Bhargava & Anr Vs. Mohinder Nath & Anr  INSC 386 (11 December 1990)
M.N. (J) Venkatachalliah, M.N. (J) Ojha, N.D.
(J) Verma, Jagdish Saran (J)
1991 AIR 1233 1990 SCR Supl. (3) 508 1991 SCC (1) 556 JT 1990 (4) 628 1990
INFO : RF 1992 SC1555 (2,16,20)
Rent Control Act, 1958: Sections 21 and 39--Tenan- cy for limited period---Rent
Controller on basis of admis- sions of parties granting permission--Whether can
be chal- lenged in collateral proceedings.
question of law'--What is.
of Civil Procedure, 1908: Section 9---Civil Court--Jurisdiction of--Competence to take decision--The test.
Contract Act, 1872: Section 8--Stipulation for payment of rent--Whether brings
about a contract of tenancy.
of Property Act, 1882: Section 105--Lease--Yearly rent paid by cheque--Cheque
returned--Effect on lease--What is.
& Phrases: 'Substantial question of law'--Meaning of.
appellants and the respondents by their joint appli- cation to the Rent
Controller sought for and obtained per- mission for a limited tenancy, under
Section 21 of the Delhi Rent Control Act, 1958. The Respondents not having surren-
dered possession upon the expiry of the said period of five years, the
appellants commenced proceedings for re-delivery.
resisted the proceedings raising several conten- tions. They urged that the
appellants were not the owners of the premises at all; that the permission
under Section 21 was vitiated by fraud resulting from a suppression by the
appellants of the material fact that at the relevant time the premises was not
available for letting at all; that respondents having been inducted into
possession as tenant from March 5, 1978 itself, one of the basic jurisdictional
requirements for the grant of permission under Section 21 was absent, and that
at all events a fresh contractual tenancy had been created with effect from
April 6, 1983 immediately upon the expiry of the five year term of the limited
The Rent Controller rejected all the aforesaid conten- tions and made an order
respondents' appeal before the Rent Control Tribunal was unsuccessful, but the
second appeal under Section 39 of the Act was allowed by the High Court which
held that even prior to the limited tenancy the respondents had been in- ducted
into possession as tenants; that the subsequent permission for the limited
tenancy was a mere pretence and the result of a fraud on the statute and
therefore a nulli- ty, and relying on this Court's decision in Subhash Kumar Lata
v. R.C. Chhiba,  4 SCC 709 held that such a nullity could be pleaded in
and against execution as well.
accordingly reversed the orders of the authorities below, and dismissed the
appellants' claim for possession.
landlords' appeal to this Court it was contended that:
both the Rent Controller and the Appellate Tribu- nal having concurrently held
that with the respondents' occupation of the premises from March 5, 1978 to
April 5, 1978 even if true, did not constitute a tenancy in that the other
requisite indicia of such tenancy, namely, the stipu- lation of a consideration
was absent and that being a pure question of fact, the High Court in exercise
of its juris- diction under Section 39 which permitted only an appeal on a
substantial question of law could not reappreciate the evidence and upset the
finality of that finding of fact,
that even if the limited tenancy under Section 21 was ob- tained despite the
subsistence of a tenancy created earlier, the respondents were bound to assail
the validity of the limited tenancy during its subsistence and not as a collat-
eral plea in the course of execution,
Even if the re- ceipt Ex. D.W.1/3 was susceptible of an inference that the
transaction envisaged by it was one of lease could be said to be a question of
law, by no standards it could be said to be a substantial question of law
within the meaning and for the purposes of Section 39 of the Act.
behalf of the tenants it was urged that Section 21 to the extent it runs
counter and forms an exception to the general scheme of the statute its
operation was required to be restricted severely to the expressed conditions
and limitations contained in that section and that wherever permission for a
limited tenancy was sought and obtained suppressing any jurisdictional fact
such as that the pro- spective limited tenant was already in occupation as a
regular tenant, the transaction amounted to a fraud on the statute rendering
the permission void ab initio, that the jurisdiction of the Rent Controller to
grant permission is conditional and that if the conditions upon which alone
permission can be granted are not fulfilled permission cannot be granted in invitum
510 and that consequently the landlord cannot recover posses- sion.
the appeal, this Court,
1(a) The receipt dated March
5, 1978 on which
Respondents relied contained a recital that a cheque for Rs.18,000 mentioned in
it was given as rent for the premises for the period of. 12 months w.e.f. March 5, 1978. The Rent Controller and the
Tribunal, quite erroneously, proceeded to hold that the mere fact that the cheque
had been shown to have been returned had the effect of taking away the consid- eration
for the lease. These authorities mistook the non- payment of rent in point of
fact as equivalent to absence of consideration in point of law. This was
A stipulation for payment of rent was by itself suffi- cient to bring about a
contract of tenancy where, of course, the other element of exclusivity of
possession was shown.
High Court held that a consideration promised is as valid as one paid, and
that, therefore, the circumstance that the cheque was returned would not
detract from the legal consequence of the stipulation to pay rent implicit in
Exhibit DW 1/3. The High Court construed the receipt and found that a lease was
construction of a document which is the founda- tion of the rights of the
parties raises a question of law.
inference from facts admitted or found is a question of law if such an
inference is to be drawn on the application of proper principles of law to the
facts. Such determination is a mixed question of the fact and law. The
submission that the High Court treaded on the forbidden ground of facts cannot
therefore be accepted. [515F]
What is a 'substantial question of law' would cer- tainly depend upon facts and
circumstances of every case. If a question of law had been settled by the
highest court of the country that question however important and difficult it
may have been regarded in the past and however large may be its effect on any
of the parties, would not be regarded as substantial question of law. [515H] Raghunath
Prasad v. Deputy Commissioner of Partabgarh,  54 I.A. 126; Sir Chunilal
V. Mehta and Sons Ltd. v. The Century Spinning and Manufacturing Co. Ltd.,
 Supp. 3 SCR 549 at 557 and 558 and Union
of India v. M/s. Chaman Lal & Co., AIR
1957 SC 652 at 655 & 656, relied on.
Pirojsha Ghaira v. C.P. Syndicate Ltd.,  I. Bom. L.R. 744; Dinkarrao v. Rattansey, I.L.R. (1949) Nag. 224 and Rimmalapudi
Subba Rao v. Noony Veeraju, I.L.R. 1952 Mad.
264, referred to.
In view of the pronouncements of this Court as to the limitations on the
permissible challenge to the exercise of jurisdiction under Section 21, any
appeal to the remedy based on concept of nullity and collateral attack is inap-
propriate. [521H] (b) In a collateral challenge the exercise is not the
invalidation of a decision, but only to ascertain whether the decision
"exists" in law at all and to rely upon inci- dents and effect of its
"non-existence". The permission granted must be presumed to be valid
till set aside. Doc- trine of collateral challenge will not apply to a decision
which is valid ex-hypothesis and which has some presumptive existence, validity
and effect in law. Such a decision can be invalidated by the right person in
'right proceedings brought at the right time. It is only a nullity stemming
from lack of inherent jurisdiction or a proceeding that wears the brand of
invalidity on its forehead that might afford a defence even against
enforcement. Such a collateral challenge may not be available where there is no
lack of inherent jurisdiction but what is disputed is only the existence or
non-existence of facts which though collateral to the merits do require
investigation into and adjudication upon their existence or non-existence on
the basis of evi- dence. If the parties before the Rent Controller have admit- ted
that the fact or the event which gives the Controller jurisdiction is in
existence and there was no reason for the Controller to doubt the bona fides of
that admission as to a fact or event, the Controller is under no obligation to
make further enquiries on his own as to that factual state. The test of
jurisdiction over the subject matter is whether the Court or Tribunal can
decide the case at all and not whether the court has authority to issue a
particular kind of order in the course of deciding the case. [522A-E] Subhash
Kumar Lata v. R.C. Chhiba,  4 SCC 709, com- mented upon.
v. Prem Kumari Khanna,  1 SCR 281;
v. Indian Export House Pvt. Ltd.,  2 SCR 899; Shiv Chander Kapoor v. Amar
Bose,  1 SCC 234 and Yamuna Maloo v. Anand Swarup,  3 SCC 30,
Kumar Butan v. R.P. Oberoi,  4 SCC 20, re- ferred to.
expression 'fraud on the statute' is merely a figurative description of a colourable
transaction to evade the provisions of a statute and does not, for purposes of
choice of the remedy, distinguish itself from the conse- quences of fraud as
vitiating the permission under Section
Permission under Section 21 for letting out the premises to the same tenant for
limited periods more than once successively would not by itself and without
more vitiate the subsequent grants. In one sense, the successive grants of
permission would share, the characteristics of post-facto grant. [524B] Dhanvanti
v. D.D. Gupta,  3 SCC 1, relied on.
jurisdiction of a court depends upon its right to decide the case and not upon
the merits of its decision.
Hugh B. Cox. "The Void Order and the Duty to Obey", 16 U.Chi. L.Rev.
86 (1948), relied on.