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Andhra Pradesh High Court
Judges : GOPALRAO EKBOLE, VENKATESWARA RAO
G.ESHWARAIAH - Appellant
Versus
MOHARUDRAPPA KHENI - Respondent
Decided On : 10-19-68
HYDERABAD HOUSES (RENT, EVICTION AND LEASE) CONTROL ACT, 1954 - SECTION 3 - A tenancy created in contravention of the provisions of section 3 of the Act is void and unenforceable under section 23 of the Indian CONTRACT ACT, 1872 as being one that is forbidden by law and opposed to public policy.
Fact of the Case:
The landlord let out a house to the tenant without obtaining permission from the Controller as required under section 3 of the Act. The tenant fell in arrears of rent and the landlord filed a suit for recovery of rent. The tenant raised the contention that the rent agreement is void as it is in contravention of the provisions of the Act. The trial court negatived this contention and decreed the plaintiff's suit. The tenant appealed to the first appellate court, which also negatived the contention that the contract of tenancy was void. The landlord filed a second appeal in the High Court.
Finding of the Court:
The High Court held that a tenancy created in contravention of the provisions of section 3 of the Act is void and unenforceable under section 23 of the Indian CONTRACT ACT, 1872 as being one that is forbidden by law and opposed to public policy. The Court observed that the intention of the Legislature was to prevent letting out of a house, which fell vacant, without the permission of the Controller. The Court further held that the imposition of penalty by the Legislature on any specific act or omission is prima facie equivalent to an express prohibition and it is clear that a contract is void if prohibited by a statute under a penalty, even without express declaration that the contract is void, because such a penalty implies a prohibition.
Issues: Whether a tenancy created in contravention of the provisions of section 3 of the Hyderabad Houses (Rent, Eviction and Lease) Control Act, 1954 is void and unenforceable under section 23 of the Indian CONTRACT ACT, 1872.
Ratio Decidendi: A contract is void if it is expressly or by necessary implication forbidden by law or by public policy. A statute sometimes penalises the making of certain contracts or their formation in certain ways. It is then a question whether the statute not only imposes a penalty on one or both of the parties to the contract but also deprives either or both of them of their civil remedies under it. If the statute prohibits the contract, it is unenforceable whether the parties meant to break the law or not. In the instant case, the Court found that the intention of the Legislature was to prohibit any contract contravening section 3 altogether. The Court also found that the imposition of penalty for contravention of section 3 is a clear indication that a contract in contravention of section 3 is forbidden. Therefore, the Court held that the contract of tenancy in the instant case was void and unenforceable.
Final Decision: The second appeal was dismissed.
( 1 ) THE second appeal and the two revision petitions raise common questions of law. They can therefore be disposed of by a common judgment. The second appeal arises out of O. S No, 53 of 1960. The respondent- plaintiff instituted the suit for recovery of Rs. 2, 391/- for an ears of rent from 31-8-1958 to 31-3-1960 in regard to House No. B-11-439, Risala Abdulla, hyderabad at the rare of Rs. 140/- per month. It was contended in the suit that the defendant executed a rental agreement in favour of the plaintiff on 5-6-1957 agreeing to pay a monthly rent of Rs. 140/ -. The tenant was a regular defaulter. A suit for recovery of arrears of rent was filed against him in the Court of Small Causes for the period ending 31-8-1958. The suit was de. creed. Even subsequent to that period, the tenant committed default in payment of the rents. A notice therefore was served upon him. As he failed to pay, the suit was laid for the recovery of rent. C. R. P. No. 85 of 1963 arises out of an eviction proceeding instituted by the land lord against the tenant. The Additional Rent Controller, Hyderabad by his order dated 22-9-1961 dismissed the eviction petition. In appeal, the chief Judge, City Small Causes Court allowed the appeal and directed the eviction of the tenant. C. R. P. No: 1540 of 1962 arises out of an application filed by the tenant for fixation of fair rent. The Additional Rent Controller, Hyderabad by his order dated 7-8-1961 fixed fair rent of Rs 61-75 Np. per. month. Both the tenant as well as the landlord preferred appeals before the Chief Judge,city Small Causes court, Hyderabad. By his order dated 24-2-1962, the learned Judge allowed the appeal of the landlord and modified the order of the Rent Controller and fixed the fair rent at Rg. 75/- per month. The appeal of the tenant was dismissed.
( 2 ) THE second appeal and the two revision petitions came before one of us (Venkateswara Rao, J, ). Having regard to the conflicting views expressed in fatima bi v. State Of Madras and Balaiah v. Ahmad Khan the case has been referred to a Bench and that is how the matter has come before us: the short but important question is whether a tenancy created in contravention of the provisions of section 3of the Hyderabad Houses (Rent, Eviction and Lease) Control Act (XX of 1954), hereinafter called "the Act. " is void and unenforceable under section 23 of the Indian CONTRACT ACT, 1872 as being one that is forbidded by law and opposed to public policy. Before we consider this question, it is necessary to mention that the house fell vacant. The landlord without giving any intimation as required under section 3 of the Act let out the house on rent to the tenant under the suit agreement.
( 3 ) THE tenant became a defaulter. Consequently, a small cause suit was filed for arrears of rent. The tenant raised the contention that the agreement of tenancy is void as it is in contravention of the provisions of the Act. This contention was negatived. The Small Cause Court ultimately after an enquiry decreed the plaintiffs suit. The judgment has become final. It is Exhibit A-3. The tenant fell again in arrears of rent. That was why the present suit, out of which the second appeal arises, was instituted against him. In this suit, one of the defences was that the rent agreement being inconsistent with section 3 of the Act is void and no suit on the basis of such an agreement can lie. The trial court followed Balaih v. Ahmed Khan and held that the contract is not void. The learned Third Assistant Judge also considered the question as to whether the plaintiff is entitled to compensation for use and occupation under section 65 of the CONTRACT ACT, 1872 and held that the landlord can demand mesne profits for use and occupation of the house. Consequently, a decree for the suit amount deducting some amount was passed in favour of the plaintiff. The defendant carried the matter in appeal. The 1st Additional Chief judge by his judgment dated 6th Fe
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