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PETITIONER: MOHD. SALIMUDDIN

       Vs.

RESPONDENT: MISRI LAL AND ANOTHER

DATE OF JUDGMENT12/03/1986

BENCH: THAKKAR, M.P. (J) BENCH: THAKKAR, M.P. (J) VENKATARAMIAH, E.S. (J)

CITATION:  1986 AIR 1019            1986 SCR  (1) 622  1986 SCC  (2) 378        1986 SCALE  (1)362  CITATOR INFO :  E          1987 SC1484  (10)  R          1987 SC2302  (3)  RF         1988 SC1821  (8)  F          1989 SC1510  (8)

ACT:      Bihar Buildings  (Lease, Rent  & Eviction)  Control Act 1947, s.3  - Loan  advanced by  tenant in violation of Act - Tenant - Whether entitled to claim adjustment of loan amount against rent accrued subsequently.      Words &  Phrases -  Doctrine of  pari delicto - Meaning and applicability of.

HEADNOTE:      The appellant-tenant  had advanced a sum of Rs.2,000 to the landlord  in  order  to  secure  the  tenancy  under  an agreement which provided that loan amount was to be adjusted against the rent which accrued subsequently. The respondent- landlord filed  a  suit  against  the  appellant-tenant  for eviction on  the  ground  of  arrears  of  rent.  The  lower appellate court  dismissed the  suit holding that the tenant was not  in arrears of rent since the amount advanced by the tenant was  sufficient to  cover  the  landlord’s  claim  of arrears. But,  the High  Court in  appeal by the respondent- landlord set aside the judgment of the lower appellate court holding  that  the  loan  advanced  by  the  tenant  was  in violation of  the prohibition  contained in s.3 of the Bihar Buildings (Lease, Rent & Eviction) Control Act and therefore he was in arrears of rent and liable to be evicted.      Allowing the appeal, ^      HELD : 1.(i) The tenant was not in arrears of rent. The judgment and  decree passed  by the High Court are set aside and the judgment and decree of the lower appellate court are restored. [626 G]      1(ii) A  greater judicial  sin than the sin of treating the ’oppressor’  and the  ’oppressed’ on  a par,  or that of rewarding the oppressor and punishing the oppressed, whilst 623 administering the  law designed  to  protect  the  oppressed cannot be conceived. The Court would be guilty of committing this sin if it upholds the view that the tenant who advances

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a loan  to the  landlord in  order to secure the tenancy (in violation of  the prohibition  to  do  so  embodied  in  the statute enacted  for his  benefit) is in pari delicto.  [624 B]      In the  instant case,  the parties to the contract were unequal. It  was the landlord, who was in the position of an oppressor, who  wanted to exploit the situation obtaining in the context  of the  acute housing shortage which prevailed. The tenant had either to yield to the unlawful demand of the landlord, or  go without a roof, for otherwise, the landlord would not  have granted  the lease.  The relevant  provision prohibiting the  payment of  rent in advance embodied in the Rent Act  was enacted  precisely to  protect the tenant from such exploitation. To deny access to justice to a tenant who is obliged  to yield to the unlawful demands of the landlord in this scenerio by invoking the doctrine of pari-delicto is to add  insult to  injury, and to negate the very purpose of the provision  designed for  his protection. The doctrine of pari  delicto   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. [624 H; 625 A-D]      2. The  doctrine of  pari-delicto is  not  designed  to reward the  ’wrong-doer’ or  to penalize  the ’wronged’,  by denying to the victim of exploitation access to justice. 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. [625 D-E]

JUDGMENT:      CIVIL APPELLATE  JURISDICTION : Civil Appeal No. 917 of 1986.      From the Judgment and Order dated 5.9.1985 of the Patna High Court in Decree No. 300 of 1983.      S.K. Sinha for the Appellant.      P.P. Singh for the Respondents. 624      The Judgment of the Court was delivered by      THAKKAR, J.  One cannot  conceive of a greater judicial sin than  the  sin  of  treating  the  ’oppressor’  and  the ’oppressed’ on a par. Or that of rewarding the oppressor and punishing  the   oppressed  whilst   administering  the  law designed to  protect the  oppressed. We  would be  guilty of committing this  sin if  we uphold  the view that the tenant who advances  a loan  to the landlord in order to secure the tenancy (in  violation of  the prohibition to do so embodied in the  statute enacted for his benefit) is in pari delicto. And that  the Court  will not  assist the tenant in claiming adjustment of  the loan  amount against the landlord’s claim for rent.      The lower  appellate  Court  dismissed  the  respondent landlord’s suit  for eviction  against the  appellant-tenant holding that  the tenant  was not  in arrears  of rent.  The following facts are not in dispute:-           1) The tenant had advanced a sum of Rs. 2000 under           an   agreement   which   interalia   contained   a           stipulation  that   the  loan  amount  was  to  be           adjusted against the rent which accrued.           2) The  amount  so  advanced  by  the  tenant  was           sufficient  to   cover  the   lanlord’s  claim  of           arrears.           3) If  the loan  amount was  accordingly  adjusted

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         towards the rent which accrued, the tenant was not           in arrears of rent.      The High  Court has  taken the view that since the loan advanced by  the tenant  was in violation of the prohibition contained in the Rent Act, [Section 3 of the Bihar Buildings (Lease, Rent  and Eviction) Control Act.] the tenant was not entitled to  claim adjustment of the loan amount against the rent which accrued subsequently. The tenant was therefore in arrears of  rent and  liable to  be evicted according to the High Court.      The view  taken by  the  High  Court  is  unsustainable inasmuch as  the High  Court has lost sight of the fact that the parties  to the  contract were  unequal. The  tenant was acting 625 under compulsion of circumstances and was obliged to succumb to the  will of  the  landlord,  who  was  in  a  dominating position.If the tenant had not agreed to advance the loan he would not  have been  able to secure the tenancy. It was the landlord who  was in the position of an oppressor who wanted to exploit  the situation  obtaining in  the context  of the acute housing  shortage  which  prevailed.  The  tenant  had either to yield to the unlawful demand of the landlord or go without a  roof, for, otherwise, the landlord would not have granted the  lease. The  relevant provision  prohibiting the payment of  rent in  advance embodied  in the  Rent Act  was enacted  precisely   to  protect   the  tenant   from   such exploitation.  Obviously,   he  had   to  succumb   to  such exploitation, the  protective  law  notwithstanding,  as  he would have been obliged to remain roofless. The law extended the protection  but did  not guarantee  the  roof.  To  deny accecess to  justice to  a tenant who is obliged to yield to the unlawful  demands of  the landlord  in this  scenerio by invoking the  doctrine of  pari delicto  is to add insult to injury, and  to negate  the very  purpose of  the  provision designed for his protection. The doctrine of pari-delicto is not designed  to reward the ’wrong-doer’, or to penalize the ’wronged’, by  denying to  the victim of exploitation access to justice.  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. The  law enunciated  by this Court in V.S. Rahi and Anr. v.  Smt. Ram  Chambeli [1984]  2 S.C.R. p.290, to which one of  us (Venkataramiah,  J) was  a party fully buttresses this  proposition.   Says   the   Court   speaking   through Venkataramiah, J :-           "The above  view is  fully in  consonance with the           spirit behind  the rule  of  oppression  which  is           recognised as  an exception to the doctrine that a           party cannot  recover what  he has  given  to  the           other party  under an  illegal contract.  ’It  can           never be predicted as pari delicto where one holds           the rod  and the  other bows  to  it’.  (Per  Lord           Ellenborough in  Smith v.  Cuff [1817] 6 M & S 160           at 165).  Cases which  call for appropriate relief           to be given to an 626           innocent  party   where  ’one  has  the  power  to           dictate, the  other  has  no  alternative  but  to           submit are not uncommon. Cheshire and Piffot’s Law           of Contract  (10th Edn.) refers to another type of

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         case belonging to this category."           At page  338 of  that treatise  is  the  following           passage:           "Another type  of case  where the  parties are not           regarded  as   equally  delictual   is  where  the           contract is  rendered illegal  by a  statute,  the           object of which is to protect one class of persons           from the  machinations of  another class,  as  for           example where  it forbids  a landlord  to  take  a           premium from  a prospective tenant. Here, the duty           of observing  the law  is placed squarely upon the           shoulders  of  the  landlord,  and  the  protected           person, the tenant, may recover an illegal premium           in an  action for  money had and received, even if           the statute omits to afford him this remedy either           expressly or  by implication. In the words of Lord           Mansfield :           Where contracts  or transactions are prohibited by           positive statutes,  for the sake of protecting one           set of  men from  another set of men; the one from           their situation  and condition  being liable to be           oppressed and imposed upon by the other; there the           parties  are   not  in   pari  delicto;   and   in           furtherance  of  these  statutes,  person  injured           after the  transaction is  finished and completed,           may bring his action and defeat the contract."      The lower  appellate Court was therefore right, and the High Court wrong. The tenant was not in arrears of rent.      The appeal  succeeds. The judgment and decree passed by the High  Court are set aside and the judgment and decree of the  lower  Appellate  Court  are  restored.  The  suit  for eviction stands dismissed. No costs. M.L.A.                                       Appeal allowed. 627