PETITIONER: LACHOO MAL Vs. RESPONDENT: RADHEY SHYAM DATE OF JUDGMENT10/02/1971 BENCH: GROVER, A.N. BENCH: GROVER, A.N. HEGDE, K.S. CITATION: 1971 AIR 2213 1971 SCR (3) 693 ACT: U.P. Temporary Control of Rent and Eviction Act, 1947, ss. 1(A) and 3-Construction after 1951-Agreement that Act should apply-If binding upon landlord-Indian Contract Act (9 of 1872), s. 23-Scope of. HEADNOTE: The appellant was the tenant of the respondents shop. As the latter wanted to make some constructions they entered into ail agreement in 1962, according to which, the appellant was to vacate the shop but reoccupy it on the same rent as soon as the construction was completed. It was also agreed that all the sections of the U.P. (Temporary) Control of Rent and Eviction Act, 1947, shall be fully applicable to the new tenancy. After the construction was completed the appellant resumed possession and offered rent. The respondent refused the rent and filed a suit for ejectment. In appeal, the High Court held that the appellant was not entitled to the protection of the Act, because, the res- pondent was entitled to rely on s. IA according to which nothing in the Act shall apply to a building constructed on or after 1st January, 1951, and that the agreement was unlawful within the meaning of s. 23 of the Indian Contract Act, 1872. In appeal to this Court, HELD : The general principle is that every one has a right to waive the advantage of a law, made for his benefit in his private capacity, when a public right or public policy is not infringed thereby. Section 1A was meant for the benefit of owners of buildings constructed after January 1, 1951. But there is no prohibition in the section against a land- lord and his tenant entering into an agreement, that they would not be governed by that section. If a particular owner did not want to avail himself of the benefit of the section, there was no bar created by it to his waiving or giving up or abandoning the advantage and no question of policy, or public policy is involved. Therefore, the performance of the agreement in the present case would not entail the transgression of any law and the agreement was not void under s. 23 of the Indian Contract Act. [696 C; 69- 7 D-E; 698 A-C] Neminath Appayya Hanumannavar v.Jamboorao Sateppa Kochteri, A.I.R. (1966) Mys. 154, approved. Vita Food Products Incorporated v. Unus Co. Ltd. (in Liquidation), (1939) AC. 277 at 291, referred to. JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 18 of 1968.
Appeal by Special leave from the judgment and order dated
April 14,,1967 of the Allahabad High Court in Second Appeal
No. 307 of 1965.
694
V.M. Tarkunde, Urmila Kapoor and R. K. Khanna, for the
appellant.
S. V. Gupte and M. V. Goswami, for the respondent.
The Judgment of the Court was delivered by
Grover, J This is an appeal by special leave from a judgment
of the Allahabad High Court and involves the question
whether the appellant, who was the tenant, was entitled to
the benefit of s. 3 of U.P. (Temporary) Control of Rent and
Eviction Act, 1947, hereinafter called the “Act”.
The facts are not in dispute. The appellant had been
occupying a shop in Mathura belonging to the respondent from
a very long time, at a monthly rental of Rs. 18.37. In 1962
the respondent wanted to construct rooms on the upper Storey
of the shop for his own residence. This construction could
possibly be made only if the appellant vacated the shop for
some period. On June 4, 1962, the appellant and the
respondent entered into an agreement . After reciting the
above facts it was agreed that the shop would be. vacated by
the appellant on the condition that as soon as the required
construction had been completed he would resume possession
of the shop. At this stage the following clauses of the
agreement may be set out.
“1. On this day the second party has withdrawn
his possession from the shop bearing No. 1/2C,
situate at Tilakdwar, and has given the same
to the first party.
2. The first party shall get the shop
constructed within thirty days and would then
hand over the possession of the same to the
second party.
3. At present a sum of Rs. 18-6-0 per
mensem, which includes house tax and water
tax, is being paid by the second Party to the
first party as rent. After the construction
of the shop, the first party shall be entitled
to get the same, amount as rent from the
second party. All the sections of the U.P.
Rent Control and Eviction Act shall be fully
applicable to this house. The first party
shall in no case be entitled to derive
benefits from it as the property built after
1-1-51.”
After the construction had been made and the appellant had
resumed his possession of the shop the appellant offered
rent to the respondent but the latter did not accept the
same. Ultimately lie deposited the rent from April 1, 1962
to July 31, 1963 in court under s. 7 C of the Act. The
respondent served a notice April 20, 1963 apparently under
the provisions of the
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Transfer of Property Act purporting to terminate the tenancy
of the appellant. This was followed by a suit which the
respondent filed for ejectment of the appellant and for
arrears of rent, damages etc. The Munsif dismissed the suit
holding that the appellant was entitled to the protection
conferred by s. 3 of the Act which was applicable. The
District Judge, on appeal, took the contrary view and
decreed the suit. The’ High Court affirmed the judgment of
the District Judge. It was held, inter-alia, that the,
respondent was, entitled to rely on s. 1 A of the Act and
the appellant could not be given the benefit of s. 3.
Now there can be no manner of doubt that the tenancy between
the appellant and the respondent was governed by the
provisions of the Act prior to the reconstruction of the
premises. It appears to have been accepted that when the
respondent made the re-construction after the agreement
mentioned above in 1962 the buildings came to be constructed
within the terms of s. 1-A of the Act: That section says
that nothing in the Act shall apply to any building or part
of a building which was under erection or was constructed on
or after January 1, 1951. It will have to be decided whether
it was open to the respondent to give up the benefit of this
provision or waive it by means of an agreement of the nature
which was entered into between the appellant and the
respondent in June 1962.
According to the preamble on the cessation of the
applicability of sub-rule 2 of rule 81 of the Defence of
India Rules after September 30, 1946 it was considered
expedient owing to the shortage of accommodation in the
State of Uttar Pradesh to provide for the continuance during
admitted period of powers to control the letting and “the
rent of accommodation and to prevent the eviction of tenants
therefrom. Section 3 imposed restrictions on eviction. No
suit could be filed in any civil court against the tenant
for his eviction from any accommodation except on one or
more of the grounds mentioned in sub-s. (1) ‘of that section
without the permission of the District Magistrate or of the
Commissioner to whom a revision lay against the order of the
District Magistrate. Section 5 contained provisions
relating to control of rent. The ether provisions of the
Act need not be noticed. It has never been disputed that
the Act was enacted for affording protection to the tenants
against eviction except in the manner provided by the Act.
It was also meant to regulate the letting of accommodation,
fixing of rent etc., the provisions relating to which were
all intended to confer benefits on the tenants against
unreasonable and capricious demands of the landlords. At
the same time’ it appears that the legislature was conscious
of the fact that the Act might retard and slacken the pace
of construction of new buildings because the landlords would
naturally be reluctant to invest
696
money in properties the letting of which would be governed
by the stringent provisions of the Act. It was for that
purpose that the saving provision in s. 1-A seems to have
been inserted. The essential question that has to be
resolved is whether S. 1-A was merely in the nature of an
exemption in favour of the landlords, with regard to the
buildings constructed after January 1, 1951 and conferred a
benefit on them which they could give up or waive by
agreement or contractual arrangement and whether the
consideration or object of such an agreement would not be
lawful within the meaning of s. 23 of the Indian Contract
Act.
The general principle is that every one has a right to waive
and to agree to waive the advantage of a law or rule made
solely for the benefit and protection of the individual in
his private capacity which may be dispensed with without
infringing any public right or public policy. Thus the
maxim which sanction the nonobservance of the statutory
provision is cuilibet licat renuntiare juri pro se
introducto. (See Maxwell on Interpretation of Statutes,
Eleventh Edition, pages 375 & 376.) If there is any express
prohibition against contracting out of a statute in it then
no question can arise of any one entering into a contract
which is so prohibited but where there is no such
prohibition it win have to be seen whether an Act is
intended to have a more extensive operation ‘as a matter of
public policy. In Halsbury’s Laws of England, Volume 8,
Third Edition, it is stated in paragraph, 248 at page 143 :
“As a general rule, any person can enter into
a binding contract to waive the benefits
conferred upon him by an Act of Parliament,
or, as it is said, can contract himself out of
the Act, unless it can be shown that such an
agreement is in the circumstances of the
particular case contrary to public policy.
Statutory conditions may, however, be imposed
in such terms that they cannot be waived by
agreement, and, in certain circumstances, the
legislature has expressly provided that any
such agreement shall be void.”
In the footnote it is pointed out that there are many
statutory provisions expressed to apply “notwithstanding any
agreement to the contrary”, and also a stipulation by which
a lessee is deprived of his right to apply for relief
against forfeiture for breach of covenant (Law of Property
Act, 1925). Section 23 of the Indian Contract Act provides
“The consideration or object of an agreement is lawful,
unless-
it is forbidden by law; or
69 7
is of such a nature that, if permitted, it would defeat the
provisions of any law or is fraudulent; or
involves or implies injury to the person or property of
another; or
the Court regards it as immoral, or opposed to public
policy.
In each of these cases, the consideration or object of an
agreement is said to be unlawful. Every agreement of which
the object or consideration is unlawful is void.”
It has never been the case of the respondent that the
consideration or object of the agreement which was entered,
into in June 1963 was forbidden by law. Reliance has been
placed mainly on the next part of the section, namely, that
it is of such a nature that it would defeat the provision of
any law and in the present case it would be s. 1-A of the
Act.
Now s. 1-A does not employ language containing a prohibition
against or impose any restriction on a landlord and a tenant
entering into an agreement that they would not be governed
by that section. We concur with the view expressed in
Neminath Appayya Hanumannavar v. Jamboorao Satappa
Kocheri(1) that the words “if permitted it would defeat the
provisions of any law” in s. 23 of the Contract Act defer to
performance of an agreement which necessarily entails the
transgression of the Provisions of any law. What makes an
agreement, which is other-wise legal, void is that its
performance is impossible except by disobedience of law.
Clearly no question of illegality can arise unless the
performance of the unlawful act was necessarily the effect
of an agreement. The following observations of Lord Wright
in Vita Food Products Incorporated v. Unus Company Ltd.(1)
(in Liquidation) are noteworthy in this connection
“Nor must it be forgotten that the rule by
which contracts not expressly forbidden by
statute or declared to be void are in proper
cases nullified for disobedience to a statute
is a rule of public policy only, and public
policy understood in a wider sense may at
times be better served by refusing to nullify
a bargain save on serious and sufficient
grounds.”
We are unable to hold that the performance of the agreement
which was entered into between the parties in the present
case would involve an illegal or unlawful act. In our
judgment s. 1-A.
(1) A. I.R. [1966] Mysore 154.
(2) [1939] A.C. 277, 293.
698
was meant for the benefit of owners of buildings which were
under erection or were constructed after January 1, 1951.
If a particular owner did not wish to avail of the benefit
of that section there was no bar created by it in the way of
his waiving, or giving up or abandoning the advantage or the
benefit contemplated by the section. No question of policy,
much less public, policy, was involved and such a benefit or
advantage could always be waived. That is what was done in
the present case and we are unable to agree with the High
Court that the consideration or object of the agreement
entered into between the parties in June 1962 was unlawful
in view of s. 23 of the Contract Act.
In the result the appeal is allowed, the judgment of the
High Court is set aside and that of the trial court
restored. The appellant will be entitled to his costs in
this, court.
V.P.S. Appeal allowed.
699