SRI KRISHNA KHANNA

709'

ADDITIONAL DISTRICT MAGISTRATE, KANPUR AND ORS.

February 26, 1975.

[K. K. MATHEW, P. N. BHAGWATI AND N. L. UNTWALIA, JJ.]

U.P. (Temporary) Control df Rent and Eviction Act, 1947, Sections 3, 7 and 7A and Control of Rem and Eviction Rules, 1949, Rules 3, 4, 5 and 6lntimation of racancy by landlord-Allotment order made afrcr expiry af rflc

ri'quircd period-Allotment order, if i11valid.

Compromise Decree-Compromise void, being w1/awful a11d opposed to public policy-Respo11dent. if committed fraud in ignoring void compromise while l•Pf'fyi11g for eviction of appellant.

The appellant who is the owner of the building bearing No. 24/6, Tulsa Kathi, Kanpur, lives in the upper floor of the building with his son and other members of the family.

There are two shops in the ground floor in which tenants had been inducted.

One of the shops has been in possession of Raghu. nath Prasad Mehrotra, respondent no. 3 and his brother Kanahyalal Mehrotra who have been carrying on the business of Druggists and Chemists in the said shop as partners of the firm Pioneer Drug Stores. The other shop was in the teaancy of Bata Shoe Company Ltd. Since the said Company had taken another shop on rent sometime in the year 1961 it was about to vacate the shop in the building of the appellant. He, therefore, filed an application on 7 .. J 1-1961 before the Rent Control and Eviction Officer (Rent Controller) with a copy to the District Magistrate, Kanpur under Rule 6 of the Control of Rent and Eviction Rules, 1949 framed under Section 17 of the U.P. (Temporary) Control of Rent and Eviction Act, 1947 praying for the release of the shop in his favour on the ground that he requ, ired the ao:ommodation for his own use for establishing a business for his son.

On 2-5-1962. respondent No.· 3 made an application under section 7 ( 2) of the Act for allotment of the accommodation to him. There were four more applicants under section 7(2). The shop was actually vacated by Bata Shoe Company on 15-8-1962. On 16-8-1962 intimation was given by the apPellant to the Re.nt Controller about the vacancy of the shop in accordance with section 7(1 ). The Additional District Magistrate, to whom proceedings had been transferred, made an order on 17-9-1962 refusing to release the shop to the appellant and directed its allotment to respondent No. 3. In pursuance of the orc!er made in his favour, the respondent got actual possession of the shop from the appellant who had occupied the shop fn the meantime.

Before the filing of the application by the third respondent on 2-11-1962 under section 7A of the Act, the appellant had filed on 22-9-IQ62, suit No. 132/ I 962 in the Court of First Civil Judge at Kan, pur challenbing the allotment order of the Additional District Magistrate and the Rent Controller i\mpleading the third respondent as the sole defendant in the suit. A decree for permanent injunction was asked for.

Interim injunction was granted. The suit ended in compromise on 11-10-1%2. The appellant filed an application for review on 17-11-1962 before the Rent Controller asking him to review bis e{parte order dated 15-11-1962 made under section 7A of the Act chiefly on two grounds viz. (!) that no notice was served upon the appellant; (2) that the third respondent had obtained the order fradulently by suppressing the fact of compromise entered in Suit No. 13211962. The Rent Controller refused to review his oruer and disrnissed the application on 8-1-1963. The appellant on the same date i.e. on 8-1-1963 filed a petition in the Allahabad High Court under Article 226 of the Constitution to challeng~ the various orders of allotment and delivery of possession made by 1 spondents I and 2 from time tc time.

The Writ J>etition was dismissed by a learned single Judge on 7-5-1963.

Special Appeal No. 254/1963 was dismissed by a Bench of the Allahabad High Court on 3-2-1964.

The present appeal was preferreti in this Court on grant of certificate by the High Court.

It was contended on behalf of the appellanC that

(i) The order of allotment havini not been made within 30 days of the receipt oi' the intimation sent by the landlord under s1:ction 7 (1) (a) of the Act as required by Rule 3 of the Rules was llltr11

ire~ and void;

(ii) Respondent No. 3 had no right to apply for possession under section 7 A of the Act after having entered into a compromise in Suit No. 132/ 1962;

(iii) that the order of allotment issued by the Rent Controller was bad

as it was mechanically issued on the basis of the order of the Additional District Magistrate and without any application of the miad by the to rm er.

Dismissini the appeal,

HELD : (By Court)

(i) Section 3 of the Act providing for restrictions on eviction is baS<:d oil public policy. It is intended to protect the weaker section of the commwlity in gem:ral by granting equality of bargaining power. [714D; 718E]

Murlidhar Agarwal and A11r. v Slate of Uttar Pradesh and Ors.; A.I.R. 1974 S.C. 1924, relied on

In Jiwa11 Singh v. Rajindra Praad & Anr., Civil Appeal No. 999(N") of 1971 decided on 18-12-1974, this Court held that if the landlord failed to ducharge his obligation of giving 7 days' notice in accordance with !lltio• 7(1)(a), he !Olli bis right of making a nomination under Rule 4. The District Magistrate has got to i; riakc the orde~ of allotment within 30 days of the r•eccipt of the intimation sent by the landlord under 11ection 7 (1 )(a) of the Act H• has, at the same time, to give notice of bis order of allotmeni to the landlord.

If the landlord receives no notice from the District Magistrate within 30 days, which as a matt.er of construction under Rule 4 must mean shortly after th• expiry of 30 days of the receipt by the landlord under section 7(1)(a), of an order of allotment having been made within that period, he gets a right to nominate tenant. Ordinarily and generally the District Magistrate shall bav•

to allot the accommodation to the nominee o_f the landlord but for special

reason~ to be recorded in writing, he may depart from the nomination made by llhe landlord and allot the accommodation to some other person, even to a person who was an appiicant before him before the expiry of the period Of 30 days and due to one reason or the other no order of allotment could be made in his favour .within the said period. If, however, the landlord does not mat. a nomination in accordance with Ruic 4 he cannot challenge the order of allotment subsequently made by the District Magistrate on the expiry of . the 'ieriod of 30 days only on the ground of its having been made beyond the timr.

[7150-E, F-716B; 718E-719F]

(ii) In the instant caac it is not correct to say that the order of allotment made on the 17th September, 1962-two days after the expiry of the period of 30 days was invalid on that account alone. The High Court is also right in its view that no order of allotment was poMible to be made in this case before disposal of the landlord's claim under Rule, 6. There is no time limit fixed for disposal of. such a claim. Of course it should be disposed of u quicklJ as possible; preferably within the period of 30 days mentioned in Rule 3. Thaa

being so even, in the light of Rule 6 it is difficult to nullify an order or allot- . ment made by the District Magistrate metely on the ground of havin1 been

made on the expiry of the period -0f 30 days.

On the facts of this case !lllrely the order of allotment was not invalid. [716D-E; 719F-720B]

(iii) The order of allotment in this case was made by the Additional Dia trict Mastrate, respondent No. 1. It inay not be quite correct to say th11t it was purely an administrative order as has been the view of the Hilb Court in the Special Appeal. But the order was made by him in

1' ll

s. I:, KHANNA v. A.D.M. (UntwaUa, J.)

7 I 1

a quasi-judicial manner after hearing the parties concerned and after fully applying his mind. He, being a delegate of the District Magistrate, waa compelftt

to make order of allotment. So was the Rent Controller. But the latter morely issued the formal order made by the former. It was not a case where die authority competent to make the order mechanically did it on the directioa or in pursuance of an order of a differenr authority not competent to pa9' the order.

[717G-718B; C-D]

(ii) By majority (Mathew and Untwalia, JJ.)

The appellant filed Civil Suit No. 132/1962 against tire third respondent to challenge the order of allotment made in his favour by respondent Nos. 1 aad 2.

Neither of the said two respondents was impleaded as a defendant in ti. suit.

But that apart, the agreement entered into between the appellant amid

spondent No. 3 embodied in the compromise petition dated 11-10-1962 Wfll void under section 23 of the Contract Act as it was unlawful and against tit• public policy of the Act under the Rules.

So long as the Act and the llules continued in force the control of letting vested in the Districl. Magistrale a"' not in the portie8, By an agreement of the kind embodied iri the compromi!e petition the parties could not curtail the wwers of the District Magistrate. n was unlawful and against the public policy of the law to do so.

RespondeDt No. 3 committed no fraud in ignoring the void compromise when he applied for eviction of the appellant under section 7A of the Act and for dcliYerv of aclulll, physical possession to him.

[717C-FJ

Per Bhagwati, J. (dissentina)

Even if the compromise was unlawful and the consent decree was oa taa\ account void, t'he very fact of the 3rd respondent having submitted to the co•- sent deem:, declaring the order of allotment to be invalid and recognising the right of the appellant to occupy the shop for himself vi.r-a-vl.t the 3rd respoa. dent, was a highly relevant circumstance bearing on the exercise of the discretion of the District Magistrate, and it ought to have been disclosed to the District Magistrate. It is a well settled proposition of law and this propositioa

should apply equally in the field of administrative law, that when a. party approaches a tribunal for discretionary relief, he must not only come wi1Ja' clean hands but must also show the utmost good faith and disc!<* all material facts having a bearing on the exercise of discretion of the authority which are

within bis knowledge. He cannot escape this obligation on the plea that th• other side can always, if it so chooses, appear and bring the material facts to the notice of the authority. It is an obligation of confidence which he owes to the authority and this obligation is impoeed by law in the larger interesta of administration of justice so that justice, whether dispensed by Civil court or by

adminitrative authority, remains pure and unsullied. The non-disclOSUI'I of the fact of consent decree by the 3rd respondent in the application made by ltim vitiated the order of the Rent Control and Eviction Ofticer under 111Ction

"!A. [722C-723B; 72•A-EJ

Civ1L APPELLATE JURISDICTION : Civil Appeal 1;0, 38 of 1968.

From the Judgment and Decree dated the 3rd February, 1964 of the Allahabad High Court in Spl. Civil Appeal No. 254 of 1963.

S. T. Desai, S. S. Bhatia, J. P. Goyal and S. M. Jain, for the 11ppellant .

. f3ishan Narain, B. P. Maheshwari and Surtsh Sethi, for respondent H No. 3.

The Judgment of the Court was delivered by Untwalia,

J . . P. N. Bhagwati, J. gave a dissenting Opinion,

712 sUPREME COURT REPORTS [1975] 3 s.c.R.

UNTWALIA, J.-There is a building bearing no. 24/6, Tulsa Kothi, situated at Mall in the City of Kanpur, The appellant in this appeal filed by certificate of the Allahabad High Court is the owner of the said building. He lives in the upper floor of the building with his son and other members of the family. There are two shops in the ground floor in which tenants had been inducted. One of the shops has been coming in possession of Raghunath Prasad Mehrotra, respondent no. 3 and his brother Kanahyalal Mehrotra who have been carrying on the business of Druggists and Chemists in the said shop as parilners of the firm Pioneer Drug Stores. The other shop was in the tenancy of Bata Shoe Company Ltd. Since the said Company had taken another shop on rent sometimr in the year 1961 it was about to vacate the shop in the building of the appellant. He, therefore, filed an applic;;. ion on 7-11-1961 before the Rent Control and Eviction OUicer

(fc, r brevity, Rent Controller) with a copy to the District Magistrate, Kanpur under Rule 6 of the Control of Rent and Eviction Rules, 1949 framed under section 17 of the U.P. (Temporary) Control of Rent and Ewction Act, 1947-herein'l\fter called respectively the Rules and the Act praying for the release of the shop in his favour on the

ound that he required the accommodation for his own use for establishing a business for his son. On 2-5-1962, respondent no. 3 111adC' an application under section 7(2) of the Act for allotment' of the accommodation to him. There were four more applicants under sec:tion 7(2). The shop wa, s actually vacated by Bata Shoe Company on 15-8-1962. On 16-8-1962 intimation was given by the appellant to the Rent Controller about the vacancy of the shop in accordance with seotion 7(1). It may be stated here that the Additional District Magistrate, respondent no. 1 as also the Rent Controller, respondent no. 2 had been authorised by the District Magistrate of Kanpur to exercise

powers under the Act. On 18-8-1962 Ike Rent (',, ontroller heard the matters and fixed 27-8-1962 for orders. Due to some reason he felt difficulty in dedding the 'Jlatter of the release of shop in favour of the appellant or its allotmelit to any of the five f!pplicants including respondent no. 3. In due course, the District Magistrate transferred the proceedings to the Additional District: Magistrate, respondent no. 1.

After hearing all the parties concerned he made an order on 17-9-1962 refusing to release the shop to the appellant and directed its allotrnent to respondent no. 3 Thereupon a formal order of allotment alloting the shop accommodation to respondent no. 3 was issued by the Re1H Controller, respondent no. 2 on 18-9-1962.

It appears that the appella.nt had in the meantime occupied the shop when it was vacated by Bata Shoe Company. Respondent no. 3. l!herefore filed an application under section 7 A of the Act on 2· 11-

1962, which was allowed by the Rent Controller on 15-11-1962. The order was ex-parte in absence of the appellant as he is said to have not responded to the notice issued and alle!!ed to have been served on him uuder secion 7~(1) of the Act. The shop was got vacated and act.ual possess10n delivered to respondent no. 3 with the help of the pohce force on 16-11-1962 in accordance with section 7 A(3) of ilieAd .

- A

s. K. KHANNA v. A.D.M. (Untwalia, J.) 713

Before the filing of the application by the third respondent on 2-11-1962 under section 7 A of the Act, the appellant had filed on 22-9-1962 Suit No. 13211962 in the Court of First Civil Judge at

Kanpiur challeging the allotment order of the Additional District Magistrate and the Rent Controller implementing the third respondent as the sole defendant in the suit. A decree for pel'Qlanent injunction was asked for. Interim injunction was granted. The suit ended in compromise on 11-10-1962. The terms of the compromise will have to be considered at the appropriate place in this judgment. It may also be noted here that Kanahyalal Mehrotra, brother of the third respondent, filed another suit to challenge the compromise decree dated

11-10-1962 claiming that the order of allotment had been made in favour of the partnership firm and the third respondent had no right to nullify the said order by the compromise. The suit was decreed and we were informed at the Bar that an appeal from the decision of the Trial Court is pending.

The appellant filed an application for review on 17-11-1962 before the Rent Controller asking him to review his cx-parte order dated 15-11-1962 made under section 7A of the Act chiefly on two grounds viz. ( n that no notice was served upon the appellant; (2) that the third respondent had obtained the order fraudulently by suppressing the fact of compromise entered in Suit No. 13211962. The Rent Controller refu•ed to review his order and dismissed the application on 8-1-1963. The appellant on the same date i.e. on 8-1-1963 filed a petition in the Allahabad High Court under Article 226 of the Constitution to challenge the various orders of aUotment and delivery of p0ssession made by respondents 1 and 2 from time to time. The Writ Petition was' dismissed by a learned single Judge on 7-5-1963.

Special Appeal No. 25411963 was dismissed by a Bench of the Alla habad High Court on 3-2-1964. The present appeal was pre ferred in this Court on grant of certificate by the High Court.

The appellant had urged five points before the High Court in the special appeal. Mr. S. T. Desai appearing for him in this Court pressed only 3 points for our consideration in support of this appeal. They are : (1) The order of allotment having not been made within 30 days of the receipt of the intimation sent by the landlord under section 7(1)

(a) of the Act as required by:Rule 3 of the Rules was ultra vires and void; (2) Respondent no.3 had no right to apply for possession under section 7 A of the Act after having entered into a compromise in Suit No. 13211962; (3) thac the order of allotment issued by the Rent Controller was bad as it was mechanically issued on the basis of the order of the Additional District Magistrate and without any application of the mind by the former.

Mr. Bishan Narain, learned counsel for resrandent no. 3 submitted that the period o~ 30 days mentioned in Rule 3 was directory, or, in any view of the matter in the facts and circumstances of this case the order of allotment was not bad on that account. He further submitted that the allotment order was in favour of the partnership firm, respondent no. 3 had applied for the allotment as a partner of the firm and the compromise entered into between the appellant

15-L 470 Sup.CI/75

and the said respondent was not bi.nding on the firm. Moreover, it was illegal, null and void. He further argued that there was no sulJ.. :; tance i'l the third point urged on behalf of the appellant in as much , ilS the order was. really that of the Additional District Magistrate who

had made it after fully hearing tl-te parties concerned.

The High Court in appeal has expressed the view that the requirement of passing the order of allotment within the period of 30 days is directory or in any view of the matter on the facts of this ca!; e it could not be made before disposing of the appellant's application for . release of the accommodation under Rule 6. In the opinion of the High Court the compromise was a fraud on the officers empowered to act . under the Statute and was of no avail to the appellant. The order of allotment was in fact made by the Additional District Magistrate and the formality of issuing the order could be done either by him or by the Rent Cuntroller, as it was an administrative order.

The object of the Act as its Preamble indicates is to provide for continuance of powers to control the letting and the rent of residential and non-residential accommodation and too prevent the eviction of tenants therefrom. Section 3 providing for restrictions on eviction as held by one of us (Mathew, J.) delivering the judgment on behalf of this Court in the case of Murlidhar Aggarwal Another v. State of Uttar .Pradesh and others(') is based on Public Policy. It is intended, to protect the weaker section of the community in gep.eral by granting equality of bargaining power. The protection is based on public policy.

Similarly, the Scheme of the Act as per the provisions contained. in; Section 7 and 7 A and Rules 3 to 6 is to curtail the right and freedom

of the landlord to a large extent in the matter of letting out of accommodation. Section 7 provides for control on letting; sub-section ( 1) of which casts a duty on the landlord to give notice in writing of the vacancy of the accommo::lation to the District Magistrate. Under subsection (2) the District Magistrate may "by general or special order require a landlord t ,,,. r not to let to any person any accommodation which has fallen vacant or is about to fall vacant.

The provision of sub-se1; tion r'.'1 has to be read in conjunction with the relevant rules. Section 7 A empowers the J:?istrict Magi5trate to take action against the unauthorised occupants by directing their eviction and in case of necessity even with force. Proviso to sub-section (1) of Section 7A enjoins upon the District Magistrate not to pass any order of eviction if he is satisfied that there has been undue delay or it is otherwise inexpedient to do so. In order to appreciate the true purp-ort of the law contained in Section 7 of the Act it is necessary to read Rtaes

3 to 6 of the Rules in full :

3. "Allotment Order-'-The District Magistrate shall make an allotment order within thirty days of the receipt of the intimation sent by the landlord under section 7 (1 )(a) of the Act and shall give notice thereof to the landlord.

4. Landlord's Right to Let-If the landlord, receives no notice from the District Magistrate wthin thirty days of the

(1) A.I.R. 1974 S.C. 1924.

s. K. XHANNA v. A.D.M. (Untwalia, !.) 715

receipt by District Magistrate of the intimation given by landlord under section 7(l)(a), the landlord may nominate a tenant and the District Magistrate shall allot the accommodation to hiS nominee unless, for reasons to be recorded in writing, he forthwith allots the accommodation to other person.

5. Liability for Rent from the date of allotment-Th,: allottee shall, unless he intimates in writing to the District Magistrate his. refusal to accept the accommodation within seven days of the receipt of the order, be liable for rent from the date of allotment.

6. Occupation by landlord-When the District Malstrate is satisfied that an accommodation, which has fallen vacant or is likely to fall vacan is bona fide needed by the

landl-ord for his own personal occupation, the District Magis- trate may permit the landlord to occupy it himself."

Recently in the case of Jiwan Singh v. Rajindra Prasad & Anr.('f, j11dgment of which was delivered by Mathew, J. on behalf of this very Bench on 18-12-197 4, it was pointed out that if the landlord failed to discharge his obligation of giving 7 days' 11otice in accordance with section 7(1)(a), he lost his right of making .a nomination under Rule

4. It is to be noticed that on the failure of the District Magistrate to make an ailotment order within the period pmvided in Rule 3 the landlord gets a right to nominate a tenant. The District Magistrate under Rule 4 has got to allot the accommodation to the nominee of the landlord unless for the reasons to be recorded he allots it to somebody else.

Under certain circumstances therefore the Ditrict Magistrate is empowered to make an order of allotment even after the expiry of the period of 30 days by ignoring the nomination made by the landlord.

In such a situation and in the context of the Rules it is difficult to holdl that the period fixed for the making of an allotment order in Rule 3 is mandatory in the sense of resulting in the nullification of the order of the District Magistrate if made after the expiry of the period.

Without resorting to the well-known expressions of the requirement of the law being mandatory or directory we would rest our view on the plain readin, g of the language of the Rules. The District Maoistrate . . as we have said above, has got to make the order of allotment within 30 days of the receipt of the intimation sent bv the landlord urder section 7(1)(a) of the Act. He has, at the same time, to give notice of his order of allotment to the landlord. If the landlord receive8 no notiee from the District Magistrate within 30 days, which as a mutter of construction under Rule 4 must mean shortly after the expiry of

30 days of the receipt byl the District Magistrate of the intimation )!iven by the landlord under section 7(1)(a), of an order of allotment having been made within that period, he gets a right to nominate a tenant. Ordinarily 1.ttd generally the District Magistrate shall have to allot the accommodation to the nominee of the landlord 1- 1t for special reasons to be rec;.orded in writing, he. may dep::.:: from the nomination made by the landlord and allot the accommodation to some

(!) Civil Appeal No. 999 (N) of 1971.

other person, even to a person who wa.s an applicant before him be- . fore the expiry of the period of 30 days and due to one reason or the other no order of allotment could be made in his favour within the

said period. If, however, t!le landlord does not make a nomination in accordwice with Rule 4 he cannot challenge the order of allotment subsequently made by the District Magistrate on the expiry of the period of 30 days only on the ground of its having been made beyond the time.

It is no doubt true that the liability for rent of the allottee begins only from the date of allotment under Rule 5 and the landlord suffers if there is delay in the making of the allotment by the District Magistrate. The landlord may move the legal machinery for forcing the District Magistrate to make the allotment. Jt may well be that in some case the order of allotment made after undue delay will be found to be bad. In the instant case it is not correct to say that the order of aliotment made on the 17th September, 1962-two days after the expiry of' the period of 30 days was invalid on that account alone. The High

Court is also right in its view that no order of allotment was possible to be made in this case before disposal of the landlord's claim under Rule 6. There is no time limit fixed for disposal such a claim.

Of course it should be disposed of as quickly as possible, preferably withiti the period of 30 days mentioned in Rule 3. That being so even in the light of Rule 6 it is difficult tQ nullify an order of allotment made by the District Magistrate merely on the ground of having been made on the expiry of the period of 30 days. On the facts of this case surdy the order of allotment was not invalid.

The appellant filed Civil Suit No. 13211962 against the third respondent to challenge the order Qf allotment made in his favour by respondent nos. l ancl 2. Neither of the said two respondents was impleaded as a defendant in the suit. But that apart, the agreement entered into between the appellant and respondent no. 3 embodied in the compromise petition dated 11-10-1962 was void under section 23 of thie Contract Act as it was unlawful and against the Public Policy o~ the Act under the Rules. The four terms of the compromise are as onder

(a) "That it is admitted by the defendant that at the expiry of 30 days from the date of intimation the shop in dispute automatically stood released t~ the plaintiff and the allotment order dated 18th Sevtember, 1962 was not at al! effective vis-a-vis the rights of the plaintiff as a landlord to use the said premises.

(b) That the defandant has no objection if the plaintiff

continues to utilize the accommodations for his. own

busirnss or a business of his son whether himself or in partnership with any person and till such time as the plaintiff and his son utilize the accommodation in this manner, the defendant will not be entitled to enforce his allotment order against him.

s. K. KHANNA v. A.D.M. (Untwalia, J.) 717

(c) That the plaintiff has agreed that if at any time he wants to discontinue the business established by him in the said shop and wants to let out the shop to any person, he will do so in favour of the defendant and unless he refuses to take the lease on reasonable terms, the plaintiff will not let out the shop to any third party. ( d) That the shop is already in possession or the plaintiff and the defendant will not be entitled to take any steps till the landlord himself desires to let out the shop to the defendant."

By clause (a) the parties agreed to the statement of the law which in our judgment was not sound and correct. It will be hazardous to permit a landlord and a tenant to agree to such a position of law.

It was not open to respondent no. 3 to permit the appellant to utilize the accommodation for his own business or business of his son as was done under clause (b). Nor was it open t'o the appellant to agn:e to let out the shop, if in future he let it out to anybody, after giving first preference to the third respondent as was agreed to be done under clause (c).

So long the Act and the Rules continued in force the contml of letting vested in the District Magistrate and not in the parties. By an agreement of the kind emobodied in the compromise petition the parties could not curtail the powers of the District Magistrate.

It was unlawful and against the public policy of the Jaw to do so.

The Public Policy behind the Act and the Rules is to vest lhe control o~ letting in the District Magistrate for the benefit of the general public or to be more precise such members thereof who were in need of accommodation on rent.

In our opinion, therefore, respondent no. 3 committed no fraud in ignoring the void compromise when he applied for eviction of the appellant under section 7 A of the Act and for delivery of actual, physical possession to him.

We do not accept the alternative argument put furward by Mr. Bishen Narain as correct in respect of the compromise. It was not bad for the rtason of having been entered into by respondent no. 3 . alone.

After perusing the application for allotment made by respondent no. 3, the order of allotment made by respondent no. 1 and the order made by respondent no. 2 under section 74(3) of the Act, we have come to the conclusion that the allottee of the accommodation in question was respondent no. 3 although he may have taken it for the purpose of extending his business of Chemists and Druggists run in' partnership with his brother.

The third submission made on behalf of the appellant has no force and must also be rejected. The order of allotment in this case was made by the Additional District Magistrate, respondent no. 1.

It may not be quite correct to say that it was purely an administrative order as has been the view of the High Court in the Special Appeal.

But the order was made by him in a quasi-judicial manner after hearing the parties concerned and after fully applying his mind.

He, being a delegate of the District Magistrate, was competent to make the order of allotment.

So was the Rent Controller. But the latter

merely issued the formal order made by the former. It was not a c:ase where the authority competent to make the order mei.:hanic:ally did it on the direction or in pursuance of an order of a different authority not competent to pass rhe order.

In our judgment, therefore, the order of allotment allotting the accommodation to responde:nt no. 3 was not bad. 'Nor had the order made by the Rent Controller under section 7 A of the Act any infirmity.

In the result the appeal fails and is dismissed..

No orders a:; to cost.

BHAGWATI, J.-1 have had the advantage of reading the judgment of brother Untwalia, J. Hi:.; has discussed the three contentions urged by Mr. S. T. Desai on behalf of the appellant and rejected them.

Whilst agreeing with the view taken by him in regard to the first and the third contentions, I find myself unable to subscribe to the view taken by him in regard to the .second contention.

I shall immediately proceed to give my reasons why I take a diITcrent view as regards the s.econd contention, but before I do so, I would like to add a few words in reference to the first contention.

The Act with which we are concerned in this appeal is the United Provinces (Temporary) Control of Rent and Eviction Act, 1947.

The object of this Act, as may be gathered from its preamble, i~. tJ provide for conl.:inuance of powers to control the letting and the rent of residential and non-residential accommodation and to prevent the eviction of tenants irom such accommodation.

Section 7, which is the material section, enacts various provisions relating to control on le:tting.

It consists of four sub-sections, but of them only twc are material.

Sub-s. l(a) requires the landlord to give notice of vaca:ncy to the Distrkt Magistrate within seven da:ys after the accommodation becomes vacant by his ceasing to occupy it or by the tenant vacating it or otherwise ceasing to occupy it or by termination of tenancy or by release from requisition or in any other manner whatsoever. A similar obligation is laid on the tenant vacating the accommodation under sub-s. l(b).

Sub-s. (2) then proceeds to say that the :District Magistrate may by general or special order require a landlord to Jet or not to let to any person any accommodation . which is or has fallen vacant or is about to fall vacant. It may be noted that the power conferred on the District Magistrate under sub-section

(2) is absolute in tel'l11s.

The vacant accommodation is placed completely under the control of the District Magistrate and he may require the landlord to let the accommodation to any person nominated by him or he may even make .a negative order that the landlord shall not let the accommodation to a par!icular person.

Morco\er, this power may be exercised by the District Magistrate at any time. There is no provision in the statute requiring the District Magistrate to exercise this power within a particular time limit.

The question is whether there is anything in the Rules which imposes any such limitation ODI the District Magistrate ? Rule 3 provides that the Distdct

s. K. KHANNA v. A.D.M. (Bhagwati, !.) 719

Magistrate shall make an allotment order within thirty days of the receipt of the intimafron sent by the landlord under s. 7(1)(aj and shall give notice thereof to the landlord.

This Rule obviously contemplates that the District Magistrate must make an order requiring the landlord to let the accommodation to a specified person within thirty days of the receipt of the intimafron of vacancy from the landlord. But does it also carry with it by necessary implication a negative prohibition that if the District Magistrate does not make such an order within the stipulated time, he shall be precluded from making such order thereafter.

We do not think so.

The only consequence of the District Magistrate not making anorder of allotment within the period o~ thirty days is that set out in Rule 4.

It confers. a right on the landlord to nominate a tenant and where the landlonl makes such a nomination, the District Magistrate is bound to allot the accommodation to such n'ilminee "unless for reasons to be recorded in writing he forthwith allots the accommodation to other persons".

It is significant to note that Rule 4 does not provide that if the District Magistrate fails to make an order cf alh; tment within the period of . thirty dys, the landlord may occupy the accommodation himself.

The only right which enutes to the landlord in', such a case is to nomiillate a tenant.

This he may do or may not do depending on his volition.

But he does not get a right to occupy the accommodation for himself. Moreover, even where the landlord nominates a tenant, the District Magistrate may, for reasons to be recorded in \vriting. disregard such nomination and allot the accommodation to another person notwithstanding the expiJiation of the period of thirty days.

It would, therefore, be seen that the time limit of thirty days is not intended to operate as a fetter on the right of the District Magistrate to make an order of allotment in the sense that he cannot thereafter make such an order.

The only reason why the period 'Of thirty days is provided is that thereaf1ter the landlord gets a right to nominate a tenar.t, thou!!h even this right can be displaced by the District Magistrate in a proper case.

But if for some reason, the landlord does not exercise this right and nominate a tenant, the power of the District Magistrate to make an order of allotment conferred under s. 7(1)(-a)

i&. not affected.

There is nothing in the Rules which says tlii; t the landlord shall be entitled to occupy the accommodation himself or that the District Magistrate shall be precluded from making an order of allotment , after the expiration of the period of thirty days. Rule 4 in fact indi.::ates to the contrary.

And so also does Ruic 6. That rule provides that if the landlord want.s the accommodation bona fide for his own personal occupation, he must obtain permission of the District Magistrate to occupy it himself.

This provision also suggests that the landlord does not become entitled to occupy the accommodation himself on the expiration of the period 0£ thirty days, but he can do so only if the necessary permi$sion is granted by the District Magilrate. If is, therefore, clear, on a con; spectus of the provisions contained in s. 7, sub-ss. (1) and (2) Rules 3, 4 and 6, that even if an order of allotment is not made bv the District Magistrate within the period of thirty days, the landlord does not become entitled to occupy the accommodation himself in defeasance of the power of the District Magistrate to make an order of allotment and the District Magistrate can, notwithstanding the expiration f the period f thirty days, make an order of allotment under s,. 7.(lJ(a). . The va~1dity of the order of allotment made by the D1stnct Magistrate. m favour of the third respondent could not, there£ore, be assailed on the ground that it was made after the expiration of thirty days from the receipt of intimation of vacancy from the appellant.

I would now turn to examine the third contention on which I find myself in disagreement with my learned brother Untwaiia, J.

The facts which bear on this contention are fully set out in the judgment •of my learned brother Untwalia, J. and I need not reiterate them. It would be enough for my purpose to state that Civil Suit No. 132 of 1962 was filed by the appellant against the 3rd respondent in the Court of the First Civil Judge, Kanpur challenging the validity of the order of allotment made by the District Magistrate in favour of the 3rd respondent. Immediately on filing the suit, the appellant obtained an injunction restraining the 3rd respondent from taking any steps to enforce the order of allotment or to interfere with the possession of the appellant in respect of the shop.

The result was that the 3rd respondent was prevented from obtaining possession of the shop from the appellant and he could ll'Ot even move the District Magistrate for evicting the appellant and handing over possession of the shop to him. The 3rd respondent, therefore, within a few days after the suit was filed and the mjunction was obtained, entered into a compromise with the appellant for settlement of the suit and the terms of this compromise were as follows :

"(a) That it is admitted by the defendant that at the expiry of 30 days from the date of intimation, the shop in dispute automatically stood released to the plaintiff .and the allotment order dated 18th September, 1962 was not at all effective vi.s-a-vis the rights of' the plaintiff as a landlord to use the said premises.

(b) T!:Jat the defen.dant has no objection if the plaintiff continues to utilize the accommodations for his own business or a business of his son whether himself or in partnership with any person and till such time as the plaintiff and his son utilize the accommodati'Jn in this manner, th; defendant will not be entitled to . enforce his allotment qrder against him.

(c) That the plaintiff has agreed that if at any time he wants to discontinue the busim; ss established by him in the said shop and wants to let out the shop to any person, he will do so in favour of the defendant and unless he refuses to take the lease on reasonable terms, the plaintiff will not let out the shop to any third party.

(d) That the shop is already in possession of the plaintiff

and the defendant will not be entitled to take any steps till the landlord himself desires to let out the:

shop to the defendant."

s. K. KHANNA v. A.D.M. (Bhagwati, J.) 721

The learned Civil Judge presumably on the view that the compromise between. the partie~ was lawful, passed a decree in terms of the compromise on 11th October, 1962 under Order XXIII, rule 3 of' the Code of Civil Procedure. One consequence of thjs consent decr_ee was that the injunction against the 3rd respondent. came to an end. The 3rd respondent, thus freed from the inhibitory mandate of the injunction, immediately proceeded to make an application to the Rent Control and Eviction Officer on 2nd November, 1962 under s. 7 A fur an order directing the. appellant to vacate the shop on the ground that he was in occupation of, it in contravention of the order of allotment made in favour of the 3rd respondent.

The application was in effect and substance one for enforcement of the order of allotment under s. 7 A.

Now, under the consent decree the order of allotment was declared void and ineffective and the right of the appellant to use the shop for his personal occupation was recognized vis-a-vis the 3rd respondent, but the 3rd respondent did not disclose this fact in the application, nor did he make any reference in it to the consent decree. There was a di9pute between the parties in regard to the service of the notice of the application on the appellant, but it was found by the Rent Control and Eviction Officer, as also by the High Court in the writ petition, out of which the present appeal has arisen, that the appellant refused to accept the notice of the application and hence we must proceed on the basis that the notice of the application was duly served on the appellant.

The appellant did not appear at the hearing of the application and proceeding ex parte, the Rent Control and Eviction Officer passed an order dated 15th November, 1962 directing that the appel!ant be evicted from the shop and the 3rd respondent be put in possession of the same.

Though this order was not contemplated to be executed before 18th Nomber, 1962, the appellant was forcibly evicted from the shop in pursuance of the order on 16th November, 1962 and possession of the shop was immediately on the same day handed over to the 3rd respondent.

The appellant applied for a review of the order to the Rent Control and Eviction Officer but the application for review was rejected on 8th January, 1963.

This led to the filing of the .writ petition out of which the present appeal has arisen before us.

The principal question which arises for consideration on these facts is as to whether the order passed by the Rent Control and Eviction Officer under s. '7 A was vitiated by reason of non-disclosure of the fact of. consent decree by the 3rd respondent in the application made by him.

It would be convenient at this stage to refor to the relevant provisions of s. 7 A under which the application was made by the 3rd respondent.

Section 7 A was introduced in the Act at a later point of time in order to ann the District Magistrate with the power to enforce the order of allotment made by him~ Sub-s. (1) of that section provided inter alia that "where an order requiring any accommodation to be let or riot t\) be let has been duly passed under sub-section (2~ of section 7 and the District Magistrate believes or has reason to beheve, that any peron has in contravention of the said order, occupied the said accommodation or anv pa1t thereof he may call upon the person in occupation to show cause, withi~

a time to be fixed by him, why he should not be evicted therefrom .. "

There is a proviso to this sub-section which is very m.aterial a.nd . it says that "n, o order under this section shall be passed 1f t?e. D1stnct Magistrate is satisfied that there has been undue delay or 1t is otherwise inexpedient to do so." Therefore, it is not in every case where a person is in occupation ofl accommodation in contravention of an order of allotment that the District Magistrate is required to maKe an order evicting such person and putting the allottee in possession of the accommodation.

Tite District Magistrate has a discretion in the matter and if he finds that there has been undue delay on the part of the allottee or that 0n the facts and circumstances_ it is inexpedient to make such a, n order, he may decline to do so. It must, therefore, follow a f ortiorari that all the facts and circumstances bearing on the exercise oB his discretion should be before the District Magistrate in order to enable him to exercise his discretion in a just and proper manner. Now, in the present case, there can be no doubt that the fact rof consent decree having been obtained by the parties in the

suit was a very material fact which could have considerable bearing on the question whether it was inexpedient to make an order under s. 7A.

The 3rd respondent having himself agreed with the appellant and obtained consent decree in the suit, that the order of cllotment in his favour was void and ineffective and the appellant could occupy the shop for himself, there can be no doubt that this piece of conduct, unless satisfactorily explained, was bound to have its impact on the exercise of discretion by the District Magistrate. The District Magistrate woultl certainly ask imself : "why should I exercise my discretion in favoUr of a person who has himself conceded in the consent decree obtained from the Civil Court that the order of allotme:nt in . his favour is invalid and he has no objection to landlord occupying the accommodation ?" Such conduct on the part of the 3rd respondent could be: inspired only by one of two reasons. It may be. that the 3rd respondent submitted to the consent decree because the wanted to get rid of the ittjunction issued against him by the Civil Court. So long as the injunction stood, he could not obtain possession eve.n by moving the District Magistrate under s. 7A. He, therefore, resorlld to this device for the purpose of getting the injunction out of his way, so that thereafter he could make an application to the District Magistrate under s. 7 A suppressing the fact of the consent decree and take a chance of obtaining an order of eviction under that section. Or, it is possible that at some poin, t of time subsequent to the p_assing of the consent decree, the 3rd respondent was advised that the consent decree was void and inoperative and it did not preclude him from makin~ n application to the Ditrict Magistrate and obtaining an order of ev1ct10n under s. 7A.

In either case, he ought to have disclosed the fact of the consent decree in the application made by him under s. 7A. If he thaught that the consent decree was valid, then obviously non-?isclosure of it by him in the application made to the District Magistrate was fraudulent, for it is difficult to see how he could have

possibly persuaded himself to believe that, notwithstanding the consent decree, he could make such an application.

The inference in that case would be irresistible that he submitted to the consent decree for

s. K. KHANNA v. A.D.M. (Bhagwati, /.) 723

the purpose of getting rid of the injunction, so that he could thereafter obtain an order of eviction from the District Magistrate by keeping back the fact of the consent decree from him. But even if I take a charitable view of the conduct of the 3rd respondent and assume that after the passing of the consent decree, he was advised that the consent decree was null and void, I cannot exonerate him from blameworthiness in not disclosing the fact of the consent decree in the application made by him to the District Magistrate. I do not think that it is open to a party against whom a decree has been passed by a court of law, whether by consent or in invitum, to arrogate to himself the right of adjudging that the decree is a nullity and to disregard or to disobey it on that hypothesis. It is true that a consent decree is based on an agreement between the parties and, as pointed out in Wentworth v. Bullen,(1) "the contract of the parties is not the less a contract, an, d subject to the incidents of a contract, bec:rnse there is superadded the command of the Judge." It would, therefore. seem to be incontrovertible that a consent decree can be avoided or declared void on the same grounds as a contract.

If tthe compromise on which the consent decree is based is induced by fraud, mistake, undue in, fiuence or any other ground which would avoid a contract, the consent decree would be liable to be set asic!e but that would have to be done by the aggrieved party by filing a suit.

So Jong as the consent decree is not set aside in such suit, it would be binding on the parties as such as a decree in invitum and it would npt be open to either party to disregard or disobey it.

Similarly, if the compromise is unlawful, Order XXIII, rule 3 prohibits the court from passing a decree in accordance with' it and even if such decree is passed because neither party raises an objection, it would be void.

But the question is : can a party to a litigation be permitted to decide for himself that the consent decree is void and on' that view ignore it altogether as if it did not exist ?

I do not think so.

Whether the compromise is unlawful so as to render the consent decfee void must be left to the determination of the

appropriate authority b'efore whom the question may arise and it F .cannot be allowed to be determined by a party himself according to his personal judgment.

Such a question may raise difficult and complex issues.

It is not always easy to determine whether an agreement is unlawful as being opposed to public policy or contrary to Jaw.

The decision of such issues requires a certain amount of legal training and skill and o'6jectivity of approach and these are

matters "hardly fit for final determination by the self-interest of a

party".

They must be left to the judgment of the appropriate authority "and not the personal iudgment of one of the parties".

That is both a postulate and a requirement of the democratic form of government.

Jt was pointed out by Frankfurter, J., in United States v. United Mine Workers of America(2 ) : "No one, no matter how exalted his oublic office or how righteous his private motive, can be iudg:e in his own case." Otherwise society will be ruled not bv law but by brute power. "If one man can be allowed to determine for himself what is law, every man can. ?'hat means first chaos,

(I) (1829) 9 B & C 1840 N.

(2) 330 U.S. 258; 91 Law. Ed. 884.

.then tyranny." Legal process is an essential part of the democratic process. Therefore, to my min, d, there can be no doubt that if the 3rd respondent was of the view that the compromise was unlawful and the consent decree was on that account void, he should have taken appropriat~ proceedings in the civil court and got the consent decree declared void before making an application to the District Magistrate unlder s. 7 A, or at the least, disclosed the fact of the consent decree to the. District Magistrate in his application under s. 7 A and pointed out to the District Magistrate that the consent decree was void on the ground that the compromise was against public policy or contrary to the Act and did not, therefore, preclude the third respondent from making an application for enforcement of the order of allotment nor did it stand in the way of the District Magistrate in making an order of eviction in favour of the 3rd respondent. The District Magistrate could not be asked to enforce the order of allotment in favour of the 3rd respondent unless the consent decree, holding the order of allotment to be invalid, was first found to be

void, because, if it was valid, it would be binding on the 3rd respondent and he could not, in that event, seek the order of eviction in his favour.

This was, therefore, a material fact which ought to have been disclosed by the 3rd respondent in the application made by him under s. 7 A.

But on 'this ground alone I would not be inclined to quash and set aside the order made by the Rent Control

a11d Eviction Officer as delegate of the District Magistrate under s. 7 A because, as pointed out by my learned brother Untwalia, J., in his judgment, and there I agree with him, that the consent decree was void by reason of the compromise being against the public policy of the Jaw and hence there would be no point in interfering with the order of the Rent Control and Eviction Officer on this ground.

There is, however, one other aspect of this question which requires consideration. It cannot be seriously disputed, and I have already reiferred to the aspect a little earlier, that the District Magistrate had

a discretion under s. 7 A not to enforce an order of allotment, if he thought that, en the facts and circumstances of the case, it was inexpedient to do so. Even if the compromise was unlawful and the consent decree was on that account void, the very fact of .the 3rd respon• dent having submitted to the consent decree, declaring the order of allotment to be invalid and recognising the right of the appellant to occupy the shop for himself vis-a-vis the 3rd respondent, was a highly relevant circumstance bearing on the exercise of the discretion of the District Magistrate, and it ought to have been disclosed to the District Magistrate. It is a well settleU proposition of law and this proposition should apply equally in the field of administrative law, that when a party approaches a tribunal for discretionary relief, he must not only come with clean hands but must also show the utmost good faith disclose all material facts having a hearing on the exercise of discretion of the authority which are within his knowledge. He cannot escape this obligation on the plea that the other side can always, if it so chooses, apper and bring the material facts to the notice of the

. ,

s. K. KHANNA v. A.D.M. (Bhagwati, !.) 725

!authoriiy. It is an obligation of confidence which he owes to the authority and this obligation is imposed by law in the larger interests of administration of justice so that justice, whether dispensed by civil court or by administrative authority, remains pure and unsullied.

I am, therefore, of the Opinion that the non-disclosure of the fact of consent decree by the 3rd respondent in the application made by him vitiated the order of the Rent Control and Eviction Officer under s. 7A

I would, therefore, allow the appeal and quash and set aside the order made by the Rent Control and Eviction Officer as delegate of the District Magistrate under s. 7 A and direct the 3rd respondent to hand over possession of the shop to the appellant. It would be open to the District Magistrate to take such action under s. 7, sus. (2) as he thinks fit including making of an order of allotment in favour of any person he thinks proper.

The District Magistrate may even, if he so thinks fit, make a fresh order of allotment in favour of the 3rd respondent. Each party will bear and pay his own costs of this litigation.

ORDER

In view of the majority judgment the Appeal is dismissed with no order as to costs.

V.M.K .

SRI KRISHNA KHANNA

February 26, 1975

K. K. MATHEW

P. N. BHAGWATI

N. L. UNTWALIA, JJ.

Control df Rent and Eviction Act, 1947

Sections 3, 7 and 7A

Control of Rem and Eviction Rules, 1949

Kanahyalal Mehrotra

Pioneer Drug Stores

Bata Shoe Company Ltd.

7 .. J 1-1961

District Magistrate, Kanpur

Section 17

Control of Rent and Eviction Act, 1947

section 7

section 7(2)

Bata Shoe Company

section 7(1 )

section 7A

First Civil Judge at Kan

section 7A

Allahabad High Court

Article 226

section 7

Section 3

section 7(1)(a)

17th September, 1962

Mathew

Untwalia

section 23

section 7A

Bhagwati

S. T. Desai

S. S. Bhatia

J. P. Goyal

S. M. Jain

f3ishan Narain

B. P. Maheshwari

Surtsh Sethi

P. N. Bhagwati

UNTWALIA

Kanpur

Raghunath Prasad

Kanahyalal Mehrotra

section 17

Control of Rent and Ewction Act, 1947

section 7(2)

Ike Rent

section 7

2· 11-

1962

section 7

section 7

First Civil Judge at

Kanpiur

section 7A

Article 226

Alla habad High Court

S. T. Desai

section 7(1)

section 7

Bishan Narain

Section 3

Section 7 and 7

Section 7

Section 7

Section 7A

Section 7

section 7

section 7(l)(a)

18-12-197 4

section 7(1)(a)

section 7(1)(a)

section 7(1)(a)

section 23

18th Sevtember, 1962

section 7

Bishen Narain

section 74(3)

section 7

BHAGWATI

Control of Rent and Eviction Act, 1947

Section 7

s. 7

Untwaiia

Court of the First Civil Judge, Kanpur

18th September, 1962

the Code of Civil Procedure

2nd November, 1962

s. 7

s. 7

15th November, 1962

8th January, 1963

s. 7

Section 7

section 7

s. 7A

s. 7A

s. 7

s. 7A

s. 7A

Frankfurter

S. 258

s. 7

s. 7

s. 7

s. 7

s. 7

s. 7A

s. 7

s. 7


726 ,;

GOPAL KRISHNA DAS

ll.

SAILENDRA NAill BISWAS & ANR.

February 26, 1975

JY. V. CHANDR.ACHUD, R. S. SARKARIA AND A. C. GUPTA, JJ.]

Cil'il Procedue Code-Order 21 Rule 71-; eaning of deficien_cy of price accrued by reason of the auction purhasers default-Wf:ether defic1en"'t l!old 'lie attributable to the default of auct1on purchaser--Sectlon 12(2) of L1munr, on "Act 1963-Time requisite for obtaining certified copy-Whether means time

'properly required or includes time spent neRli~:enrly.

. A

The appellant was one of the joint owners of the premises in question. In , execution of a money decree obtained agn.inst the appellant his share in the

property was put to sale and was purchased by the father of the first respondent

 C -~ jor Rs. 77,000. 1be purchaser deposicd 25 per ent of the purchase price.

T he property was put to sale once agam and was m fact knocked down for a

um of Rs. 700/ in favou.r of the father of respondent No. 1. The apellant :.Uade an application under Order XXI Rule 71 of C.P.C. for recovenng the :

deficiency in the price realised in the second sale from the purchase. Order XXI Rule 71 C.P.C. reads as under :-

J I I l -1 .. Any deficiency of price which may happen on a re-sale by reason of the purhaser's defJult and nit expenses attending such re-sale, shall be certified to the Court by the Officer or other person holding the 5alc, and shall nt the instance of either the decree bolder or the judFment Jcbtor, be recoverable from the defaulting purchaer under the provisions relating to the execution of a decree for the payment of money ...

I D . l

The proclamation of sale for the first sale stated that the premises were free from encumbrances. Proclamation for the seconJ sale, however, states that the , entire grou11d floor excepting two road-side shops, was let out. ..

The !..earned Single Judge allowed the nppli::ation of the nppeUnnt and . direc1ed t~1e pur<; hao.; er ta pay the dcfitit:nc:y with interest. The Division Bench

of the H•gh O.mrt 011lowcd the appc:al unJ dismissed applicotion filed by the appelJunt. unde.r Ordr .xxr. Rut~ 71 !or recovering from the auction purchar

t~ defi.cuncy tn the satd pnce. On llPpeal by certificate undc:r Article t33ll ~(a) . & (c) tt wa$ contend!!d before this Court by th~ appellant that he was enutled . to recover from the first rsponJent the deficiency in the price reali:;, cJ in th'"

S'!cond "'le under Order XXl Rule 71. The resrondent contended that the . appellant can ro; over t!le dcfficiency in the second sale only if it can be attributed

to ddault of the auctJon purchaser.

HELD:

e application of Order XXI rule 71 i~ limited to c:1scs in which the ddlctency of pr1ce ha., <>ccl'rrcd by rt:lwn of the auction purchaser•s default . .Property oce put to hale in exution procecJings m:ty hav~: to be resold tor

rea\On~ whtch .m>tY or may not \le connected with the ddault of the auction G purc.har. It not c~OO!!h that the rt, alc i~ occ:t'\ioneJ. by the default of the

. fi~Cllon purcar. .Jt l'i fur!her nces, ary thnt the re ... ale must result in a dfi

'Jency of pree whh defictcncy 1s uttributahle to th-e udault of the aucuon

rurch:tlo(t. fn the fil"'tt rr!lclamation of ll>lo there wus no mention of the.le:lSef In the ond proclamation the lae ha" been m--ntioned. In the ctty 0

Clcl!J.ta were premi'l~5 nre . .., ituated, the We'lt Dcngl Premises Tenancy Act,

19~6 wa~ ID f?r~~ nt the t1me of the scond sale.

Under that Act tn:nts enJ?Yed te pnv1lege5 of stanJard rnt nnd . immunity from evi:tion. 1ht:. rdt:roce m the se1.ond sat~ proclamation to n lca<>e and to the fact that su\:1- Jl

$lnttl part _of the. property was in on.'\lpntion of the tenant wa.1 bound to

nfle~~ the markt!a.bllity of the property. Order XXI rule 71 h intndl!l I!J v~O\ ldc:r ID cxpcdtiJOUS remedy to the juuj!ment debtor or the decree hoiJC'I' W~

~)~~Dld • detriment due to the default of the auction purhascr. [n ~>c. '

G, K. DAS v; S, N. BlSWAS (Clumdrachud, J.) 727

(2) The apreal before the Division Bench was not time barred. The time requisite for obtaining certified copy means time properly required and an appellant cannot in computation of the period of limitation for filing the appeal ask for exclusion of time which was spent negligently. In the present case settlement of the draft decree was adjourned from time to time by an officer of the court on being properly satisfied that there was good reason for adjournment.

The Auction purchaser cannot be blamed for the time thus spent in settling the draft of the decree unckr appeal.

[734F-G]

B CIVIL APPELATE JURISDICTION : Civil Appeal no. 10, ?.332 &

2333 of. 1968.

From t\le Judgment & Order dated the 21st March, 1967 of the Calcutta High Court in Appeal Nos. 9, 10 and 43 of 1959.

P. K. •Sen and G. S. Chfltterjee, for the appellant.

A. K. Sen, P. K. Chatterjee, Rathin Das and Mrs. Anjana Sen; for respondent No. 1 .

The Judgment of tlie Court was delivered by

CHANDRACHUD, J. Premises No. 4-A, Chowringhee Road, Calcutta, belonged to the appellant Gopal Krishna Das and four others, each having an undivided one-fifth share therein. In 1951, one Ganga Prasad Gupta obtained two money-decrees against the appellant. and another person i1a the total sum of Rs. 12,378. In execution of these decrees, the undivided one-fifth share of the appellant was put to sale on June 16, 1954 a't1d was purchased by Pashupati Nath Biswa'3, the father of the first respondent, for:. Rs. 77,040.

Pashupati Nath Biswas deposited Rs. 19,260 in the court, being 25% of th~ purchase price and later he deposited a further sum of Rs. 15,0{)0.

He however, failed to pay the balance of the purchase price whereupon the appellant made an application that the property be put to a fresh sai.e.

Accordingly. the /property was put to sale on March 20, 1957 and once again Pashupati Nath Biswas was the highest bidder. But whereas in the first sale he had offered a bid of Rs. 77,040 this time the sale was knocked down in his favour for a paltry sum of Rs. 700. The second sale was confirmed on May 29, 1957.

In the meanwhile, on May 16, 1957 the Sheriff certified unLl'!r Order XXI, Rule 71 of the Code of Civil Procedure that the deliciency in the price realised in the second sale due to the default of the auction purchaser, after giving him credit h the sum of Rs, 15,000 paid by him in the first sale," amounted to Rs. 61,340 apart from the cost and expenses of the sales.

Ol1 June 28, 1957 the appellant made an application under Order XXI, Rule 71 C.P .C. for . recovering the deficiency from Pashupati -Nath Biswas.

A learned single Judge of the Calcutta High Court allowed that application and direct by an order dated August 19, 19 5 S that Pashupati Nath Biswas do pay to the appellant a sum of Rs. 42,080 with interest at 6% per annum.

This Oider was challenged by Pashupati Nath Biswas in appeal No. 10 of 1959.

The auction purchaser had alsp filed an application asking that the appellant be restrained from taking execution proceedings for recovering the deficiency in price. That prayer was rejected. It may be mentioned that pursuant to an application dated April 13, 1957 filed by the auction purchaser himself, it was directed by an order dated May 21, 1957 that a sum of Rs. 22,000 be paid by the Sheriff out of the sale proceeds lying with him, to the Official Receiver in satisfaction of the decree obtained by G-anga Prosad Gupta against the appellant, h1 execution of which the two sales were held. Ganga Prosad Gupta's estate, it seems, had come to be vested in the Official Rcciver, he is the second respondent to these appeals. The auction purchaser prayed that the Sheriff do pay to him the balance after deducting therefrom the sum of Rs. 22,000 and the cost and the expenses of the Sheriff.· This prayer was also rejected.

The auction purchaser f1leu appeal No. 9 of 1959 against the order rejecting this application.

The appeUant then filed an application for a~1 order directing that the Sheriff do pay to him all the moneys lying with him after deducting the cost and the expenses of the sales. That application was allowed by the learned single Judge on December 11, 1958. The auction purchaser challenged that order in appeal No. 43 of 1959.

The three appeals were heard together and disposed of by a Division Bench of the Calcutta High Court by three separate judgment!5.

By its judgment dated March 21, 1967 the Division Bench allowed appeal No. 10 of 1959 and dismissed the application filed by the appellant under Order XXI, Rule 71 for recovering from the auction purchaser the deficiency in the sale price. The two other appeals were disposed of consistently with that judgment. The auction purchaser Pashupati Nath Biswas having died on April 16, 1964, the first respondent Sailendra Nath Biswas came on the record of the appeals as his Executor 3nd legal representative. On December 15, 1967 the . High Court granted to the appellant leave to file an appeal to this Court under Article 13 3 ( 1 )(a) and (c) of the Constitution.

Questions raised in the High Court by the rival parties as regards the disbursement by the Sheriff ef the balance remaining with him after satisfying Ganga Prasad Gupta's decree are incidental to the main controv"rsy arising out of the appellant's application under Order XXI, P 'llle 71, Code of Civil Procedure. The real question

for decision JS. whether the appellant i~ entitled under Order "XI, Rule 71, to recover from the first respondent the deficiency in the priCe realised in the second sale. .

The scheme of the Code in relation to execution sales is like this : G Under Order XXI, Rule 64 any Court executing a decree may order the sale of oa property in satisfaction of the decree. Order 21, Rule 66 provides that the Court shall cause a proclamation qf the intended sale to be made. Sub-Rule (2) of Rule 66 specifies the details which are required to be mentioned in the proclamation of sale. The person declared to be the purchaser must uQder Order XXI, Rule 84, pay immediately after the declaration a deposit of 25% of the purchase- H money.

In default of such deposit the property has to be re-sold forthwith.

By Rule 85 the full amount of purchas{}-money has to be paid by the purchaser within 15 days from the date of sale. If the

pwchaser commits a default, the deposit is liable to be. f;:, feited to the Government by virtue of Rule 86 and the property ts hable to be re-sold. A re-sale of property, in default of payment of the Pll; rchasemoney, can be-made only after the issue of a fresh proclamatiOn as provided in Rule 87. Under Order 21, Rule 71 :

"Any deficiency of price which may happen on a re-sale bv reason of the purchaser's default, and all expenses attending such re-sale, shall be certified to the Court by the officer or other person holding the sale, and shall, at the instance of either the decree holder or the judgment debtor, be recoverable from the defaulting purchaser under the provisions relating to the execution of a decree , for the payment f " o mcMey.

It is clear on a careful re.•ading of Rule 71 that its application is limited to cases in which the deficiency of price has occurred by reason of the auction purchaser's d0fault.

Property once put to snle in execution procoedi1ags may have to be re-sold for reasons which m11y

or may not be connected with the default of the auction purchaser.

A re-sale consequent on the failure of the auction purchaser o deposit 25% of the purchase price immediately after he is declared to be the purchaser of t:.e property or a resale consequent upon his failure todeposit the balance of the purchase price within 15 days of the sale are instances when the re-sale is occasioned by the default of the oauction purchaser.

OJ1 the other i1and, re-sale consequent upon the . . , etting aside of the sale on the ground of material irregularity iri

publishing or conducting the sale as provided in Order XXI, Rule 90, may not be attributable to the default of. the purchaser. The provisions of Order XXI, Rule 71, come into play only if the property i~ required to be resold on account of the default of the action purchaser.

If the re-sale is not due to the auction purchaser's default, there can be l1o question of mulcting him with the deficient y in the price realised in the re-sale. The words : "Any deficiency of price which ma} happen on a resale by reason of the purchaser's default'' occurring in Rule 71 therefore mean : "Any deficiency of price. which on a re-sale niay happen by reason of the purchaser's default".

As smted before, the question of holding the auction purchaser liable to make f.!OOd the deficiency in price can arise only if the re-sale is occasioned by bi!l default. But though, this is necessary, it is not enough to meet the requirements of Rule 71.

What is necessary is that the re-sale occasioned by the auction purchaser's default must result in a deficiency of price, which

deficiency is attributable to his default.

A resale may have to be held because the auction purchaser has committed default in payin~ the deposit of 25% under Order XXI, Rule 84, or because of his default in paying the full price which J.5 days of the sale as required by Rule 85. And yet the deficiency of price realised in the re-sale may not be attributable to his default as, for example, where the market value of the property is reduced to . the discovery or disclosure of an infirmity in the right, title and interest of the judgment-debtor in

the property put to sale. An encumbrance existing on the property at

16-470SCI/75

the time of the first sale but not disclosed in the proclam_ation of that sale will hav~;; no bearin, g on the price realised in the auction sale, unless the existence of the encumbrance was otherwise known to the bidders.

The disclosure of tnat enc-Lllllbrance in the sale proclamatirm accompanying the re-sale must, on normal commercial considerations, have a direct impact on the price of the property put to sale.

In such a case the deficiency of price realised in the~ resale will be attributable uot necessarily to the default of th~ auction

purchaser but to circwnstances extraneous to his default.

Or<ler XXI, Rule 71, concerns itself not with that class of cases but with those in which the deficiency of prict~ realised in the re-sale is

ttributable to the default of the aucHon purchaser.

Even a broad and non-too-meticulous examination of the two proclamation of sale in the instant case is enough to conclude that the deficiency in price realised in the re-sale cannot b~ said to have happened on account of the auction purchaser's default.

The first sale was held on June 16~ 1954 and the proclamation of sale accompanying it is dated May 10,. 1954. The second s:1lc v, as

held on March 20. 1957 for which the relevant sak proclamation is dated February 8, 1957.

Both the proclamations mention that what was being put to sale was the right, little and interest of the appellant, Go pal Krishna Das, in the undivided one> fifth share iR the particular property.

But there is a material difference in 1he terms of the two proclamations in regard to the encumbrances existing on the property.

The proclamation of 1954 sets out in a tabular form encumbrances like leases and mortgag~:; to which the property was :)rcviomly subjected. as appearing from the affidavit of one Damodar Mullick.

The proclamation then says :-

"It appears from the said affidavit that all the Mortgages have been reconveyed. The lease has expired.

The sale is in respect of the undivided 1 /5th sh'are of Pm•na Ch. Das.

It appears from the said affidavit that the 1/5th share of Gopal Kr. Das in the said premises is free from encumbraoces.''

The proclamation of 1957, relying on an affidavit of one Sudhansu :lumar Roy savs undoubtedly that th"'. appellant's one-fifth share was

free from encumbrances but the tabu1ar statement of encumbrances included in tbe proclamati()n refers to a Term Lease and Agree111ent of 1955 and the proclamation says :

"The :lease of 1955 is for five years from October, 1955 anr:l the same is in respect of the Restaurant "Bombay Crown" containinl! the enrire Qrnund flnnr 0 "1icentinptn1o road side shoos and was exeuted by one Abde Ali Abdul Hussain in favour of Ashtifaq and J afiar Hussain."

It is notorious. that orooerties jn possession of tenants who enioy the orotection of Rent Acts do not fP:tch. the same nrice as prcmerties of which the purchaser can obtain vacant possesion.

In the

city of Calcutta where the property in question is situated, The West Bengal Premises Tenancy Act, XII of 195(), was in force, at the time of the seond sale.

Under that Act the tenants enjoyed the privilegs of standard ren~ and immunity from eviction save on stated grounds.

It is unnecessary to enter into refinements arisin!l out of the West Bengal Act but even the sub:-tenants would appear to enjoy thereunder a certain :.imount of immunity from eviction.

Refrence may in this behalf b~ made to sections 13 (2), ( 4), (5) and section 16 of the Act of 1956.

The reference in the second sale proclamation to a live lease and suh I ease and to the fact that a substantial part of the property was in occupation of the tenant or the sub-tenant was bound to affect

the marketability of the prerty. The paltry price realised in the second sale may justifiably be attributed to the disclosure of encumbrances in the second proclamation, which were not mentioned in the fust proclamation. It is not without significanc~ that apart from the auction purchaser there were no bidders at the second sale. The paucity of bidders may , r:easonably be taken to reflect the fall in the value of the property in the estimation of prospective bidders .

Order XXI, Rule 71 is intended to provide an expeditious remedy to the judgment-debtor or the decree-holder who has suffered a detriment due to the default of the auction purchaser. The ,_Jficer or other person holding the sale has to certify to the Court the deficiency of price which oni the re-sale has happened by the purchaser's default and all expenses attending the re-sale.

Upon such certification the amount becomes recoverable from tne defaulting purchaser at the instance of the decree-holder or the judgment-debtor, "under the provisions relating to the execution of a decree for the payment of money".

The Code has not made the certificate conclusive of the facts stated therein and consequently it is permissible to the purchaser who is alleged to have defaulted to challenge the correctness of the certificate in all .its particulars.

But the object of certification, as evidenced even more clearly by the provision that the proceeding to recover the amount wi.ll be governed by provisions relating to the execution of a money-decree, is to eschew an elaborate inquiry into the comoetin& causes culminating in the deficiency of price.

This object can be achieved only if the property successively put to sale is in material

resoecfs icff'ntical. that is to sa!V. if the ri!!ht. t1+1e ::lnrl interr.st of the judgment debtor is put to sale under substantially the same description.

If that happens it is easy to predica+e that the deficiency of price has resulted on account of the purchaser's default.

But if, as here, what was shown as unencumbered in the previous proclamation is exoresslv described 1n the la.ter nrodamation as being subiect to an encumbrance which on a reasonable assessment is alculated to affect e market value of e property, the ~

ced:n!! ceases to be a s1mole enouqh mattr l1ke +l, e e~Pcution of

a money-decree and assumes the form of a contentious claim open to diverse defences as in a sutantive suit. The soeedv remedv intent). to. qe provided by Order XXI, Rule 71 will lose its meaning an4

SUPREM~ COURT REPORTS

[1975] 3 S.C.R.

purpose if the executing court seized of the claim agaist the alleged

detau!tmg purchaser has to embark upon a comparative evaluallo? of the causes that led to the deficiency in the pnce.

Suc.Q. me:at IS not for the executing court.

Counsel for the appellant relied on certain decisio~ to fasten liability on the auction purchaser but those decisions will not help.

In A1inavajhula Venkatachellamayya v.

Rama Girjee Milakanta Girjee(l), a purchaser in a court auc.tion of the judgment-debtor's right to get a re-conveyance of certain lands on payment of a specified sum was, on default in payment of the balance purchase mcmey,

held liable to pay the deficiency in price on re-sale under Order XXJ, RuLe 71, C.P.C., thougn the date stipulated for making the payment in order to get the rKonveyance happened to be sh.ortly after the 'court sale and before the expiry of the lS days within which

he ·•uction . purchaser could deposit the balance of the purc:llaso money.

Wallin CJ. observes in his judgment that the sale axuf, the l'c•sale were of the judgment-debto1's inte1est as it existed at the date of the sale •and the re-sale and that the depreciation which occurred . in he meantime wa~ one for which the auction purchaser was exclusively responsible.

In his concurring judgment Kumaraswami Sastriya•~ J. observeH that having regard to the fact that there is no warrant of title in a court auction, the maxim caveat emptor applies and therefore the purchaser cannot avoid the sale so Ion~ as the judgment-debtor has some saleable interest in! the property, howsoever small. The Ieame.d Judge further observes that the objections which a defaulting purchaser can urge are practically .confined to those .which can be urged in an application for setting aside

the sale under Order XXI. Relying on; these observations it is contended on behalf of the appellant that sine in the instant case the judgment-debtor had a saleable interest the auction purchaser cannot avoid his liability to make up the deficiency in price on the ground that the deficielllcy was caused by the disclosure of the encumbrance.

We are unable to appreciate the relevance of the maxim caveat emptor on a question like the one before us. The auction purchaser is not attempting' to avoid the sale.

Far from it. He adheres to his purchase but disputes his liability for the deficiency.

There is no question of any failure on his part to take due care at the time of the first sale because that sale was held in 1954 whereas the encumbrance referred to in the second proclamation was stated to have been created in 1955. . ' .

M_adho v. "':atsalubai(2), o~ which the appellant relies, was a <:ase m which the ex.tstence of a mamtenance charge and the right of reside.nce were om1tted to be mentioned in the sale proclamation. 'The Htg? C?ur~ a.t. Nagpur held that the auction purchaser could not avOid hts hab•hty to make good the deficiency in the sale price as the decee-ho1der in whose favour tlle charge was created bad reit<ra

ted aqam and arcai~ tb3t she was willing to waive the charJ!e. Hidavatullah J. who dectded the case further observes in his judgment that

. l) I. I .R. 41 Mad. 474.

(2) I.L.R. £1947] Nag. 939.

on a comparison of the two sale proclamations he found that the existence of the charge was not mentioned in either. Naturally, the deficiency in price could not be attributed to the existence of the charge.

In Nelluri Brahmaiah vs. Mohd. Sheik Mohiddin and Anr.,(1) the auction purchaser disputed his liability for the deficiency on the ground that the judgment debtor had no sateable interest in the property.

This contention was based on th~ circumstance that though the property was situated in Venkatapuram it was wrongly described as lying within the limits of Borrampalem. There was_ no dispute about the boundaries, about the survey number or the area and it was not sug~ gestcd that there was any other property of the particular description c jn Borrampalem. The High Court of Andra Pradesh held that in

these circumstan(:es the property could be ea~Hy identified, tat the location of tho property put to sale was known to everyone concerned

tmd therefore it was difficult to posit that the judgment-debtor had no

alcable interest in the property.

The decisions in Baijnath Sahai vs. Moheep Narain Singh ( ~) md in Gangadas Dayabhai vs. Bai Suraj( a), are more to the point. These cases arose under section 293 of the Code of 1882 corresponding to Order XXI, Rule 71, of the Code of 1908. In the Calcutta case, at the first sale no encumbrance upon the properties sold was notifid.

In the re-sale two encumbrances were notified. The econd sale was held because the auction purchaser had committed a default in paying

the balance of the purchase-price in the first sale. The price fetched in the second sale resulted in a deficiency for which the auctio:n purchaser was sought to be made liable.

Apart from the circumstance that the decree-holder was himself to blame for niot mentioning the encumbrances in the first proclamation and was therefore attempting to obtain an advantage of his own wrong, the Calcutta High Court expressed the legat position correctly by saying that "the re-sale contemplated by s. 293 of the Code of Civil Procedure must be a sale of the same property that was first sold, and under the same description, and any substantial difference of description at the sale and the

re-sale in any of the matters required to be specified by s. 287 to

eable intending purchaser~. to judg~ of the value of the property should disentitle the decree-holder to recover the deficiency of price under s. 293." In the Bombay Case the errors in the two proclamations were so confusing that the oeficiency in the price could oot, it .

was held~ be attributed to the default of the purchaser. The description in the second proclamation being materially different from that in the first, the re-sale was not of the same property and the auction purchaser, though he had defaulted in paying the balance of the purchase-price was absolved from making good the deficiency.

It was contended that Pashupati Nath Biswas, the auction purchaser, being in possession of a part of the property must be deemed

(1) [1964] (I) Andhra Law Times, 321.

(2) I. L. R. 16 Cal. 535.

(3) I. L. R. 36 Born. 329.

to have been aware of the lease and the sub-lease and therefore he is estopped from relying upon. the sai!le as having. led to the deficie.ncy in price. No estoppel can anse agamst the auct10n purchaser on e question whether the deficiency in price can be recovered . from lum.

The question which arises under Order XXI, Rule 7~ IS whether the deficiency can be attributed to the default of the auct10n purchaser or whether it c:an be reasonably attributed to any other supervening circumstance. This is not a case in which tht auction purchaser can be said to be taking advantage of his own wrong. He cannot therefore be estopped from contending tat the disclosure of the encum brance is the operative cause of the fall in price.

We may mention that the matter under consideration arose out of the Ordinary Original civil jurisdiction of the Calcutta High Court and therefore the Original Side Rule~ of the High Court would govern the matter. That will, however, net make any difference to our decision because Chapter XXV, Rule 7 of the Rules of 1914 provides by the Third clause for re-sale of the property in default of the payment of the p.rice by the purchaser within the stipulate'd time. The Third clause of Rule 7 provides : "Where the proceeds of the resale

arc less than the price bid by such defaulting purchaser, the diff<.rence shall be leviable from him under the rules contained in Order l ot the Code for the execution of a. decree for money.'' The Fifth clause of Rule 7 also pr01Jids that the sale is maqe under and subject to all other provisions contained in the Code of Civil Procedure relating to sales in exc!Cution of decrees.

Order XXI, Rule 71 of the Code would therefore apply.

It was finally contended on behalf of the appellant that the appeal filed by the auction purchaser from the judgment of the single Judge to the Division Bench of the High Court was barred by limitation.

We see no substance in this contention. The time requisite f.or obtaining certified copies undoubtedly means "the time properly required'' and all appellant cannot in the computation of the period of

limitation for filling the appeal ask for exclusion of time which was spent negligently.

But the facts and dates mentioned to us by the appellant's counsel show that the settlement of the draft decree was adjourned from time to time by an officer of the court on being property satisfied that there was good reason for adjournment. The auction purchaser cannot be blamed for the time thus spent in settling the draft of the decree under appeal. The argument must therefore fail. ·

For these reasons we confirm the jugments and dismiss these a~ peals with costs. Costs shall be in one set.

P.H.P.

Appeals dismissed.

GOPAL KRISHNA DAS

SAILENDRA NAill BISWAS & ANR

R. S. SARKARIA

A. C. GUPTA, JJ.

Order 21 Rule 71

C.P.C

Order XXI Rule

C.P.C

Order XXl Rule

Dcngl Premises Tenancy Act

Clumdrachud

Calcutta High Court

P. K. •Sen

G. S. Chfltterjee

A. K. Sen

P. K. Chatterjee

Rathin Das

Anjana Sen

CHANDRACHUD

Calcutta

Gopal Krishna Das

Ganga Prasad Gupta

June 16, 1954

Pashupati Nath Biswa'3

Pashupati Nath Biswas

March 20, 1957

May 29, 1957

May 16, 1957

the Code of Civil Procedure

June 28, 1957

Pashupati -Nath Biswas

August 19, 19 5

April 13, 1957

May 21, 1957

G-anga Prosad Gupta

Ganga Prosad Gupta

11, 1958

March 21, 1967

April 16, 1964

Sailendra Nath Biswas

December 15, 1967

Article 13

Code of Civil Procedure

Order 21, Rule 66

Order 21, Rule 71

May 10,. 1954

March 20. 1957

February 8, 1957

Krishna Das

Damodar Mullick

Gopal Kr. Das

Sudhansu :lumar Roy

Abde Ali Abdul Hussain

Ashtifaq

J afiar Hussain

sections 13

section 16

C.P.C

Wallin

Kumaraswami Sastriya•~

Hidavatullah

Venkatapuram

Borrampalem

High Court of Andra Pradesh

section 293

s. 293

the Code of Civil Procedure

s. 287

s. 293

Bombay

the Code of Civil Procedure