Hazari Lal Sharma vs Birla Cotton & Spinningweaving ...
1976 Latest Caselaw 23 Del

JUDGMENT

V.S. Deshpande, J.

(1) The appeal is against the concurrent findings of the Controller and the Rent Control Tribunal that the appellant tenant did not comply with the terms of clause (a) of the proviso to sub-section (1) of section 14 of the Delhi Rent Control Act. 1958 when he sent a cheque for the arrears of rent to the landlord within two months of the receipt of the notice from the landlord; demanding the arrears of rent. The reason for the findings was that the cheque was not a legal tender and. therefore. it could not be said within the meaning of section 14(1)(a) that the tenant either paid or tendered the whole of the arrears of rent within time

(2) Learned counsel for the appellant contends that the landlord is a public limited, company and the parties arc residing in the city of Delhi in which most of the payments are made by cheque. It is more convenient to make payment by cheque because the parties do not have to keep record of the payments as the payment can be proved any time later by the production of the bank records. Learned counsel also ralies on sub-section (3) of section 40A of the Income Tax Act as an example that even the Legislature has recognised in a different context that proof of payment is best given when the payment is made by crossed; cheque.

(3) Learned counsel for the respondent on the other hand points out that cheque is not a legal tender. Under sections 38 and 50 of the Contract Act the tender or the performance of the contract has to be in the prescribed manner. In the present case, there is no specific agreement as to how the payment of rent is to be made. The tenant has, therefore, only the right under the law to adopt such method, of payment as cannot be disputed by the landlord. Under the Indian Coinage Act, certain coins are made legal tender by section 13. Similarly, under the Reserve Bank of India Act, the Reserve Bank notes are made legal tender by section 26. The tenant could have. therefore, tendered or paid the rent in legal tender in the money which is recognised as tender in the above enactments.

(4) Learned counsel for the appellant could have succeeded in establishing the payment by cheque as valid only if he could have shown that it was an implied term of the contract between the parties that the landlord was to accept payment by cheque. The question as to when a term may be implied in a contract was recently considered by a Division Bench of this Court in Tnd,ia International Centre v. S. N. Pandit, 2nd (1976) I Delhi 60(1). Briefly, the implication of a term in a contract could be made only when the ^contract will not have business efficacy in the absence of such term. It must be understood by both the parties that the contract was to be performed only with the addition of the implied term to be express terms. Since more than one ways of making payment of rent were available to the tenant it cannot be said that both the parties had in their mind that the payment would be made necessarily by a cheque. Such implication could be made only if the practice between the parties was of making payment by cheque or that there was a general commercial practice that the payment of rent is always made by cheque. There is neither any pleading nor any evidence on record of any practice between the parties or a general commercial practice to this effect. On the contrary, the landlord informed the tenant that he would not receive payment by cheque. In view of this statement of the landlord an inference cannot be drawn against him that he acquiesced in receiving the payment by cheque.

(5) Learned counsel for the appellant contends that the landlord should have returned the crossed cheque to the tenant if he did not want to accept it. But after the statement by the landlord that he would not accept payment by cheque the value of the crossed cheque . in his hands was nil. Unless and until the cheque is credited to the account of the landlord the money would not have been received by him. The landlord wanted the tenant to take away the cheque from him. Even though the landlord could have sent back the cheque to the tenant, it cannot be said that the failure of the landlord to do so would amount to acceptance of payment by cheque.

(6) Learned counsel for the appellant relied on three decisions. In Commissioner of Income Tax v. M/s. Ogale Glass Works Ltd., , the validity of the payment by cheque was not disputed because it was the practice between the parties to make payment in this form. The real question there was the place at which the payment was received. The mention of section 82 of the Negotiable Instruments Act in the headnote does not appear to be appropriate. The said legal provision is not relevant as to the mode of payment by a debtor to the creditor even when a negotiable instrument is in question.

(7) In Paras Ram v. Damadilal, 1971 R.C.R. 20(3), a learned Single Judge of the Madhya Pradesh High Court observed that "in the highly developed society, payment by cheque has become more convenient mode of discharging one's obligation. If a cheque is an instrument which represents and produces cash and is treated as such by businessmen, there is no reason why the archaic principle of the common law should be followed in deciding the question as to whether the handing over of the cheque is not a sufficient Compliance as to arrears of rent if the cheque is drawn for that amount." The learned Judge then proceeds to say that in his view an implied agreement should be inferred that if the payment is made by a cheque, that mode of payment would be accepted. That is the ratio of this decision. As already stated above, an implied agreement between the parties to this effect in the present case could be proved either by the previous dealings of the parties or by an acquiescence on the part of the landlord after receiving the cheque. But none of these modes of proving an implied agreement is available in the present case. No such implication can, therefore, be drawn on the facts of the present case.

(8) In Marutrao Bahaurao Shelka v. Akbaralli Noorbhai Bohori, 1974 R. C. R. 212(4), a learned Single Judge of the Bombay High Court held that under section 12(3)(a) of the Bombay Rents, Hotel and Lodging House Rates Control Act, a tenant who made payment of rent by cheque could be said to be ready and willing to pay rent as required by section 12(1) and so long as he was ready and willing to pay rent he could not be evicted from the premises. The learned Judge was careful enough to observe that "the point for decision, as already stated, is whether the tenant was ready and willing to pay rent or neglected to make the payment of arrears of rent and not whether cheque was legal tender". He did not, therefore, dispute that the cheque was not a legal tender but decided the case on the ground that the tenant was ready and willing to pay rent and as such could not be evicted. There is no provision corresponding to section 12(3)(a) of the Bombay Act in the Delhi Rent Control Act and, therefore, this decision also does not help the appellant.

(9) It is to be hoped that the healthy practice of making payments by cheque will be further encouraged by legislation and by private persons in their transactions so that a commercial practice may develop which would enable courts to draw an inference of an implied term in contracts on the ground of which payment by cheque may be upheld even though a cheque is not a legal tender. Till then, unfortunately, the law has to be followed and even at the cost of inconvenience to the parties a payment by cheque by a tenant not agreed to by the landlord cannot be said to be a valid tender or payment of arrears of rent within the meaning of section 14(l)(a) of the Delhi Rent Control Act.

(10) For these reasons the appeal is dismissed without any order as to costs.