Waman Shriniwas Kini Vs. Ratilal
Bhagwandas & Co [1959] INSC 14 (16 February 1959)
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-EjectmentAgreement 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 subtenants, 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 Control
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 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.
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 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 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 subletting of the
premises. The defence of the appellant was that under the terms of the lease he
had the right to sublet the premises. As to the claim on the ground of nonpayment
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 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 apply 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 express
terms allowed sub-letting as follows :" Notwithstanding anything to the
Contrary in any law for the time being inforce, 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 subletting 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 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 rescission, though not on the contract.
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 conductor 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 isnot
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:" 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 tollhouses.
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 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.
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