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M/s. Fashion World vs. Banshidhar Multi Builders Pvt. Ltd.

Civil Appeal · 2022 INSC 1099Decided 17 Oct 2022
Civil Appeal No. 7325 of 2022
M.R. Shah · C.T. Ravikumar

Background

The tenant (appellant) had leased commercial premises and was liable under the lease to pay rent plus maintenance charges and GST. The tenant paid rent and maintenance but did not deposit the GST component, so the landlord applied under Section 13(6) of the M.P. Accommodation Control Act, 1961 to strike off the tenant's defence in the eviction suit. The trial court struck off the defence, and the High Court of Madhya Pradesh dismissed the tenant's challenge to that order, prompting this appeal to the Supreme Court.

Decision Breakdown

While issuing notice in 2018, the Supreme Court had already stayed further proceedings on the tenant's undertaking to deposit the outstanding GST amount (about Rs. 5,80,000), which the tenant subsequently paid. Since the defence had been struck off solely for non-payment of that GST amount, and the amount was now deposited, the Court set aside both the High Court's and the trial court's orders striking off the defence, restoring the tenant's right to contest the eviction suit on merits. At the landlord's request, the Court also directed a staggered increase in rent (from Rs. 58,650 up to Rs. 1,15,958 per month by 2023, continuing thereafter) to balance the equities, and directed the High Court/trial court to decide the underlying suit within six months.

Lesson Learnt

A tenant's defence can be restored if the sole ground for striking it off (such as non-payment of a specific statutory dues like GST) is cured; courts may balance such relief by ordering realistic interim rent payments while the underlying dispute is decided on merits.

Official source (sci.gov.in)View Judgment (PDF)

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