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1974 (4) TMI 109

ion of this Court in Udhoo Dass v. Prem Prakash, 1963 All LJ 406 = (AIR 1964 All 1) (FB) requires reconsideration and, therefore, referred the following question for consideration by a larger Bench:- "Whether a person to whom an accommodation governed by the U. P. (Temporary) Control of Rent and Eviction Act, 1947, has been let out by a landlord in contravention of a general order passed by the Magistrate under Section 7 of that Act, is liable to be proceeded against under Section 7-A at the instance of the person in whose favour an allotment order has been passed by the District Magistrate subsequent to the date on which the accommodation was unauthorisedly let out by the landlord to the former person." The material facts of the case are that the previous tenant, Jamal Waris, was occupying the disputed shop situate in the city of Lucknow without any allotment order, i.e. an order of the District Magistrate under Section 7 (2) of the U. P. (Temporary) Control of Rent and Eviction Act, 1947 (hereinafter referred to 'as the Act') and he vacated the accommodation on 2-6-1967. He was in arrears of rent amounting to ₹ 50. Mohd. Ishaq applied to the District Magis .....

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l 1) (supra) the Full Bench has expressed the opinion that where the order of allotment was passed after the private tenant had entered into possession of the accommodation, irrespective of whether a general order under Section 7 (2) of the Act does or does not exist, the special order under Section 7 (2), in other words, the allotment order is, not valid and cannot be enforced under Section 7-A. We respectfully differ with the view. 6. We shall like to make it clear that the rule laid down in the Full Bench case can, in our opinion, be applied only to those cases where no general order as contemplated by Section 7 (2) of the Act, not to let out the accommodation without the permission or order of the District Magistrate, has been passed. In such a case there would merely be the direction contained in Section 7 (1) (a) of the Act, but there shall be no restriction on the landlord to himself make a contract with any person for letting out the accommodation. The restriction imposed by Sub-section (2) of Section 7 comes into play only after the District Magistrate passes a general or special order. When no such order exists, the landlord can unhesitatingly exercise the fundamental rig .....

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y other manner whatsoever, give notice of the vacancy in writing to the District Magistrate". Similarly, Clause (b) of this section places responsibility on the tenant occupying the accommodation to give notice in writing to the District Magistrate of his vacating the accommodation or ceasing to occupy it. Both the landlord and the previous tenant admittedly contravened the provisions of Sub-section (1) of Section 7 for which they can be prosecuted under Section 8 of the Act; but in the absence of a general or. special order under Sub-section (2) of Section 7, they cannot be said to have disregarded the provisions of the Act nor an order passed under Section 7. The intimation under sub-section (1) can be for the information of the District Magistrate to enable him to decide whether or not to issue a general or special order under Sub-section (2). Consequently, in the absence of an order under Sub-section (2) the landlord is free to exercise his ordinary rights, that is, to let out the accommodation. Under Sub-section (2) of Section 7 the District Magistrate can pass a general or special order requiring a landlord to let or not to let to any person any accommodation which is or .....

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d recover from him any amount of rent. The person with whom the landlord may enter into an agreement shall not necessarily be a person who needs the accommodation the most. Needs of other persons may be more urgent. The result shall be that it shall not be possible for the District Magistrate to allot the accommodation to the most deserving person. Further, it shall be possible for the landlord to enhance the rent in spite of the rent being controlled under the provisions of the Act. To put it differently, if a private agreement arrived at between the landlord and another person, as a result of which the latter is put in possession of the accommodation as a tenant, is regarded as a void and unenforceable transaction, any special order passed by the District Magistrate under Section 7 (2) shall become ineffective and the object and the purpose of the Act shall be completely defeated. 11. Coming to the Contract Act Section 10 thereof provides that "all agreements are contracts if they are made by the free consent of parties competent to contract, for a lawful consideration and with a lawful object and are not hereby expressly declared to be void.'' Consequently, agreemen .....

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ndia the force of law. In Article 366(10) the expression 'existing law' has been defined for the purpose of the Constitution, to mean any law, Ordinance, order, bye-law, rule or regulation passed or made before the commencement of this Constitution by any Legislature, authority or person having power to make such a law, Ordinance, order, bye-law, rule or regulation. By virtue of Article 367(1), the General Clauses Act, 1897, is, subject to such adaptations and modifications that may be made therein under . Article 372, apply for the interpretation of the Constitution as it applies for the interpretation of an Act of the Legislature of the Dominion of India. 13. On the application of the principles contained in the above definition contained in the General Clauses Act, 1897 and the Constitution of India it can safely be laid down that the term 'law' includes an order by a competent authority having the force of law. Consequently, where any agreement is forbidden by an order of the competent authority having the force of law, it shall be an agreement forbidden by law as contemplated by Section 23 of the Contract Act. This shall be irrespective of whether the general o .....

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f the District Magistrate under Section 7 (2) of the Act is one which is forbidden by law or is at least of such a nature that, if permitted, it would defeat the provisions of the law. By virtue of Section 23 of the Contract Act the consideration or object of the agreement is unlawful and such an agreement is void. A void agreement is, in the eye of law non-existent and does not confer any right on the parties to the agreement. A void agreement can be disregarded by a third party and, therefore, in a case of the present nature the possession of the so-called lessee being unlawful shall be as trespasser which can be kept out of consideration and the state of affairs existing before he took possession shall come into play. In other words, in respect of an accommodation having been occupied by a person under a private agreement with the landlord, his possession can be overlooked and in the eye of law, the accommodation shall be deemed to be vacant such that the District Magistrate, can pass special order under Section 7 (2), as was done in the present case in favour of Mohd. Ishaq, and if necessary steps under Section 7-A of the Act can be taken to put the allottee into possession of .....

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the statutory provisions. The relationship can thus be regarded as one of statutory tenancy. It is true that a statutory tenant does not enjoy all the benefits and privileges of a lessee as detailed in the Transfer of Property Act, but for so long as he is in occupation of the accommodation he enjoys the status of a tenant and he can easily be called a statutory tenant. See Anand Nivas Private Ltd. v. Anandji Kalyanji's Pedhi, (AIR 1965 SC 414). 19. Thus, the District Magistrate has no power to dictate the term of tenancy or to direct the landlord to enter into a contract of tenancy with the allottee, but once the order of allotment is passed and the allottee takes possession of the accommodation, the relationship between the landlord and the allottee acquires the status of landlord and tenant though the relationship is to a large extent, be governed by the special law, namely, the present Act. 20. The Full Bench was also guided by the factor that the making of the private contract of tenancy was prohibited by the District Magistrate and not by the law, and that the order of the District Magistrate may have the force of law but was not a law. The meaning and scope of the term & .....

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ccommodation as tenant. There is thus not material difference between allowing an accommodation to be used as tenant and entering into a contract of tenancy. 23. Similarly, Desai, C. J. observed that an order made under Section 7 (2) by a District Magistrate may have the force of law but is not law and that allowing the lessee to occupy the accommodation is an act forbidden by the District Magistrate but not by law within the meaning of Section 23 of the Contract Act. We have already made our comments on this point and for reasons already given above, the order of the District Magistrate under Section 7 (2) having the force of law is for the purpose of Section 23 of the Contract Act a 'law'. 24. The Full Bench placed the order of the District Magistrate under Section 7 (2) of the Act in the same category as an injunction order issued by the courts of law. It is said that the injunction order did not stand in the category of law and on similar grounds the order of the District Magistrate may have the force of law but cannot be treated to be law within the meaning of Section 23. Under Article 19(1)(f) of the Constitution the State Legislature can place reasonable restrictions .....

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v. Lakshmi Narain Mathur, MR 1961 All 347 and Shamsher Bahadur v. State, AIR 1964 All 395. A similar view was expressed by a Division Bench in the case of Ravindra Kumar v. Ram Chand Kohli, AIR 1973 All 247 wherein the Full Bench case was distinguished on the ground that the contract of tenancy may not be void between the landlord and the lessee but that will not make the possession of the lessee as that of a valid tenant within the meaning of Section 7 (2) of the Act. However in Ram Lal v. S.M. Singh, 1962 All LJ 260, Desai, C, J. and S.D. Singh J. took the view later adopted in the Full Bench case. It may be mentioned that in this case there was no reference to a general order under Section 7 (2) of the Act. 27. The question referred to the Full Bench proceeds with the assumption that there exists a general order passed by the District Magistrate under Section 7 (2) of the U. P. (Temporary) Control of Rent and Eviction Act, 1947. Consequently, while expressing our opinion on the question referred to the larger Bench, we must restrict ourselves to cases where such a general order has been passed. In respect of such cases, we respectfully differ from the view expressed in the above .....

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the suit out of which the second appeal in which this reference has been made arose, seeking an injunction to restrain the allottee Mohd. Ishaq respondent from dispossessing the appellant from the said shop. The suit was dismissed by the trial court. That decree was affirmed in appeal by the lower appellate court. The plaintiff then filed a second appeal in this Court. While hearing the second appeal the Single Judge being of the opinion that an earlier Full Bench decision of this Court in 1963 All LJ 406 = (AIR 1964 All 1) (FB) required re-consideration made the above reference to this larger Full Bench. The reference assumes that there is a general order passed by the District Magistrate, Luck-now which forbids the landlords from letting out any accommodation to any person without his permission or an allotment order passed by him. That such a general order exists in respect of this district would also be evident from a decision of this Court in AIR 1964 All 395 in which that order dated 22-5-1947 passed by the then District Magistrate, Lucknow has been extracted. 30. We have therefore to see whether the private letting out of the accommodation by the landlord to the plaintiff-ap .....

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be passed if the District Magistrate is satisfied that there has been undue delay or it is otherwise inexpedient to do so. (2) If such person foils to appear in reply to the notice served under Sub-section (1), or, if he appears but fails to satisfy the District Magistrate that the order under Sub-section (2) of Section 7 was not duly passed and that he is entitled to remain in occupation of the accommodation, the District Magistrate may, without prejudice to any other action which may be taken against him under this Act or any other law for the time being in force, direct him to vacate the premises within a period to be specified. (3) Upon the making of the order under Sub-section (2), the person against whom the order is made and every person claiming under him shall vacate the accommodation. If the accommodation is not vacated within the time allowed or such extended period, as the District Magistrate may grant, the 'District Magistrate may evict or cause to be evicted the person or persons and use such force as may be necessary for carrying out the order, and also put the person, entitled under Sub-section (2) of Section 7, in occupation of the accommodation. Sub-section (1 .....

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s any restriction imposed on this common law right to let out that accommodation to any person of his choice. The giving of this intimation may be only for the purpose of record or with a view to enable the District Magistrate, if he so liked to pass an allotment order under Section 7 (2) in favour of some person. But before such an allotment order is actually passed the landlord is not prohibted by Section 7 (1) itself or this sub-section read with Rules 3 and 4 of the aforesaid Rules from letting out the accommodation privately. In fact the landlord after intimating the vacation to the District Magistrate need not wait for any length of time before letting out the accommodation or ask the District Magistrate if he intended to allot it to some one else. If he privately lets out the accommodation to any person before an allotment order is actually passed by the District Magistrate that allotment order would be infructuous and void as there was no vacancy at that time. Such an allotment order could not be enforced by the District Magistrate by taking recourse to the procedure prescribed under Section 7-A. 34. If however the landlord had not actually exercised his right of letting ou .....

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rate, neither the contract of tenancy is void nor the District Magistrate can take proceedings under Section 7-A and dispossess Y to enforce the order of allotment in favour of X. All that can be done in such a case is to prosecute and punish the landlord under Section 8 and possibly the tenant also under the same section read with Section 11 of the Act. 36. With all respects to the learned Judges I am wholly unable to subscribe to the second proposition. Even with regard to the first proposition I find it difficult to agree with the view that an agreement of tenancy made by the landlord in violation of the general order of the District Magistrate is not void and illegal. In fact if the agreement of tenancy between the landlord and the tenant is held to be valid it is difficult to hold that the tenant is still liable to be proceeded against under Section 7-A. I shall now examine the reasons given by the Full Bench in support of its view and state my own reasons for the different view. 37. The reasons given by the Full Bench in support of its view may be summarised as follows : 1. An order of allotment passed by the District Magistrate under Section 7 (2) only directs the landlord t .....

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greement may defeat the object of the Act but it does not defeat any provision of the Act. 8. In some cases proceedings under Section 7-A can also be taken by the District Magistrate if the letting has been done after an allotment order was passed in defiance of that order as well as a general order passed by the District Magistrate. But if the letting had been done only in contravention of general order and the order of allotment was passed subsequent to such private letting proceedings under Section 7-A also cannot be taken. In such a case the only action that can be taken against the landlord and the tenant is criminal action under Sections 8 and 11. 38. I shall examine these reasons seriatim. 1. It is true that a special order passed by the District Magistrate under Section 7 (2) which is popularly known as an order of allotment is in terms of this sub-section a direction issued to the landlord to let out the accommodation to the allottee. But it is not quite correct to say that the relationship of landlord and tenant can be created only when the landlord is pleased to enter in a contract of tenancy with the allottee and that if he is not willing to do so for reasons best known .....

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ld that it is seldom that an Act can be construed to declare something unlawful unless that Act provides a penalty for breach of the provision. In the present case the Act by itself does not contain any provision prohibiting the landlord and another person from entering in a contract of tenancy. But delegates that power to the District Magistrate to impose such a restriction by issuing a general or special order under Section 7 (2). Once that order has been passed by the authority to whom power has been delegated under Section 7 (2) that order is effective and binding on all concerned like any other provision contained in the Act itself. Since the Act itself provides a penalty for breach of such an order it follows that an agreement of tenancy made in violation of that Order would be illegal. 4. Desai C. J. concedes that it is the act of entering into a contract of tenancy in contravention of an order made under Section 7 (2) by the District Magistrate that may be said to be prohibited. But it is an act forbidden by the District Magistrate and not by law within the meaning of Section 23. The District Magistrate does not prohibit the making of such a private contract of tenancy by m .....

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Act and any agreement made in violation of such Order has been held to be void and illegal. Reference may be made to Sita Ram v. Kunj Lal, AIR 1963 All 206 and Mukul v Indian Air Lines Corporation, AIR 1962 Cal 311. In (l888) ILR 10 All 577 the plaintiff was granted a licence by the excise authorities under Section 42 of the Excise Act, 1881, to manufacture and sell country liquor which contained a condition against subletting the benefits of the licence. In the Act itself there was no such prohibition and it simply provided that the violation of any condition of a licence granted under the Act would be a punishable offence. The plaintiff sublet the licence to the defendants in violation of that condition and the defendants executed an agreement to pay to the plaintiff ₹ 1,500. When the plaintiff filed a suit to recover the money on the basis of that agreement, it was held that the subletting of the licence having been made punishable as an offence is to be deemed as an act contrary to law within the meaning of Section 23, Contract Act and the claim to recover the amount due under such an agreement could not therefore be enforceable in a court of law. The same view was taken .....

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at a statutory order like a general Order passed by a District Magistrate under Section 7 (2) of the Act is law within the meaning of Section 23, Contract Act. 7. If an agreement made by a landlord with a person in violation of a general Order issued by the District Magistrate under Section 7 (2) is held as a valid contract it would not only defeat the purpose of the Act but would also make the provisions of that Act as contained in Section 7 read with Rule 3 and Section 7-A nugatory. In that case it would be open to a landlord not to intimate the vacancy to the District Magistrate under Sub-section (1) of Section 7 and to let out the accommodation to any person whom he likes at any rent as agreed upon between him and that person and thereby disabling the District Magistrate from allotting the accommodation to a person whom he thinks it should be allotted under Rule 3 within a period of thirty days of the receipt of the intimation sent by the landlord under Section 7 (1) (a) and thereafter the District Magistrate would also be helpless to dispossess that person by taking recourse to the proceedings under Section 7-A. If such a contract is allowed to stand, it would defeat the provi .....

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he District Magistrate under Section 7 (2) was illegal and void. Reference may be made to the decision in AIR 1961 All 347 and AIR 1964 All 395 (supra). In 1962 All LJ 260 it was held that if a person has already entered into occupation of an accommodation under a contract of lease with the landlord before an order under Sub-section (2) of Section 7 has been passed by the District Magistrate, he cannot be said to be in occupation of an accommodation in contravention of the order passed under Section 7 (2) and cannot be called upon to show cause under Section 7-A (1) why he may not be evicted from that accommodation. The contravention of a prior general order under Section 7 (1) was not considered in this case. 41. Even after the Full Bench decision, a Division Bench of this Court consisting of Satish Chandra and P.N. Bakshi JJ. held in the case of AIR 1973 All 247 that where a general order has been passed by the District Magistrate under Section 7 (2) prohibiting the landlord from letting out any accommodation then, without an allotment order the letting in defiance of such a general order would be unauthorised and in the eyes of Law there was vacancy; and the Rent Control and Evi .....

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