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PETITIONER: BUDHWANTI AND ANR.

       Vs.

RESPONDENT: GULAB CHAND PRASAD

DATE OF JUDGMENT04/03/1987

BENCH: NATRAJAN, S. (J) BENCH: NATRAJAN, S. (J) MUKHARJI, SABYASACHI (J)

CITATION:  1987 AIR 1484            1987 SCR  (2) 534  1987 SCC  (2) 153        1987 SCALE  (1)501  CITATOR INFO :  R          1987 SC2302  (14)  R          1988 SC1821  (9)

ACT:     Doctrine of "In pari delicto", applicability of--Whether it applies to tenants also who pay enhanced rents in contra- vention of the Rent Restriction Acts, and therefore,  cannot claim later adjustment of excess rent paid contrary to  law, in  eviction  cases on the plea of default of rent  and  ap- plicability of the doctrine.     Second  Appeal, scope of--Interference with the  finding of fact by the High Court, when permissible--Section 100  of the Code of Civil Procedure.

HEADNOTE:     The  first  appellant, widow of one Dr.  Ramachandra,  a tenant  since  1932 of one room used as a medical  shop  was recognised as tenant on the death of her husband in or about 1960 by Babu Lal, the original landlord. The rent was  fixed at  Rs.416  per month. Over the years the rent  came  to  be increased  from  Rs.16 to 60 per month, i.e. both  when  Dr. Ramachandra  was  alive  and also  later.  Babulal  died  on 14.11.1973 and the respondent became the Karta of the family as  the  senior most male member of the  joint  family.  The respondent  issued  a notice on  12.6.1974  terminating  the tenancy with effect from 30.6.1974 and called upon the first appellant  wife to surrender possesssion of the leased  shop from  1.7.74. As the appellants (wife and son of  Dr.  Rama- chandra)  failed tO deliver possession a salt  for  eviction was  filed under the Bihar Buildings (Lease, Rent and  Evic- tion)  Control Act on two grounds: (a) default of  rent  and (b) bonafide requirements of the junior members of the Joint family.  The trial court allowed the eviction  petition.  In appeal,  the  appellate court reversed the findings  of  the Trial Court and applying the principle of unjust  enrichment contrary  to  statutory law, held that the  appellants  were entitled to have the excess payment adjusted towards arrears of  rent  as  well as future payments of  rent  since  1943. However,  in the Second Appeal, the Full Bench of the  Patna High  Court  held that the rule of "in pari  delicto"  would squarely apply to tenants who pay enhanced rents in  contra- vention of the terms of the Rent Restriction Acts and there-

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fore  the appellants cannot claim adjustment of excess  rent paid  and seek avoidance of their eviction. The  High  Court also  reversed  the finding of the appellate  court  on  the question of bona 535 fide  requirement as being vitiated by misreading  of  facts and  misapplication  of law. Hence the  tenant’s  appeal  by special leave. Dismissing the appeal, the Court,     HELD: 1. In Mohd  Salimuddin v. Misrilal & Anr.,  [1986] 2 SCC 378, the Supreme Court have taken care to set out that the doctrine of "in pari delicto" will not be attracted when there  is no element of compulsion or exploitation and  both parties have by consensus contravened the provisions of  law for their mutual advantage. [539D-E]     2. It is true that in a second appeal a finding on  fact even if erroneous will generally not be disturbed but  where it  is found that the finding is vitiated by application  of wrong  tests or on the basis of conjectures and  assumptions then a High Court will be well within its rights in  setting aside  in  a second appeal a patently erroneous  finding  in order to render justice to the party affected by the errone- ous finding. [540F-G]

JUDGMENT:     CIVIL  APPELLATE JURISDICTION: Civil Appeal No. 4110  of 1985.     From  the  Judgment and Order dated  22.5.1985  of  the, Patna  High Court in Appeal from Appellate Decree No. 51  of 1982. S.S.  Javali,  B .P. Singh and Ranjit Kumar for  the  Appel- lants. S.N. Kacker, M.S. Singh and K.K. Gupta for the Respondent. The Judgment of the Court was delivered by,     NATARAJAN,  J. This appeal by special leave by the  ten- ants is directed against the judgment of a Full Bench of the Patna High Court in a Second Appeal against Appellate Decree No.  51  of 1982. By the impugned judgment  the  High  Court allowed  the  appeal preferred by the  landlord  (respondent herein)  and  restored the order of eviction passed  by  the Trial  Court  against the appellants herein  on  grounds  of default in payment of rent and bona fide requirement of  the leased premises for the business needs of the landlord.     The circumstances under which the suit came to be  filed and  the  contentions of the parties may  be  summarised  as below. One Babu Lal who died on 14.11.73 and the respondent were 536 brothers  and were members of a Joint Hindu Family  governed by  the Mitakshra Law. The joint family was the owner  of  a non-residential building in the G.B. Road, Gaya. One room in the said building was given on rent in the year 1932 to  one Dr.  Ramachandra,  the husband of the  first  appellant  and father  of the second appellant for running a  medical  shop known as Punjab Dental and Opticals Works. The joint  family has  been running its business in the other portions of  the building.  The rent was fixed at Rs. 16 per month. Over  the years the rent came to be increased from Rs. 16 to Rs.60 per month. It would appear that the rent was increased to  Rs.20 in  1943,  to Rs.25 in 1946, to Rs.30 in 1947, to  Rs.32  in 1951,  to Rs.35 in 1963, to Rs.40 in 1967, to Rs.50 in  1970 and  finally to Rs.60 in 1971. Dr. Ramachandra,  the  tenant died  in  or about 1960 and therefore his  wife,  the  first

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appellant  came  to  be recognised as the  tenant  and  rent receipts were issued in her name. Before the Trial Court  it was  sought  to be contended that the second  appellant  had become the tenant after the demise of his father and as such the  notice  of termination of tenancy issued to  the  first appellant was not an effective and valid notice. The conten- tion  was repelled by the Trial Court and that  finding  has not been challenged before the Appellate Court and the  High Court.     As already stated Babu Lal the Karta of the family  died on  14.11.73. Consequent on his death the respondent  herein became  the  Karta  of the family as the  senior  most  male member of the joint family. The respondent issued notice  on 12.6.74 terminating the tenancy with effect from 30.6.74 and called  upon the first appellant to surrender possession  of the leased shop from 1.7.74. It was the case of the respond- ent  that the first appellant had committed default in  pay- ment of rent from November 1973 onwards and furthermore  the leased  portion  was  required for expansion  of  the  joint family  business  carried  on in the other  portion  of  the building.  As the appellants failed to deliver possession  a suit  for  eviction  was filed  under  the  Bihar  Buildings (Lease, Rent and Eviction) Control Act (hereinafter referred to  as  the  ’Act’) for a decree for  eviction  against  the appellants. A sum of Rs.540 was also claimed in the suit  as arrears of rent.     The  appellants contested the suit raising  various  de- fences. The principal defences were that the respondent  was not  the Karta of the family and one Ram Prakash Gupta,  the eldest son of deceased Babu Lal was the Karta, that rent was tendered to him after the death of Babu Lal but the said Ram Prakash Gupta demanded rent at Rs. 150 per month refused  to receive the rent that was tendered, that thereupon the  rent was sent by money order but it was refused and as such 537 there was to default in payment of rent. It was alternative- ly contended that even if there had been default in  payment of  rent it would not afford a cause of action  for  seeking eviction because the original rent of Rs. 16 had been  ille- gally  raised  to Rs.60 per month in  contravention  of  the terms of the Act, that as such the appellants were  entitled to  seek  adjustment  of the excess payments  made  by  them towards  the alleged arrears of rent and consequently  there can  be no arrears of rent under law. In so far as  the  re- quirement of the shop for the business needs of the respond- ent  is  concerned it was contended that it was not  a  bona fide claim but only a make-believe story in order to get the appellants evicted.     The  Trial Court, after a detailed consideration of  the oral  and documentary evidence adduced by the parties,  held that  the  appellants had neither tendered the rent  to  Ram Prakash Gupta nor had the latter refused to receive it, that in  the absence of a refusal to receive rent the  appellants were  not entitled under the Act to make remittances of  the rent  by money order, that in any event the payment of  rent to a junior member of the family instead of to the Karta was not  a  valid payment and that as such  the  appellants  had committed  default in payment of rent and  were,  therefore, liable  to  be evicted. On the other ground also  the  Trial Court held that the leased portion was bona fide required by the  Karta for the gainful engagement of two members of  the joint  family  who  were unemployed and that  was  a  second ground  for ordering eviction. Accordingly the  Trial  Court decreed the suit for eviction.     On  the appellants preferring an appeal,  the  Appellate

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Court reversed the findings of the Trial Court and dismissed the suit for eviction. The Appellate Court held that even if the  appellants  had failed to pay the rent  from,  November 1973 onwards the appellants cannot be deemed to have commit- ted  default in payment of rent because the  enhancement  of rent from Rs. 16 to Rs.60 was in contravention of the provi- sions of the Act and as such the appellants were entitled to have the excess payments adjusted towards arrears of rent as well  as  future payments of rent. The ground of  bona  fide requirement was also not accepted by the Appellate Court.     Against the judgment of the Appellate Court the respond- ent  herein preferred a second appeal to the High Court.  As there  was a conflict of decisions of different  Benches  of the  High Court on the question whether tenants paying  rent in  excess of the agreed rent would be affected by the  rule of "in pari delicto" and cannot, there- 538 fore, seek adjustment of the excess payments towards arrears of rent to resist a suit for eviction for default in payment of rent, the second appeal was referred to a Full Bench. The Full  Bench, after elaborately considering the  matter  held that  the rule of "in pari delicto" would squarely apply  to tenants who pay enhanced rents in contravention of the terms of  the Rent Restriction Acts and hence the  appellants  are guilty  of pari delicto and cannot, therefore, seek  adjust- ment of the excess payments made by them and seek  avoidance of  their eviction for default in paying the rent. The  Full Bench  further held that the finding of the Appellate  Court on  the question of the landlord’s bona fide requirement  of the leased premises was vitiated on account of misreading of facts and misapplication of law and hence the Trial  Court’s finding  warranted restoration. The Full  Bench,  therefore, allowed  the  appeal  and restored the  decree  of  eviction passed by the Trial Court on both the grounds set out in the plaint.      Mr. Javali, learned counsel for the appellants  strenu- ously  contended  that the High Court was not  justified  in allowing  the  second appeal since the  appellants  had  not committed  any  default in payment of rent  and  furthermore even  if there was any default, due to their erroneous  ten- der,  they  were entitled to seek adjustment of  the  excess payments  made by them and avoid eviction. It was also  sub- mitted  that  the appellants, being in  the  disadvantageous position of tenants, cannot be placed on par with the  land- lord and held that they are "in pan delicto" and cannot seek adjustment  of the excess payments towards arrears of  rent. The further submission was that the respondent’s requirement of  the  shop for the business needs of the members  of  the joint family was not established either by the pleadings  or the  evidence and as such the Appellate Court was  perfectly in  order in rejecting the second ground on  which  eviction was  sought for and the High Court had erred in  interfering with a finding of fact in a second appeal.     In  the view we propose taking of the matter we  do  not think  it  necessary  to go into the  question  whether  the appellants  had  committed default in payment  of  rent  and secondly even if they had committed default, they are  enti- tled  to adjust the excess rent paid by them over a span  of 30 years without reference to the rule of "in pari delicto". The reason for our refraining to go into these questions  is because  we find the decree for eviction passed against  the appellants  can be sustained on the second ground viz.  bona fide  requirement of the shop for the business  requirements of  the  members of the joint family. Even so  we  think  it necessary to point out an error contained in the argument of

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Mr. Javali. The learned counsel submitted that the 539 decision  of  the  High Court on the question  of  "in  pari delicto"  may not be good law in view of recent decision  of this Court in Mohd. Salimuddin v. Misri Lal & Anr., [1986] 2 SCC  378.  It  is true that the case related  to  a  dispute regarding default in payment of rent between a landlord  and a tenant and this Court held that it will be a judicial  sin to  treat  the landlord and tenant on a par  and  apply  the doctrine of pari delicto because the parties were placed  in the  position  of "oppressor" and "oppressed".  The  learned counsel  has  failed to notice that the facts in  that  case were  entirely different. It was a case where a  tenant  was obliged  to  advance a loan of Rs.2,000 to the  landlord  in order  to  secure  the lease of a  premises.  The  agreement between  the  parties specifically provided  that  the  loan amount was to be adjusted against the rent which accrued. In spite of it the landlord sought the tenant’s eviction on the ground  of  arrears of rent and set up a plea  of  "in  pari delicto"  against the tenant. It was in  such  circumstances this Court held that the doctrine of pari delicto cannot  be applied since the tenant was perforce compelled to advance a loan  to  secure the lease even though such  advancement  of loan  was  against the terms of the Rent  Act.  The  learned Judges have taken care to set out that the doctrine will not be  attracted  when  there is no element  of  compulsion  or exploitation and both parties have by consensus  contravened the  provisions  of law for their  mutual  advantage.  They, however, found that the tenant concerned in that case was  a victim of exploitation and hence he was not "in pari  delic- to". The relevant portion of the judgment reads as follows:-               "The  doctrine is attracted only when none  of               the  parties is a victim of such  exploitation               and both parties have voluntarily and by their               free  will joined hands to flout the  law  for               their mutual gain. Such being the position the               said doctrine embodying the rule that a  party               to  a  transaction prohibited  by  law  cannot               enforce  his  claim in a court of law  is  not               attracted in a situation like the present."     Coming  now to the ground of eviction based on the  bona fide  requirement of the respondent, Mr. Javali argued  that the bona fides of the claim is not established either by the pleadings or the evidence and hence the Trial Court and  the High  Court were in error in sustaining the said  ground  of eviction.  It  was pointed out by the counsel  that  in  the plaint  there is only a casual statement about the  require- ment of the shop by the landlord and in the evidence it  was not  made clear whether the shop was required for  expansion of  the  existing business or for starting  a  new  business venture for the benefit of the younger members 540 of the joint family. The Trial Court has discussed the  case of bona fide requirement in para 14 of its judgment and  has held  that the landlord is bonafide in need of the  shop  to engage  two  members of the joint family  in  business.  The Appellate Judge has reversed the finding of the Trial  Court on  four  grounds viz. that the tenants were  refugees  from West  Pakistan and had no shop of their own in the  town  of Gaya,  that from the point of comparative hardship it  would be the tenants who would suffer more than the landlord by an adverse  decision, that the shop occupied by the  appellants is only a small portion in a massive building in the occupa- tion of the landlord and that the landlord’s requirement  of the  building was more attributable to a desire  to  recover

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possession  rather than on account of any genuine  need  for it. The High Court has pointed out that the Appellate  Judge had  completely misdirected himself in his approach  to  the question  because of erroneous assumptions of facts as  well as law. Admittedly, the tenancy had commenced in 1932  which was long prior to the partition in 1947 and hence there  can be  no  question  of the tenant being a  refugee  from  West Pakistan. Likewise, the application of the test of  compara- tive  hardship  between the landlord and the tenant  was  an extraneous test because no such test has been prescribed  by the  Act  for going into the reckoning. Then  again  it  was noticed that without any evidence or materials the Appellate Judge  has assumed that the main building in the  occupation of  the  joint  family is a massive building  and  that  the leased portion constitutes only a negligible area.  Likewise the Appellate Judge had no materials to hold that the  land- lord’s  requirement  of the building was only borne  out  of desire  and  not on account of any genuine need.  Since  the Appellate Judge had rendered his findings on the question of bona  fide requirement of the shop by the landlord on  base- less assumptions and wrong principles of law, the High Court was justified in setting aside the finding of the  Appellate Judge  even though it was factual in character. It  is  true that in a second appeal a finding on fact even if  erroneous will  generally not be disturbed but where it is found  that the finding is vitiated by application of wrong tests or  on the  basis of conjectures and assumptions then a High  Court will be well within its rights in setting aside in a  second appeal  a  patently  erroneous finding in  order  to  render justice to the party affected by the erroneous finding.  Mr. Javali  tried to canvass that the Appellate Judge  had  ren- dered his finding mainly with reference to the pleadings and the evidence and his incidental references to other  factors and circumstances were only to reinforce his conclusion  and as  such his finding does not suffer from any  infirmity  or error.  We  are not persuaded by this  argument  because  it cannot  be  predicated as to how far the  Appellate  Judge’s conclusion 541 was  influenced  by  the mistaken tests applied  by  him  to determine the issue.     We  are, therefore, of the view that the finding of  the Trial  Court  which  has been confirmed by  the  High  Court regarding the respondent being bona fide in need of the shop for the business needs of the joint family does not call for any interference by this Court in this appeal under  Article 136 of the Constitution.     In  the  result, the appeal fails and  will  stand  dis- missed.  There will be no order as to costs. To  enable  the appellants  to find alternate accommodation to  shift  their business  they  are given time till 30.6.87  to  vacate  the premises. S.R.                                            Appeal  dis- missed. 542