a fair rent, cannot retroactively create rights that affect the court's jurisdiction.

“it is well settled principle that right of parties crystallizes to the date of institution of the suit...the date of filing of the petition is the relevant date to consider the jurisdiction and not subsequent any conduct will not oust the jurisdiction." 

The petitioner leased his property to the respondent, an advocate, for a monthly rent of Rs.3,400, with a security deposit of Rs.10,00,000. The petitioner and respondent were initially friends, and the lease agreement was executed as per the respondent's request. The lease agreement was for three years. Since the respondent expressed his inability to pay the rent subsequently, the petitioner agreed to deduct the rent from the security deposit till 2013. 

The petitioner intended to move into the property after retiring and hence requested the respondent to vacate. However, despite promises, the respondent failed to vacate the premises even after the lease term ended. Thus the petitioner filed an eviction petition.

The Trial Court found that while jural relations of landlord and tenant exist between the parties, the petition was not maintainable due to lack of jurisdiction as per Section 2(3)(e)(1) of the Karnataka Rent Act.

The petitioner appealed against this decision. He contended that the fixation of fair rent by the Rent Controller should only be considered as a yardstick for the cases of enhancement of rents and not as a guiding rule for fixation of jurisdiction.

Further, he argued that the respondent's conduct demonstrated a deliberate attempt to evade eviction by approaching the Rent Controller for fixing the fair rent after the filing of the eviction petition. The petitioner asserted that there was no fixed rent, as the lease agreement stipulated no rent, only a premium.

The High Court reviewed the case and concluded that the Trial Court had erred in invoking Section 2(3)(e)(1) of the Rent Act. The Court highlighted that the rights of the parties are determined at the time of filing the suit and rejected the respondent's attempts to oust jurisdiction through subsequent actions.

The Court highlighted that the respondent's fixation of fair rent after filing the eviction petition did not alter the situation.

“Mortgage contemplates the taking of a loan and delivering possession to secure payment of the loan, the relationship being that of a creditor and debtor. On the other hand, in a lease for money advanced or deposit made, there is no relationship of debtor and creditor between the landlord and tenant. In such a transaction, the tenant who desires to take the premises on lease, agrees to make a deposit, instead of making a monthly payment as rent, with the understanding that the landlord will continue to hold the said advance or deposit so long as the tenant continues in possession and he should refund the same when the tenant vacates the leased premises.”

That being the case, the Trial Court ought not to have invoked Section 2 (3)(e) of the Karnataka Rent Act and proceeded in an erroneous direction invoking Section 2(3)(e) of the Rent Act, the Judge held. 

"The question of either fixing of the standard rent or non fixing of the standard rent does not arise. There is an explicit contract between the parties, no rent is payable and only premium amount was paid and this aspect has not been taken note of by the Trial Court while invoking Section 2(3)(e) of Karnataka Rent Act and Trial Court committed an error in coming to the conclusion that Court has no jurisdiction since it attract Section 2(3)(e) of Karnataka Rent Act and the very approach of the Trial Court is erroneous.”

The Court further noted the respondent's conduct, which included failing to pay the premium and indicating he would vacate upon payment of Rs.10,00,000, only to backtrack later. 

“It is clear that only with an intention to ouster the jurisdiction he had approached the Rent Controller and got it fixed the rent as Rs.21,000/-, but never he intended to comply with the same.”

Accordingly, the petition was allowed and the respondent was directed to vacate the premises within 60 days. The petitioner was directed to pay Rs.10,00,000 which was paid as premium to the respondent at the time of vacating the premises.

Case Title: Krishnaprasad A AND L Doreswamy

Case No: HOUSE RENT REV. PETITION NO.10/2022

Citation: 2023 LiveLaw (Kar) 314

Date of Order: 11-08-2023

Appearance: Advocate Shanthi Bhushan for Advocate Deepal D C for Petitioner.

Advocate Ravishankar S for Respondent.

Click Here To Read/Download Order