LACHOO MAL versus RADHEY SHYAM

LACHOO MAL

RADHEY SHYAM

February 10, 1971

[K. S. HEGDE AND A. N. GROVER, JJ.}

U.P. Temporary Control of Rent and Eviction Act, 1947, ss. l(A) •nd 3-Cons1ructio11 after 1951-Agreement that Act tho11/d •pp/y-lf binding upon landlord-hidian Contract Act (9 of 1872), a. 23-Scope of.

The appellant was the tenant of the respondent's shop. As the latter wanted to make sotlle constructions they entered into an agree· ~nt in 1962, according to which, the appellant was to vacate the shop but re-occupy it on the same rent as soon as the construction was Cl)m-pleted. It was also agreed that all the sections of the U.P. (Temporary) Control of Rent and Eviction Act, 1947, shall be fully applicable to the new tenancy. After the construction was completed the appellant resum· ed possession and offered rent. The respondent refused the rent and filed suit for ejectment. In appe'al, the High Court held that the ap· pellant was not entitled to the protection of the Act, because, the res-pondent was entitled to rely on s. !A according to which nothing in the Act shall apply to building constructed on or after !st January, 1951, and that the agreement was unlawful within the meaning of s. 23 of the lndian Contract Act, 1872.

In appeal to this Court,

HELD : The general principle is that every one has right to waive the advantage of law made for his benefit in his private capacity, when public right or public policy is not infringed thereby. Section lA was meant for the benefit of owners of buildings constructed after tan· uary 1, 1951. But there is no prohibition in bhe section against land· lord and his tenant entering into an agreement,. that they would not !>e gove;;iecl by that section. If particular owner did not want to avail himself of the benefit of the section, there was no bar created by it to his waiving or giving ·up or abandoning the advantage and no question of pnlicy, or public policy is involved. Therefore, the performance of the agreement fa the present caae would not entail the transgression of, any law and the agreement was not void under s. 23 of the Indian Contract Act. [696 C; 6<)7 D·E; 698 A-CJ

Nemlnath Appayya Hanumannavar v. Jamboorao Sateppa Kocherl, A.I.R. (1966) Mys, 154, approved.

Vita Food Products Incorporated v. Unus Co. Ltd. (in Liquldatio11), (1939) A.C. 277 at 293, referred to.

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 18 of 1968.

Ap~ by special leav~ from the judgment and, order dated April 14, 1967 of the Allahabad High Coun in Second Appeal No. 307 of 1965.

V. M. Tarkunde; Umlila Kapoor and R. K. Khanna, for the' appellant. '

S. V. Gupte and M. Iii· Goswami, for the respondent.

The Judgment of the ~ourt was delivered by

Grover, J. This is an appeal by specilj].

leave from

judgment of the Allahabad High Court and involves the question whether the appellant, who was the tenant, was entitled to the benefit of s. 3 of U.P. (Temporary) Control of Rent and Eviction Act, 194 7, hereinafter called the "Act".

The facts are not in dispute. The appellant had been occupy-ing shop in Mathura oelonging to the respondent from very lbng time at monthly rental of Rs. 18.37. In 1962 the respon-dent wanted to construct rooms on the upper storey of the shop for his own residence. Thisl construction could possibly be made only if the appellant vacated the shop for some period. On June 4, 1962, the appellant and the respondent entered into an agree-ment.. · After reciting the. ab6ve facts it was agreed that the shop would be vacated by thel ~ppellant on the condition that as soon as the required construction had been completed he would resume possession of the shop. ' At this stage the following clauses of the agreement may be set out.

"1. On this day the second party has withdrawn his possession from 1 [the shop bearing ][No. ][1/2C, situate ]at Tilakdwar, and !fas given the same to the first party.

2. The first patty shall get the shop constructed within thirty days and would then hand over the pos-session of the sanie to the second party.

! 3. At present a. sum of Rs.

18-6-0 per mensem,

which includes house tax and water tax, ·is being paid by ·the second party to the first party as rent. After the c0nstruction of' the shop, the first part}' shall be entitled to ·get the. s~ine amount as rent from the second party. All the s~ti6ns of the U.P. Rent Control and Eviction Act shall be fully applicable to .this house. The first party shall in no case be entitled to derive benefits from it as the property built after 1-1-SL"

After the construction had been made and the appellant had resumed his possession ,of the shop the appellant offered rent to the respondent but the latter did not accept the same. Ultimately he 'deposited the rent frbm April 1, 1962 to July 31, 1963 in court under s. 7 of the Act. The respondent served notice dated April 20, 1963 apparently under the provisions of the

Transfer of Property Act purporting to terminate the tenancy of the appellant. This was followed by suit which the respondent filed for ejectment of the appellant and for arrears of rent, damages etc. The Munsif dismissed the suit holding that the appellant was entitled to the protection conferred by s. 3 of the Act which was applicable. The District Judge, on appeal, took the contrary view and decreed the suit. The High Court affim1-ed the judgme!J.t of the District Judge. It was held, inter-a/ia, that the respondent was entitled to rely on s. 1-A of the Act and the appellant could not be given the benefit of s. 3.

Now there can be no manner of doubt that the tenancy between the appellant and the respondent was governed by the provisions of the Act prior to the reconstruction of the premises. It appears to have been accepted that when the respondent made the re-construction after the agreement mentioned above in 196~ the buildings came to be constructed within the terms of s. 1-A of the Act. That section s~,y5' that nothing in the Act shall apply to any building or part of building which was under. erection or was constructed on or after January 1, 1951. It will ·have to be decided whether it was open to the respondent 'to give up the benefit of this provision or waive it by means of an agreement of the nature which was entered into between the appellant and the respondent in June 1962. According to the preamble on the cessation of the applicability of sub-rule 2 of rule 81 of the Defence of India Rules after Sep-tember 30, 1946 it was considered expedient owing to the short-age of accommodation in the State of Uttar Pradesh to provide for the continqance during limited period of powers to control the letting and the rent of accommodation and to prevent the evic-tion of tenants therefrom. Section 3 imposed restrictions on evic-JI tion. No suit could be filed in any civil court against the tenant for his eviction from any accommodation except on one or more of the grounds mentioned in sub-s. ( 1) of that section without the permission of the District Magistrate or of . the Commissioner to whom revision lay against the order of the District Magistrate. SectioP 5 contained provisions relating to control of rent. The ether provisions of the Act need not be noticed. It has never been disputed that the Act was -enacted for affording protection to the tenants against eviction except in the manner provided by the Act. It was also meant to regulate the le!tting of accommoda-tibn, fixing of rent etc., the provisions relating to which were all intended to confer benefits on the tenants against unreasonable and capricious demands of the landlords. At the same time it appears that the legislature was conscious of the fact that the Act might retard and slacken the pace of construction of new ~uild­ings because the la.'1.dlords would naturally be reluctant to invest

money in properties the letting of which would be governed by the stringent provisions of the Act. It was for that purpose that was for that purpose that the saving provision in s. 1-A seems to have been inserted. The essential question that has to be resolved is whether S. 1-A was merely in the nature of an exemption in favour of the landlords, with· regard to the buildings constructed after January 1, 1951 and conferred benefit ort them which they could give up or waive by agreement or contractual arrangement and whether the consideration or object of1 [such ][an ][agreement would not be law-]ful within the meaning of s. 23 of the Indian Contract Act.

It was for that purpose that was for that purpose that The

The general principle 1[is that every one has right ][;to ][waive ]and to agree to waive the advantage of law or rule made solely for the benefit and protection of the individual in his private capa-city which may be dispensed with without infringing any public right or public policy. Thus the maxim which sanction the non-observance of the statutory provision is cuilibet licat renuntitire juri pro se introducto_ (See Maxwell on Interp!etation of Sta-tutes, Eleventh Edition, pages 375 & 376.) If there is any express prohibition against contracting out of statute in it then no question can arise of apy one entering into contract which is so prohibited but where there is no such prohibition it will have to be seen whether an Ad: is intended to have more extensive operation as matter of public policy. In Halsbury's Laws of England, Volume 8, Third Edition, it is stated in paragraph 248 at page 143 : '

"As general ~e, any person can enter into binding contract to waive the benefits conferred upon him by an Act of Parliament, or, as it is said, -can contract himself out of the Act, unless! it can be shown that such an agreement is in the circumstances of the particular case contrary to public wlicy. Statutory conditions ·may, however, be imposed in such terms that they cannot be waived by agreement, and, in certain circumstances, the legislature has expressly provided that any such agree-ment shall be void."

In the footnote it is pointed out that there are many statutory pro-visions expressed to apply "notwithstanding any agreement to the contrary", and also stipulation by which lessee is deprived of his right to apply for relief against forfeiture for breach of cove-nant (Law of Property Act, 1925). Section 23 of the Indian Contract Act provides :

"The consideration. or object of an agreement ii. lawful, unless--1 it is forbidden by law; or

is of such nature that, if pennitted, it would defeat the provisions of any law; or is fraudulent; or

involves or implies injury to the person or property of another; or

the Court regards it as immoral, or opposed to public policy.

In each of these cases, the consideration or object of an agreement is said to be unlawful. Every agree-ment of which the object or consideration is unlawful is void."

It has never been the case of the respondent that the considera-tion or object of the agreement which was entered into in June 1963 was forbidden by law. Reliance has been placed mainly on the next part of the section, namely, that it is of such nature that it would defeat the provision of any law and in the present case it would be s. 1-A of the Act.

Now s. 1-A does not employ language containing prohibi-tion against or impose any restriction on landlord and tenant entering into an agreement that they would not be governed by that section. We concur with the view expressed in Neminath Appayya Hanumannavar v. Jamboorao Satappa Kocheri(') that the words "if permitted it would defeat the provisions of any law" in s. 23 of the Contract Act defer to perfonnance of a:t agreement which necessarily entails the transgression of the pro-visions of any law. What makes an agreement, which is other-wise legal, void is that its performance is impossible except by disobedience of law. Clearly no question of illegality can arise unless the performance of the unlawful act was necessarily the effect of an agreement. The following observations of Lord Wright in Vita Food Products Incorporated v. Unus Company Ltd.(~) (in Liquidation) are noteworthy in this connection :

"Nor must it be forgotten that the rule by which contracts not expressly forbidden by statute or declared to be void are in proper cases nullified for disobedience to statute is rule of public policy only, and public policy understood in wid·~r sense may at times be better served by refusing to nullify bargain save on serious and sufficient grounds."

We. are unable to hold that the perfonnance of the agreement which was ent~red inte> between the parties in the present case would involve an illegal or unlawful act. In our judgment s. s. 1-A.

In our judgment s. s. 1-A.

(I) AJ.R [1966] Mysore 154. (2) [1939] A.C. 277, 293.

-was meant for the benefit of owners of buildings which were under erection or were constructed after January 1, 1951. If parti-cular owner did not wish to avail of the benefit of that section there was no bar created by it in the way of his. waiving or giving up or abandoning the advantage or the benefit c9ntemplated by the section. No question of policy, much less public policy, was involved and such benefit or advantage could alway.:1 be waived. That is what was done in the present case and we are unable to agreei with the High Court that the consideration or object of the agreement entered into between the parties in June 1962 was unlawful in view of s. 23 of the Contract Act.

In the result the appeal is .allowed, the judgment of the High Court is set aside and that of the trial court restored. The appel· tant will be entitled to his costs in this court. ·

Appeal allowed.