1. These second appeals have been referred to a bench by our learned brother Umamaheswaram, J. Second Appeal No. 1226 of 1954 arises out of a suit filed for the recovery of Rs. 4,575 claimed by the landlord as arrears of rent due from 1-7-1950 to 31-11-1952 at the rate of Rs. 175 per mensem. The plaintiff-landlord stated that the defendants Nos. 2 to 4 who formed a partnership carrying on business under the name and style of Sri Krishna Ice Parlour and Bakery took the suit premises on rent.
It would appear that the rent fixed originally was Rs. 80 per month and this continued till 30-11-1948 when there was an agreement to pay a higher rent, namely, Rs. 125. The rent was Being paid at this rate from 1-12-1948 to 30-6-1950. On 1-7-1950 there was a further agreement to pay a higher rent, namely, Rs. 175 per month. The plaintiff's case is that the defendant paid the rent till 30-6-1950 and failed to pay subsequently.
He, therefore, claimed the arrears of rent on the basis of the increased rent at Rs. 175. The defendants 1 and 4 filed a joint written statement and denied that they had agreed to pay the rent at the rate of Rs. 175 per mensem. It was stated that the rent was exhorbitant and the plaintiff was entitled to recover only at the rate of Rs. 80 per month, and it was also urged that the claim to a higher rent was contrary to the provisions of the Madras Buildings (Leare and Rent) Control Act and, therefore, such an agreement was not enforceable.
Defendant No. 3 also pleaded the same defence to the suit. Although the courts below held that the agreement to pay the enhanced rent was proved, but with regard to the question as to whether the claim for the enhanced rent was against the provisions of the Madras Buildings (Lease and Rent) Control Act, the trial Court held that the right of the plaintiff to claim a higher rent had come into effect even before the Madras Buildings (Lease and Rent) Control Act of 1946 and the Act could not affect the plaintiff's right to recover.
The lower appellate court, however, came to the conclusion that so long as the fair rent had not been fixed there was nothing in the House Rent Control Act to debar the landlord to claim the enhanced rent under an agreement come to between himself and the tenant. The tenant has now come up in appeal.
2. The agreement to pay the enhanced tent having been found to have been established by both the courts below, the question cannot be canvassed here. Therefore, the only point that arises for consideration here is as to whether the agreement between the landlord and the tenant for an enhanced rent offended Section 6 of the Madras Buildings (Lease and Rent) Control Act of 1946 or 1949 as amended in 1951.
3. Relying upon a decision of the Madras High Court of Govinda Raja Chari, J., in A. Moses Pillai v. M. K. Govindan, 1948-1 Mad LJ 51: (AIR 1948 Mad 346) (A), it was argued on behalf of the appellant's counsel that the provisions of Section 6 of the Rent Control Act would apply despite the fact that the parties had contracted otherwise, The argument was that Section 6, Sub-section (2) of the Act was peremptory and imperative and it was not open to the landlord or the tenant to enter into a contract in violation of the above provisions.
The facts of the aforesaid case were that the tenant in that case had executed a rent chit to say that the tenancy would last for a year first and that during that period a sum of Rs. 40 would be paid every month. There was a further stipulation to say that, if possession of the house was not delivered as agreed to within the prescribed period, the tenant would pav a rent of Rs. 45 that is to say (an increased rent of Rs. 5) until possession was given.
It was contended in that case that the excess of the sum of Rs. 5, the enhanced rent, could not be recovered from the tenants that stipulation was unenforceable in view of Clause 7 (a) of the Madras Rent Control Order of 1941. The learned Judge while interpreting the above clause came to the conclusion that that provision in the Rent Control Order permitted the increase in rent only where some addition, improvement or alteration such as was mentioned in that clause, had been carried out at the landlord's expense and that the clause permitted an increase in rent only in such a contingency.
The learned Judge also held that the language employed indicated that the legislature was intending la interfere with the riqhts created under contracts entered into before or after the order, Oil grounds of high policy. In the result, the learned Judge upheld the contention of the tenant and rejected the claim of the plaintiff for a large rent.
4. The matter came up for consideration before the Madras High Court subsequently in the case of George Oakes Ltd. v. Chief Judge, Sin. C C.. Madras, : AIR1951Mad222 (B). In this case, the question did not arise in the same way as it did in the former case or in the case now before us. What was decided in that case was that where the House Rent Controller had fixed the rent and that happened to be higher than the lent that was bring paid by the tenant it was not open to the landlord to claim the difference between the rent that was being paid and the fair jent as fixed by the Rent Controller anterior to the date of filing of the application.
A decision of Govinda Menon J., in Venkateswara Rao v. Mohd. Mohibullah, : (1953)2MLJ669 (C, may also be adverted to in this connection. In this rase the learned Judge following the decision of 1948-1 Mad LJ 51: (AIR 1948 Mad 346) (A), held that the provisions of Sections 5 and 6 of the Madras Buildings (Lease and Bent) Control Act 1946, now Act 25 of 1949 wers peremptory and would apply even though the parties had contracted to the contrary. This was also a case where the plaintiff-landlord claimed a higher rent and the claim was resisted by the tenant on the ground that the agreement to pay enhanced rent was null and void in view of the provisions of the Madras Buildings (Lease and Rent; Control Act of 1946.
The courts below rejected the contention of the defendant and decreed the suit. On revision before the High Court, Govinda Menon, J., held that the case fell within the decision in 1948-1 Mad LJ 51: (AIR 194$ Mad 346) (A), He further held that there was no material difference between Clause 7 (a) of the Madras House Rent Control Order, 1941 and Clause 6 of Rent Control Act 25 of 1946. In this view, he held that any agreement for enhanced rent was not allowed in law unless the conditions mentioned in Section 6 of the Act were complied with.
In effect the learned Judge opined that except under the circumstances pointed out in Station 6 of the Act, the rent could not be increased even by agreement between the parties. In order to appreciate the contentions raised by the respective counsel, it would be useful to refer to the relevant provisions of the Madras House Rent Control Order 1941 and the Madras Buildings (Lease and Rent) Control Acts of 1946 and 1949. Clause 7 (a) of the Madras House Rent Control Order of 1941 is to the following effect :
''After the commencement of this order an increased rent shall be permissible only where some addition, improvement or ulteration not included in the necessary repair or repairs which are usually made to houses in the local area, has been carried out at the landlords expense since the rent was Bred.'
The relevant provision in the latter (Act of 1947/ 1949) is as follows :
Section 5 (1):
'When the fair rent of a building has been fixed under this Act no further increase in such fair rent shall be permissible except in cases where some addition, improvement or alteration has been carried out at the landlord's expense and if the building is then in the occupation of a tenant, at his request.' The words 'in this Act' were substituted by the amending Act of 1951. A comparison of the provisions ot the Rent Control Order and the Act extracted above would show that while Clause 7(a) of the Madras House Rent Control Order 1941 completely prohibited an increase in rent after the coming into force of the control order except under the circumstances mentioned in Clause 7, Clause 5 of the subsequent Act prohibited an increase only where a fair rent had been fixed. It would, therefore, be evident from the terms of the Section in the Act of 1946 that where fair rent has not been fixed, it was open to the parties to come to an agreement with regard to an increase in rent. This question did not arise in the case before Govindarajachari J.
5. In a case of this kind where the tenant agreed to pay the enhanced rent it can be assumed from the agreement entered into by him with the landlord which has been held to be proved. As was observed in the case of Raja Chetty v. Jagannatha Das Govind Das : AIR1950Mad284 (D) parties can always agree to be governed by the terms and conditions which may be inconsistent with some provisions of the Act.
The record would show that in this case application for the fixation of fair rent was never made and no fair rent was fixed as a matter of fact. Under these circumstances, having regard to the clear words of Section 5(1) of the Act of 1946 it must be held that the agreement entered into between the landlord and the tenant tor the enhanced rent could not be declared null and void as being in contravention ot the provisions of the Act. The terms of a contract have to be observed by both the contracting parties.
A contract must be enforceable unless such contract is prohibited by law or vitiated by other circumstances. This apart, it may also be noted that where a statute seeks to control contractual obligations, such a statute must always be strictly construed. Courts will not be astute to construe an Act so as to avoid a contract, or a contract so as to bring it within the prohibition of a statute. Vide Craies Statute Law P. 236.
(5-a) We must, therefore, hold that the contention raised by the learned counsel for the appellant that the agreement for the enhanced rent is unenforceable cannot be sustained and must be rejected. The appeal is therefore dismissed with costs.
Second Appeal No. 1051 of 1954.
6. This appeal arises out of a suit filed by the tenant for the recovery of a sum of Rs. 1,317/- being the excess rent collected by the landlord after the fixation of fair rent. The trial Court relying upon Section 6 of the Rent Control Act and taking all the circumstances of the case and the evidence on record came to the conclusion that the enhanced rent paid by the tenant was not warranted and, therefore, he was entitled to recover the amount.
A decree, therefore, was passed in favour of the plaintiff-tenant. On appeal the Subordinate Judge allowed the appeal holding that the tenant was not entitled to a refund of the excess rent because in the opinion of the learned Judge there was no fixation of fair rent by the Rent Controller. He, therefore, negatived the contention of the tenant and dismissed the suit. Hence this appeal.
7. We have gone through the record and wo feel that the Subordinate Judge has been under a misapprehension in regard to the matter as to whether there was a fixation of fair rent by the Rent Controller. In the order of the Rent Controller of 21-2-1945 in proceedings L. Dis. 11853/44 which is part of the record the Rent Controller has stated that a petition for the fixation of fair rent was filed and that on 23-8-1944 the fair rent was fixed at Rs. 19/- per month. It would, therefore, be clear that as a matter of fact an application for the fixation of fair rent was made and that fair rent was fixed. Quite apart from this the landlord in his statement in the Rent Controller's court stated as follows:
'After the fair rent was fixed, I have improved the house, got it electrified.'
The landlord, therefore also admits the fact of fair rent having been fixed. In the face of the observation of the Rent Controller and the statement of the defendant landlord himself, it is not open to contend that there was no fair rent fixed. If, therefore, fair rent had been fixed and it had not been shown that repairs and additions as contemplated by Section 6 of the Act, had been carried out, there can be no enhancement of rent.
8. Under these circumstances, we allow the appeal, set aside the judgment of the subordinate Judge and restore the judgment of the trial Court. The appellant would be entitled to a refund of the court fee in this Court. As regards other costs, each party will bear his own costs here.
(This second appeal having been set down this day for being mentioned, the court made the following) :
9. It is evidently a mistake for thedirection to get half the court fee paid by the appellant from the other side. In other words, theappellant will get half the court-tee paid by herfrom the other side.