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Lakshmi Chand Vs. Pt. Niader Mal - Court Judgment

LegalCrystal Citation
SubjectContract;Tenancy
CourtAllahabad High Court
Decided On
Case NumberSecond Appeal No. 2075 of 1958
Judge
Reported inAIR1961All295
ActsContract Act, 1872 - Sections 2, 16 and 23
AppellantLakshmi Chand
RespondentPt. Niader Mal
Appellant AdvocateA.P. Gupta and ;Satish Chandra, Advs.
Respondent AdvocateS.B.L. Gour and ;K.B.L. Gour, Advs.
DispositionAppeal dismissed
Excerpt:
.....- agreement in violation of section 7 - agreement unlawful under section 23 - defence found on illegal agreement can not be entertained by court. (ii) undue influence - section 16 of contract act, 1872 - one party to agreement in dominant position over will of other - uses his dominance to obtain unfair advantage - agreement is hit by undue influence - plaintiff agreed to stay his hands from filing ejectment suit on promise of defendant to pay penalty in case of his failure to vacate accommodation - agreement is not under undue influence. - - 25 per mensem with effect from the date of occupationand also agreed to vacate the accommodation by 12th september 1954. he, however, failed to do so and niader mal brought his suit for ejectment and recovery of a certain sum as compensation..........are conflicting versions about the nature of the transaction made by the parties which resulted in lakshmi chand occupying the house, the landlord alleging that lakshmi chand was allowed the use of it as a licensee and the latter asserting that he entered possession under a regular agreement of tenancy. it is again common ground that in november 1953 the defendant lakshmi chand executed a registered deed of agreement by which he promised to pay the owner, a sum of rs. 25 per mensem with effect from the date of occupationand also agreed to vacate the accommodation by 12th september 1954. he, however, failed to do so and niader mal brought his suit for ejectment and recovery of a certain sum as compensation for use and occupation. 2. lakshmi chand contested the suit and denied that he was.....
Judgment:

S.S. Dhavan, J.

1. This is a defendant's appeal against a decree of ejectment passed by the learned District Judge of Bulandshahr against the appellant. A sum of Rs. 1328 was also awarded against them as compensation for use and occupation, The facts are these: The respondent Niader Mal is admittedly the owner of tile accommodation in dispute. It is common ground that in 1951 the appellant Lakshmi Chand was in need of accommodation and was admitted into the house by Niader Mal on the recommendation of a common friend Shiam Lal Mittal Vakil.

There are conflicting versions about the nature of the transaction made by the parties which resulted in Lakshmi Chand occupying the house, the landlord alleging that Lakshmi Chand was allowed the use of it as a licensee and the latter asserting that he entered possession under a regular agreement of tenancy. It is again common ground that in November 1953 the defendant Lakshmi Chand executed a registered deed of agreement by which he promised to pay the owner, a sum of Rs. 25 per mensem with effect from the date of occupationand also agreed to vacate the accommodation by 12th September 1954. He, however, failed to do so and Niader Mal brought his suit for ejectment and recovery of a certain sum as compensation for use and occupation.

2. Lakshmi Chand contested the suit and denied that he was occupying the house as a licensee. He claimed to be a tenant on a monthly rent of Rs. 15. He contended that the original transaction created a tenancy. He repudiated the subsequent registered agreement of November 1953 as vitiated by duress and undue influence. The trial court held that Lakshmi Chand was either a tenant or a lessee and not a licensee, and that the agreed rent was Rs. 15 per mensem.

He dismissed the suit for ejectment but passed the decree for Rs. 343-10-0 for arrears of rent at the rate of Rs. 20 per mensem, holding that a subsequent oral agreement had enhanced the rate of Rs. 15 to Rs. 20. Both the parties assailed the decision of the trial court, the landlord by means of an appeal and the tenant by a cross-objection against the decree for rent.

One of the questions agitated before the trial court concerned the status of the appellant Lakshmi Chand that is to say, whether he had been occupying the house as a lessee or a licensee. The learned District Judge, after a review of the oral evidence (there is no written agreement of the original transaction) held that the original arrangement between the parties did not amount to an agreement of lease and did not confer on Lakshmi Chand the status of a tenant. He was of the view that) Lakshmi Chand's occupation of the house was permissive.

As regards the registered agreement of 1953, the learned Judge held that it was executed under undue influence and that its terms were unenforceable but, according to him, this agreement could not have the effect of changing the status of Lakshmi Chand from that of a licensee to a lessee. Accordingly, the learned District Judge decreed the suit for possession and also allowed a sum of Rs. 83-10-0 as compensation for use and occupation. Thus both the appeal and cross-objection were allowed in part. The plaintiff appears to have submitted to those decisions but the defendant Lakshmi Chand has come to this Court in second appeal.

3. In my view this appeal must fail on a simple ground. The plaintiff Niader Mal alleged in his suit that he had allowed Lakshmi Chand to occupy the house as a licensee. In defence the latter set up an agreement of tenancy. This plea could not be entertained by the court, for it was based on a transaction which was made in violation of the U. P. Control of Rent and Eviction Act.

4. The plaintiff's evidence shows that the house was constructed before the year 1951, and, therefore, it is 'accommodation' to which the provisions of the U. P. Control, of Rent and Eviction Act would apply. Under Section 7 (1) (a) of the Act every landlord is required, within seven days after an 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 a tenancy or by release from requisition or in any other manner whatsoever, to give notice of the vacancy in writing to the District Magistrate.

The District Magistrate, under Section 7 (2), has the power to require a landlord by general or special order to let the accommodation which has fallen vacant or about to fall vacant to any person. The combined effect of these provisions is that a landlord cannot create a tenancy behind the back of the District Magistrate.

In the present case, the appellant Lakshmi Chand defended the suit for ejectment on the plea that he was admitted by the landlord as a tenant on monthly rent. In other words, he set up an agreement the object of which would obviously be to defeat the provisions of the Control of Rent and Eviction Act. Such an agreement would be unlawful under Section 23 of the Indian Contract Act and a defence founded on an illegal tenancy cannot even he entertained by the Court.

5. Mr. Satish Chandra, who argued the case for the appellant with ability, contended that the agreement of tenancy is not illegal as it is well within the permissible limits of the Control of Rent and Eviction Act. I am afraid I cannot agree. If the object of the parties was to create a tenancy, the proper procedure for the landlord would be to inform the District Magistrate that the house had been vacated by his son and had fallen vacant.

The defendant could then have applied for 'allotment', to use a popular phrase, and taken his chance. Instead of complying with the procedure prescribed by the Act, the parties, if the defendant is to be believed, made an agreement which completely short-circuited it. The agreement is, in my opinion, obviously unlawful.

6. Mr. Satish Chandra then argued that if the Court held the agreement of tenancy to be illegal, the plaintiff should be non-suited. He pointed out that the defendant had acquired possession with the free consent of the plaintiff under an unlawful agreement and the Court will not enforce such an agreement at the instance of either party. It is true that the Court will apply the maxim ex turpi causa non oritur actio to every unlawful agreement, and will refuse assistance to any plaintiff who comes to it with a cause of action based on an illegality.

But this maxim does not apply where it is not necessary for the plaintiff to rely on the illegal transaction for the purpose of obtaining the relief he seeks. By way of illustration, if the owner lets his house knowingly to a prostitute for immoral purposes he cannot recover the rent from her. But if he sues for her ejectment and recovery of possession, the illegal transaction does not come in for consideration, for it is sufficient for him to prove his title and ownership and ask for possession.

In Bowmarkers Ltd. v. Barnet Instruments, Ltd., (1945) 1 KB 65, it was. held that though no claim founded on an illegal contract will be enforced by the Court, but as a general rule a man's right to possession of hig own chattels will be enforced against one who without anv claim of right, is detaining them, or has converted them to be of his own use, even though it may appear; from the pleadings or in the course of the trial, that the chattels in question came into the defendant's possession by reason of an illegal contract between himself and the plaintiff, provided that the plaintiff does not seek, and is not forced either to found his claim on the illegal contract, or to plead its illegality in order to support his claim.

The principle enunciated in that case would apply to a case like the present in which the owner sues for ejectment of the defendant, basing his right on his title and ownership of the house. The same principle has been enunciated by Cheshire and Fifoot in 'The Law of Contract' Fourth Edition, p. 297, in these words:

'It must be noticed that the right to return of property transferred is barred only when the plaintiff must necessarily have recourse to the illegal contract. If he can establish his case without being driven to disclose the illegality he will succeed. Or, to put it in another way any rights which he may possess irrespective of the illegal contract are recognised and enforced. Suppose, for instance, that a lease for ten years is made by A to B for a purpose known by A to be illegal. A cannot sue for the recovery of rent, since to substantiate his claim he must necessarily rely upon the illegal transaction. Nor, it is apprehended, can he sue to recover possession before expiry of the agreed term. If he did so B would allege possession by virtue of the lease, and A would be precluded from pleading its illegality. But, once the term of ten years had expired, A has an independent cause of action by virtue of his ownership. He cannot be allowed to recover what he has transferred in pursuance of the illegal transaction, but he cannot be deprived of rights which he has not transferred. Once the illegal, but temporary, title has ceased, he can rely upon his previous lawful title.'

7. Sir John Salmond enunciates this rule of law in his Principles of Contracts, 2nd Edition page 346 with an illustration in the following words:

'If ........ I lend my horse to a man for aweek in order that he may use it in the commission of a highway robbery, and he refuses to return it to me at the end of the week, there is no doubt that I can recover it from him, notwithstanding the illegality of the transaction. For I am not bound to sue on the illegal contract, being entitled, instead of doing so, to rely on my ownership of the horse and to sue in detinue for the tort of wrongfully detaining it. The borrower could not effectually plead in answer to my claim that he obtained the horse in pursuance of a contract, for I could reply that the contract had come to an end by efflux of time, and I should not be driven to the inadmissible reply that the contract was illegal.....On the same principle he who agreed to let his house to a woman for the purpose of prostitution could, in reliance on the fact that he was the freehold owner of the property, recover it in ejectment at the end of the agreed term; though he would be unable to recover the rent, since for this purpose he would have to rely on his illegal contract.'

8. These principles will apply to the facts of the present case. The defendant occupied the house under an arrangement which, according to his own witness, Mr. Shiamlal who has been believed by both the courts below, was to last for one or two months. At the expiry of this period he would not vacate the house. The plaintiff is asserting his right as an owner to eject a trespasser. He is not basing his suit on his rights, whatever they may be, under the original transaction, but is enforcing his right to possession as an owner. The law will permit him to do so.

9. It is the defendant who is resisting the suit on the basis of an agreement which is unlawful. He cannot be permitted to take advantage of the illegality to defeat the rightful claim of an owner to recover possession.

10. It appears that, after the defendant had failed to vacate the house according to his word and was behaving like the proverbial camel in the tent, the parties entered into another agreement in November 1953. The plaintiff, after making repeated but unsuccessful attempts to persuade the defendant to go, told him that he had no option but to apply to the 'Deputy Saheb' for his ejectment, obviously meaning the Rent Control and Eviction Officer.

The defendant asked for time and requested the plaintiff to stay his hand. He agreed to vacate the house by 12th September, 1954 at the latest. The plaintiff, however insisted that there should be a clause in the agreement providing a penalty in? case of the defendant breaking his promise. Thereupon, an agreement was executed in winch the defendant admitted that he had taken the house initially for two months but had not been able to vacate it.

He promised to do so by 12th September 1954 and stipulated that, if he did not, he would pay damages to the plaintiff at the rate of Rs. 25/-per mensem from the date of his initial occupation of the house. This agreement has been condemned by both the courts below as vitiated by undue influence. With respect to them I am unable to see the slightest ingredient of undue influence in it. An agreement is said to be obtained by undue influence where the relationship between the parties is such that one of them is in a position to dominate the will of the other and uses that position to obtain an unfair advantage over the other.

The classical illustrations of such relationship are parents and child, guardian and ward, doctor and patient, and lawyer and client. I failed to see how a landlord who merely seeks his legal remedy for the ejectment of a tenant in accordance with a previous agreement can be said to dominate the will of the tenant or to obtain an unfair advantage over him within the meaning of Section 16 of the Indian Contract Act which defines a contract 'by undue influence'.

Furthermore, I am unable to agree with the view of the courts below that the terms of this agreement are unconscionable. The plaintiff wanted to file a suit for the ejectment of the defendant but stayed his hand, in consideration of which the defendant agreed to pay a penalty at the rate of Rs. 25/- per mensem for his failure to vacate within a year. In my view, the defendant made a very advantageous bargain for himself for he was permitted to live in the house for nearly over a year.

It is settled law that forbearance to sue is sufficient consideration for a contract to be enforceable. In Alliance Bank Ltd. v. Bromm, (1864) 62 ER 631 : 143 RR 120, the defendants were indebted to a bank for a sum of Rs. 20,000/-. The plaintiff pressed for security and the defendant promised to hypothecate certain goods and deliver the documents as soon as they were received.

In a suit for declaration that the plaintiff Bank was entitled to the warrant for goods and for an injunction restraining the defendants from handing over the goods to them, the Court held that inasmuch as by their promise to give security the defendants had obtained forbearance on the part of the plaintiff, there was sufficient consideration and thecontract was enforceable.

See also Morton v. Burn, (1837) 112 ER 378, in which a forbearance to sue even for a limited time was held to be sufficient consideration for an enforceable promise. For these reasons I hold that the defendant was rightly ejected from the accommodation. The agreement of November 1953 did not have the effect of creating a tenancy but only gave him time to vacate the house. The stipulation for penalty is also enforceable.

11. The appeal fails and is dismissed. The defendant shall pay the costs of the plaintiff in all courts.

12. This is not a fit case for special appeal and leave to appeal is refused.


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