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PETITIONER: WAMAN SHRINIWAS KINI

       Vs.

RESPONDENT: RATILAL BHAGWANDAS & CO.

DATE OF JUDGMENT: 16/02/1959

BENCH: KAPUR, J.L. BENCH: KAPUR, J.L. IMAM, SYED JAFFER DAS, S.K.

CITATION:  1959 AIR  689            1959 SCR  Supl. (2) 217  CITATOR INFO :  R          1973 SC 921  (10)  D          1985 SC 507  (13)  RF         1986 SC1194  (10)  RF         1987 SC 117  (27)  RF         1991 SC 744  (12)

ACT:        Landlord  and Tenant-Ejectment- Agreement of lease  allowing        sub-letting--Sub-letting  prohibited  by  statute-Landlord’s        suit  for ejectment-Right of ejectment  under  statute-Equal        Participant in illegality-Plea of Waiver-Agreement to  waive        an illegality-Bombay Hotel and Lodging Houses Rates  Control        Act, 1947 (Bom. 57 of-1947), ss. 13(1)(e),15-Indian Contract        Act, 1872 (9 of 1872), s. 23.

HEADNOTE: The  appellant was a tenant originally in the  old  building but  after it was purchased by the respondent he vacated  it and  became  a  tenant  under  the  respondent  in  the  new premises.   In  the  old building  the  appellant  had  sub- tenants,  who  shifted to the new premises  along  with  the appellant  when the latter occupied those premises.  One  of the  terms  of the lease which were contained  in  a  letter dated  June  7,  1948,  written by  the  respondent  to  the appellant  provided: " In the shops in the old  chawl  which are with you, you have kept sub-tenants.  We are  permitting you  to keep sub-tenants in the same manner, in  this  place also." On April 20, 1949, the respondent brought a suit  for ejectment  against the appellant on the ground, inter  alia, that s. 15 of the Bombay Hotel and Lodging Houses Rates Con- trol Act, 1947, prohibited sub-letting and under s. 13(1)(e) of the Act the landlord has the right to evict the tenant on account  of  sub-letting.  The appellant’s defence  was  (1) that s. 15 of the Act was confined to "any other law ", that it  did  not  apply to contracts between  the  landlord  and tenant  and  therefore  it did  not  preclude  an  agreement between the parties as to sub-letting, (2) that the  parties were in pari delicto and therefore the respondent could  not succeed, and (3) that the right of the respondent to sue for ejectment  on  the ground of sub-letting  being  a  personal right for his benefit, he must be taken to have waived it as

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he  had allowed the appellant to sub-let and,  consequently, he could not evict him under s. 13(1)(e) of the Act. Held  : (1) that the non-obstante clause  "  Notwithstanding anything contained in any law " in s. 15 of the Bombay Hotel and  Lodging Rates Control Act, 1947, applies  to  contracts also  as  they would fall under the provisions  of  the  law relating to contracts; (2)  that the respondent was entitled to sue for  ejectment, though the agreement recognised sub-letting, as the suit was brought  not  for the enforcement of the  agreement  but  to enforce the right of eviction which flowed directly from  an infraction  of  the provisions of s. 15 of the Act  and  for which the Act itself 28 218 provided a remedy.  The section is based upon public policy, and  where public policy demands, even an equal  participant in an illegality is allowed relief by way of restitution  or rescission, though not on the contract; and, (3)  that the plea of waiver which the appellant  relied  on cannot be sustained because as a result of giving effect  to that plea the court would be enforcing an illegal  agreement and thus contravene the statutory provisions Of s. 15 Of the Act.  An agreement to waive an illegality is void on grounds of public policy and would be unenforceable. Case law reviewed.

JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeal No. 674 of 1957. Appeal  by special leave from the judgment and decree  dated August  10,  1955,  of  the  Bombay  High  Court  in  C.  R. Application  No. 1213 of 1953, arising out of  the  judgment and  decree  dated April 25, 1953, of the  Assistant  Judge, Thana,  in  C. A. No. 97 of 1952, against the  judgment  and decree  dated  January 31, 1952, of the Court of  the  Civil Judge, J. D. Kalyan, in Suit No. 153 of 1949. Purshottam  Tricumdas, Rameshwar Nath and S. N. Andley,  for the appellant. H.   J. Umrigar, Ratnaparkhi Anant Govind and W.  P.    Oka, for the respondent. 1959.  February 16.  The Judgment of the Court was delivered by KAPUR,  J.-This  is an appeal by special leave  against  the judgment of the High Court of Bombay confirming the order of ejectment passed by the Assistant Judge, Thana.  The  tenant who  was the defendant in the suit is the appellant and  the landlord who was the plaintiff is the respondent. The facts giving rise to this litigation shortly stated  are that  the appellant was a tenant for about 20 years  in  the premises  known  as  " Fida Ali Villa  "  in  Kalyan.   This building was purchased by the respondent who gave notice  to the  appellant  to vacate, as he wanted to construct  a  new building  on  the site of the old building.   The  appellant agreed to vacate and the respondent let to him a portion  of his new building which 219 was riot far from " Fida Ali Villa ". The appellant had four sub-tenants, three of them also shifted to the new  premises which were let to the appellant by the respondent.  Although it  was  disputed,  the courts below have  found  that  they occupied  the same position qua the appellant.  The  4th,  a Bohri, was fixed up by the  respondent in some  other place. There  was  some  dispute  as to the  date  when  these  new

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premises  were let to the appellant, the appellant  alleging that they were let on July 1, 1948, and the respondent  that they  were let on June 1, 1948.  The trial Court found  that they  were let on June 1, 1948.  The terms of the lease  are contained in a document dated June 7,1948, which is a letter in  Marathi written by the respondent to the  appellant  and contains the following terms as to sub-tenancy: " In the shops in the old chawl which are with you you  have kept sub-tenants.  We are permitting you to keep sub-tenants in the same manner, in this place also ". The  parties  were not agreed as to the correctness  of  the translation  of this term.  The submission of the  appellant was  that the word ’sub-tenant’ should be in the plural  and of  the  respondent that it should be in  the  singular  but whether it is in the singular or plural it does not make any difference to the principal argument advanced in this Court. On  January  3,  1949, the respondent  gave  notice  to  the defendant to vacate the premises on the ground of nonpayment of rent and sub-letting which it was alleged had resulted in the termination of the tenancy. On  April  20,  1949,  the respondent  brought  a  suit  for ejectment  on  the ground of non-payment of  rent  and  sub- letting  of the premises.  The defence of the appellant  was that  under the terms of the lease he had the right to  sub- let  the  premises.  As to the claim on the ground  of  non- payment  of rent be deposited the arrears of rent in  court. The trial Court held that subletting was lawful in spite  of s. 15 of Bombay Hotel and Lodging Houses Rates Control  Act, 1947 (Bom. 57 of 1947).  He also held that the appellant did not occupy the premises on the same terms and conditions  on which he occupied the old premises in " Fida Ali 220 Villa".  He passed a decree for Rs. 445 on account  of  rent remaining  due  and  dismissed  the  respondent’s  suit  for ejectment.  On appeal the Assistant Judge at Thana  reversed the  decree  holding  that  s.  15  of  the  Act  completely prohibited sub-letting and under  s. 13(1)(e) of the Act the landlord  bad  the right to evict the tenant on  account  of sub-letting.   The  appellant then went in revision  to  the High  Court  of  Bombay,  but  it  affirmed  the  order   of ejectment.  The appellant has come to this Court by  special leave. Counsel  for  the  appellant urged that  there  was  no  new tenancy after the coming into force of the Act and therefore ss.  13(1)(e) and 15 of the Act did not apply; (2) that  the tenant  had not sub-let the premises to the sub-tenants  and they were merely licensees of the landlord; (3) that no  new sub-tenancy  had been created ; (4) that s. 15 was  confined to  ’any other law’; it did not apply to  contracts  between the landlord and tenant and therefore it did not preclude an agreement  between the parties as to sub-letting;  (5)  that the parties were in pari delicto and therefore the plaintiff -respondent could not succeed.  He also raised a new  ground which  had  not been raised in the courts below  or  in  the grounds of appeal or in the statement of case in this Court, that  the respondent had waived his right in regard  to  the prohibition  against  sub-tenancy and the  provision  in  s. 13(1)(e)  was for the protection of his rights which he  was entitled to waive. The courts below have held that the tenancy by the letter of June 7,1948, was a new tenancy and not a continuation of the old  and that the sub-tenants were tenants of the  appellant and  not  licensees of the respondent and in this  Court  no serious  argument  was  addressed  on  these  points.    The previous  tenancy was of a different building called I  Fida

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Ali  Villa’ which came to an end when the appellant  vacated those premises and entered into a new agreement of lease  in regard  to the premises in dispute.  There ",as  no  privity between the respondent and the sub-tenants of the  appellant and   they  could  not  be  termed  his  licensees.    These contentions  are  without substance and  have  rightly  been rejected. 221 It  was then argued that under s. 15 of the Act there is  no prohibition  against  a contract of  sub-letting,  the  non- obstante  clause being confined to other laws.  The  section when quoted runs as follows:- " Notwithstanding anything contained in any law it shall not be  lawful after the coming into operation of this  Act  for any tenant to sub-let the whole or any part of the  premises let to him or to assign or transfer in any other manner  his interest therein: Provided that the (State) Government may, by notification in the  Official  Gazette, permit in any area the  transfer  of interest  in  premises held under such leases  or  class  of leases  and  to  such  extent as may  be  specified  in  the notification ". This  section prohibits sub-letting and makes  it  un-lawful for  a tenant to assign or to transfer his interest  in  the premises  let  to him.  The non-obstante clause  would  mean that even if any other law allowed subletting, e. g., s. 108 of  the  Transfer of Property Act,  the  sub-letting  would, because of s. 15, be unlawful.  This would appy to contracts also as all contracts would fall under the provisions of the law  relating  to  contracts,  i.  e.,  Contract  Act.    An agreement contrary to the provisions of that section (s. 15) would  be  unenforceable as being in  contravention  of  the express  provision of the Act which prohibits it. It is  not permissible to any person to rely upon a contract the making of which the law prohibits (s. 23 of the Contract Act). Counsel  for  the appellant contended that the view  of  the Bombay High Court in P. D. Aswani v. Kavashah Dinshah  Mulla (1) was erroneous and that the correct rule was laid down by that  Court in Cooper V. Shiavax Cambatta (2).  That  was  a case  under s. 10 of Bombay Rents, Hotel Rates  and  Lodging Houses Rates (Control) Act (Bom.  VII of 1944) which in  ex- press terms allowed sub-letting as follows :- "  Notwithstanding anything to the Contrary in any  law  for the time being in- force, a tenant may sublet any portion of his   premises  to  a  sub-tenant,  provided  be   forthwith intimates in writing to his landlord (1) (1953) 56 Bom.  L.R. 467. (2) A.I.R. 1949 Bom. 131. 222 the fact of his having so sub-let the premises and also  the rent at which they have been sub-let ". It  was contended that the non-obstante clauses in s. 10  of Act  VII  of 1944 and of s. 15 of the Act being  similar  in language  must be similarly interpreted.   The  non-obstante clause  has to be read in conjunction with the rest  of  the section.   Section  10  of the Act of  1944  permitted  sub- letting  on  certain  conditions.   By  s.  9  of  that  Act provision  was made for a Contract between the landlord  and the tenant prohibiting sub-letting and in Cooper v.  Shiavax Cambatta  (1) the two provisions were reconciled  by  saying that,  a contract under s. 9 prevailed over  the  permission given  by s. 10.  But s. 15 expressly  prohibits  subletting and  therefore a contract to the contrary cannot  neutralise its prohibitory effect.  The non-obstante clause of the  two sections,  s. 10 of the Act of 1944 and of s. 15 of the  Act

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therefore cannot be said to have the same effect. The  respondent’s  suit for ejectment was brought  under  s. 13(1)(e) which provides: "  Notwithstanding  anything  contained  in  this  Act  (but subject  to the provisions of section 15), a landlord  shall be  entitled  to recover possession of any premises  if  the Court is satisfied (e)  that the tenant has, since the coming into operation of this  Act,  sub-let  the whole or part of  the  premises  or assigned  or  transferred in any other manner  his  interest therein ; ". It was contended that s. 13(1)(e) had to be read  separately and  not in conjunction with s. 15 of the Act.  The  section itself  makes  it  quite clear that it  is  subject  to  the provision  of s. 15 and the two sections must  therefore  be read  together.   The  appellant  pleaded  that  under   the agreement between him and the’ respondent he was entitled to sub-let the premises.  Such an agreement, in our opinion  is void because of the provisions of s. 15 of the Act and s. 23 of  the Contract Act and enforcement of the agreement  would produce the (1)  A.I.R. 1949 Bom. 131. very  result  which the law seeks to guard  against  and  to prevent  and  by sustaining the plea of  the  appellant  the Court  would be enforcing an agreement which  is  prohibited and made illegal. The appellant relied on the maxim in pari delicto potior est conditio posidentis to support his plea that the  respondent could  not enforce his right under s. 13 (1)(e).   But  this maxim  "  must  not be understood as meaning  that  where  a transaction  is  vitiated by illegality the person  left  in possession  of goods after its completion is always  and  of necessity entitled to keep them.  Its true meaning is  that, where the circumstances are such that the Court will  refuse to  assist  either  party, the consequence  must,  in  fact, follow that the party in possession will not be disturbed ". (Per   Du  Parcq,  L.  J.,  in  Bowmakers  Ltd.  v.   Barnet Instruments  Ltd. (1).  The respondent in the  present  case did not call upon the Court to enforce any agreement at all. When  the  instrument of lease was executed  and  possession given  and sub-letting done it received its full effect;  no aid   of  the  Court  was  required  to  enforce  it.    The respondents’  suit  for ejectment was not  brought  for  the enforcement  of the agreement which  recognised  sub-letting but  he  asked the Court to enforce the  right  of  eviction which  flows directly from an infraction of a  provision  of the  Act  (s. 15) and for which the Act  itself  provides  a remedy.   There is thus a manifest distinction between  this case  where  the plaintiff asked the Court to afford  him  a remedy against one who by contravening s. 15 of the Act  has made  himself liable to eviction and those cases  where  the Court  was called upon to assist the plaintiff in  enforcing an  agreement the object of which was to do an illegal  act. The  respondent is only seeking to enforce his rights  under the statute and the appellant cannot be permitted to  assert in a Court of justice any right founded upon or growing  out of  an illegal transaction.  Gibbs &  Sterret  Manufacturing Co.  v.  Brucker (2).  In our opinion s. 15 of  the  Act  is based  on public policy and it has been hold that if  public policy demands it even an equal participant in the (1) [1945] I K.B. 65, 72. (2) (1884) III U.S. 597; 28 L. Ed. 534. 224 illegality  is allowed relief by way of restitution of  res- cission, though not on the contract.

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It  was next contended that s. 13(1)(e) is a  provision  for the protection of private rights of the landlord and  unless there  is in the Act itself any provision to  the   contrary such  rights  as  far as they were personal  rights  may  be parted  with or renounced by the landlord.  In  other  words the  right  of the respondent to sue for  ejectment  on  the ground of subletting being a personal right for his benefit, the  landlord  must  be taken to have waived  it  as  by  an express  contract he had allowed the tenant to  sub-let  and consequently  he  could  not evict the  appellant  under  s. 13(1)(e) of the Act. The  plea  of waiver was taken for the first  time  in  this Court  in arguments.  Waiver is not a pure question  of  law but  it is a mixed question of law and fact.  This plea  was neither  raised  nor  considered by  the  courts  below  and therefore ought not to be allowed to be taken at this  stage of  the  proceedings.  But it was argued on  behalf  of  the appellant  that according to the law of India the duty of  a pleader is to set up the facts upon which he relied and  not any legal inference to be drawn from them and as he had  set up all the circumstances from which the plea of waiver could be  inferred lie should be allowed to raise and argue it  at this  stage  even  though  it had not  been  raised  at  any previous  stage not even in the statement of case  filed  in this Court and he relied upon Gouri Dutt Ganesh Lal Firm  v. Madho Prasad (1).  Assuming that to be so and proceeding  on the  facts found in this case the plea of waiver  cannot  be raised because as a result of giving effect to that plea the Court  would  be  enforcing an illegal  agreement  and  thus contravene the statutory provisions of s. 15 based on public policy  and  produce  the  very  result  which  the  statute prohibits  and makes illegal.  In Surajmull  Nargoremull  v. Triton Insurance Co. (2), Lord Sumner said:- "  No  Court  can  enforce as  valid  that  which  competent enactments  have  declared  shall  not  be  valid,  nor   is obedience to such an enactment a thing from (1) A.I.R. 1943 P. C. 147. (2) (1924) L.R. 52 I. A. 126. 225 which  a  Court  can  be dispensed by  the  consent  of  the parties,  or by a failure to plead or to argue the point  at the  outset: Nixon v. Albion Marine Insurance Co. (1).   The enactment is prohibitory.  It is not confined to affording a party  a protection of which he may avail himself or not  as he  pleases.  It is not framed solely for the protection  of the revenue and to be enforced solely at the instance of the revenue  officials, nor is the prohibition limited to  cases for which a penalty is exigible In the instant case the question is not merely of waiver  of statutory  rights enacted for the benefit of  an  individual but whether the Court would aid the appellant in enforcing a term of the agreement which s. 15 of the Act declares to  be illegal.  By enforcing the contract the consequence will  be the  enforcement  of  an  illegality  and  infraction  of  a statutory provision which cannot be condoned by any  conduct or agreement of parties.  Dhanukudhari Singh v. Nathima Sahu (2).  In Corpus Juris Secundum, Vol. 92, at p. 1068, the law as to waiver is stated as follows:- "............  a waiver in derogation of a  statutory  right is- not favoured, and a waiver will be inoperative and void, if it infringes on the rights of others, or would be against public policy or morals............... In Bowmakers  Limited v. Barnet Instruments Ltd. (3) the same rule was laid  down. Mulla in his Contract Act at page 198 has stated the law  as to waiver of an illegality as follows:-

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"  Agreements which seek to waive an illegality are void  on grounds  of public policy.  Whenever an illegality  appears, whether  from the evidence given by one side or  the  other, the  disclosure is fatal to the case.  A stipulation of  the strongest form to waive the objection would be tainted  with the  vice  of the original contract and void  for  the  same reasons.  Wherever the contamination reaches, it destroys ". This, in our opinion, is a correct statement of the law  and is supported by high authority.  Field, J., in (1) (1867) L.R. 2 Ex. 338.  (2) (1907) 11 C. W. N. 848, 852. (3)  [1945] 1 X.B. 65, 72. 29 226 Oscanyan v. Winchester Arms Company (1) quoted with approval the observation of Swayne, J., in Hall v. coppell (2)- "  The  principle  is indispensable to  the  purity  of  its administration.   It will not enforce what it has  forbidden and denounced.  The maxim Ex dolo malo non oritur actio,  is limited  by no such qualification.  The proposition  to  the contrary strikes us as hardly worthy of serious  refutation. Wherever the illegality appears, whether the evidence  comes from  one side or the other, the disclosure is fatal to  the case.   No  consent  of the  defendant  can  neutralise  its effect.  A stipulation in the most solemn form, to waive the objection,  would be tainted with the vice of  the  original contract,  and  void  for the same  reasons.   Wherever  the contamination reaches, it destroys ". Waiver  is  the  abandonment  of  a  right  which   normally everybody  is  at  liberty to waive.  A  waiver  is  nothing unless  it amounts to a release.  It signifies nothing  more than  an intention not to insist upon the right.  It may  be deduced  from  acquiescence or may be  implied.   Chitty  on Contract,  21st  Ed., p. 381 : Stackhouse v.  Barnston  (3). But  an agreement to waive an illegality is void on  grounds of  public  policy and would be unenforceable. In Mytton v.  Gilbert(4) Ashurst, J., said:- "  Besides, there is still further reason why  the  trustees should  not  be  estopped  ; for this is  a  public  Act  of Parliament, and the Courts are bound to take notice that the trustees  under this Act had no power to mortgage the  toll- houses.   This  deed  therefore  cannot  operate  in  direct opposition  to  an Act of Parliament,  which  negatives  the estoppel ". Vaughan  Williams, L. J., in Norwich Corporation v.  Norwich Electric Tramways Company(5) said :- "  The case is not like that of a provision in an  agreement which is for the benefit of one of the parties and which  he may  waive.   This is a provision in an Act  of  Parliament, which, though to some extent (1) (1881 103 U.S. 261 ; 26 L. Ed. 539.  (2) 7 Wallace 542. (3) (1805) 10 Ves. 453; 32 E.R. 921. (4) (1787) 2 T.R. 171 ; 100 E.R. 91.  (5) [1906] 2 K.B. 119, 124. 227 it may be for the benefit of the parties to the  difference, must  be regarded as inserted in the interest of the  public also In  that case there was a provision made by the  Legislature that disputes mentioned in the section of the Act were to be determined by an Expert nominated by the Board of Trade  and it  was  contended that though not in the  strict  technical sense estoppel, it was a waiver of the provisions introduced into  the  Statute for the benefit of  private  rights.   No doubt  that  was  a case which proceeded on  a  question  of jurisdiction but the judgment proceeded on the principle  of

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waiver of a statutory provision inserted in public interest. Thus the plea of waiver is unsustainable. In our opinion, therefore, the judgment of the High Court is sound and the appeal must therefore be dismissed with costs. Appeal dismissed.