A SMT. SHRISHT DHA WAN

v.

·~

SHAW BROTHERS ...

DECEMBER 13, 1991

B [DR. T .K.THOMMEN AND R.M. SAHAI, JJ.]

,_

Rent Control and Eviction .

·_;~~

Delhi Rent Control Act, 1958: ,..

c S.21-Applicationfor permission to let out residential premises/or short

period-Requirements of-Order of Rent Controller granting permissio~

When can be challenged.

'Fraud -What constitutes for purposes of s.21: Onus to prove fraud-

On whom lies.

D

Words and Phrases:

'Fraud': 'jurisdictional fact' -Meaning of. •

E

The ·appellant-landlady on 3.11.1978, applied for permission under

s.21

of the Delhi Rent Control Act, stating that she wanted to give the

ground

nour of her house on rent for residential purposes for a short

period

of three years, whereafter she would need the house. After record-

ing the statements of the landlady in support of her

application, and of the _,

tenant who had agreed in writing to vacate the house after the stipulated

F

period, the Rent Controller granted the permission. Twenty days before

the tenancy was to come to an end, the tenant-firm vainly requested the

landlady to renew the lease; and the latter filed an execution application

under s.21 of the Act, which was successfully challenged by the tenant-

"'.;~

farm on the ground that the permission was obtained by the landlady by

playing fraud

as she knew from the very beginning that the premises were

G

availa~le for letting out indefmitely.

The Rent Controller held that in the absence of any averment in the

-.

application of the landlady that she would require the premises for her

younger son, her statement in support of it could not be looked into; and

that, apart from the variance between pleadings and proof, the landlady

H failed to establish that the premises were let out with intention to get it

446

J

SMT. DHA WAN v. SHAW BROS. 447

back after three years for her second son. It was also held that even

assuming

that the premises were not needed by her for her son could not

validate the sanction.

The appellate authority, agreeing with the findings

of the Controller,

held that since the landlady stated

that she

requirtid the premises for

herself after three years

and she was having an

accommodation which was

sufficient for her and her family, the permission obtained by her was

vitiated by fraud.

After unsuccessfully approaching the High Court, the landlady

preferred the appeal by special leave to this Court.

It was contended by the appellant that the authorities below

mis­

directed themselves in placing the burden on her to prove that the

permission obtained by

her was genuine; and that it was for the tenant to

establish

that the permission was obtained by playing fraud.

A

B

c

On the question of the requirements of s. 21 of the

Delhi Rent D

Control Act for the purpose of acl'.ording permission, and as to what

constitutes fraud in relation thereto,

Allowing the .landlady's appeal, this Court,

HELD:

(By the Court): 1.

Section 21 of the Delhi Rent Control

Act,1958 operates in terms thereof, notwithstanding any other law, unless

the contract itself,

or the permission of the Controller, is vitiated by fraud.

Absent such vitiating circumstance,

and once the Controller has accorded

sanction, the parties to the contract are presumed to have. entered into

their relationship and the law binds them to the terms

of their agreement.

[pp. 456EF;

4610]

E

F

2. Section 21 of the Act is attracted in the specific circumstances

postulated by

it-the absence of requirement by the

landlord of the whole

or any part of the premises for a particular period, the period must be

clear and definite, the lack of requirement must be honestly felt by the

landlord, the permission

of the Controller in the prescribed manner for G

the

lease orthe premises in. question, the agreement in writing between the

landlord

and the. tenant

for the lease of such premises as a residence for

'the agreed.period,

the refusal of the tenant to

vacate the premises on the

. exp fry orthat period, an<J an application made within the prescribed time

by the landlord invoking the power of the Controller under the section.

. . [pp.456GH; 457A; 461C] H

448 SUPREME COURT REPORTS [1991) SUPP. 3 S. C.R.

A 3.(i) Permission granted under s.21 of the Act can be assailed by the

'""

•.;::----

tenant only if it can be establishe~ that it was vitiated by fraud or

collusionor jurisdictional error which in the context of Section 21 is

t

nothing else except fraud and collusion. [pp.457F; 468AB]

(ii) Fraud or coJlusion must relate to the date when permission was ·~

B granted. [pp. 457GH; 458A; 468B]

l

(iii) Permission carries a presumption of correctness which can be

permitted to be challenged not only

by raising objection but proving

....

itprima facie to the satisfaction of C~ntroller before landlord is called

..--

uponto file reply or enter into evidence. [pp.459B;468BC] l

c

l

(iv) No rashing or roving inquiry should be permitted at the stage of

execution. [pp. 459E; 468C]

(v) A

permission does not suffer from any of these errors merely

D

because no reason was disclosed in the application at the time of cretion

r of short term tenancy. [pp.4588; 4680)

(vi) Availability of sufficient accommodation either at the time of

grant of permission or

at the stage of execution is not a relevant factor

I

for deciding validity of permission. [p.468EJ

E

4. (i) Any objection to the validity of sanction should be raised prior

to expiry of the lease. [p.462F]

--("-

(ii) The objection should be made immediately on becoming aware "

of fraud, collusion etc. [pp.459B; 462F] · .f ,_

F

(iii) A tenant may be permitted to raise objection after expiry of

lease in exceptional circumstances only. [p.462G]

~

(iv) Burden to prove fraud or collusion is on the person alleging

r

"

it.[p.459B; 462G]

..-l:"

G

5. The authorities in the instant proceedings misunderstood the

guiding principle of burden of proof, misconstrued the requirements of

the section, and reached a totally unreaso~able conclusion that the origi-

nal order of the controller was obtained by fraud. The High Court was

r wrong in affirming the totally unsustainable conclusion reached by the

H authorities. [pp.459EFG; 471A] t

..

--4

i

SMT. DHA WAN v. SHAW BROS. 449

Per Dr. Thorrimen, J. (Concurring) A

I. Section 21 of the Delhi Rent Control Act, 1958 postulates that both

the landlord and the tenant act honestly.

If the

permissi?n of the Control-

ler has been fraudulently obtained

by

the landlord, and the tenant has

been let into the premises, the landlord loses the right to seek eviction of

'

the tenant by the summary procedure contemplated by the section.

B

---...

Likewise if the tenant has deJiberately-but not a1ccidently-violated the

I

· terms of the lease, by using the premises otherw~.e than as permitted by

I

the section, he is liable to be evicted on an application by the landlord, .. although the stipulated period of the lease has not expired. All this is

because the very basis of the Controller's order has been violated by the

... fundamental breach of the guilty party.[pp.458(iH; 459A]

...

c

2. Fraud is essentially a question of fact, the burden to prove which

is upon him who alleges it. He who alleges frallld must do so promptly.

[p.459B]

3.1 There

is a presumption of legality in favour of a statutory order.

'.j

[p.459B] D

....

l'

3.2 The Controller's order under s.21 is pres'umed to be valid until

proved to

be

vi~iated by fraud or ma/a fide. [p.459BJ

4.1

That the landlord does not require the building is a question of

honest belief heid by him

at the relevant time, that is, at the time of

.his

E

seeking the Controller's permission. The landlord must have honestly and

reasonably believed that he would not require the building for the period

specified in his application to the ControHer for permission to let out the

premises.

If that belief was truthfully

hield by him at the time of his

application to the ControJJer, the fact

that subsequent events proved him

wrong, and that

he did not require the

buiJdini~ not only for the period

F

stated in the application, but also for a longer period, or that he required

it earlier than anticipaied would not make the belief any less honest

or

valid. [pp.457GH; 458AB]

4.2 All that the landlord is required to state in his application for

permission

of the Controller is the absence of his requirement of the

premises for the particular period, but he

is not bound to state its reasons. G

[p.458B]

Jnder Mohan Lal v. Ramesh

Khanna, [1987] 4 SCC 1, relied on.

4.3 What. s. 21 postulates is the bona fide belief of an honest and

) reasonable landlord and not the reckless &nd casual opinion of an irre-

sponsible and careless person.[p. 458C]

H

'

(

~

A

B

c

D

E

F

G

H

450 SUPREME COURT REPORTS (1991] SUPP. 3 S. C.R.

4.4 There is no fraud if what the landlord honestly believed to be true

turned out to be false. The section does not place any higher degree of

responsibility on the landlord. [p. 458D]

5. If the order under

s.21-was obtained by the fraud of the party

seeking it or if the Controller made a 'mindless order' in the sense of

acting

malafide by illegitimate exercise of power owing to non-application

of his

mind to the strict requirements of the section, then the special

mechanism of the section would not operate.[ p.459BC]

S.BNoronah v. Prem Kumari Khanna, [1980] 1 SCC 52, relied

on.

6. The order of the controller in the circumstances warranted by

section

21 is a self-executing order requiring no further proceeding. It is

at once a sanction for the lease and for eviction on expiry of the period of

the lease. Neither can the landlord evict the tenant during the period of the

lease

nor can the tenant remain in possession beyond that period. None has

any right outside the section which operates strictly in terms thereof

provided the conditions stipulated therein are unquestionably

satisfied.[p.457D-EJ

JR.Vohra v. India Export House Pvt. Ltd. & Anr., [1985] 1 SCC 712,

relied on.

Shiv Chander Kapoor v. Amar Bose, [1990] 1 SCC 234; Subhash Kumar

Lata

v. R.C.Chhiba and Another, [1988] 4

SCC 709; V.S.Rahi and Another v.

Smt. Ram Chambeli, [1984] 1 SCC 612; Yamuna Maloo v. Anand Swarup,

[1990] 3 SCC 30; Pankaj Bhargava and Another v. Mohinder Nath and

Another,

AIR 1991SC1233;

Smt. Dhanwanti v. DD.Gupta, [1986] 3 SCCl

and Pukhraj Jain v. Padma Kashyap and Another, [1990] 2 SCC 431,

referred to.

Per

Sahai , J.

1.1 Mistake of fact in relation to jurisdiction is an error of jurisdic­

tional fact. [p.46SAJ

1.2 A jurisdictional fact is one on existence or non-existence of which

depends assumption

or refusal to assume jurisdiction by a Court, tribunal

or an authority.[p.464G]

l.3 No statutory authority or tribunal can assume jurisdiction in

respect

of subject matter which the statute does not confer on it and if by

' .

SMT. DHAWANv. SHAW BROS. 451

deciding erroneously the fact on which jurisdiction depends the court or A

tribunal exercises the jurisdiction then the order is vitiated. Error of

jurisdictional fact renders the

order ultra vires and bad.

Raza Textiles v. Income Tax

Officer, Rampur. [1973] 1 SCC 633,

relied on.

Wade Administrative

Law, referred to.

1.4

As regards section 21 of the Delhi Rent Control Act, 1958, the

jurisdictional fact can be said to be availability of vacant premises which

are not required by the landlord for the particular period and its letting

out for residential purpose.

1.5 A permission obtained

under section 21 of the Act may be

vitiated if the premises were not vacant on the date of application

or if the

permission

is obtained in respect of non-residential premises.

1.6

An error of jurisdictional fact which could entitle a Controller to

re-examine the matter in the context of s.21

is fraud or collusion.

2.1 Fraud in public law is not the same as fraud in private law. Fraud

in public law or administrative Jaw, as it is developing, is assuming

different shade.

It arises from a deception committed by disclosure of

incorrect facts knowingly

and deliberately to invoke exercise of power and

procure an order from an authority or tribunal and must result in exercise

of jurisdiction which otherwise would not

ha'Ve been exercised. Misrepre­

sentation must be in relation to the conditions provided in a section on

existence or non-existence of which power can be exercised ..

Khawaja v. Secretary of State for Home Deptt., 1983(1) All Eng­

land Reports p.765 andDerryv.Peek [1889] 14 App. Cas. 337,

referred to.

Craies on Statute Law, 7th Edn. p. 79, referred to.

2.2 Fraud or misrepresentation resulting

in vitiation of permission

in

context of s.21 therefore could mean disclosure of false facts but for which

the Controller would not have exercised jurisdiction.

2.3 But non-dislosure of a fact not required by a statute to be

disclosed does not amount to misrepresentation

or may not amount to

fraud.

B

c

D

E

F

G

H

452 SUPREME COURT REPORTS [1991] SUPP. 3 S. C. R

A Anson's Law of Contract, referred to.

~·

2.4 Non-disclosure of any reason in the application under s.21 of the

Act about the need

of the premises after expiry of period or

failure to give

reason that the premises shall be required by son, daughter or any other

family member does not result in misrepresentation or fraud.

B

~

2.5 It is not misrepresentation under s. 21 to state that the premises

shall be needed by the landlord after expiry of the lease even though the

premises in occupation of the landlord

on the date of application or after

expiry of period were

or may be sufficient.

~

2.6 Section 21 does not place any positive or comprehensive duty on

c the landlord to disclose any fact except that he did not need the premises

for the specified period. Even the Controller

is not obliged with a pro-

active duty to investigate.

3.1 An action is mindless when it

is thoughtless or without any care

or caution. In law it is passing of an order without any regard to the

D provision of law.

If the section requires the authority to pass an order on

inquiry

or on being satisfied of existence or non-existence of a fact then the

I"'

duty cast is higher and an order which is passed without due regard to

duty to investigate then the order may be mindless. But in absence of any

statutory requirement it may utmost be regulatory oversight.

E 3.2 An order made under section 21 may be mindless if at the time

of granting permission there

is material to indicate that the premises

were

being let out for a short period even though It was available .for indefinite

letting. But in absence of any material to indicate to the contrary if the

Controller grants permission on the mere statement in the application that

the premises was available for being let out for a short time as it was not

F required by the landlord and it is supported by a statement recorded

before Controller which

is not objected to by the tenant rather agreed then

it would be too much to say that the exercise of power was made

thoughtlessly.

""

Shiv Chand Kapoor v. Amar Bose, [1991) 1 SCC 234; Smt.

~

G Dhanwanti v. DD.Gupta, [1986] 3 SCC 1; Inder Mohan Lal v •.

Ramesh Khanna, [1987] 4 SCC 1 and Joginder Kumar Butan v.

R.P.Oberoi, [1987] 4 SCC 20, relied on~

3.3 There is no statutory requirement for the Controller to enter into

enquiry on application under sectfon

21 made by a landlord supported by

H

a statement and agreed to by the tenant.

~<~

·"-

SMT. DHAW AN v. SHAW BROS. 453

4.1 Error in assumption of jurisdiction should not be confused with A

mistake, legal or factual in exercise Of jurisdiction. In the former the order

is void whereas in the latter it is final unless set aside by higher or

competent Court or authority.

4.2 A permission granted under section 21 once permitted to attain

finality becomes unassailable on

error in exercise of jurisdiction. It could B

be

c~llenged later or in execution only if it could be brought in the

category of a void or

ultra vires permission.

Such invalidity can arise if

jurisdiction is exercised by misrepresentation of facts either about exis­

tence or vacancy or nature of premises.

5.1 Letting under s. 21 is not hedged with any restriction. Throwing C

the whole or part of the premises by landlord for Jetting out is not linked

with his existing accommodation, its number or sufficiency. The one is not

dependent on the other. Even letting for paying instalment of Joan, for

constructing the premises

or its re-letting cannot be said to be contrary to

section

21.

5.2

Valid~ty of permission has to be judged on the date of grant of

application. Availability of premises for indefinite letting cannot be judged

by subsequent events or the failure of the landlord to occupy immediately

for personal, financial economic

or other reasons.

6.1 The declaration by the landlord that the premises were available

for letting out for short period

is not required to be backed by any reason.

And the application filed under s.21 with or without reasons is neither

bad

nor contrary to law. It may be accompanied by statement of reasons or

may merely state that the landlord does not require the premises for the

period mentioned therein.

In either case the application shaJJ be in

accordance with law.

6.2 If the Controller is satisfied that what was stated was correct he

is obliged to grant permission. This satisfaction may

be arrived at by

believing the statement

or requiring a landlord to give reasons or furnish

such information as the Controller may consider necessary to satisfy

himself that the statement made by

landlord was correct.

6.3 But once satisfaction is arrived at and the order is passed it

becomes operativ~ and final. It cannot be re-opened because of mere

mistake

or error or in the circumstances a more

reasonable approach

D

E

F

G

should bav@ b@@n to r@ject the application or allow it after obtaining better H

details.

A

454 SUPREME COURT REPORTS [1991] SUPP. 3 S. C.R.

7.1 If a tenant has objection to raise to the validity of the limited

vacancy, it

has to be done prior to the lapse of the lease and not as a

defence to the

landlord's application for being put in possession. The

tenant cannot wait

for the entire period of lease and then raise objection

to the execution on

fraud or collusion unless he is able to

establish that it

was not known to him

and he came to know of it, for the first time only at

B the time of execution.

Shiv

Chand Kapoor v. Amar Bose, [1991] 1 SCC 234; Pankaj

Bhargava v. Mohinder Nath, AIR 1991 SC 1233 and Yamuna

Maloo v. Anand Swarup, [1990] 3 SCC 30, relied on.

C 7.2 The Controller shall not be justified in entertaining an objection

D

E

F

G

H

in execution unless the tenant establishes, affirmatively, that he was not

aware of fraud before expiry of the period of lease.

8.1

In the instant case, the tenant was not entitled to claim the

protection

as the objection filed by him to execution application was in

defence to

landlord's

application for delivery of possession. The applica­

tion is conspicuously silent on knowledge of fraud. It did not whisper that

the tenant was unaware of facts stated therein during subsistence of lease.

The tenant's application was, therefore, Hable to be dismissed.

8.2 No exceptional circumstance could be deciphered either from the

application

or from the statement of the tenant. Neither the Controller nor

the Appellate Authority found any exceptional circumstance which could

justify

the tenant to resist the execution after expiry of the period.

8.3

The authorities were not right in assuming fraud or

misrepresen­

tation on mere averment in the objection of the tenant, and in proceeding

to

record the finding on premise that the landlady was required to prove it.

8.4 Apart from the procedural error, even the finding that the

premises were

not needed by the

landlady after three years is not well

founded. The primajacie evidence led by her to prove that her statement

that she shall be requiring the premises after three years was not a mere

make belief

or a pretence but a genuine statement on the state of affairs

as it stood then,

and the averment

could not be construed as mis­

representation.

8.5

The requirement of a landlord includes the requirement of a son

.>

SMT. DHAW AN v. SHAW BROS. [THOMMEN, J.] 455

or daughter or any member of the family. If the appellant gave the

premises for

three years believing that in the meantime either of her sons,

who were temporarily residing out of Delhi in connection with their

employment,

may require the premises, which may not have come out to

be exactly as she desired it to be, it could not invalidate the permission.

A

8.6 The

Controller was, therefore, not justified in entertaining the B

tenant's objection and entering upon an enquiry which was roving in

nature and wholly uncalled for.

J.R.Vohra v. India Export House Pvt. Ltd. & Anr., [1985] 1 SCC

172; Pukhraj Jain v. Padma Kashyap, [1990] 2 SCC 431;

SBNoronah v. Prem Kumari Khanna, (1980] 1 SCC 52 and C

V.S.Rahi v. Ram Chambeli, [1984] 1 SCC 612, referred to.

CIVIL APPELLA1E JURISDICTION: Civil Appeal No. 4927of1991.

From the Judgment and Order dated 21.1.1989 of the Delhi High Court

in S.A.0.No. 18 of 1989. D

Rajiv Dhawan, Akshyababu and Ms. Geetanjali Mohan for the Appel-

!ant

Awadh Behari Rohtagi, Ms. Indu Malhotra, Ms. Ayesha Khatri and Ms.

Neerja Dutta for the Respondent.

The Judgments of the Court were delivered by

THOMMEN, J. Leave granted.

The scope of section

21 * of the Delhi Rent

Control Act, 1958 has been

* Section 21 reads:

" Recovery of possession in case of tenancies for limited period.-(1) Where a landlord does not

require the whole

or any part of any premises for a particular period, and

the landlord, after

obtaining the pennission

of the Controller in the prescribed manner, lets the whole of the premises

or pan thereof as a residence for such period as may be agreed to in writing between the landlord

and the tenant and the tenant does not, on the

el\ll.i!Y of the said period, vacate such premises, then,

not withstanding anything contained in Section 14

or in any other law, the Controller may, on an

application made

to him in this behalf by the landlord within such time as may be prescribed, place

the landlord

in vacant possession of the premises or part thereof by evicting the tenant and every

other person who may be in occupation

of such premises.

(2) While making an order under sub-section

(1 ), the Controller may award to the landlord

such damages for the use

or occupation of the premises at such rates as he considers proper in the

circumstances

of the case for the period from the date of such order till the date of actual vacation

by the

tenant."

E

F

G

H

456 SUPREME COURT REPORTS [1991] SUPP. 3 S. C.R.

A considered by this Court in a number of decisions* .The section embodies the

legislative policy to devise a special mechanism to increase the supply of

accommodation to meet the rising demands of a growing metropolis. It

operates in limited circumstances; and, strictly within those bounds, and

subject to the vigilant enquiry

of the Controller before according his permis­

sion, the parties are, once permitted

to regulate their relationship in accordance

B with the section, totally governed by the terms of their contract.

The section operates in terms thereof, notwithstanding any other law,

unless the contract itself, or the permission

of the Controller is vitiated by

fraud. Absent such

vitiating circumstance, and once the Controller has

C accorded sanction, the paxties to the contract are presumed to have entered into

their relationship at arm's length and the law binds them

to the terms of their

agreement.

While the Act is meant for the protection

of the tenant, the legislative

policy reflected in section

21 is to carve out an area free of that protection.

D Where the conditions stipulated in section 21 are satisfied, the prohibition

contained in section

14 against eviction of tenants except on the specified

grounds

or the requirements of the Transfer of Property

Act or the Civil

Procedure Code or any other law are removed or dispensed with.

E

F

The section is attracted in the specific circumstances postulated by it The

absence

of requirement by the landlord of the whole or any part of the premises

for a particular period, the permission

of the Controller in the prescribed

manner for the lease

of the premises in question, the

agreement. in writing

between the landlord and the tenant for the lease of such premises as a

residence for the agreed period, the refusal

of the tenant to vacate the premises

on the expiry

of that period, and an application made within the prescribed time

by the landlord invoking the power of the Controller under this section:

these·

are the conditions precedent to the exercise of power by the Controller to place

the landlord in vacant possession

of the premises

by evicting the tenant or any

G *Shiv Chander Kapoor v. Amar Bose, [1990] l sec 234; /nder Mohan Lal v. Ramesh Khanna,

[1987] 4 SCC l; SubhashKumor Lota v. R.C.Chhibo and Another, [1988] 4 SCC 709; V.S.Rahi

andAnotherv. Smi.RamChombe/i,

[1984] l

SCC 612;JR.Vohro v.JndiaExportHou.se Pvt.lt.d.

and Another, (1985] l SCC 712; Yamuna·Maloo v. Anand Swarup, (1990] 3 SCC 30; Pankaj

Bhargava and Another ·v. Mohinder_Nath and An:,iher, AIR 1991SC1233; Smi. Dhanwonti v.

DD.Gupta, [1986] 3 SCC l; SB.Noronah v. Prem Kumori Khanna, [1980] 1 SCC 52 and

H Pukhroj Jain v. Podmo Kashyap and Another, [1990] 2 sec 431.

SMT. DHA WAN v. SHAW BROS. [THOMMEN, J.] 457

other person in occupation of such premises. The person in occupation of the A

premises has no right in law to resist eviction once the section is attracted. This

is an extraordinary power vested in the Controller to restore possession

of the

premises to the landlord by a quick and summary action. The

non obstante

clause contained in the section protects the action of the Controller from

challenge on any ground postulated in section

14 of the Act or any other law.

This is a wide protection

of any action duly taken in terms of the section, but B

the requirements of the section must be strictly complied with before action is

taken under it.

The order

of the Controller in the circumstances warranted by the section

is a self-executing order requiring no further

proceeding. It is at once a sanction C

for the lease and for eviction on expiry of the period of. the lease. Neither can

the landlord evict the tenant during the period

of the lease nor can the tenant

remain in possession beyond that period. Parties are bound by their contract,

as sanctioned by the Controller, and the provisions

of section 14 are of no avail

to either party to circumvent section

21.

Once the period has expired, there is

no question

of any further notice to the tenant or any other person in occupation D

of the premises and there is no scope for any further proceeding. None has any

right outside the section which operates strictly in terms thereof provided the

conditions stipulated therein are unquestionably satisfied. See

JR.Vohra v.

India Export House Pvt. Ltd. & Anr., [1985) 1

SCC 712.

The only protection that the tenant has is what section

21 itself postu­

lates. He is protected against the conduct

of a fraudulent landlord. The law does

not protect either pany whose actions are tainted by fraud. A landlord seeking

recovery in terms

of that section must satisfy that he has strictly complied with

the provisions

of that section. The landlord must obtain the permission of the

Controller in the manner prescribed. He is not entitled to the permission unless

the condition specified for the purpose in section

21 is satisfied, namely, the

absence

of his requirement of the building for a particular period. The period

must be clear and definite. The lack

of requirement must be honestly felt by the

landlord. That the landlord does not require the building is a question

of honest

belief held by him at the relevant time, that is, at the time

of his seeking the

Controller's permission. The landlord must have honestly and reasonably

believed that he would not require the bui.lding for the period specified in his

application to the Controller for permission to let

out the premises. If that belief

was truthfully held by him at the time

of his application to the Controller, the

fact that subsequent events proved him wrong, and that he did not require the

E

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458 SUPREME COURT REPORTS [19?11 SUPP. J S. C.R.

A

building not only for the period stated in the application, but also for a longer

_.,.._

period, or that he required it earlier than anticipated, would not make the belief

'

any less honest or valid. All that the landlord is required to state in his

application for permission

of the Controller is the absence of his requirement

of the premises for the particular period, but he is not bound to state its reasons:

Inder Mohan Lal v. Ramesh Khanna, [1987] 4

SCC 1.

B

What the section postulates is the bona fide belief of an honest and

reasonable landlord, and not the reckless and casual opinion

of ah irresponsible

and careless person. The question is, did the landlord make a fraudulent

P-=

representation to the Controller about the absence of his requirement of the

c

premises, i.e., knowingly that his statement was false or without belief in its

truth or recklessly careless whether it was true or false. Did the landlord

honestly believe that what he stated

in his application to be a true and fair

representation of the facts? There is no fraud if what he honestly believed to

be true turned out to

be false. The section does not place any higher degree of

responsibility on the landlord.

D

The section requires that the premises have to be let out solely for the

purpose

of residence for the period agreed to in writing. If the agreement does

not so

stipulate, the section is not attracted, and the Controller cannot sanction

the lease in terms

of the section. No non-residential premises can come within

the protection of the section.

On the other hand, if the premises let out as a

E

residence in terms of the section is deliberately used by the tenant for non-

residential purposes, he loses the protection

of

the statute for the period of the

lease and the Controller can, on

an application by the landlord, evict the tenant,

or any other person in occupation,

and restore possession of the premises to the

.....,,

landlord forthwith. The section protects the landlord and the tenant strictly in

terms thereof, and on the fraud or deliberate breach by either party

of the terms

F

of the !ease as contemplated by the section, the protection is withdrawn from

the guilty party. This means,

if the permission of the Controller has been

fraudulently obtained by the landlord, and the tenant has been let into the

premises,

the landlord loses the right to seek eviction of the tenant by the

..-'

summary procedure contemplated by the section. Likewise, if the tenant has -

deliberately-but not accidently-violated the terms of the lease by using the

G premises otherwise than as permitted by the section, he is liable to be evicted

on

an application by the landlord, although the stipulated period of the lease has

not expired. All this

is because the very basis of the Controller's order has been

violated by the fundamental breach of the guilty party. The section thus

postulates that both the landlord and the tenant act honestly. Ne_ither of them

can take advantage

of his own deceit or breach. No sanction of the statutory

H

-:-

SMT. DHA WAN v. SHAW BROS. [SAHAI, J.] 459

~ authority procured by fraud can protect the guilty or harm the innocent. A

'

Fraud is essentially a question of fact, the burden to prove which is upon

him who alleges it.

He who alleges fraud must do so promptly. There is a

presumption

of legality in favour of a statutory order. The Controller's order

under section

21 is presumed to be valid until proved to be vitiated by fraud or

malafide. If his order was obtained by the fraud of the party seeking it or if he B

made a 'mindless order' in the sense of acting malafide by illegitimate exercise

of power owing to non-application of his mind to the strict requirements of the

._., section, then the special mechanism of the section would not operate. (See

SBNoronah v. Prem Kumari Khanna, (1980] 1 SCC 52].

My learned brother, R.M.Sahai, J. has exhaustively dealt with various c

aspects of the questions raised in this appeal. He has eome to the conclusion

that there was no evidence

of fraud or non-application of the mind of the

Controller to the essential requirements

of the section, and the burden to prove

the same has not been discharged by the tenant. He has further found that the

evidence on record amply proved that the landlady honestly believed

that sl'fe

D

required the premises at the end of stipulated period; that her request to the

Controller for permission in terms

of section 21 was not in any manner tainted

by lack

of good faith; and that the order obtained by her under section 21 was

not liable to

be upset by conducting a roving enquiry and by placing th.e burden

wrongly on

her to prove that she did not act dishonestly.

I agree that the statutory authorities in the present proceedings addressed

E

themselves to the wrong questions, misunderstood the guiding principle of

burden of proof, misconstrued the requirements of the section, and reached a

totally irrational, unreasonable and unsustainable conclusion that the original

order

of the Controller was obtained by fraud. There was no justification on the

part

of the authorities for coming to that conclusion on the basis of a belated

F

-

plea and far from satisfactory or reliable evidence. The High Court was wrong

in affirming the totally unsustainable conclusion reached by the authorities.

In

the. circumstances, I respectfully agree with the findings reached by

my learned brother

Sahai, J.

·--.-

G

R.M.SAHAI, J. Economically equally matched tenant, resisted execu-

tion, successfully, under Section 21 of Delhi Rent Control Act, (in short the

Act) by accusing landlady

of fraud, misrepresentation and lies thus giving rise

to a very important issue in this landlady's appeal as to the nature and extent

of fraud which could vitiate the sanction granted under

Section 21 of the Act

by the Rent Control Officer. H

460 SUPREME COURT REPORTS [1991] SUPP. 3 S. C. R.

A Short durational tenancy, a provision unique of its kind in a rent control

legislation, with a fresh look

on eviction ensuring vacant possess,ionstatutorily,

after expiry

of lease period 'without notice even'* or hazard of establishing

bonafide need,** due to social necessity, peculiar to Delhi, favourably inclined

towards landlord, was subjected

to inherent and implied limitations by this

Court in

Noronah,*** in larger social interest of fairness and justice, which per-

B meates our jurisprudence, to avoid any abuse of provision or arbitrary exercise

of power, by directing such sanction or permission

to pass the test of being

clear

of fraud or collusion. Even a mindless order was held to vitiate the

procet"Alings. And the tenant was permitted to raise the objection in execution.

Another was added

to it in V.S.Rahe**** when an order on incorrect facts was

also held to be invalid. But the decision not only created misapprehension

C amongst tenants who seized upon it to raise all possible objections frivolous

and otherwise but was misunderstood

by the authorities, too, who applied er­

roneously and tested validity

of

the permission on requirement on the date of

execution, or it was bad because the reason due

to which sanction was obtained

did not

materialise even at time of execution. At times the yardstick applied

D was of bonafide necessity as understood in Section 14 of the Act. Consequently

short term tenancy became an illusion and in a span of ten years from Noronah

(supra) there came to be rendered at least a dozen reported decisions by this

Court only. Although

Noronah (supra) has, since, been substantially watered

down, in subsequent decisions, yet it still furnishes the basis

for assailing the

sanction therefore it

is necessary to examine, in brief, how much of it survives

E

F

G

today and to what extent the law may be taken as settled.

*

For this it is worthwhile extracting the Section 21 which reads as under:-

"21. Recovery of possession in case of tenancies for limited

period.-(1) Where a landlord does not require the whole or any

part

of any premises for a particular period, and the landlord; after

obtaining the permission of the controller in the prescribed

man­

ner, lets the whole of the premises or part thereof as a residence for

such period as may be agreed to in writing between the landlord

and the tenant and the tenant does not,

on the expiry of the said

period, vacate such premises, then, notwithstanding anything

contained in Section

14 or in any other law, the Controller may, on

J.R.Vohra vlndiaExporl House PYt.Lld. & Anr ... [1985]1SCC172.

Shiv Chand Kapoor, [1990]1SCC234.

Pukhraj Jainv PadmaKashyap , [1990] 2 SCC 431.

*** SB.Noronahv,PremKwnari Khanna, [1980] l SCC 52.

H **** V.S.Rahe v, Ram Chambeli, [I 984] l sec 612.

...

SMT. DHAW AN v. SHAW BROS. [SAHAI, J.] 461

an application made

to him in this behalf by the

landlord within

such time as may be prescribed, place the landlord in vacant

possession

of the premises or part thereof by evicting the tenant

and every other person who may be

in occupation of such prem­

ises."

What strikes one is, the simplicity of the ianguage and oneness of purpo~e. As

observed in

Noronah (supra) the

Parliament was keen on maximising accom­

modation available for letting, due

to scarcity crisis. The objective was sought

to be achieved by simplifying the provision for letting and assuring possession

after expiry

of lease. The

only condition for applicability of the Section is non­

requirement

of it by the landlord for short period. It is not subjected to any

restriction by requiring the landlord to disclose any reason nor whether

it shall

be required thereafter for self or any family member. Othe_r conditions, namely,

passing

of order, letting it for residential purpose, and entering of agreement

with tenant,

are incidental only. Use of non-obstante clause further leaves no

room for doubt that the legislature intended it to operate on its own. That is why

it has been held to be a self-contained code*. Neither creation

of tenancy nor

recovery

of possession after expiry of period has been hedged in with any

statutory restriction or condition. However,

Noronah (supra) culled out, dual

protection for tenants one substantive and other procedural

by providing that

validity

of sanction could be assailed on fraud etc. and the objection could be

taken in execution. But the latter, that is, procedural safeguard has been diluted

in four

sub~equent decisions of Llrree Judge Bench. In Vohra (supra) warrant

of possession issued under Section 21, without service of notice, to the tenant

was upheld as after expiry of-short term tenancy the tenant had no right

to

continue. However, to avoid a tenant from being completely shut out even

where the permission was obtained by

'a mere ritualistic observance of

procedure' or, 'where such permission was procured by fraud' or, 'was a result

of collusion' the court held that competing claims could be harmonised by

"insisting upon his approaching (tenant) the Rent Controller during

the currency

of the limited tenancy for adjudication of his sooner

he discovers facts and circumstances that tend

to vitiate ab initio

the initial grant of

permission."

It was reiterated in Shiv Chand Kapoor (supra). Yamuna Maloo **narrowed it

down further when it held that;

"if the tenant has objection to raise to the validity of the limited

vacancy

it has to be done prior to

~e lapse of lease and not as a

* Shiv Chand kapoor v. Amar Bose, (1991] l SCC 234.

**Yamuna Maloo v. Anand Saroop, [1990] 3 SCC 30.

A

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A

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462 SUPREME COURT REPORTS [1991) SUPP. 3 S. C.R.

defence to the tenants application for being put in possession. We

would like to reiterate that even if such

an exercise is available that

must

be

taken to be very limited and made applicable in excep­

tional cases."

In Pankaj Bhargava,• it was observed;

"It is true that in Noronah' s case a challenge to the validity of the

limited tenancy was permitted even after the period of limited

lease. But later cases have substantially denuded this position.

In

Vohra' s case (AIR 1985 SC 4 75), this Court laid down that a tenant

who assails the permission

was procured by fraud a ground not

dissimilar

to the one urged in the present case must approach the

Rent Controller during the currency of the limited tenancy for an

adjudication of his pleas as

soon as he discovers facts and circum-

stances which, according

to him, vitiate the permission."

Thus a tenant cannot wait for the entire period of lease and then raise objection

to execution on fraud

or"collusion unless he is able to establish that it was not

D known to him and he came to know of it, for the first time only at the time of

execution. In other words the Controller shall not be justified in entertaining an

objection in execution unless the tenant establishes, affirmatively, that he was

not aware of fraud before expiry of the period

of lease. To the following extent,

therefore,

the law on procedural aspect should be taken as settled.

E

(1) Any

objection to the validity of sanction should be raised

prior

to expiry of the

lease.

(2) The objection should be made immediately on becoming

aware of fraud, collusion etc.

(3) A tenant may

be permitted to raise objection after expiry of lease

F in exceptional circumsta.'lCes only.

(4) Burden to prove fraud or collusion is on the person alleging iL

Tested in the light of what has been stated above the tenant was not

entitled

to claim the protection as the objection filed by him

to execution

G application was in defence to landlord's application for delivery of possession.

The application is conspicuously silent on knowledge of

fraud. It did not

whisper that the tenant

was unaware of facts stated therein during subsistence

of lease. In fact, from a letter sent, twenty days, before expiry of lease

to the

landlord it

is clear that the tenant was not only aware that he was required to

vacate the premises after expiry of the time but he requested the landlady to

H

• Panaj Bhargava v. Mohinder Nath, AIR 1991 SC 1233.

.,

l

-

SMT. DHA WAN v. SHAW BROS. [SAHAI, J.] 463

grant him some more reasonable time for vacating the premises. In any case in A

absence of any averment in the application that he was not aware of various

allegations made against the landlady in the application seeking invalidity of

the permission granted by Controller the application was liable to be dismissed.

No exceptional circumstance so as to bring it within the principle laid down in

Yamuna Maloo' s (supra) case could be deciphered either from the application

or from the statement of the tenant. Neither the Controller nor the Appellate B

Authority found any exceptional circumstance which could justify the tenant

to resist the execution after expiry of the period. Therefore, the Controller was

not justified in entertaining his objection and entering upon an enquiry which

was roving in nature and whqlly uncalled for. But since law was not so clear

when the objection was decided by the Controller it is appropriate to examine

if

the finding on merits is sustainable. C

With this the more difficult and important

aspect, namely, the objections

or

grounds on which a tenant can challenge validity of sanction granted under Section 21 of the Act by the Controller either during subsistence of lease or

after its expiry in execution may now be examined. In Noronah (supra) even

though law was declared and a tenant was pennitted to raise objections that

sanction was obtained by fraud or collusion or the Controller passed L'le order

mindlessly

the Court clid not decide what constitutes fraud or collusion in

relation to

Section 21 of the Act or when an order passed by the Controller

could be held to be mindless. An action is mindless when it is thoughtless or

without any care or caution. In law it is passing of an order without any regard

to the provision of law. If the section requires the authority to pass an order on·

inquiry

or on being satisfied of existence or non-existence of a fact then the

duty cast is higher and an order which is passed without due regard to duty to

investigate then the order may be mindless. But in absence of any statutory

requirement

it may utmost be regulatory oversight. In the context of

Section 21

it is clear that there is no statutory requirement for the Controller to enter into

enquiry on application made by a landlord supported by a statement and

agreed to by the tenant. Even though in Noronah' s case it was said that an

application to be beyond suspicion must contain special reasons but in

subsequent decisions this has been explained· and it has been held that in

absence of any requirement in the Section to disclose any reason an application

filed without reason could not be said to be bad in law nor a permission granted

on it could be said to be mechanical or mindless. An order may be mindless if

at the time of granting permission there is material to indicate that the premises

were being let out for a short period even though it was available for indefinite

letting. But in absence of any material to indicate to the contrary if the

Controller grants permission on the mere statement in the application that the

premises was available for being let out for a short time as it was not required

D

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464 SUPREME COURT REPORTS (1991] SUPP. 3 S. C.R.

A by the landlord and it is supported by a statement recorded before Controller

which is not objected

to by the tenant rather agreed then it would be too much

to say that the exercise

of power was made thoughtlessly. In Shiv

Chand

Kapoor this Court did not approve of the decision of the High Court that a

permission granted under Section

21 was mindless only because on the date of

expiry

of the period of limited tenancy the age of the landlord's son was about

B 19 or 20 years whereas the minimum age prescribed by law for marriage was

21 years when the reason for requirement of the premises after expiry of lease

period was marriage

of the son. The Bench further deprecated the practice of

the Authorities of entering into roving inquiry at the instance of tenant as that

would

frustrate the very purpose of limited period of tenancy contemplated by

Section 21. In

Smt. Dhanwanti Devi* it was held that even successive letting

C under Section 21 prior to grant of sanction could not adversely reflect on the

permission as

it was reasonable for landlord to let out looking to immediate

future.

Nor could the permission be said to be vitiated because after expiry of

the period the landlord may in. changed circumstances, decide to let out again.

In

lnder Mohan Lal** it was held that the landlord was under no obligation

to disclose reasons for letting out for a short period.

It was' held that omission

D

to do so did not render the order invalid nor it could justify the inference that

the sanction was granted mindlessly. In

Joginder Kumar Butan *** even

letting

of ground floor or first floor to the tenants on earlier occasions which

was

not disclosed

in the application, for grant of permission, under Section 21

was not considered fatal as the landlord might have done so on basis of bona

fide

grounds and genuine calculations which may have gone wrong.

E

F

All

these decisions were examined in Shiv Chand Kapoor (supra). The

Bench explicitly ruled out sufficiency

of accommodation or bona fide need,

provided for in Section 14, as beyond scope

of the enquiry under Section 21

of the Act. It was held that the invalidity which could vitiate sanction was error

in jurisdictional fact at the time

of grant of permission, as valid sanction was

sine qua non for Controller's jurisdiction. What, then, is an error in respect of

jurisdictional fact? A jurisdictional fact is one on existence or non-existence of

which depends assumption or refusal to assume jurisdiction by a Court,

tribunal

or an. authority. In Black's Legal Dictionary it is explained as a fact

which must exist before a court can properly assume jurisdiction

of a particular

G case. Mistake of fact in relation to jurisdiction is an error of jurisdictional fact.

No statutory authority or tribunal can assume jurisdiction in respect

of subject

matter which the statute does not confer on it and

if by deciding erroneously

the fact on which jurisdiction depends the court

or tribunal exercises the juris­

diction then the order is vitiated. Error

of jurisidictional fact renders the

ordrr

H

• Smt. Dhanwanti v. DD. Gupta, [1986] 3 SCC 1.

** lnder Mohan Lal v. Ramesh Khanna, [1987] 4 SCC 1.

*** Joginder Kumar Bulan v. R.P. Oberoi, [1987] 4 SCC 20.

SMT. DHAW AN v. SHAW BROS. [SAHA!, J.] 465

ultra vires and• bad. In Raza Textiles*• it was held that a court or tribunal

cannot confer jurisdiction on itself

by deciding a jurisdictional fact wrongly.

What are those facts which can be said to be jurisdictional fact

under Section

21? Although the Section visualises four conditions, namely, that the landlord

does not require the whole or part

of premises for a particular period, the

landlord must obtain the permission

of the Controller in the prescribed manner,

letting

of the whole or part of the premises must be for residence and such

letting must be for such period as may

be agreed between the landlord and the

tenant in writing. But the jurisdictional fact can

be said to be two, availability

of vacant premises which are not required by the landlord for the particular

period and its letting out for residential purpose. For instance a pennission

obtained under Section 21 may

be vitiated if the premises were not vacant on

the

da~e of application. Similarly if the permission is obtained in respect of non­

residential premises.

Whatis significant is that the declaration by the landlord

that the premises were available for letting out for short period

is not required

to be backed by any reason. And an application filed under section

21 with or

without reasons is neither bad nor contrary

to law. It may be accompanied by

statement

of reasons or the application may merely state that the landlord does

not require the premises

for the period mentioned therein. In either case the

~pplication shall be in accordance with law. And if the Controller is satisfied .

that -w:hat was stated was correct he is obliged to grant permission. This

satisfaction may be arrived at by believing the statement or requiring a landlord

to give reasons or furnish such information as the Controller may consider

necessary to saitsfy himself that the statement made by landlord was correct.

But once satisfaction is arrived at and the order is passed it becomes operative

and final. It cannot be re-opened because

of mere mistake or error or in the

circumstances a more reasonable approach should have been to reject the

application

or allow it after obtaining better detaiis. Error in assumption of

jurisdiction should not be confused

wilh mistake, legal or factual in exercise of

jurisdiction. In the former the order is void whereas in the latter it is final unless

set aside by higher or competent court or authority. An order which is void can

be challenged at any time in any proceeding. A permission granted under

section

21 once permitted to attain finality becomes unassailable on error in

exercise

of jurisdiction. It could be challenged later or in execution only if it

could be brought in the category of a void or ultra vires permission.

Such

invalidity can arise if jurisdiction is exercised by misrepresentation of facts

either about existence

of vacancy or nature of premises. In other words what

attains finality

in accordance with law cannot be permitted to be reagitated or

reopened except in the

larger social interest of preventing a person from

practising deceit. Therefore an error

of jurisdictional_ fact which could entitle

* Wade Administrative Law;

••

1

~aza Texlile v. lncomt Tax Officer ,RampU1, [1973 ]1 SCC 633.

A

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466 SUPREME COURT REPORTS [1991] SUPP. 3 S. C. R.

A a Controller to re-examine the matter in the context of section 21 is the same,

namely, fraud or collusion. Ratio in

Noronah(supra) to this extent was

reitereated and accepted as correct exposition

of law in

Shiv Chand Kapoor

(supra). It has to be understood as such.

B

c

D

Fraud and collusion vitiate even the most solemn proceedings in any

civilised system of jurisprudeQce. It is a concept descriptive of human conduct.

Michael Levi likens a fraudster to Milton's sorcerer, Com us, who exulted in his

ability

to, 'wing me into the easy-hearted man and trap him into snares'. It has

been defined as an

act of trickery or deceit. In Webster fraud inequity has been

defined as an act

or omission to act or concealment· by which one person

obtains an advantage against conscience over another or which equity

or public

forbids as being prejudicial to another. In Black's

Legal Dictionary, fraud is

defined as an intentional perversion

of truth for the purpose of inducing another

in reliance upon

it to part some valuable thing belonging to him or surrender

a legal right; a false representation of a matter

of fact whether by words or by

conduct, by false or misleading allegations, or by concealment

of that which

should have been disclosed, which deceives and is intended

to deceive another

so that he shall act upon it to his legal injury. In Oxford, it has been defined

as criminal deception, use

of false representation to gain unjust advantage;

dishonest artifice

or

trick According to Halsbury's Laws of England, a

representation is deemed to have been false, and therefore a misrepresentation,

if it was at the material.date false in substance and in fact. Section 17 of the

Contract Act defines fraud as act committed by a party to a contract with intent

E

. to deceive another. From dictionary meaning or even otherwise fraud arises out

of deliberate active role of representator about a fact which he knows to be

untrue yet he succeeds in misleading the representee by making him believe it

to be true. The representation

to become fraudulent must be of fact with

knowledge that it was false. In a leading

English• case what constitutes fraud

was described thus,

F "fraud is proved when it is shown that a false representation has

been made (1) knowingly, or (2) without belief

in its truth, or (3)

recklessly, careless whether it be true or false."

But fraud in public law is not the same as fraud in private law. Nor can

G the ingredients which establish fraud in commercial transaction can be of

assistance in determining fraud in Administrative Law. It has been aptly

observed by Lord Bridge in·

Khawaja** that it is dangerous to introduce

maxims

of common law as to effect of fraud while determining fraud in relation

* Derry v. Peek, [1889] 14 App. Cas. 337.

H ** Khawaja v. Secretary of State for Home Depll., 1983 (1) All England Repons p. 765.

:;._

·\_

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(

t

I

SMT. DHA WAN v. SHAW BROS. [SAHAI, J.] 467

to statutory law. In ·Pankaj Bhargava (supra) it was observed that fraud in

relation to statute must be a colourable transaction to evade the provisions of

a statute.

'If a statute has been passed for some one particular purpose, a

court

of law will not countenance any attempt which may be made to extend the

operation of

the Act to something else which is quite foreign to its object and

beyond its scope•.' Present day concept of fraud on statute has veered round

abuse of power or ma/afide exercise of power. It may arise due to overstepping'

the limits of power or defeating the provision of statute by adopting subterfuge

or

the power may be exercised for extraneous or irrelevant considerations. The

colour of fraud in public law or administrative law, as it is developing, is

assuming different shade. It arises from a deception committed by disclosure

of incorrect

facts knowingly and deliberately to invoke exercise of power and

procure an order from an authority or tribunaJ. It must result in exercise of

jurisdiction

which otherwise would not have been exercised. That is misrepre­

sentation must be in relation to the conditions provided in a section on

existence or non-existence of which power can be exercised. But

non-disclo­

sure of a fact not required by a statute to be disclosed may not amount to fraud.

Even in commercial transactions non-disclosure of every fact does not vitiate

the agreement, 'In a contmct every person must look for himself and ensures

that

he acquires the infonnation necessary to avoid bad

bargain•• In public law

the duty is not to deceive. For instance non-disclosure of any reason in the

application under section 21 of the Act about its need after expiry of period or

failure to.give reac;on that the premises shall be required by son, daughter or any

other family member does not result in misrepresentation or fraud. It is not mis­

representation under section 21 to state that the premises shall be needed by the

landlord after expiry of the lease even though the premises in occupation of the

landlord 'on the date of application or, after expiry of period were or may be

sufficient A non-disclosure of fact which is not required by law to be disclosed

does not amount to misrepresentation. Section 21 does not place any positive

or comprehensive

duty on the landlord to disclose any fact except that he did

not need the premises for the specified period. Even the Controller is not

obliged with a pro-active duty to investigate. Silence or non-disclosure of facts

not required by law to be disclosed does not amount to misrepresentation. Even

in contracts it is excluded as is clear from explanation to Section 17 unless it

relates

to fact which is likely to effect

willingness of a person to enter into a·

contract Fraud or misrepresentation resulting in vitiation of permission in

context to Section 21 therefore could mean disclosure of false facts but for

which the Controller would not have exercised jurisdiction.

On the substantive safeguard therefore the law that is settled and should

• Craies on Statute Law, 7th Edition, p. 79.

**Anson's law o/Contract.

A

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468 SUPREME COURT REPORTS [1991] SUPP. 3 S. C.R.

A be followed by the authorities may be stated thus:

B

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(1) Permission granted under

Section 21 of the Act can be assailed J

by the tenant only if it can be established that it was vitiated by /

fraud or collusion or jurisdictional error which in context· of 'I

Section 21 is nothing else except fraud and collusion.

(2) Fraud or collusion must relate

to the date when permission was

granted.

(3) Permission carries a presumption

of correctness which can be

permitted to be challenged not only be raising objection but

proving it

prima facie to the satisfaction of Controller before

landlord

is called upon to file reply or enter into evidence.

(4) No fishing or roving inquiry should be permitted at the stage

of

execution.

(5) A permission does not suffer from any of these errors merely

because no reason was disclosed in the application at the time

of

creation of short term tenancy.

(6) Availability

of sufficient accommodation·either at the time of

grant of permission or at the stage of execution is not a relevant

factor for deciding validity

of permission.

Turning to the facts now, is the sanction granted under

Section 21

vitiated because the landlady in obtaining the permission committed fraud? On

3rd November 1978 the landlady filed an application before the Controller

under Section 21 the material allegations of which were that the ground floor

F of the house was. lying vacant and she desired to give it on rent for a short

period

of three years whereafter she needed the house for herself. It was

mentioned that the premises were being given for residential purpose only and

a proposed lease agreement between her and the tenant along with the plan was

attached with the application. Her statement was recorded in which she stated

that she would require the premises for her own use after three years.

It was

G ·also mentioned that the premises had not been let out earlier.

Statement of

tenant was also recorded in which he expressed his agreement to take the

premises for a period

of three years after expiry of which he agreed to vacate

the same. In absence

of any material on the record to establish that the

statement was not correct the Controller assumed jurisdiction and granted the

permission as required under

Section 21 for a period of three years. Twenty

H days before tenancy was to come to an end, the tenant, which is a firm, wrote

. '

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SMT. DHA WAN v. SHAW BROS. [SAHA!, J.] 469

a letter, through one of its partners to the landlady for sympathetic considera­

tion for renewal of lease as theft had occurred in the premises in which the

tenant

had lost valuable goods. There was a veiled, irrelevant, suggestion in the

letter that

no reason was

disclosed by her for requiring the premises as her

family was having sufficient accommodation for living. Since the landlaqy did

not agree

to extend the lease and filed an application under

Section 21 of the

Act for a direction

to the Controller to place her in vacant possession of the

premises

an objection was filed by the tenant on all possible grounds which

could be imagined from inaccuracy,

lack of knowledge, fraud, collusion etc.

One of the objections was that since the premises was taken by one of the

partners of

the firm, only, without any authority the agreement entered into by

him for grant of permission under

Section 21 was not binding. It was also

alleged

that this was done without knowledge of other partners. Therefore the

permission

was neither binding nor enforceable. But the partner who made the

statement

was neither examined nor it was stated that the firm was not aware

that

the tenancy was for short duration only. The tenant went to the length of

averring that

in fact they were already in occupation of the premises from a date

before

the tenancy was created, a plea which was rejected by the Rent Control

Authorities.

Even the plea that the premises were let out for residential-cum­

commercial purposes did not

find favour with any of the authorities. Nor did

the Controller find any merit in the claim that the order of permission was

mindless or it was bad for non-disclosure of reason. But the challenge

succeeded because the permission

was obtained by playing

. fraud as the

landlady

knew from the very beginning that premises were available for letting

out indefinitely. The Controller

found that in absence of any averment in the

objection that she

had let out: the premises in 1978 for three years as she would

require it after expiry

of this period for her younger son her statement in

support of it could not be looked into. The authority further found that variance

between pleading and proof, apart,

the landlady failed to establish. that

premises

were let

out with intention to get it back after three years for her

second

son. Inference was drawn against her due to non-production of the son

who could have been the best person to throw light on it as later on he not only

joined another service but purchased a flat

in Bombay. It was held that even if

it

was assumed that the premises were not needed by her for son that could not

validate the sanction. The Appellate Authority agreed

with the finding of the

Controller

as there was no statement in the application, made at the time for

grant of permission, that

the premises shall be required after three years by her

son. In other

words since she stated that she required the premises for herself

after

three years and she was having an accommodation which was sufficient

for her and family the permission obtained by her was vitiated by fraud.

The

High Court did not consider it proper to examine the matter as it was concluded

by findings of fact.

A

B

c

D

E

F

G

H

470. SUPREME COURT REPORTS [1991] SUPP. 3 S. C.R.

A Sri Rajeev Dhavan rightly urged that both the Controller and the Tribunal

misdirected themselves

in placing the burden on the landlady to prove that the

permission obtained

by her was genuine. According to him the primary burden

· was on the tenant to establish that the permission was obtained by playing

fraud. Unfortunately, it appears, the authorities assumed fraud and misrepre­

sentation

on mere averment in the objection of the tenant and proceeded to

B record the finding on premise that the landlady was required to prove it. Apart

from the procedural error even the finding that the premises were not needed

by her after three years is not well founded. The law does not require to give

any reason on the date when the application is made. May be that one of her

sons was in Army and

the other was at Bombay and therefore she did not need

the premises for them on the date of application; Yet the landlady could, well,

C visualize that she would need the premises after three years either because her

son who was in Military was to be posted at Delhi, who in fact ,was posted in

the meantime, or because her other son who had been rendered jobless in 1978

and was not doing well in life may need the house for establishing a factory in

NOIDA. In fact some land was allotted and licence too appears to have been

issued in his favour. B.ut that is not relevant. What is relevant is a prima facie

D evidence led by her to prove that her statement that she shall be requiring the

premises after three years was not a mere make belief or a pretence but a

genuine statement on the state of affairs as it stood then. The averment in the

application that the premises shall be needed by her after three years could not

be construed

as misrepresentation. The requirement of a landlord

iricludes the

E requirement of a son or daughter or any member of the family. If she gave the

premises for three years believing that in the meantime her son in Military

might

be posted at Delhi or the son at Bombay may start a business at

NOIDA,

which may not have come out to be exactly as she desired it to be it could not

invalidate

the permission. Further the landlady in her statement before Control­

ler, stated that

she informed the partner who had taken the premises that she

F shall need it after three years for her second son. And yet

the tenant instead of

producing that partner, without any excuse, chose to examine another partner

and the authorities did not attach any weight to it.

Letting under Section 21 is not hedged with any restriction. Throwing the

whole or part of the premises by landlord for letting out is not linked with his

G existing accommodation, its number or sufficiency. The one is not dependent

on the other. Even letting for paying instalment of loan, for constructing the

premises orits re-letting has not

been held to be

contrary to Section 21. Validity

of permission

has to be judged on the date of grant of application. A vailabiltty

of premises

for indefinite letting cannot be judged by subsequent events or the

failure of the landlord to occupy immediately for personal, financial, economic

H or other reasons. Therefore, the authorities committed manifest of error of law,

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SMT. DHAWANv. SHAW BROS. 471

both in entertaining the application of the tenant resisting the objection of the A

landlady by placing the burden on her erroneously and deciding against her by

misapplication of law and misconstructions of the provisions of Section 21.

ORDER

For the reasons stated by us in our concurring judgments dated December B

3, 1991 we set aside the impugned judgment of the High Court and the Order

of the

Additional Rent Controller dated 21.11.87 in Misc. Application No. M-650of1978 and that of the Rent Control Tribunal dated 26.9.1988 in R.C.A.

No. 1085 of 1987. The appeal shall accordingly stand allowed. The appellant

shall be entitled

to her costs assessed at Rs.

5,000/-.

R.P. Appeal allowed.