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PETITIONER: JOGINDER KUMAR BUTAN

       Vs.

RESPONDENT: R.P. OBEROI

DATE OF JUDGMENT12/08/1987

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

CITATION:  1987 AIR 1996            1987 SCR  (3) 937  1987 SCC  (4)  20        JT 1987 (3)   298  1987 SCALE  (2)273  CITATOR INFO :  RF         1989 SC 458  (11)  RF         1991 SC1233  (5,10)  RF         1992 SC1555  (18)

ACT:     Delhi   Rent   Control   Act,   1958:   s.   21--Limited tenancy--Permission obtained .from Rent Controller for short periods--Whether fraud/ wilful contravention/abuse of  stat- ute--Objections   not   raised  during  the  term   of   the lease--Permissibility  of--Lease  agreement not  reduced  to writing--Validity of     Statutory Interpretation--Local statutes--Law settled by High Court over a continuous period of time--Normally to  be adhered to-Should not be disturbed.

HEADNOTE:     The respondent, a government official, while residing in Government quarters sought permission of the Rent Controller under s. 21 of the Delhi Rent Control Act, 1958 for  leasing out a portion of his house to the appellant for  residential purposes for 18 months as he did not require it for his  own use for that period. The appellant declared before the  Rent Controller that he accepted the statement of the  respondent and  that he shall vacate the premises on the expiry of  the period of 18 months. The Rent Controller, thereupon,  passed an  order granting permission in terms of  the  declaration. When  after  expiry of the stipulated period  the  appellant failed to vacate the leased portion, the respondent filed an execution  application for recovering possession.  The  Rent Controller  as  well  as the  Appellate  Authority  rendered concurrent finding to the effect that the tenancy came  into effect only by reason of the permission granted by the  Rent Controller under s. 21 and directed the appellant to deliver possession to the respondent.     In second appeal before the High Court it was  contended by  the  appellant that since the lease  agreement  was  not reduced to writing, as required under s. 21 of the Act,  the permission  granted  by the Rent Controller was  not  valid. Dismissing the appeal the High Court held that in as much as the  parties had made statements before the Rent  Controller and  duly signed them, there was sufficient compliance  with

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the  terms  of  s. 21 and it was not  necessary  that  there should be a separate agreement in writing over and above the draft agreement and the statements rendered before the  Rent Controller.  938     In  the  appeal by special leave, the  contention  taken before the High Court was reiterated, and in addition it was contended for the first time that the permission obtained by the  respondent from the Rent Controller under s. 21 was  in fraud of the statute inasmuch as he had been obtaining  such permission  on several occasions for short periods in  order to deprive the tenants of their rights under the Act. Dismissing the appeal,     HELD: 1.1 A plea pertaining to fraudulent practice is  a mixed question of fact and law. Without the requisite  foun- dation on facts to prove a wilful contravention or abuse  of a provision of law a finding cannot be rendered as to wheth- er a party has committed a fraud by abusing any legal provi- sion. [943FG]     1.2  In the instant case, the appellant had  not  cross- examined the respondent with reference to the lease  granted earlier  by the respondent to other tenants nor had  he  ad- duced  independent  evidence to prove the  factum  of  those leases and such leases being granted by abuse of the  provi- sions  of s. 21 of the Delhi Rent Control Act, 1958. In  the absence  of factual material to show the abuse or misuse  of the provisions of s. 21, it cannot be said that the respond- ent had practised fraud on the Rent Controller in  obtaining permission.  Besides,  even if the respondent  had  let  out different  portions  of  the building to  other  tenants  on earlier  occasions by having recourse to s. 21 he  may  have done so on the basis of bona fide grounds and genuine calcu- lations  and  his calculations may have gone  wrong  due  to factors  or  events  beyond his control. The  mere  fact  of letting  out of the premises once again by resort to  s.  21 for  a  limited period should not necessarily  lead  to  the inference  that  from the very beginning the  premises  were available  for  letting out  indefinitely.  [943EF,  G-944A, 946A] Dhanwanti v. D.D. Gupta, (AIR 1986 SC 1184) referred to. 1.3  The respondent was a government servant and was  living in Government quarters. He had an apprehension that the said allotment may be cancelled because of his owning a house and so he had to provide for any contingency resulting from such cancellation and hence he felt he would be able to spare the leased  premises  only for a limited period.  There  was  no material before the Rent Controller to establish or even  to arouse suspicion that the respondent was playing a fraud  on the  statute. In such circumstances the order passed by  the Rent Controller cannot be said to be vitiated in any manner. [945AB] 939 S.B. Noronah v. Prem Kumari Khanna, [1980] 1 SCR 281, applied. V.S. Rahi v. Ram Chambeli, [1984] 2 SCR 290, distinguished.     2.  The  appellant has waited for the full term  of  the lease  to  raise objections about the respondent  playing  a fraud  on  the  statute. He has failed to  put  forth  these objections  within a reasonable time, after  the  permission was  granted by the Rent Controller, to impugn the order  on the ground of the alleged fraud perpetrated by the  respond- ent,.  This  factor  weakens the objections  raised  by  the appellant and denudes them of force and content. [946CD]     J.R.  Vohra v. India Export House, [1985] 2 SCR  899  at 911-912, referred to.

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   3.  In the matter of interpretation of a  local  statute the  law settled by the High Court over a continuous  period of  time  should normally be adhered to and  should  not  be disturbed.  The Delhi High Court has consistently held  that s. 21 of the Delhi Rent Control Act, 1958 is a complete Code by  itself,  and a permission granted thereunder  would  not become invalid either on account of the landlord failing  to disclose  the  reasons  for non-requirement  of  the  leased premises for a particular period or because of the  landlord and  the  tenant not entering into an agreement  in  writing subsequent  to  the grant of permission under s.  21  or  on account  of  the agreement of tenancy in writing  not  being subsequently  registered.  A different view would  not  only introduce  an  element of uncertainty and confusion  but  it would also have the effect of unsettling transactions  which might  have  been entered into on the faith of  those  deci- sions. [947B, 946H-947A, FG]     Inder Mohan Lal v. Ramesh Khanna (C.A. No. 468 of  1977) decided on 4.8.1987; Raj Narain Pandey & Ors. v. Sant Prasad Tewari  &  Ors., [1973] 2 SCR 835 and Kasturi  Lal  v.  Shiv Charan  Das Mathur, [1976] Rent Control Reporter, Vol. 8  p. 703, referred to.

JUDGMENT:       CIVIL  APPELLATE JURISDICTION: Civil Appeal  No.  1148 1979.     From the Judgment and Order dated 4.4.1979 of the  Delhi High Court in S.A.O. No. 103 of 1979. P.H. Parekh and A.K. Gupta for the Appellant.  940     Dr.  U.R.  Lalit,  C.M. Oberai and D.N.  Misra  for  the Respondent. The Judgment of the Court was delivered by     NATARAJAN,  J. This appeal by special leave is  directed against  a judgment of the Delhi High Court  dismissing  the second  appeal preferred by the appellant herein  to  impugn the order passed against him in execution proceedings  taken under  Section 21 of the Delhi Rent Control Act 1958 by  the Rent Controller and confirmed by the Rent Control Tribunal.     The  respondent,  a Government official  who  has  since retired from service is the owner of a house bearing  number A/15,  Naraina Vihar, New Delhi. During the year  1976,  the respondent  was residing in Government Quarters situated  in Kidwai Nagar, New Delhi. On June 1, 1976 the respondent  and the appellant appeared before the Rent Controller and sought for  permission of the Rent Controller for the rear  portion of  the  ground floor being leased out for a  period  of  18 months  to the appellant under Section 21 of the Delhi  Rent Control  Act (hereinafter referred to as the  Act).  Besides filing the application, the parties gave their  declarations before the Rent Controller. The respondent declared that  he was the owner of the premises No. A-15, Naraina  Residential Scheme,  Delhi, that he did not require the rear portion  of the  ground floor as shown in the plan Exhibit A-1  for  his own  use. that as such he wanted to let out the same to  the appellant  for  residential  purpose at a  monthly  rent  of Rs.500  exclusive  of water and electricity  charges  for  a period  of  18 months with effect from June 1, 1976  as  per proposed lease deed Exhibit A-2. The appellant for his  part declared  that he had heard the statement of the  respondent and he accepted the same as correct, that he wanted to  take on  lease  the rear portion of the ground floor of  the  re- spondent’s  house  as  marked in plan Exhibit  A-I  for  his

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residence on a monthly rent of Rs.500 exclusive of water and electricity  charges for a period of 18 months  with  effect from  June 1, 1976 as per the terms contained in  the  draft lease  deed Exhibit A-2 and further declared that he  "shall vacate the premises on the expiry of the aforesaid period of 18 months." Thereupon the Rent Controller passed an order as under:-               "Having  regard to the averments made  in  the               petition  and  the statements of  the  parties               recorded above, permission under Section 21 of               the Delhi Rent Control Act, 1958 is granted to               the  petitioner for letting out the  aforesaid               por-                941               tion of the aforesaid house as detailed in the               statement of the petitioner to the  respondent               for  residential  purpose for a period  of  18               months  with  effect from today,  the  1st  of               June,  1976. File be consigned to  the  record               room."     It  was  the  case of the respondent  in  the  execution application  filed  by him that pursuant to the  above  said permission granted by the Rent Controller, the appellant was inducted  into possession of the leased portion on  June  2, 1976,  that the period of lease came to an end  on  November 30, 1976 and that as the appellant failed to deliver posses- sion  on  December 1, 1977 as undertaken by him, he  had  to file the application under Section 21 for recovering posses- sion  of the leased portion. The said execution  application was filed on December 12, 1977.     The  appellant  contested the application and  raised  a three-fold defence as under:-     (1) He had been inducted into possession as a tenant  on May  28, 1976 itself, i.e. before the Rent  Controller  gave permission to the lease transaction by his order dated  June 1. 1976 and that as such the tenancy was not governed by the order  passed under section 21  of the Act by the Rent  Con- troller.     (2)  Though  the leased portion was taken  on  rent  for being used as a residence, the parties by mutual arrangement had  agreed  soon after the lease to  make  the  proprietary concern of the appellant viz. M/s. Refaire Projects Corpora- tion the tenant of the premises and as such the firm was the tenant and not the appellant and hence the execution  appli- cation against the appellant was not maintainable.     3. After the period of tenancy was over, a fresh tenancy was  entered into governing not only the leased  portion  of the  ground floor on a higher rent of Rs.550 P.M.  but  also covering a garage and servants quarters on a monthly rent of Rs. 150 and by reason of the new tenancy the respondent  was disentitled to file an execution application.     The Rent Controller and the Rent Control Tribunal, after a due consideration of the materials placed before the court by  the parties, rendered concurrent findings to the  effect that  the  tenancy came into effect only by  reason  of  the permission granted by the Rent Controller under Section  21, that the several pleas of the tenant viz. a tenancy 942 coming  into existence even prior to the order of  the  Rent Controller,  a subsequent modification of the tenancy so  as to make the firm the tenant and a fresh tenancy being creat- ed  so as to cover an additional area and on revised  rental terms were all untenable and baseless contentions. Both  the authorities therefore allowed the execution application  and directed  the appellant to deliver possession of the  leased

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premises.     Before the High Court, in the second appeal preferred by the  appellant, the question of a fresh tenancy  on  revised terms of lease was again sought to be canvassed but the High Court  very  rightly declined to examine the matter  as  the exercise  would  call for appraisal of evidence  on  factual matters  which is in the domain of the Trial Court  and  the first Appellate Court and would also necessitate sitting  in judgment  over concurrent findings of facts rendered by  the courts  below. It was then urged before the High Court  that there was no agreement in writing as required under  Section 21  of the Act and hence the permission granted by the  Rent Controller  was not a valid one on the strength of which  an execution application can be filed. The High Court  rejected this  contention  stating that inasmuch as the  parties  had made  statements before the Rent Controller and duly  signed them,  there  was sufficient compliance with  the  terms  of Section  21 and it was not necessary that there should be  a separate  agreement  in  writing over and  above  the  draft agreement  and the statements rendered before the Rent  Con- troller. The High Court also briefly went into the  question whether the proprietary concern of the appellant had  become the  tenant and whether thereby the use of the premises  had been changed from residential to non-residential purpose and found  the contentions of the appellant to be wholly  devoid of  merit.  The High Court therefore  dismissed  the  second appeal and hence the present appeal by special leave by  the tenant.     Mr. Parekh, learned counsel for the appellant, realising the futility of canvassing once over again the  unsuccessful defences raised before the courts below and the High  Court, sought  to  assail the judgment of the High  Court  and  the order in the Execution Application on two grounds alone viz. (1) the permission obtained by the respondent from the  Rent Controller under Section 21 was in fraud of the statute  and (2) an important condition prescribed by Section 21 was  not fulfilled.  It  has  to be mentioned even  here  that  these contentions  had not been raised before the Rent  Controller and the Appellate Tribunal or even before the High Court. 943     In  so  far as the first contention  is  concerned,  the appellant has alleged in the special leave petition that the respondent  had  been  obtaining permission  from  the  Rent Controller under Section 21 on several occasions for leasing out  different portions in the ground floor as well  as  the first  floor  of the house to different  tenants  for  short periods  in  order to deprive the tenants  of  their  rights conferred  by the Act and also to get higher rent from  each successive  tenant.  The respondent has  controverted  these averments  in  his counter-affidavit. Mr.  Parekh  submitted that the appellant was not setting up a new case because  he had  given the details of the names of the previous  tenants and the portions occupied by them and the periods for  which short  term  leases  were granted to  them  after  obtaining permission from the Rent Controller under Section 21 of  the Act and as such there were enough materials before the Court to show that the respondent had been abusing the  provisions of  Section  21  and playing a fraud upon  the  statute  and obtaining  permission for leasing out portions of the  house to  several  tenants for limited durations and as  such  the permission  granted by the Rent Controller in this  case  is vitiated by the fraud committed by the respondent and  hence the execution application filed by the respondent was not at all maintainable. It is true we find that in the  objections filed by the appellant to the execution application, he  has

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given  some particulars regarding the names of some  tenants to whom the other portions of the building had been let  out by  the respondent after obtaining permission from the  Rent Controller  under Section 21. But significantly enough,  the appellant  had not pursued the matter and substantiated  the charge  of fraud levelled by him. He has not  cross-examined the respondent with reference to the leases granted  earlier by  him  to  other tenants nor has  he  adduced  independent evidence to prove the factum of those leases and such leases being  granted by abuse of the provisions of Section 21.  In the absence of factual materials to show the abuse or misuse of  the provisions of Section 21, it is not possible for  us to  sustain the contention of the appellant’s  counsel  that the  respondent had practised fraud on the  Rent  Controller and  obtained  permission under Section 21 to  lease  out  a portion  of the house to the appellant because a  plea  per- taining  to fraudulent practice is a mixed question of  fact and law. Without the requisite foundation on facts to  prove a  wilful  contravention or abuse of a provision  of  law  a finding cannot be rendered as to whether a party has commit- ted a fraud by abusing any legal provision. Besides, it  has to be borne in mind that even if the respondent had let  out the ground floor portions and the first floor of the  build- ing to other tenants on earlier occasions by having recourse to Section 21 of the Act, the respondent may have done so on the basis of bona .fide grounds and 944 genuine  calculations  and his calculations  may  have  gone wrong due to factors or events beyond his control.     Learned  counsel invited our attention to the  decisions rendered in S.P. Noronah v. Prem Kumari Khanna, [1980] 1 SCR 28  1  and V.S. Rahi v. Ram Chambeli, [1984] 2 SCR  290  and argued  that  the respondent had suppressed  material  facts from the Rent Controller when he asked for permission  under Section 21 of the Act to lease out the premises in  question to  the appellant for eighteen months, and  furthermore  the Rent  Controller  had passed his order  granting  permission under  Section 21 without the application of  mind.  Similar contentions were raised before us in the case of Inder Mohan Lal  v. Ramesh Khanna (C.A. No. 468 of 1977) in which  judg- ment  has been rendered by us on 4.8. 1987. The whole  gamut of  Section  21, the object underlying  the  provision,  the field  of its operation and the correct ratio to be  applied in  dealing  with cases pertaining to Section 21  have  been elaborately  considered  by us in the light of  the  earlier decisions  of this Court and some of the decisions  rendered by the Delhi High Court. We have pointed out therein that in order  to  attract  Section 21 four conditions  have  to  be satisfied  viz. (1) the landlord does not require the  whole or  part  of any premises for a particular period,  (2)  the landlord must obtain the permission of the Controller in the prescribed  manner, (3) the letting of the whole or part  of the premises must be for residential purposes only; and  (4) such letting out must be for such period as may be agreed to in  writing. After analysing the decision in Noronah’s  case the  resultant position emerging under law has  been  summa- rised as follows:-               "An  analysis of this judgment which has  been               applied  in the various cases  would  indicate               that  Section  21 only gives sanction  if  the               landlord makes a statement to the satisfaction               of  the court and the tenant accepts that  the               landlord  does not require the premises for  a               limited  period, this statement of a  landlord               must  be  bona fide. The purpose must  be  for

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             residence.  There  must not be  any  fraud  or               collusion. There is a presumption of regulari-               ty.  But  it is open in particular  facts  and               circumstances  of  the case to  prove  to  the               satisfaction of the executing court that there               was collusion or conspiracy between the  land-               lord  and the tenant and the landlord did  not               mean  what he said or that it was a  fraud  or               that the tenant agreed because the tenant  was               wholly unequal to the landlord."               945     Viewed in this light it may be seen that the  respondent herein  has satisfied all the tests prescribed in  Noronah’s case. The respondent was a Government servant and was living in Government quarters allotted to him. He had an  apprehen- sion  that the allotment of the Government quarters  may  be cancelled  because  of his owning a house and so he  had  to provide for any contingency resulting from the  cancellation of the allotment of Government quarters to him, and hence he felt he would be able to spare the leased premises only  for a  limited  period. There was no material  before  the  Rent Controller to establish or even to arouse suspicion that the respondent  was  playing  a fraud on the  statute.  In  such circumstances the order passed by the Rent Controller cannot be  said  to  be vitiated in any manner. It  would  also  be pertinent  to  point out in this context that  if  the  Rent Controller  had  reason  to suspect the bona  fides  of  the respondent’s application under Section 21, the Rent Control- ler could only have declined to grant his permission for the lease transaction and, if he had done so, the lease transac- tion  would not at all have come to pass through.  The  Rent Controller could not have compelled or directed the respond- ent  to give the premises on lease to the appellant  for  an indefinite  period of time so as to enable the appellant  to have the benefit of the statutory protection afforded by the Act  against eviction except on one or more of  the  grounds set  out in Section 14. In so far as Rahi’s case (supra)  is concerned, the facts therein were totally different and they were  instrumental  for the court declining to  sustain  the landlady’s application under Section 21 for eviction of  the tenant. The evidence in the case established that the  land- lady  had  previously let out the identical portion  of  the house to other tenants but still she had made a false decla- ration before the Rent Controller that she had never let out the  portion to any one earlier. Furthermore  her  statement that  after  the lease period was over her mother  would  be joining her and the leased portion would be required for her was  found to be false because the lady in question was  not her  mother but an aunt whom the landlady claimed to be  her foster mother. It was therefore a case where the  permission under  Section  21 had been obtained on the basis  of  false declarations  and  statements. In the present case  no  such false  declaration had been made by the respondent  when  he sought  the permission of the Rent Controller under  Section 21.  On  the other hand we are inclined to  agree  with  the argument  of the respondent’s counsel that the facts of  the case  call for the court taking the view which it had  taken in the case of Dhanwanti v. D.D. Gupta, (AIR 1986 SC  1184). In that case it was observed that there may be certain cases where the owner, after obtaining permission under Section 21 of the Act had let out the premises for a limited period and after the expiry of the said 946 period  he may have again found it necessary to obtain  per- mission  to let out the premises for another limited  period

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due  to genuine causes and therefore, the mere fact of  let- ting  out  of the premises once again by  having  resort  to Section 21 of the Act for a limited period should not neces- sarily  lead to the inference that from the  very  beginning the premises were available for letting out indefinitely. In the instant case there is no evidence except the averment of the  appellant  that the respondent had let out  the  leased portion  on  earlier occasions also for limited  periods  by having resort to Section 21. However even if that  statement is  true  there cannot be an automatic  inference  that  the permission granted by the Rent Controller pertaining to  the lease of the premises to the appellant had been obtained  by fraudulent means by the respondent.     Apart  from  these things there is also  another  factor which  weakens  the objections raised by the  appellant  and denudes  them  of force and content. He has waited  for  the full  term  of the lease to raise objections about  the  re- spondent  playing a fraud on the statute. He has  failed  to put-forth  these objections within a reasonable  time  after the permission was granted by the Rent Controller to  impugn the order on the ground of the alleged fraud perpetrated  by the respondent. It was observed by this Court in J.R.. Vohra v. India Export House, [1985] 2 SCR 899 at 911-912 that  the remedy available to a tenant in a case where there was  only a  ritualistic  observance of the procedure  while  granting permission  for the creation of a limited tenancy  or  where such  permission  was  procured by fraud  practised  by  the landlord or was a result of collusion between the strong and the  weak,  would  be for the tenant  approaching  the  Rent Controller during the currency of the limited tenancy itself for adjudication of his pleas as soon as he discovers  facts and circumstances that tend to vitiate ab initio the initial grant of permission and not to wait till the landlord  makes his  application  for  recovery of the  premises  after  the expiry of the period fixed under Section 21.     We are, therefore, unable to sustain the first ground of attack of the appellant’s counsel to assail the judgment  of the High Court.     In so far as the second ground is concerned, this aspect of the matter also has been considered by us and dealt  with in a detailed manner in Inder Mohan Lal’s case. After notic- ing  the decisions of the Delhi High Court which  have  held the field all along declaring that Section 21 is a  complete Code  by itself and that a permission granted under  Section 21 would not become invalid either on account of the 947 landlord failing to disclose the reasons for non-requirement of the leased premises for a particular period or because of the  landlord and the tenant not entering into an  agreement in  writing  subsequent  to the grant  of  permission  under Section  21  or on account of the agreement  of  tenancy  in writing  not being subsequently registered, this  Court  af- firmed the decisions of the Delhi High Court laying down the above  ratio  in observance of the settled  judicial  policy that in the matter of interpretation of a local statute  the law  settled by the High Court over a continuous  period  of time  should be normally adhered to and should not  be  dis- turbed.  The relevant passage in the judgment reads as  fol- lows:-               "Learned   counsel  for  the  appellant   also               stressed before us that Section 21 of the Rent               Act  was a complete Code by itself. The  order               was  under  section  21 of the  Rent  Act.  No               further question of lease or registered  lease               arose thereafter.

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                       This  question has been  settled  by               series  of decisions of the Delhi  High  Court               upon which people have acted for long. See the               decision  in  Kasturi Lal v. Shiv  Charan  Das               Mathur,  [1976] Rent Control Reporter Vol.  8-               703  where  at pages 708-709 Misra J.  of  the               Delhi High Court had clearly indicated  numer-               ous  cases where it was held that  Section  21               was a Code by itself. The order of the permis-               sion  is  itself an authority;  no  lease  was               necessary  and if that is the state of law  in               Delhi,  it  is  too late in the  day  to  hold               otherwise. See the observations of this  Court               in Raj Narain Pandey and others v. Sant Prasad               Tewari  & others, [1973] 2 SCR 835 where  this               Court  observed  that  in the  matter  of  the               interpretation  of a local statute,  the  view               taken by the High Court over a number of years               should  normally be adhered to and not  to  be               disturbed.  A  different view would  not  only               introduce an element of uncertainty and confu-               sion  but  it would also have  the  effect  of               unsettling transactions which might have  been               entered into on the faith of those  decisions.               In Delhi, transactions have been completed  on               the  basis  of  permission and  it  was  never               doubted that there was any requirement of  any               lease or any agreement subsequent to the order               and the same required registration.     There is therefore, no merit in the second contention of the appellant’s counsel that since the lease transaction was not reduced to 948 writing  in terms of Exhibit A-2 subsequent to the grant  of permission  by the Rent Controller, the terms of Section  21 are not fulfilled and hence the execution application  under Section 21 would not lie.     In  the light of our conclusions the appeal has to  fail and  it will accordingly stand dismissed with costs  to  the respondent. P.S.S                                           Appeal  dis- missed. 949