Srikanth Neemkar v. G. Yelloji Rao .

S.H Sheth, J.:— This Second Appeal arises out of the suit for possession, filed by the plaintiff against the defendant. The material facts of the case, briefly stated, are as under:

2. One M. Satyanarayana was the owner of the suit property. He agreed to sell it to the plaintiff. That agreement led to the suit for specific performance by the plaintiff against the said Satyanarayana. The litigation went right upto the Supreme Court and ultimately a decree for specific performance was passed in favour of the plaintiff. The Supreme Court rendered its decision on 7-8-1965. One Tuljaram Neemkar was the original tenant of the suit premises. The defendant who is his cousin took over from him the business which was run in the suit premises and continued it there. The plaintiff recognised him as his tenant. In 1968 the plaintiff filed eviction petition against the defendant before the Rent Controller. It was R.C 97 of 68. There was a compromise between the parties in that eviction petition and the defendant continued to be in possession of the suit premises. The present suit, O.S 1474/73, has been filed by the plaintiff against the defendant for eviction on the ground that the defendant has been the trespasser. The plaintiff has made his claim on the ground that when the suit premises had fallen vacant earlier, the vacancy was not notified to the Accommodation Controller and that without doing so the defendant was inducted into the premises. The defendant was therefore inducted unlawfully into the suppressed vacancy and that therefore no tenancy rights accrued to him. The plaintiff's case was based upon Sec. 3 of the A.P Buildings (Lease, Rent and Eviction) Control Act, 1960 (hereinafter referred to as the ‘Rent Act, for the sake of brevity). The trial Court accepted the case advanced by the plaintiff and held that the defendant has been the trespasser. Decree for possession was therefore passed against him.

3. The defendant challenged that decree in an appeal which he filed in the Appellate Court. The Appellate Court confirmed the decree and dismissed the appeal.

4. It is that Appellate Court decree which is challenged by the defendant in this Second Appeal.

5. It has been contended on behalf of the defendant by Mr. N. Ramachandra Rao, that even though the lease between the plaintiff and the defendant may not be valid for the purpose of Sec. 3 of the Rent Act, it is binding as between the parties. He has therefore contended that the plaintiff having let out the suit premises to the defendant cannot turn round and contend that the contract was illegal and that therefore no rights accrued to the defendant. He has also argued that it is not open the plaintiff to take advantage of his own wrong.

6. A similar question arose before a Bench of this Court in G. Eswaraiah v. Mahendrappa Khani, 1969 (2) APLJ 66. It was a case which directly arose under the Rent Act. A similar question arose before the Supreme Court under the U.P (Temporary) Control of Rent and Eviction Act (3 of 1947) in Murlidhar v. Sate of U.P, (1974) 2 SCC 472 : AIR 1974 S.C p. 1924. In Mirza (Mohd.) v. Balakistaiah, 1975 (2) APLJ p. 96 Lakshmaiah, J. sitting single has taken the view that the contract similar to one which a Bench of this Court held to be invalid in the Eswaraih's case (1) is valid, in view of the decision of the of Supreme Court in Murlidhar v. State of U.P, (1974) 2 SCC 472 : AIR 1974 S.C p. 1974. A similar view has also been taken by Vimadalal, J. in S. Anjajah v. K. Kishtamma, 1976 (2) APLJ p. 109. The view expressed by the two learned single judges in the two decisions referred to above has cast doubt upon the validity of the decision of the Bench of this Court in Eswaraiah's case (1). Therefore, the Second Appeal was referred to the Bench by my learned brother for a fuller examination of the question.

7. In order to find out whether the decision of the Bench of this Court in Eswaraiah's case (1) is still good law or has ceased to be so and in order to examine the contention which has been raised it is necessary to turn to Sec. 3 of the Rent Act. Sub-Sec. (1) of Sec. 3 interalia provides as follows:

“Every land-lord shall, within ten days after the building becomes vacant by his ceasing to occupy it, or by the termination of a tenancy, or by the eviction, of the tenant or by release from requisition or otherwise give notice of the vacancy in writing to the officer authorised in that behalf by the Government.

The explanation appended to it states:

“a land lord who, having obtained possession of a building under Sub-Sec. (3) of Sec. 10 lets the whole or part of it to a tenant shall be deemed to have failed to give notice under this section.

8. Sub-sec. (3) provides as follows:

“If, within fifteen days of the receipt by the authorised officer of a notice under Sub-Section (1) or sub-sec. (2), the Government or the authorised officer does not intimate to the land-lord in writing that the building is required for the purpose of the State Government or the Central Government or of any local authority or of any public institution under the control of any such Government or for the occupation of any officer of such Government, the landlord shall be at liberty to let the building to any tenant or to occupy it himself.”

9. These two provisions make it clear that there is a statutory obligation on the land-lord to notify the vacancy within ten days of its occurrence and that there is a further obligation on him to wait for 15 days after giving notice and before letting it out to any one else.

10. Sub-Sec.(5) provides as follows:

“The land lord shall not let the building to a tenant or occupy it himself before the expiry of the period of fifteen days specified in Sub-Sec. (3) unless in the meantime he has received intimation that the building is not required for the purposes, or for occupation by any of the officers, specified in that sub-section.”

11. A cumulative reading of these two sub-sections leaves no doubt in our mind that the land-lord cannot occupy himself or let out to any one the premises which have become vacant until he has notified the vacancy to the authorised officer within ten days of its occurrence and has waited for 15 days more thereafter.

12. It is also clear that Sub-Sec. (5) enacts a statutory prohibition against letting the premises which has fallen vacant within the aforesaid period. He is free to let it out after the expiry of 15 days specified in sub-sec. (3) of Sec. 3 if it is not required by the authorised officer for any of the purposes specified in sub-section (3). There is no doubt that if a landlord in contravention of the aforesaid provisions in sub-sec. (3) lets out to any one the premises which has fallen vacant, the authorised officer is not bound by that contract. So far as he is concerned irrespective of whether the landlord has let out the premises to any one else or not, the premises are vacant for the purpose of Sec. 3.

13. However, the question which has been canvassed is thus: If a landlord has entered into a contract with a tenant in contravention of the provisions of sub-sec. (3) of Sec. 3, is that contract void absolutely or is it void as against the authorised officer of the Government specified in Sub-Sec. (3) of Sec. 3? In other words, can it be said that what is void for the purpose of sub-sec. (3) is valid between the parties.? In Eswaraiah's case (1) this question came up for consideration before the Division Bench of this Court. After having considered Sec. 5 of the Hyderabad (Houses Rent, Eviction end Lease (Control Act 1954 which is in parimateria with sec. 3 of the Rent Act and after having considered Sec. 23 and Sec. 55 of the Contract Act and Sec. 11 of C.P.C this Court took the view that such a contract is void for all purposes and that it confers no rights upon the tenant. While taking this view this Court observed that even if all other requisites for the formation of a contract were complied with, yet if the object of the contract was forbidden or discouraged by law and if that object was in contemplation of the parties when they entered into the agreement the law would not allow any party to enforce it. Proceeding further, this court observed that an agreement could be invalidated either by an express provision of law or by the rules of common law, illegal contracts can usually be classified under two heads, those contracts which the courts will not enforce because they were entered into with the object of committing an illegal act or of doing that which it is the policy of the law to prevent. Such contracts are illegal and void at common law. Secondly, the courts will not enforce contracts the making or performance of which is expressly or impliedly prohibited by statute. They strike at he agreement itself. It is next observed that the law will refuse to assist in any way a person who found the cause of action upon such an agreement or it will simply say that such an agreement is not to have legal effect. In the former case, the agreement is illegal while in the later case it is void. This court therefore took the view that a contract entered into between a landlord and a tenant in violation of the provisions of Sec. 3 is void for all purposes and that therefore no rights accrue to the tenant. In that view of the matter one who claims tenancy rights under such a contract does not acquire any and is a trespasser simplicity. In such a case, a suit for possession will lie against him in the civil court on the strength of the title of the landlord. In the case of Muralidhar (2) a similar question arose under the U.P Act before the Supreme Court. Before we analyse that decision it is necessary to note whether the U.P Act contained identical provisions.

14. Clause 1(a) of Sec. 7 of the U.P Act provides as follows:

“Every landlord shall within 7 days after an accommodation becomes vacant by his ceasing to occupy it or by the tenant vacating it or otherwise ceasing to occupy it or by termination of a tenancy or by release from requisition or in any other manner whatsoever, give notice of the vacancy in writing to the District Magistrate.”

15. Clause 1(b) of Sec. 7 provides as follows:

“Every tenant occupying accommodation shall within 7 days of vacation of such accommodation or ceasing to occupy it give notice thereof in writing to the district Magistrate.”

16. The provisions of clause (a) of Sub-Sec. (1) of Sec. 3 of the Rent Act appear to us to be identical with the provisions of clauses (a) and (b) of Sub-Sec. (1) of Sec. 7 of the U.P Act except for two facts. Where the U.P Act cast obligation both upon the landlord and tenant to notify the vacancy, the Rent Act with which we are concerned casts that obligation only on the landlord. Secondly, whereas, the U.P Act prescribed a period of 7 days for notifying the vacancy to the District Magistrate Sub-Sec. (1) of Sec. 3 of the Rent Act specifies a period of 10 days for such a purpose. There is a provision in sub-sec. (2) of Sec. 7 of the U.P whose counter part we do not find in the Rent Act. Sub Sec. (2) of Sec. 3 of the U.P Act provided:

“The District Magistrate may by general or special order require a landlord to let or not to let to any person any accommodation which is or has fallen vacant or is about to fall vacant”

17. Sec. 7-A of the U.P Act conferred upon the District Magistrate power to take action against unauthorized occupants. Similar power has been conferred upon the authorised officer by the Rent Act. In the U.P Act there is no provision corresponding to sub-sec. (5) of Sec. 3 of the Rent Act. However, rule 3 of the rules made under the U.P Act provided that within 30 days of the receipt of the information by the District Magistrate of the occurrence of vacancy, he could make an allotment order in favour of a person who in his opinion should be allotted the vacant premises and inform the landlord accordingly. It is true as argued by Mr. G. Bhaskar Rao, that the U.P Act did not have the provision corresponding to sub-sec. (5) of Sec. 3 of the Rent Act but in our opinion it does not make any difference for the following reasons.

18. Sub-Sec. (5) of Sec. 3 expressly prohibits a landlord from letting out the vacant premises to any one before the expiry of the period specified in sub-sec. (3) of Sec. 3 and subject to the provisions of sub-sec. (6) of Sec. 3. However, so far as the U.P Act was concerned, it cast an obligation upon the landlord to give information to the District Magistrate of the vacancy and rule 3 of the rules made under that Act empowered the District Magistrate to make an allotment order within 30 days. In absence of any provision corresponding to sub-see. (5) of Sec. 3 of the Rent Act, if a landlord lets out to any one the vacant premises before the period during which District Magistrate under the U.P Act could make an allotment order, what would be the effect? If we take the view that because the U.P Act had no provision corresponding to sub-sec. (5) of sec. 3 the landlord could let out the premises to any one after having given information of the vacancy to the District Magistrate it would defeat the very object of that Act, because whenever a vacancy occurred a landlord would formally comply with the requirement of law by serving upon the District Magistrate an intimation of vacancy let them out to anyone whom he thought fit. In such in case the power conferred upon the District Magistrate to allot the premises to a person who in his opinion should be allotted the premises, would be rendered futile and infructuous. In our opinion, therefore, even though Sec. 7 of the U.P Act read with rule 3 of the rules made thereunder did not have a provision corresponding to sub-sec. (5) of Sec. 3 of the Rent Act which expressly prohibits the landlord from letting out the vacant premises within the period specified in the statute, it necessarily carried with it the implication that within the period specified in rule 3 of the rules made under the U.P Act the landlord was under a statutory disability and could not let out to anyone the vacant premises. To take any other view would be contrary to the scheme of the U.P Act, and the legislative intent underlying it. In our opinion, therefore, the result which Sec. 7 of the U.P Act read with rule 3 of the rules made there under produced was the same as the effect which Sec. 3 of the Rent Act produces. For the purposes of the question which we are to examine, we are unable to discover any material difference between the relevant provisions of the U.P Act and the relevant provisions of the Rent Act. Bearing in mind this scheme we proceed to analyse the decision of the Supreme Court rendered in Muralidhar's case (2). In order to appreciate the principle laid down by the Supreme Court it is necessary to refer to a few facts of that case.

19. The premises belonged to one Ram Swaroop Gupta. He leased the premises to Pioneer Exhibitors and Distributors Ltd. who used the premises for exhibiting cinema. The lease in their favour terminated by efflux of time on June 30, 1952. Landlord Gupta thereafter leased out the premises for a period of 10 years to one Ram Agyan Singh. No order allotting them to Ram Agyan Singh was made by the District Magistrate under Sub-Section (2) of Section 7 of the U.P Act. Ram Agyan Singh also used the premises for exhibiting cinematograph films Disputes arose between the parties. Landlord Gupta filed a suit for recovery of rent and possession against Ram Agyan Singh. Sometime in 1962 landlord Gupta sold away the premises to Murlidhar Agarwal another, the appellants in that case. The purchasers made an application under Section 7 of the U.P Act for release of the accommodation in their favour. The Additional District Magistrate allowed the application and permitted the purchasers to take possession of the premises. He made that order on the basis that the premises were in illegal occupation of Ram Agyan Singh. A representation was made against that order to the State Government by Ram Agyan Singh. It was rejected on the ground that there was no provision which enabled the Government to interfere with the order of the District Magistrate. On December 4, 1965 the purchasers filed an application for eviction against Rem Agyan Singh under Section 7-A of the U.P Act. The Additional District Magistrate issued notice to Ram Agyan Singh and ultimately passed against him the order of eviction. Ram Agyan Singh challenged that order in the revision application which he filed before the Additional Commissioner who confirmed the order of the Additional District Magistrate and dismissed the application. There after, Ram Agyan Singh field a revision application before the State Government under Section 7-F of the U.P Act. By their order dated October 20, 1957 the State Government allowed that application and held that Ram Agyan Singh was not liable to be evicted from the premises. The State Government communicated to the parties a summary of the reasons on the basis of which they passed the order. They said that Ram Agyan Singh had been running a cinema under a licence in the premises since 1953 and that when the Magistrate granted him the licence he was satisfied that Ram Agyan Singh was in lawful occupation. Therefore, the Government thought that Ram Agyan Singh was entitled to the benefit of the proviso to Section-7-A(1) of the U.P Act and was not liable to be evicted from the premises. The purchasers filed writ petition in the High Court in order to have that order quashed. It was heard by a learned Single judge of the Allahabad High Court who quashed the order. It appears that Ram Agyan Singh filed an appeal against, that order before the Bench which reversed the order of the learned single Judge. That order was challenged before the Supreme Court by the purchasers. The question which arose before the Supreme Court was whether the contract under which Ram Agyan Singh was inducted into premises by the landlords in contravention of provisions of Section 7 and Sec. 7-A of the U.P Act was void and whether Ram Agyan Singh was liable to be evicted on the ground that no rights had accrued to him from that contract. The Supreme Court in paragraph 16 of the reports has quoted with approval the decision of the Allahabad High Court Udhoo Das v. Prem Prakash, AIR 1964 All p. 1 F.B In that decision the Full Bench of the Allahabad High Court took the view that lease entered into in violation of the provisions of Section 7(2) of the U.P Act would be valid between the parties and would create relationship of landlord and tenant between them although it would not bind the authorities concerned. The Supreme Court approved the decision, applied it to that case and held that Ram Agyan Singh was a tenant who could not be evicted on the ground that no rights had accrued to him and further held that the lease entered into in violation of the provisions of Section 7(2) of the U.P Act was valid and binding between the parties. In Paragraph 17 of the report, the Supreme Court has observed that such an agreement would indeed not bind the District Magistrate. Therefore, inspite of the fact that there was a lease between the land-lord and the tenant the District Magistrate could treat the accommodation as vacant and evict the tenant who occupied the accommodation without an allotment order. That was that statutory obligation of one who occupied the premises in contravention of the provision of Sec. 7. But so far as the landlord and tenant were concerned, the landlord would be estopped from denying that the respondent has been his tenant. Even though the lease entered into between the landlord and tenant violated the provisions of Sec. 7 of the U.P Act and even though there was no allotment order in favour of the tenant the tenant would be a tenant with all tenancy rights in his favour in so far as the landlord was concerned.

20. In Sri Krishna v. A.D.M Kanpur, (1975) 2 SCC 361 : AIR 1975 S.C p. 1525 the Supreme Court has referred to its decision in the case of Muralidhar Agarwal (2). In that case the landlord not notify the vacancy to the District Magistrate as required by Sec. 7 of the U.P Act and inducted the tenant into it. An order was therefore made against the tenant for his eviction. That order was challenged by the tenant in the Court of law. The landlord challenged the order of eviction made against the allottee. In those proceedings there was a compromise between the landlord and the allottee and they agreed under the compromise that the landlord would be free to occupy the premises allotted to the allottee but if he ever thought of letting them out to anyone he would give first preference to the allottee. On these facts the Supreme Court held that the compromise entered into between the landlord and the tenant was illegal probably because it defeated the rights of the tenant. It was in that context that the case of Muralidhar Agarwal (2) was cited before them. Referring to the earlier decision of the theirs the Supreme Court has observed that the object of the U.P Act is to provide for continuance of powers to control the letting and the rent of residential and non-residential accommodation and to prevent the eviction of tenants therefrom. It is intended to protect the weaker sec. of the community in general by granting equality of bargaining power. That protection is based on public policy. The scheme of Sec. 7 and 7-A of the U.P Act and rules 3 to 6 is to curtail the right and freedom of the landlord to a large extent in the matter of letting out the accommodation. Thereafter the Supreme Court has analysed the provisos to Secs. 7 & 7-A of the U.P Act. In that context they have referred to their earlier decision in the case of Muralidhar Agarwal (2). We may state that they have not dis approved their decision in Muralidhar's case (2).

21. The Full Bench decision of the Allahabad High Court in the case of Udhoo Das (5) was approved by the Supreme Court in the case of Murlidhar Agarwal (2). However that very decision came up for consideration before a larger bench of the Allahabad High Court in Abdul Hameed v. Mohammed Ishaq, AIR 1975 All. p. 166. Mr. G. Bhaskar Rao has placed very strong reliance on this decision and contended that the earlier decision of the Allahabad High Court in Udhoo Das's case (5) has been overruled by the larger bench of that court in Abdul Hameed v. Mohammed Ishaq (7). After having analysed the provisions of Secs. 1, 7-A and 8 of the U.P Act the full bench has observed that a person to whom an accommodation governed by the U.P (Temporary) Control of Rent and Eviction Act, 1947, has been let out by the landlord in contravention of the general order passed by the District Magistrate under Sec. 7(2) of the Act is liable to be proceeded against under Sec. 7-A at the instance of the person in whose favour an allotment or has been passed by the District Magistrate even though that allotment or passed was subsequent to the accommodation having been unauthorisedly let out. Having expressed that view they have further observed that consequent a private agreement of tenancy between the landlord and a third person entered into in contravention of the general or special order of the District Magistrate made under Sec. 7(2) is void and that his possession can be overlooked and, in the eye of the law, the accommodation can be deemed to be vacant so that the District Magistrate can pass a special order under Sec. 7(2) and if necessary, steps under Sec. 7-A of the Act can be take to put the allottee into possession of the accommodation.

22. The decision of the Supreme Court in Muralidhar's case (2) was rendered on 29-7-1974. The decision of the Allahabad High Court in Abdul Hameed v. Mohd. Ishaq (7) was rendered on 26-4-1974. Obviously, therefore, Allahabad High Court did not have the benefit of the decision of the Supreme Court to which we have referred. In Abdul Hameed v. Mohd. Ishaq (7) a Full Bench of five Judges of the Allahabad High Court has overruled the decision of the Full Bench of three Judges in Udhoo Das's Case (5). The fact that its earlier decision in Udhoo Das's Case (5) has been overruled by the Allahabad High Court cannot weigh with us in light of the principle laid down by the Supreme Court in Muralidhar Agarwal's Case (2). It may also be noted that the principle laid down by the Supreme Court in Muralidhar's case (2) has been referred to with approval by the Supreme Court in its later decision in Sri Krishna v. A.D.M Kanpur (6). On a close reading of the Full Bench decision of the Allahabad High Court in Abdul Hameed's case (7) it appears to us that what the larger bench of the Allahabad High Court was considering in that case was the effect of an allotment order on the tenancy created by the landlord in favour of the tenant in contravention of the provisions of Section 7 of the U.P Act. There is no doubt or dispute about the fact that the tenancy created in contravention of Section 7 of U.P Act or in contravention of Section 3 of the Rent Act cannot produce any adverse effect whatsoever on the right of the authorised officer, or the Government to make an allotment order in favour of a third party. They say so because no agreement entered into by two persons can adversely affect the rights of a third person if he has any. The question with which we are concerned relates to the nature and character of such a lease and the relationship which it creates between the parties themselves. The latest decision of the Allahabad High Court has not dealt with the aspect with which we are concerned in this case. Even if they had dealt with that aspect we would have with respect followed the principle laid down by the Supreme Court in Muralidhar's case (2) and none else. Following the principle laid down by the Supreme court in the case of Muralidhar (2) we are of the opinion that the contract between the parties created the relationship of landlord and tenant between the plaintiff and the defendant and that so far as they were concerned it was a valid contract, though it would be void against the authorised officer specified in sub-section (3) of Section 3 of the Rent Act. It very often happens that what is void for one purpose is valid for another purpose. That seems to be the situation in the instant case. The authority of decision of the Bench of this court in the case of Eswaraiah (1) is therefore shaken and it is no longer a good law. We are in agreement with the view expressed by Lakshmaiah, J. and Vimadalal, J. in the decisions referred to above. Since in our view there is the subsisting relationship of landlord and tenant between the plaintiff and the defendant the plaintiff is not entitled to sue the defendant for possession except in accordance with the provisions of the Rent Act, Section 10 of the Rent Act provides that the tenant shall not be evicted except in accordance with the provisions of Section 10, Section 12 or 13. It is not disputed that plaintiff has not filed the petition in accordance with the provisions of the Rent Act. He has filed the civil suit to recover possession of the premises from the defendant on the basis of his title. Such a suit for the reasons stated above is not maintainable and must be dismissed. We therefore allow the appeal, set aside the decree passed by the courts below and dismiss the suit.

23. Since in the light of the principle laid down by the Supreme Court in Muralidhar's Case (2) we have taken a different view from the view expressed by the Bench of this Court in the case of Eshwaraiah (1) we direct that there shall be no order as to costs throughout.