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PETITIONER: V.S. RAHI AND ANR.

       Vs.

RESPONDENT: SMT. RAM CHAMBELI

DATE OF JUDGMENT03/01/1984

BENCH: VENKATARAMIAH, E.S. (J) BENCH: VENKATARAMIAH, E.S. (J) MISRA, R.B. (J)

CITATION:  1984 AIR  595            1984 SCR  (2) 290  1984 SCC  (1) 612        1984 SCALE  (1)5  CITATOR INFO :  F          1986 SC1019  (4)  D          1987 SC1986  (21)  D          1987 SC1996  (9,10)  R          1990 SC 325  (16)  R          1990 SC1113  (3)  E          1992 SC1555  (2,15)

ACT:      Delhi Rent  Control Act,  1958 (Act 59 of 1958) Section 21-While invoking the remedial provisions of Section 21, the landlord should  come with clean hands a and not suppress or falsify facts-Doctrine of suppressioveri will disentitle him to get back possession later in such cases of suppression of facts-Duty  of   the  Court-Meaning  of  collusion-Right  to resile,  when   available-Rule  of  oppression  and  illegal contract explained.

HEADNOTE:      The respondent  Smt. Ram  Chambeli leased  out the suit premises to the appellants for a period of three years under an order  dated December  22, 1977  passed by the Additional Rent Controller in Suit No. M/798/77 under section 21 of the Delhi Rent  Control Act.  On the  expiry of the said period, when the  respondent filed  an application  before the  Rent Controller for  possession of  the premises,  the appellants filed  objections,   highlighting  how  by  suppression  and falsifying facts  the respondent  resorted to the provisions of section  21 of  the Rent Act, and challenged the need for personal  occupation.   The  Additional   Rent   Controller, therefore, after  hearing both  sides revoked the permission granted in  1977. However,  the Rent  Control  Tribunal  set aside the  order of  the Addl.  Rent Controller  and ordered eviction.  The   High  Court   in  Second  Appeal  confirmed Tribunal’s order. Hence the tenant’s appeal by Special Leave of the Court,      Allowing the appeal, the Court, ^      HELD :  1. On  the facts and circumstances of the case, the landlady  is not  entitled to  invoke the  remedy  under section 21  of the  Delhi Rent  Control Act.  The permission under section  21 of the Act had been obtained by her on the basis of wrong statement, but for which the permission would

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not have  been accorded.  These statements which were in the nature of  half truths were apparently made in order to make good the  plea that  there was only a temporary necessity to lease out the building for a short period and that there was a bonafide  anticipation that  there  would  be  a  pressing necessity to reoccupy the premises at the end of the period, which were the two crucial factors governing and order under section 21 of the Act. [296 F; E]      S.B. Noronah  v. Prem  Kumari Khanna,  [1980] 1  S.C.R. 281; applied.      2 :  1 It  is true  that the  appellants who  were  the weaker of  the two parties did not question the truth of the statements made  by the  respondent when  the permission was granted. But  such  conclusion,  if  any,  between  the  two unequal  parties   does  not  confer  any  sanctity  on  the transaction in  question. In  cases of  this  nature  it  is always open  to the  weaker of  the two parties to establish that the transaction was only a camouflage used to cover its true nature. [296 H; 297 A] 291      2:2. Collusion  implies the  existence of  two or  more parties who  can deal with each other independently with the object of  entering into an arrangement which may serve as a cloak to  cover up the real state of affairs. When one party can dominate  over the  will of the other, it would not be a case of  collusion but  one of compulsion. 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. The ground that the appellants  cannot challenge  the  permission  initially granted under  section 21  of the  Act  is  not,  therefore, available in this case. [297 B-C]      Smith v.  Cuff [1817]  6 M  & S  160 @ 165, quoted with approval.

JUDGMENT:      CIVIL APPELLATE JURISDICTION : Civil Appeal No. 2800 of 1982.      From the Judgment and Order dated the 23rd August, 1982 of the  Delhi High  Court at  New Delhi in S.A.O. No. 277 of 1982.      E.X. Joseph and N.S. Das Behl for the Appellant.      J.M. Khanna for the Respondent.      The Judgment of the Court was delivered by :      VENKATARAMIAH, J.  This is  an appeal  by special leave against the judgment of the High Court of Delhi dated August 23, 1982  in S.A.O.  No. 277  of 1982  dismissing the appeal filed by the appellants.      The  respondent   Smt.  Ram  Chambeli  leased  out  the premises in  question to the appellants under an order dated December 22,  1977 passed  by the Additional Rent Controller in suit  No. M/798/77  under section  21 of  the Delhi  Rent Control Act,  1958 (Act 59 of 1958) (hereinafter referred to as ‘the Act’), the relevant part of which reads thus :      "Statement of Smt. Ram Chambeli w/o Sh. G.L. Gandhi           I am  the  owner-landlord  of  premises  No.  637,      Double Storey,  New  Rajinder  Nagar,  New  Delhi.  The      entire premises comprising of two rooms, kitchen, bath,      latrine shown in the plan Exhibit-A1 is surplus with me      for a limited period of 3 years which I want to let out      to the respondent for residential purposes for the said      period at  rupees 425/- p.m. which is mentioned in Mark

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    B with effect from the date of permission. I have never      let out  the portion  to anybody  earlier to it. My son      and my mother were living in the 292      said premises.  My mother has not been feeling well. My      son is  studying in  9th class. After about three years      my mother  will be  alright and my son will grow up and      for them  I shall  require  the  premises  after  three      years.      RO & AC                                             ARC           Statement of  Shri V.S.  Rahi, son  of Sh.  Thakur      Gopal Singh,  45 years,  teacher and  Smt. Santosh Rahi      w/o Shri  V.S. Rahi, aged 45 years, teacher resident of      33/52, Prabhat Road, Karol Bagh, New Delhi. We want the      premises for  three years  for the residential purposes      from the  date of  permission. We are not in possession      of the premises nor were we tenants in it.      RO & AC                                           ARC                           ORDER           This  order  will  dispose  of  application  under      Section 21 DRC Act filed by Smt. Ram Chambeli applicant      seeking permission  to  let  out  first  floor  of  her      premises No. 637 Double Storey, New Rajinder Nagar, New      Delhi. It  is stated  that the  first floor of the said      premises comprising  of two living rooms, kitchen, bath      and latrine  detailed in  plan exhibit  A-1 is  surplus      with her  for a  limited period  of three years and she      will require  it after  the said period of three years.      The petitioner  and respondent  have made  statement on      oath in  this connection.  In view  of the statement of      the parties, permission u/s 21 of DRC Act is granted to      Smt. Ram  Chambeli, wife  of Shri G.L. Gandhi applicant      to let  out first floor of her premises No. 637, Double      Storey, New Rajinder Nagar, New Delhi to Shri V.S. Rahi      and  Smt.  Santosh  Rahi  respondents  for  residential      purposes for the said period of three years with effect      from the date of the order.                                     J.D. Kapoor,                                 Add. Rent Controller"      On the expiry of the period of three years mentioned in the above  order the  respondent filed an application before the  Additional   Rent  Controller  for  possession  of  the premises.  The  appellants  filed  objections  to  the  said application stating that the respondent was comfor- 293 tably living with her husband and son in the ground floor of the building; that she was not in need of the first floor of the building which had been leased out in their favour; that the statement  that her  mother was  living with her was not true; that her son was studying in the 7th class in 1977 and not in  the 9th  class as  stated by  her  before  the  Rent Controller  in   1977  and  that  the  Rent  Controller  had permitted the  leasing out  of the building under section 21 of the Act without applying his mind. It was further pleaded that  the   application  had  been  filed  with  a  view  to extracting higher  rent. The appellants also stated that the statement of  the respondent that she had not leased out the building earlier  to any body else was not true. After going through the  affidavits filed  by the  parties in support of their cases  the Additional  Rent Controller  held that  the respondent had  obtained the  permission under section 21 of the Act  by making  wrong statements and accordingly revoked the said  permission. Consequently  the appellants could not be evicted under that section. Aggrieved by the order of the Additional Rent  Controller, the  respondent filed an appeal

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before the  Rent Control  Tribunal. The Tribunal allowed the appeal and  directed the  eviction of  the  appellants.  The Tribunal observed that when the Controller had been informed by the  respondent right at the time when the permission was granted under  section 21  of the  Act that the property was not required by her for a period of three years but would be needed after  that period  for the  use of  her son  and her mother who  was unwell  at that time, there was no ground to hold that the transaction was not genuine. The second appeal filed by  the appellants  against the  order of the Tribunal was dismissed  by the  High Court.  This appeal  by  special leave is filed against the judgment of the High Court.      Section 21 of the Act reads.           "21. Where  a landlord  does not require the whole      or any  part of  any premises  for a particular period,      and the landlord, after obtaining the permission of the      Controller in  the prescribed manner, lets the whole of      the premises  or part  thereof as  a residence for such      period as  may be  agreed to  in  writing  between  the      landlord and the tenant and the tenant does not, on the      expiry of  the said period, vacate such premises, then,      notwithstanding anything  contained in section 14 or in      any other  law, the,  Controller may, on an application      made to  him in this behalf by the landlord within such      time as may be prescribed, place the 294      landlord in  vacant possession  of the premises or part      thereof by  evicting the  tenant and every other person      who may be in occupation of such premises."      When section  21 of the Act was enacted it was believed that it  would encourage landlords, who would not ordinarily be willing  to lease  out a  building as  a residence  for a short time  even though  they might  not be  in need  of  it during that  period, to  lease it  out for such short period because of  the summary  remedy provided  by that section to recover possession  of the  building quickly from the tenant instead of the usual eviction proceedings which would take a long time to terminate.      It was  not perhaps  fully realised  at the time of the enactment of  section 21  of the  Act that many unscrupulous landlords would  enter into  arrangements purporting  to  be those under that section but in reality were ordinary leases and would utilise the threat of the summary remedy available under that  section to realise higher rents or for any other purpose considered  to be  contrary to  the benign  purposes sought to  be achieved  by the  Act. When  one such  case in which the  genuineness of  a transaction  entered into under section 21 of the Act came before this Court in S.B. Noronah v. Prem Kumari Khanna,(1) Krishna Iyer, J. observed :           "It is  easy to  envisage the terrible blow to the      rent control law if Section 21 were freely permitted to      subvert the  scheme of  Section 14. Every landlord will      insist on a tenant going through the formal exercise of      Section 21,  making ideal  averments in  terms of  that      Section. The  consequence will  be that  both the Civil      Procedure Code  which prescribes  suits for recovery of      possession  and   the  Delhi  Rent  Control  Act  which      prescribes grounds for eviction will be eclipsed by the      pervasive operation  of Section 21. Neither grounds for      eviction nor  suits for  eviction  will  thereafter  be      needed, and  if the landlord moves the court for a mere      warrant  to  place  the  landlord,  through  the  court      process, in  vacant possession of the premises, he gets      it. No  court-fee, no decree, no execution petition, no      termination of  tenancy wish  for  possession  and  the

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    court is  at your  command. Such a horrendous situation      will be  the negation  of the rule of law in this area.      So it is that we deem it necessary to 295      lay down the law as implied in Section 21.           When an  application under  Section 21 is filed by      the landlord and/or tenant, the Controller must satisfy      himself by  such inquiry  as  he  may  make  about  the      compulsive requirements  of that provision. If he makes      a mindless  order, the  Court, when  challenged at  the      time of  execution, will  go into  the question  as  to      whether the  twin conditions  for sanction  have really      been fulfilled."      The appeal  before us  has to be considered against the above background.      It is  urged by  the appellants  that the  order passed under section  21 of  the  Act  in  this  case  having  been obtained on  the basis  of statements  which were wrong, the application for eviction should be dismissed.      While it is true that the Court should proceed with the initial presumption  that the  order under section 21 of the Act was  a regular  one, the  Court should still examine the material placed  before it by the tenant inducted under that provision in order to satisfy itself that there has not been any misuse  of the  said provision  by the  landlord  taking advantage of  the helpless situation in which the tenant was placed at the time when such order was obtained.      In the  instant case  it is  seen that there were three wrong statements  made by the respondent when she approached the Additional  Rent  Controller  seeking  permission  under section 21  of the  Act to lease out the property. First, it is not  true that  the building  had  not  been  leased  out earlier. Now  it is  admitted before  us that  there was one Kataria occupying the building as a tenant on a monthly rent of Rs.  100/- only and he had vacated the same about four or five months  before the,  date on  which the  order was made under section  21 while it is true that he had been there as a tenant  even before  the respondent purchased the building in the  year 1972.  After he  vacated the  building, it  was leased out  to the  appellants on  a rent  of Rs.  425/- per mensem. Secondly,  it  is  admitted  that  the  respondent’s mother was not living with her. It is now admitted before us that the  woman who  is more  than 75 years old described as the mother  of  the  respondent  in  the  statement  of  the respondent recorded  by the  Additional Rent Controller when permission was  given under  section 21 is the sister of the respondent’s father although in the course of the pro- 296 ceedings before  the Additional Rent Controller out of which this appeal arises, she was described as the adoptive mother of the  respondent. It  is now stated that she is the foster mother  of  the  respondent  and  that  she  came  with  the respondent  to  the  residence  of  her  husband  after  her marriage. It  is stated that she was suffering from cataract in her  eyes; that it was not ripe for being treated in 1977 when the  order was  passed under  section 21 of the Act and that it was expected that after the cataract was removed she would need  the building in the occupation of the appellants which is equal in size to the ground floor in the occupation of the respondent. Thirdly, the son of the respondent was an young boy  studying in  the seventh class in 1977 and not in the ninth  class. From  the foregoing it is obvious that the respondent had  suppressed that  there was  a tenant  in the building who  had vacated  only a few months before the date of the  application under  section 21  of the  Act; had made

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false statement  about the  relationship with  her so-called foster mother;  had not disclosed the nature of her sickness which was  expected to  be cured  in three years; had stated that her  son was  studying in  the ninth  class to  make it appear that  he would  be sufficiently old at the end of the period of  three years and that he would be in need of extra accommodation. These  statements which were in the nature of half-truths were  apparently made  in order to make good the plea that  there was only a temporary necessity to lease out the building for a short period and that the respondent bona fide anticipated that there would be a pressing necessity to reoccupy the premises at the end of the period which are the two crucial  factors governing  an order under section 21 of the  Act.   The  reasons   given  in  this  case  are  quite unconvincing. We  are  not  satisfied  that  the  respondent honestly believed  when she  applied  for  permission  under section 21  of the  Act that  she would  be in  need of  the premises in question at the end of the stipulated period. On a consideration  of the  material before him, the Additional Rent Controller  was right  in holding  that the  permission under section  21 of  the  Act  had  been  obtained  by  the respondent on  the basis  of wrong  statements but for which the permission would not have been accorded.      It is,  however, urged  that  the  appellants  who  had colluded with  the respondent  when permission  was  granted under section  21 of  the Act  should not  be now allowed to resile from  the stand  they had taken then. It is true that the appellants  who were  the weaker  of the two parties did not question  the  truth  of  the  statements  made  by  the respondent  when   the  permission  was  granted.  But  such collusion, if  any, between the two unequal parties does not confer any sanctity 297 on the  transaction in  question. In cases of this nature it is always open to the weaker of the two parties to establish that the transaction was only a camouflage used to cover its true nature.  Collusion implies the existence of two or more parties who  can deal with each other independently with the object of  entering into an arrangement which may serve as a cloak to  cover up the real state of affairs. When one party can dominate  over the  will of the other, it would not be a case of  collusion but  one of compulsion. 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 predicated 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 innocent party where ’one has the power to dictate, the other has no alternative but to submit are not  uncommon. Cheshire  and Fifoot’s  Law  of  Contract (10th Edn.)  referes to  another type  of 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

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    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 the one 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 com  the pleted,  may  bring  his  action  and           defeat the contract,"      The ground  that the  appellants cannot  challenge  the permission 298 initially granted  under  section  21  of  the  Act  is  not therefore, available in this case.      The Tribunal  and the  High Court  have approached  the present case  in a  mechanical way  and have failed to apply correctly the ratio of the decision in Noronah’s case to the facts before  them. We are of the view that on the facts and in the  circumstances of  the case  the  respondent  is  not entitled to invoke the remedy under section 21 of the Act to recover possession of the premises.      In the  result, the  judgments of the High Court and of the Tribunal  are set aside and the application filed by the respondent under  section 21  of the Act for recovery of the premises is dismissed.      The appeal is accordingly allowed with costs. S.R.                                         Appeal allowed. 299