Timblo Irmaos Ltd., Margo Vs. Jorge
Anibal Matos Sequeira & ANR [1976] INSC 332 (16 December 1976)
BEG, M. HAMEEDULLAH BEG, M. HAMEEDULLAH RAY,
A.N. (CJ) SINGH, JASWANT
CITATION: 1977 AIR 734 1977 SCR (2) 451 1977
SCC (3) 474
ACT:
Construction of a power of
attorney--Principles of ejusdem
generis---Object-Purpose--Nature--Frame--Provisions and language
used--Dictionary meaning --Surrounding circumstances, whether power
includes--Incidental to the ascertained objects.
Evidence Act 1872--Sec. 92 proviso
2--Existence of separate oral agreement on which written agreement is silent.
HEADNOTE:
The appellant company sued Mr. & Mrs.
Sequeira for recovery of certain amounts under two contracts of supply of iron
ore. The first contract was signed by Ramesh holder of a power of attorney of
Sequeiras and the second contract was signed by Ramesh's father as the agent of
Ramesh. Under the two contracts Sequeiras were supposed to supply and load iron
ore and were liable to pay demurrage in case of delay in loading the ship and
were entitled to receive certain despatch money if the loading was made
earlier. Sequeiras filed their counter claims. The Court did 'not arrive at a
definite conclusion about the quantity of ore supplied and left that to be
determined in execution proceedings. The court found that the first contract
was binding between the appellant and Sequeiras as it had been ratified by
Sequerias and acted upon by the appellant. The court, however, held that the
second contract was not 'binding on Sequeiras as Ramesh had a limited authority
and, therefore, he could not constitute his father his attorney for the
purposes of executing the second agreement. The trial Court also found that the
appellant had committed breaches of the contract but left the quantum of
damages to be determined in execution proceedings. The decree of the .trial
Court was substantially confirmed in appeal by the Additional Judicial
Commissioner.
HELD: 1. The Judicial Commissioner erred in
concentrating on only one dictionary meaning of. the word "exploitation"
used in the power of attorney executed by Sequeiras m favour of Ramesh. The
court, while interpreting a power of attorney, has to construe the document as
a .whole m the light of its purpose and surrounding circumstances and the
transactions meant to be governed by it. Practice and custom have also some
bearing on the nature and effect of the power of attorney. The purpose of the
powers conferred on the power of attorney have to be ascertained having regard
to the need which gave rise to the execution of the document, the practice of
the parties and the manner in which parties themselves understood the purpose
of the document.
The powers. which are absolutely necessary
and incidental to the execution of the ascertained purposes of the general
powers given must be necessarily implied. Applying the above rules of
interpretation the court came to the conclusion that Ramesh had power to
appoint an agent to execute the contract in question and therefore the second
.contract was also binding on Sequeiras [454A-B, 456A-H] Bryant, Powls, and
Bryant, Limited v. La Banque De Peuple etc. (1893) A.C. 170 @ 177 and 179 and
Jonmenjoy Coondoo v. George ,Alder Watson, 10 I.L.R. Cal. 901 @ 912 approved.
O.A.P.R.M.A.R. Adaikappa Chettiar v. Thomas
Cook & Son (Bankers) Ltd. AIR 1933 PC 78, distinguished.
2. The implied powers cannot go beyond the
scope of the general object tances do not derrogate from the width of the
general power initially conferred of the power of attorney but must necessarily
be subordinated to it Specific in to such a case ejusdem generis cannot be
applied. The mode of construing a document and the rules to be applied to
extract its meaning correctly depends upon not only the nature and object but
also upon the frame, provisions, and language of the documents. In cases of
uncertainty the rule embodied in proviso 2 to section 92 of the Evidence Act
which is applicable to contracts can be invoked.
452 The ultimate decision of such a matter
turns upon the practice and particular facts of each case. [458D-P]
3. The findings arrived at by the Appellate
Court that Sequeiras were prevented from performing their part of the contract,
owing to the failure of the appellant to provide either sufficient lighting or
enough winches to enable due performance of the contract, is unexceptionable.
The Judicial Commissioner rightly concluded that the company had not discharged
its own part of the contract so that it could not claim demurrage or damages.
[458-G-H] The court partly allowed the appeal and remanded the matter back to
the trial court for determining the liabilities of the parties in the light of
the judgment. [459E-F]
CIVIL APPELLATE JURISDICTION: Civil Appeal
No. 1868 of 1968.
Appeal from the Judgment and Decree dated the
21st February 1968 of the Judicial Commissioner's Court at Goa, Daman and Diu
in Appeal No. 3370 of 1964.
S.V. Gupte, Naunit Lal and (Miss) Lalita
Kohli for the Appellant.
V.C. Mahajan and R.N. Sachthey for
Respondents.
The Judgment of the Court was delivered by
BEG, J.--The Plaintiff-appellant Timblo Irmaos Ltd., (hereinafter referred to
as 'the Company') had sued Jorge Anibal Matos Sequeira and his wife
(hereinafter referred to as Sequeiras') for recovery Rs. 2,82,141/claimed under
a contract of 23rd January, 1954, and a sum of Rs. 1,14,700/-, claimed under
another contract of 4th February, 1954. The Sequeiras counter-claimed Rs. 3
lakhs as price of 8000 tons of iron ore supplied to the Company; and pleaded
that a sum of Rs. 1,13,000/-, advanced by the Company to the Sequeiras was to
be adjusted after final determination of the amount due as price, of goods sold
and supplied.
The Sequeiras are holders of a mining
concession. They, it was alleged, had entered into the two contracts, one of
23rd January, 1954, through their attorney, Ramesh Jethalal Thakker
(hereinafter referred to as Thakker Junior), for supplying 8000 tons of iron
ore, altered in some respects, by a later agreement, and the other of 4th
February, 1954, alleged to be binding on the Sequeiras although entered into
through Jethalal C. Thakker (hereinafter referred to as 'Thakker Senior'),
the.father of R.J. Thakker. The most important clause in the contract of 23rd
January, 1954, was that iron ore should be loaded in a ship 'Mary K' at
Marmagoa, and that the loading must be done at the rate of 500 tons per
'weather working day" of 24 hours. Under the contract, the rate of
demurrage for not loading the ship in time was to be paid at the rate of US $
800.00 per day an pro rata for each fraction of a day. The buyer company was to
pay what was called "despatch money" at half the rate of demurrage
for time saved in loading. The payment was to be in the Portuguese Indian
rupees at the exchange rate of Rs. 4.76 per US $. The buyers had also to make
an initial payment of Rs. 55,000/as soon, as delivery by loading began. The
buyers were also to establish a Letter of Credit, before 27th January, 1954, in
favour of 453 the sellers, the Sequeiras, for the full value of the iron ore
after deducting Rs. 55,000/paid initially, and Rs. 1/4 per gross ton awaiting
final settlement by presentation within ten days, at the bank named in the
agreement, by presentation of the certificate of weight issued by the Master of
the vessel. Certificates of the quality and specifications and of final
weighment were to be sent by the buyers after the vessel's arrival at the port
of discharge.
The second agreement of 4th February, 1954,
relates to loading of 6000 to 9000 tons of iron ore of given quality and
specifications in the ship 'Mary K' at the minimum rate of 500 tons per day
commencing delivery within 24 hours of the buyer notifying the requirements to
the seller. It also contained other stipulations similar to those of the first
one. The important point to note about this agreement is that it is signed by
Jethalal C. Thakker as the attorney of his son Ramesh Jethalal Thakker.
It appears that the clause relating to
initial payment was changed so that the sellers, Sequeiras, were paid Rs.
1,13,000/between 25th January, 1954, and 22nd
July, 1954.
It also appears that there was delay in
delivery for which the plaintiff claimed demurrage. There were also complaints
about alleged departure by the seller from the specifications agreed upon. The
Sequeiras, the sellers, had it seems, also applied for an interim injunction so
that the ship's loading capacity may be checked. Under orders of the Court, an
inspection of the ship was made and a report was submitted by an expert on 15th
March, 1954, after the determination of its loading capacity so that the ship
could finally sail only on 16th March, 1954.
The Margao Comarca Court, where the claim and
the counter claims were filed, held that the seller's attorney, Thakker Junior,
who had received Rs. 1,13,000/-, which had to be deducted from the price of the
iron ore supplied, was not duly authorised by the power of attorney executed by
the Sequeiras to sell. The Court did not find enough material to reach a
definite conclusion about the quantity of ore supplied and left that to be
determined in execution proceedings. It, however, held the first contract to be
binding between the parties as it had been ratified by the seller and acted
upon by the buyer. But, the second contract was held to be not binding upon the
Sequeiras as Thakker (Junior) was found to have been given only a limited
authority so that he could not constitute his father his attorney for the
purpose of executing the second agreement. The Trial Court accepted the basis
of the counter-claim of the Sequeiras and found that the company had committed
breaches of contract but left the quantum of damages to be determined in
execution proceedings.
The decree of the Trial Court was
substantially affirmed in appeal. Nevertheless, the Additional Judicial
Commissioner Goa, Daman & Diu, had modified the decree, the appellant
company has come up to this Court in appeal as of right.
Two questions arise for determination before
us. The first is whether the second contract of 5th February, 1954, was duly
covered by the authority conferred by the Sequeiras upon their attorney, Ramesh
Jethalal Thakker, or not. The second 454 relates to the amount of demurrage, if
any, payable by the Sequeiras, the defendants-respondents, to the plaintiff appellant.
On the first question, the Judicial
Commissioner concentrated on the dictionary meaning of the word
"exploitation" used in the power attorney executed by the Sequeiras
in favour of Thackker Junior. The learned Judicial Commissioner took the
meaning of the word from Chambers' 20th Century Dictionary which gave:
"the act of successfully applying industry to any job, as the working of
mines, etc; the act of using for selfish purposes". The learned Judicial
Commissioner also referred to the inability of learned Counsel for the company
to cite a wider meaning from the Oxford Dictionary which the learned Counsel
had carried with him to the Court. The Judicial Commissioner then ruled:
"Hence, I see no escape from the conclusion
that on the basis of the power of attorney given by Sequeira to Ramesh the
latter could not have entered into any agreement for sale of ore extracted from
the mine belonging to Sequeira on his behalf. Consequently, Sequeira is not
bound by the agreement dated 4th of February, 1954".
As already mentioned by us, the first contract
of 23rd January, 1954, was held to-be binding despite this finding because the
parties had acted upon it and dealt with each other on the basis that such a
contract existed. We think that this background can be taken into account as
indicating what the parties themselves understood about the manner in which the
words used in the power of attorney dated 17th January, 1953, executed by
Sequeiras in favour.of Thackker Junior was related to the actual facts or dealings
between or by the parties. Moreover, the power of attorney had to be read as a
whole in the light of the purpose for which it was meant. As it is not lengthy,
we reproduce its operative part. It reads:
"Jorge Anibal de Matos Sequeira, married,
major of age, businessman, landlord, residing in Panglm, whose identity was warranted
by witnesses, said in the presence of the same witnesses that by the present
letter of attorney he appoints and constitutes his attorney Mr. Ramesh
Jethalal, Bachelor, major of age, businessman, from Bombay, residing at present
in Bicholim and conters on him the power to represent him, to make
applications, allegations, and to defend his right in any public offices or
Banks, to draw up and sign applications, papers, documents and correspondence;
specially those tending to acquire petrol, gunpowder, train, transport
vehicles, machines, furniture (alfaias) and other instruments used in mining
industry, apply for and obtain licences for importation and exporation, to give
import and export orders, even temporary, sign applications, suits and only
other things necessary, attach and withdraw documents, make declaration. even
under oath and in general any powers necessary for the exploitation of the mine
named Pale Dongor situate at Pale for the concession of which they said
Siqueira applied and which he is going to obtain to impugn, object, 455 protect
and prefer appeals upto the higher Courts, notify and accept notifications and
summons in terms of Sec. 35 and 37 of the C.P.C., to use all judicial powers
without any limitation, to subrogate these powers to someone else. This was
said and contracted. The witnesses were Bablo Panduronga Catcar and Xec Adam
Xecoli, both married landlords, major of age from Bicholim who sign below".
Apparently, practice and custom have some
bearing on these transactions in Goa. It is this reason that, although the
power of Attorney was executed by Mr. Sequeira, yet, his wife was impleaded,
according to the practice in Goa, and no objection was raised either on the
ground that she was wrongly impleaded or that the power of attorney was
vitiated on the ground that it was executed only by her husband. In any case,
the subsequent agreement of 23rd January, 1954, which was held to have been
acted upon, and the similar agreement of 5th February, 1954, of which also the
defendants were bound to have and did have full knowledge, were never
repudiated by Sequeiras, before the filing of the suit before us. Indeed, the
agreement of 5th February, 1954, appears to be a sequal to the first agreement
of 23rd January, 1954. We do not think that the two could be really separated
in the way in which the Judicial Commissioner thought that they could be by
holding that the one was acted upon whereas the other was not. In any case, the
second was the result of and a part of the same series of dealings between the
parties.
We do not however propose forest our findings
on the ground that the parties are bound by the second agreement due to some
kind of estoppel. We think that the terms of the power of attorney also justify
the meaning which the parties themselves appear to have given to this power of
attorney that is to say, a power to conduct business on behalf of the Sequeiras
in such a way as to include sales on behalf of Sequeiras.
We think that perhaps the most important
factor in interpreting a power of attorney is the purpose for which it is
executed. It is evident that the purpose for which it is executed must appear
primarily from the terms of the power of attorney itself, and, it is only if
there is an unresolved problem left by the language of the document, that we
need consider the manner in which the words used could be related to the facts
and circumstances of the case or the nature or course of dealings. We think
that the rule of construction embodied in proviso 6 to Section 92 of the
Evidence Act, which enables the Court to examine the facts and surrounding
circumstances to which the language of the document may be related, is
applicable here, because we think that the words of the document, taken by
themselves, are not so clear in their meanings as the learned Judicial
Commissioner thought they were.
As we have already mentioned, the learned
Judicial Commissioner chose to concentrate on the single word "exploitation"
torn out of its context. The word "exploitation" taken by itself,
could have been used to describe and confer only such general powers as may be
13--1546 SCI/76 458 them. If the word 'negotiate' had stood alone, its meaning
might have been doubtful, though, when applied to a bill of 'exchange or ordinary
promissory note, it would probably be generally understood to mean to sell or
discount, and not to pledge it. Here it does not stand alone, and, looking at
the words with which it is coupled, their Lordships are of opinion that it
cannot have the effect which the appellant gives to it, and, for the same
reason, 'dispose of' cannot have that effect".
We think that this case also bears out the
mode of construction adopted by us.
We were then referred to
O.A.P.R.M.,A.R..Adaikappa Chettiar v. Thomas Cook & Son (Bankers) Ltd.,(1)
where the well known principle of ejusdem generis was applied to hold that
general words following words conferring specifically enumerated powers
"cannot be construed so as to enlarge the restricted power there
mentioned". In this case, the purpose of the general power was
subordinated to the specific powers given which determined the object of the
power of attorney. There is no deviation in this case from the general rules of
construction set out above by us. We have indicated above that implied powers
cannot go beyond the scope of the general object of the power but must
necessarily be subordinated to it. In fact, in a case like the one before us,
where a general power of representation in' various business transactions is
mentioned first and then specific instances of it are given, the converse rule,
which is often specifically stated in statutory provisions (the rules of
construction of statutes and documents being largely common), applies. That
rule is that specific instances do not derrogate from the width of the .general
power initially conferred. To such a case the ejusdem generis rule cannot be
applied. The mode of construing a document and the rules to be applied to
extract its meaning correctly depend upon not only upon the nature and object
but also upon the frame, provisions, and language of the document. In cases of
uncertainty, the rule embodied in proviso 2 to Section 92 of the Evidence Act,
which is applicable to contracts, can be invoked. Thus, the ultimate decision,
on such a matter, turns upon the particular and peculiar facts of each case.
Coming now to the second question, we find
that the findings of fact recorded by the Judicial Commissioner are
unexceptionable. Firstly, it was found that, although, under the contract, the
defendants-respondents could load iron ore at any time during 24 hours, which
included the night, yet, the defendants were prevented from doing so owing to
the failure of the plaintiff to provide either sufficient lighting or enough
winches to enable due performance of the contract. Secondly, it was admitted
that the appellant never opened a Letter of Credit with the named bank by 27
January, 1954, as promised by it. Thirdly, the delay in loading was held to be
due to the fault of the company. The Judicial Commissioner rightly concluded
that the company had not discharged its own part of the contract so that it
could not claim (1) A.I.R. 1933 PC 78.
459 demurrage or damages. Indeed, it was
found that the company did not have to pay any demurrage at all to the shippers
for delayed departure.
Learned Counsel for the appellant relied
strongly on the following terms in the contract of 23rd January, 1954:
"Demurrage (if any) in loading payable
by Seller at the rate of US $ 800.00 per running day fraction of day pro rata.
Buyers to pay despatch money at half the demurrage rate for all time saved in
loading. Payment either way in Portuguese Indian rupee currency at the rate of exchange
of Rs. 476/for US $ 100.00." The contention was that this created an
absolute liability to pay for delay in loading irrespective of whether the
company had to pay the shippers any demurrage. It was urged that the liability
was upon the seller irrespective of whether such payment had to be made to the
shipping company or not. We think that the demurrage could not be claimed when
the delay in loading was due to the default of the respondents themselves. It
is apparent that the basis upon which the agreement to pay demurrage rested was
that the appellant will afford proper facilities for loading. When the
appellant itself had committed breaches of its obligations, it is difficult to
see how the respondents could be made responsible for the delay in loading. We
think that the Judicial Commissioner had rightly disallowed this part of the
claim.
In the result, we partly allow this appeal,
set aside the finding of the Judicial Commissioner as regards the binding
nature of the contract dated 5th February, 1954. We hold that this document
embodied the terms of an agreement which was legally binding on both sides
before us. The case will now go back to the Trial Court for determination of
the liabilities of the parties to each other for alleged breaches of contract
except to the extent to which the findings negative the claim to demurrage and
the admitted payment of Rs. 1,13,000/by the appellant to the defendants which
will have to be taken into account. The parties will bear their own costs.
P.H.P. Appeal allowed in part 462 Ltd.,
Calcutta v. Commissioner of Excess Profits Tax, West Bengal(1) wherein the High
Court held .that when a party at whose instance the reference had been made
under section 66(1) of the Indian Income tax Act, 1922 does not appear at the
hearing of the reference, the High Court is not bound to answer the question
referred to it and should not do so. It is urged by Mr. Manchanda that the
above decision has been followed by some of the other High Courts. As against
that Mr. Desai on behalf of the appellant has urged that the correctness of
those decisions is open to question in view of the decision of this Court in
the case of Commissioner of Income-tax, Madras v. S. Chenniappa Mudaliar(1). It
was held by this Court in that case that an appeal filed by the assessee before
the Tribunal under section 33 of the Act should be disposed of on merits and
should not be dismissed in default because of non-appearance of the appellant.
The Court in this context referred to section 33(4) of the Act and particularly
the word "therein" used in that sub-section. It is urged by Mr. Desai
that as the Tribunal is bound to dispose of the appeal on merits even though a
party is not present, likewise the High Court when a question of law is
referred to it, should dispose of the reference on merits and answer the
question referred to it. In our opinion, it is not essential to express an
opinion about this aspect of the matter, because we are of the opinion that the
High Court was not functus Officio in entertaining the application which had
been filed on behalf of the appellant for re-hearing the reference and
disposing of the matter on merits.
A party or its counsel may be prevented from
appearing at the hearing of a reference for a variety of reasons. In case such
a party shows, subsequent to the order made by the High Court, declining to
answer the reference, that there was sufficient reason for its nonappearance,
the High Court, in our opinion, has the inherent power to recall its earlier
order and dispose of the reference on merits. We find it difficult to subscribe
to the view that whatever might be the ground for non-appearance of a party,
the High Court having once passed an order declining to answer the question
referred to it because of the non-appearance of that party, is functus officio
or helpless and cannot pass an order for disposing of the reference on merits.
The High Court in suitable cases has, as already mentioned, inherent power to
recall the order made in the absence of the party and to dispose of the
reference on merits. There is nothing in any of the provisions of the Act
which, either expressly or by necessary implication, stands in the way of the
High Court from passing an order for disposal of the reference on merits. The
courts have power, in the absence of any express or implied prohibition, to
pass an order as may be necessary for the ends of justice or to prevent the
abuse of the process of the court. To hold otherwise would result in quite a
number of cases in gross miscarriage of justice.
Suppose, for instance, a party proceeds
towards the High Court to be present at the time the reference is to be taken
up for hearing and on the way meets with an accident.
Suppose, further, in such an (1) 27 I.T.R.
188. (2) 74. I.T.R 41.
463 event the High Court passes an order
declining to answer the question referred to it because of the absence of the
person who meets with an accident. To hold that in such a case the High Court
cannot recall the said order and pass an order for the disposal of the
reference on merits, even though full facts are brought to the notice of the
High Court, would result in obvious miscarriage of justice. It is to meet such
situations that courts can exercise in appropriate cases inherent power. In
exercising inherent power, the courts cannot override the express provisions of
law. Where however, as in the present case, there is no express or implied
prohibition to recalling an earlier order made because of the absence of the
party and to directing the disposal of the reference on merits, the courts, in
our opinion, should not be loath to exercise such power provided the party
concerned approaches the court with due diligence and shows sufficient cause
for its non-appearance on the date of hearing.
Our attention had been invited to the
decision of the Allahabad High Court in Roop Narain Ramchandra (P) Ltd. v. Commissioner
of Income-tax, U.P.(1) wherein the High Court held that it has no power to
recall an order returning a reference unanswered. For the reasons stated above,
we are unable to agree with the view taken by the Allahabad High Court in that
decision. The facts brought out in the application filed on behalf of the
appellant show, in our opinion, that there was sufficient cause for the nonappearance
on behalf of the appellant on the date of hearing as well as for the non-filing
of the paper books within time. It also cannot be said that there was lack of
diligence on the part of the appellant in approaching of the High Court for
recalling it's earlier order and for disposing of the reference on merits. We
accordingly accept the appeal, set aside the order of the High Court and remand
the case to it for answering the questions referred to it on merits. Looking to
all the circumstances, we make no order as to costs.
M.R. Appeal allowed.
(1) 84 I.T.R. 181.
466 The Judgment of the Court was delivered
by BHAGWATI, J.---There is a house bearing No. 10-A situate at Khuldabagh in
the city of Allahabad belonging to respondent No. 3. This house consists of a
ground floor and a first floor. There are two tenements on the ground floor and
two tenements on the first floor. Each of the two tenements in the first floor
is in the possession of a tenant.
The tenement on the northern side of the
ground floor is in the possession of respondent No. 3, while the tenement on
the southern side is in the possession of the appellant as a tenant since the
last over 35 years. The appellant pays rent of Rs. 4/per month in respect of
the tenement in his occupation. Respondent No. 3, after determining the tenancy
of the appellant, made an application before the Rent Control and Eviction
Officer, Allahabad under section 3 of the U.P. Rent Control & Eviction Act,
1947 for permission to file a suit to eject the appellant on the ground that
she bona fide required the rented premises in the possession of the appellant
for her use and occupation. The Rent Control & Eviction Officer, on a
consideration of the evidence led before him, came to the conclusion that the
need of respondent No. 3 for the rented premises was not bona fide and genuine
and on this view, he rejected the application of respondent No. 3 by an order
dated 23rd February, 1972.
Respondent No. 3 preferred a revision
application against the decision of the Rent Control and Eviction Officer to
the Commissioner and, on the coming into force of the U.P. Urban Buildings
(Regulation of Letting, Rent & Eviction) Act, 1972 (U.P. Act No. 13 of
1972), this revision application came to be transferred to the District Court
under section 43 (m) of that Act and it was numbered as Civil Appeal No. 245 of
1972. The District Judge by an order dated 12th January, 1973 agreed with the
view taken by the Rent Control and Eviction Officer and dismissed the appeal.
However, within a short time thereafter,
respondent No. 3 undaunted by her failure, filed an application before the
Prescribed Authority on 18th January, 1974 under section 21(1) of U.P. Act No.
13 of 1972 claiming release of the rented premises in her favour on the ground
that she bona fide required them for occupation by herself and the members of
her family for residential purposes. The Prescribed Authority held that
Explanation (iv) to section 21(1) of U.P. Act No. 13 of 1972 was attracted in
the present case, since the ground floor of house No. 10-A constitute a building,
a part of which was under tenancy of the appellant and the remaining part was
in the occupation of respondent No. 3 for residential purposes, and hence it
must be held to be conclusively established that the rented premises were bona
fide required by respondent No. 3. The Prescribed Authority also went into the
question of comparative hardship of the appellant and respondent No. 3 and
observed that greater hardship would be caused to respondent No. 3 by refusal
of her application than what would be caused to the appellant by granting it.
On this view, the Prescribed Authority allowed the application of respondent
No. 3 and released the rented premises in her favour.
The appellant being aggrieved by the order
passed by the Prescribed Authority prefered an appeal to the District Court,
Allahabad. The 467 District Court agreed with the view taken by the Prescribed
Authority that Explanation (iv) to section 21(1) of U.P. Act No. 13 of 1972 was
applicable to the facts of the present case and "that fact conclusively
proved that the building was bona fide required" by respondent No. 3. But
on the question of greater hardship, the District Court disagreed with the
conclusion reached by the Prescribed Authority and held that the appellant was
likely to suffer greater hardship by granting the application than what
respondent No. 3 would suffer by its refusal. The District Court accordingly
allowed the appeal and rejected the application of respondent No. 3 for release
of rented premises.
This led to the filing of a writ petition by
respondent No. 3 in the High Court of Allahabad challenging the legality of the
order rejecting her application. Respondent No. 3 contended that since her bona
fide requirement of the rented premises was established by reason of
applicability of Explanation (iv) to section 21 (1) of U.P. Act No. 13 of 1972,
the question of comparative hardship was immaterial and the District Court was
in error in throwing out her application on the ground that greater hardship
would be caused to the appellant by granting her application than what would be
caused to her by refusing it. The High Court while dealing with this contention
observed that the Prescribed Authority had recorded a finding of fact that
"the accommodation on the ground floor constituted one building" and
"the respondent was in possession of a part of the building and the land
lady was in occupation of the remaining part of the building for the
residential purposes" and this finding of fact reached by the prescribed
Authority was confirmed by the District court and in view of this finding which
the High Court a apparently thought it could not disturb, the High Court
proceeded on the basis that Explanation (iv) to section 21 (1) of U.P. Act No.
13 of 1972 was applicable in the present case. But the High Court went on to
point out that once it was held that Explanation (iv) to section 21(1) of the
U.P. Act No. 13 of 1972 was attracted, there could be no question of examining
comparative hardship, for in such a case greater hardship of the tenant would
be an irrelevant consideration. The High Court on this view allowed the writ
petition, set aside the order of the District Court and allowed the application
of respondent No. 3 for release of the rented premises but gave two months'
time to the appellant to vacate the same. The appellant being dissatisfied with
this order passed by the High Court preferred the present appeal with special
leave obtained from this Court.
Now, it may be pointed out straight away that
if Explanation (iv) to section 21(1) of U.P. Act No. 13 of 1972 is applicable
in the present case, the question of comparing the relative hardship of the
appellant and respondent No. 3 would not arise and respondent No. 3 would
straight away be entitled to an order of eviction as soon as she shows that the
conditions specified in the Explanation are satisfied.
Section 21 (1), as it stood at the material
time with the retrospective amendment introduced by the U.P. Urban Buildings
(Regulation of Letting, Rent & Eviction) (Amendment) Act, 1976 being U.P.
Act 470 accommodation which is the subject-matter of tenancy. The question thus
is: what is the sense in which the word 'building' is used when it occurs for the
second time in the Explanation. The context clearly indicates that the word
'building' is there used to denote a unit, of which the accommodation under
tenancy constitutes a part and the remaining part is in the occupation of the
land, lord for residential purposes. The accommodation under tenancy and the
accommodation in the occupation of the landlord together go to make up the
'building'. The use of the word 'part' is a clear pointer that the 'building',
of which the accommodation under tenancy and the accommodation in the
occupation of the landlord are parts, must be a unit. Where a superstructure
consists of two or more tenements and each tenement is an independent unit
distinct and separate from the other, the Explanation would be of no application,
because each tenement would be a unit and not part of a unit. It is only where
there is a unit of accommodation out of which a part is under tenancy and the
remaining part is in the occupation of the landlord, that the Explanation,
would be attracted. To determine the applicability of the Explanation, the
question to be asked would be whether the accommodation under tenancy and the
accommodation in the occupation of the landlord together constitute one unit of
accommodation? The object of the Legislature clearly was that where there is a
single unit of accommodation, of which a part has been let out to a tenant, the
landlord who is in occupation of the remaining part should be entitled to
recover possession of the part let out to the tenant. It could never have been
intended by the Legislature that where a super-structure consists of two
independent and separate units of accommodation one of which is let out to a
tenant and the other is in the occupation of the landlord, the landlord should,
without any proof of bona fide requirement, be entitled to recover possession
of the tenement let out to the tenant. It is difficult to see what social
object or purpose the legislation could have had in view in conferring such a
right on the landlord. Such a provision would be plainly contrary to the aim
and objective of the legislation. On the other hand, if we read the Explanation
to be applicable only to those cases where a single unit of accommodation is
divided by letting out a part to a tenant so that the landlord, who is in
occupation of the remaining part, is given the right to evict the tenant and
secure for himself possession of the whole unit, it would not unduly restrict
or narrow down the protection against eviction afforded to the tenant. This
construction would be more consistent with the policy and intendment of the
legislation which is to protect the possession of the tenant, unless the
landlord establishes his bona fide requirement of the accommodation under
tenancy. We may point out that Mr. Justice Hari Swarup has also taken the same
view in a well considered judgment in Chuntwo Lal v. Addl. District fudge. Allahabad(1)
and that decision has our approval.
Since the question as to the applicability of
Explanation (iv) on the facts of the present case has not been considered by
the High Court as well as the lower courts on the basis of the aforesaid
construction of the Explanation, we must set aside the judgment of the High
Court as also the order of the District Court and remand the case to the
District Court with a direction to dispose it of in the light (1975) 1 A.L.R.
362.
471 of the interpretation placed by us on the
Explanation, It was contended before us on behalf of the appellant that since
Explanation (iv) has been omitted by U.P. Act No. 28 of 1976, respondent No. 3
was no longer entitled to take advantage of it and her claim for possession
must fail.
But the answer given by respondent No. 3 to
this contention was that the omission of Explanation (iv) was prospective and
not retrospective and since Explanation (iv) was in force at the date when
respondent No. 3 filed her application for release, she had a vested right to
obtain release of the rented premises in her favour by virtue Explanation (iv)
and that vested right was not taken away by the prospective omission of
Explanation (iv) and hence she was entitled to rely on it despite its omission
by U.P. Act No. 28 of 1976. We have not pronounced on these rival contentions
since we think it would be better to leave it to the District Court to decide
which contention is correct. If the District Court finds that by reason of the
omission of Explanation (iv) by U.P. Act No. 28 of 1976 respondent No. 3 is no
.longer entitled to rely on it to sustain her claim for release of the rented
premises in her favour, it will be unnecessary for the District Court to
examine the further question as to whether Explanation (iv) is attracted on the
facts of the present case, If, on the other hand, District Court finds that the
omission of Explanation (iv) by U.P.
Act No. 28 of 1976 being prospective and not
retrospective, respondent No. 3 is entitled to avail of that Explanation, the
District Court will proceed to decide whether the two tenements or the .around
floor constituted one single unit of accommodation so as to attract the
applicability of Explanation (iv) and for this purpose, the District Court may,
if it so thinks necessary, either take further evidence itself or require
further evidence to be taken by the Prescribed Authority. If the District Court
finds that the case is covered by Explanation (iv), there would be no question
of examining comparative hardship of the appellant and respondent No. 3, and
respondent No. 3 would straight away be entitled to an order of release of the
rented premises in her favour. On the other hand, if the District Court comes
to the conclusion that by reason of the omission of Explanation (iv) of the
U.P. Act No. 28 of 1976 respondent No. 3 is not entitled to rely on it or that
Explanation (iv) is not applicable on the facts of the present case, the
application of respondent No. 3 would fail, since it has already been found by
the District Court--and we do not' propose to disturb this finding--that the
appellant would suffer greater hardship by granting of the application than
what would be suffered by respondent No. 3 if the application were to be
refused. We accordingly remand the matter to the District Court with no order
as to costs.
P.H.P. Appeal allowed.
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