Supreme Court of India
PANKAJ BHARGAVA AND ANR.versusMOHINDER NATH AND ANR.
- Citation
- 1990 INSC 385
- Decided
- 11 December 1990
- Disposal
- Appeal(s) allowed
- Bench
- M N VENKATACHALIAH
Holding
A stipulation for rent, even if not yet paid, creates a tenancy; the receipt's construction is a question of law but not a substantial question of law, and a Section 21 permission obtained by fraud cannot be collaterally attacked after the tenancy expires.
Summary
The landlords and tenants jointly obtained permission for a five‑year limited tenancy under Section 21 of the Delhi Rent Control Act, 1958. After the tenancy expired, the landlords sought possession, but the tenants argued that a prior tenancy already existed and that the permission was obtained by fraud, rendering it void. The Rent Controller and Tribunal upheld the landlords, but the Delhi High Court, on a Section 39 appeal, set aside the permission as a nullity and allowed a collateral attack. The Supreme Court held that a stipulation to pay rent, even if the rent was not actually paid, creates a tenancy under the Transfer of Property Act, and that the construction of the receipt is a question of law but not a substantial question of law for a Section 39 appeal. It further ruled that a permission obtained by fraud cannot be collaterally attacked after the tenancy expires; the permission is presumed valid until set aside in proper proceedings. Consequently, the High Court’s order was reversed, the Rent Controller’s order restored, and the landlords' appeal was allowed.
Issues considered
- Whether a stipulation for payment of rent, even if executory, creates a tenancy under the Transfer of Property Act.
- Whether the construction of the receipt and inference of a lease is a substantial question of law for a Section 39 appeal under the Delhi Rent Control Act.
- Whether a permission under Section 21 obtained by fraud can be collaterally challenged after the limited tenancy has expired.
- Whether the doctrine of 'fraud on the statute' renders the permission void ab initio and permits a collateral attack.
Legislation cited
Subjects
Delhi Rent Control Actlimited tenancySection 21fraud on statutecollateral attacksubstantial question of lawtenancy contractconsiderationjurisdictionCivil Appeal
Judgment
A PANKAJ BHARGAVA AND ANR.
v.
MOHINDER NATH AND ANR.
DECEMBER 11. 1990
B
[M.N. VENKATACHALIAH, N.D. OJHA AND
. J.S. VERMA,D.]
Delhi Rent Control Act, 1958: Sections 21 and 39-Tenancy for
limited period-Rent Controller on basis of admissions of parties grant-
ing permission-Whether can be challenged in collateral proceedings.
c
Appeal-'Substantial question of law'-What is.
Code of Civil Procedure, 1908: Section 9-Civil Court-Jurisdic-
tion of-Competence to take decision-The test.
D Indian Contract Act, 1872: Section 8-Stipulation for payment of
rent-Whether brings about a contract of tenancy.
Transfer of Property Act, 1882: Section 105-Lease-Yearly rent
paid by cheque-Cheque returned-Effect on lease-What is.
E Words & Phrases: 'Substantial question of law'-Meaning of.
The appellants and the respondents by their joint application to
the Rent Controller sought for and obtained permission for a limited-
tenancy, under Section 21 of the Delhi Rent Control Act, 1958. The
Respondents not having snrrendered possession upon the expiry of the
F said period of five years, tbe appellants commenced proceedings for
re-delivery, Respondents resisted the proceedings raising several con-
tentions. They urged that the appellants were not the owners of the
premises at all; that the permission under Section 21 was vitiated by
fraud resulting from a suppression by the appellants of the material fact
that at the relevant time the premises was not available for letting at all;
G that respondents having been inducted into possession as tenant from
March 5, 1978 itself, one of the basic jurisdictional requirements for the
grant of permission under Section 21 was absent, and that at all events a
fresh contractual tenancy had been created with effect from April 6,
1983 immediately upon the expiry of the five year term of the limited-
tenancy.
H
508
PANKAJ v. MOHINDER 509
The Rent Controller rejected all the aforesaid contentions and
made an order granting possession. A
The respondents' appeal before the Rent Control Tribunal was
unsuccessful, but the second appeal under Section 39 of the Act was
allowed by the High Court which held that even prior to the limited
tenancy the respondents had been inducted into possession as tenants; B
that the subsequent permission for the limited tenancy was a mere
pretence and the result of a fraud on the statute and therefore a nullity,
and relying on this Court's decision in Subhash Kumar Lata v. R.C.
Chhiba, [1988] 4 sec 709 held that such a nullity could be pleaded in
and against execution as well. It accordingly reversed the orders of the
authorities beii>w, and dismissed the appellants' claim for possession.
c
In the landlords' appeal to this Court it was contended that: (1)
both the Rent Controller and the Appellate Tribunal having concur-
rently held that with the respondents' occupation of the premises from
'- March 5, 1978 to April 5, 1978 even if true, did not constitute a tenancy
in that the other requisite indicia of such tenancy, namely, the stipula- D
lion of a consideration was absent and that being a pure question of
fact, the High Court in exercise of its jurisdiction under Section 39
which permitted only an appeal on a substantial question of law could
not reappreciate the evidence and upset the finality of that finding of
fact, (2) that even if the limited tenancy under Section 21 was obtained
despite the subsistence of a tenancy created earlier, the respondents E
were bound to assail the validity of the limited tenancy during its sub-
sistence and not as a collateral plea in the course of execution, (3) Even
if the receipt Ex. D.W.1/3 was susceptible of an inference that the
transaction envisaged by it was one of lease could be said to be a ques-
tion of law, by no standards it could be said to be a substantial question
of law within the meaning and for the purposes of Section 39 of the Act. F
On behalf of the tenants it was urged that Section 21 to the extent
it runs counter and forms an exception to the general scheme of the
statute its operation was required to be restricted severely to the expres-
sed conditions and limitations contained in that section and that where-
ver permission for a limited tenancy was sought and obtained suppres- G
sing any jurisdictional fact such as that the· prospective limited tenant
was already in occupation as a regular tenant, the transaction
amounted to a fraud on the statute rendering the permission void ab
initio, that the jurisdiction of the Rent Controller to grant permission is
conditional and that if the conditions upon which alone permission can
be granted are not fulfilled permission cannot be granted in invitum H
510 SUPREME COURT REPORTS [1990] Supp. 3 S.C.R.
A and that consequently the landlord cannot recover possession.
Allowing the appeal, this Court,
HELD: l(a) The receipt dated March 5, 1978 on which Respon-
dents relied contained a recital that a cheque for Rs.18,000 mentioned
8 in It was given as rent for the premises for the period of 12 months
w.e.f. March 5, 1978. The Rent Controller and the Tribunal, quite
erroneously, proceeded to hold that the mere fact that the cheque had
been shown to have been returned had the effect of taking away the
consideration for the lease. These authorities mistook the non-payment
Of rent in point of fact as equivalent to absence of consideration in point
C of law. This was clearly erroneous. [5150]
(b) A stipulation for payment of rent was by itself sufficient to
bring about a contract of tenancy where, of course, the other element of
eJtclusivity of possession was shown. The High Court held that a consid-
eration promised is as valid as one paid, and that, therefore, the . ·'
D circumstance that the cheque was returned would not detract from the
legal consequence of the stipulation to pay rent implicit in Exhibit OW
1/3. The High Court construed the receipt and found that a lease was
intended. [515E]
2. The constrnction of a document which is the foundation of the
t! rights of the parties raises a question of law. An inference from facts
admitted or found is a question of law if such an inference is to be drawn
oll the application of proper principles of law to the facts. Such deter-
tliiMtion is a mixed question of the fact and law. The submission that
the High Court treaded on the forbidden ground of fads cannot there-
fore be accepted. [515F]
F
3. What is a 'substantial question of law' would certainly depend
upon facts and circumstances of every case. If a question of law had
been settled by the highest conrt of the country that question however
important and difficult it may have been regarded in the past and
however llil'ge may be its effect on any of the parties, would not be
G regarded as substantial question oflaw. [515H]
Raghunath Prasad v. Deputy Commissioner of Partabgarh,
[1927] 54 I.A. 126; Sir Chunilal V. Mehta and Sons Ltd. v. The Century
Spinning and Manufacturing Co. Ltd., [1962] Supp. 3 SCR 549 at 557
and 558 and Union of India v. M/s. Chaman Lal & Co., AIR 1957 SC
Ii 652 Ill 655 & 656; relied on.
PANKAJ v. MOH!NDER 511
Kaikhushtoo Pirojsha Ghaira v. C.P. Syndicate Ltd., [1948] I.
A
Bom. L.R. 744; Dinkarrao v. Rattansey, l.L.R. (1949) Nag. 224 and
Rimr>:alapudi Subba Rao v. Noony Veeraju, l.L.R. !952 Mad. 264,
referred to. ·
4( a) In view of the pronouncements of this Court as to the llmita•
tions on the permissible challenge to the exercise of jurisdiction under B
Section 21, any appeal to the remedy based on concept of nullity and
collateral attack is inappropriate. [521H]
(b) In a collateral challenge the exercise is not the ill validation of
a decision, but only to ascertain whether the decision "exists" in law at
all and to rely upon incidents and effect of its "non-existence". The
permission granted must be presumed to be valid till set aside. Doctrine c
of collateral challenge will not apply to a decision which is valid
ex-hypothesis and which has some presumptive existence, validity and
effect in law. Such a decision can be invalidated by the right person in
·right proceedings brought at the right time. It is only a nullity stemming
from lack of inherent jurisdiction or a proceeding th~t wears the brand D
of invalidity on its forehead that might afford a defence even against
enforcement. Such a collateral challenge may not be available where
there is no lack of inherent jurisdiction but what is disputed is only the
existence or non-existence of facts which though collateral to the merits
do require investigation into and adjudication upon their existence or
non-existence on th~ basis of evidence. If the parties before the Rent E
Controller have admitted that the fact or the event which gives the
Controller jurisdiction is in existence and there was no reason for the
Controller to doubt the bona /ides of that admission as to a fact or
event, the Controller is under no obligation to make further enqniries
on his own as to that factual state. The test of jurisaiction over the
subject matter is whether the Court or Tribunal can decide tile case at
all and not whether the court has authority to issue a particular kind of
order in the course of deciding the case. [522A-E]
Subhash Kumar Lata v. R.C. Chhiba, [1988] 4 sec 709, commented
upon.·
G
S.B. Naronah v. Prem.Kumari Khanna, [1980] 1SCR281; J.R.
Vohra v. Indian Export House Pvt. Ltd., [1985] i SCR 899; Shiv Chan-
der Kapoor v.
Amar Bose, [1990] 1 SCC 234 and Yamuna Maloo v;
Anand Swarup, [1990] 3 SCC 30, explained.
Joginder Kumar Rutan v. R.P. Oberoi, (1987] 4 SCC 20;'referted
to.
512 SUPREME COURT REPORTS [1990] Supp. 3 S.C.R.
5. The expression 'fraud on the statute' is merely a figurative
A
description of a colourable transaction to evade the provisions of a
statute and does not, for purposes of choice of the remedy, distinguish
itself from the consequences of fraud as vitiating the permission under
Section 21. [523H-524A]
B 6. Permission under Section 21 for letting out the premises to the
same tenant for limited periods more than once successively would not
by itself and without more vitiate the subsequent grants. In one sense,
the successive grants of permission would share, the characteristics of
post-facto grant. [524B]
I
Dhanvanti v. D.D. Gupta, [1986]3 SCC 1, relied on.
c
7. The jurisdiction of a court depends upon its right to decide the
case and not upon the merits of its decision. [522G]
Hugh B. Cox. "The Void Order and the Duty to Obey", 16 U.Chi.
D L.Rev. 86 (1948), relied on.
CIVIL APPELLATE JURISDICTION: Civii Appeal No. 6000.
of 1990.
From the Judgment and Order dated 29 .11.1989 of the Delhi
E High Court in S.A.0. No. 384 of 1987.
Ra jinder Sachher and K. C. Dua for the Appellants.
Avadh Bihari and C.P. Juneja for the Respondents.
F The· Judgment of the Court was delivered by
VENKATACHALIAH, J. The appellant-landlords seek special
leave to appeal to this Court from the Judgment dated 29 .11. 1989 of
the High Court of Delhi in SAO No. 384 of 1987 allowing Respondent-
tenants' appeal and setting-aside the Appellate Order dated
G 17.10.1987 of the Rent Control Tribunal, Delhi which had confirmed
the order of the Rent Controller dated 16.2.1987, granting possession
of premises No. 19/20, New Rohtak Road, to the appellants upon the
expiration of a limited-tenancy under Section 21 of the Delhi Rent
Control Act, 1958, [Act].
H 2. The effect of the High Court's judgment was invalidation of
PANKAJ v. MOHINDER [VENKATACHALIAH, J.I 513
the permission for the limited-tenancy and refusal of appellants'
A
prayer for possession. The High Court held that the initial grant of
permission by the Rent Controller under Sec. 21 for a limited-tenancy
for five years from 6.4.1978 was itself marred by a fraudulent suppres-
sion of material facts; that the permission, in effect, was merely a
ex-post facto sanction of a subsisting tenancy which had earlier come
into existence on 5.3.1978 and that, therefore, the appellants were not B
entitled to the benefit of Section 2 1. The High Court relied upon a
pronouncement of this Court in Sub hash Kumar Lata v. R. C. Chhiba,
[1988] 4 sec 709 to support its view that the nullity of the order under
Section 21 obtained .by fraud could be urged in defence against
execution.
3. We have heard Sri Rajinder Sachhar, learned Senior Counsel c
for the appellants and Sri Avadh Bihari Rohtagi, learned Senior
Counsel for the respondent-tenants. Special Leave is granted.
The necessary and material facts, briefly stated, are these:
Appellants and the respondents by their joint application to the Rent D
Controller sought for and obtained permission for a limited-tenancy
for five years under Section 21. Respondents not having surrendered
possession upon the expiry of the said period of five years, the appel-
lants commenced proceedings for re-delivery .. Respondents resisted
the proceedings raising several contentions. They urged that the appel-
lants were not the owners of the premises at all; that the permission E
under Section 21 was vitiated by fraud resulting from a suppressi.on by
the appellants of the material fact that at the relevant time the pre-
I
.; mises was not available for letting at all; that respondents had been
inducted into possession as tenant from 5.3.1978 itself and therefore,
one of the basic jurisdictional requirements for the grant of permission
under Section 21 was absent and that, at all events, a fresh contractual F
tenancy had been created with effect from 6.4.1983 immediately upon
the expiry of the five years term of the limited-tenancy.
4. The Rent Controller by his order dated 16.2.1987 rejected all
these contentions and made an order granting possession. The respon-
dents' appeal before the Rent Control Tribunal was unsuccessful. In G
the second appeal under Section 39 of the Act by the respondents, the
High Court held that even prior to the limited-tenancy, the respon-
dents had been inducted into possession as tenants; that the subse-
quent perniission for the limited-tenancy was a mere pretene and the
result of a fraud on the staute and, therefore, a nullity. Relying on
Subhash Kumar Lata's case, the High Court held that such a nullity H
514 SUPREME COURT REPORTS [1990] Supp. 3 S.C.R.
A could be pleaded in and against execution as well. The High Court,
accordingly, allowed the second appeal and, in reversal of the orders
of the authorities below, dismissed appellants' claim for possession.
The correctness of this view is assailed in this appeal.
It must, however, be stated that Sri Rohtagi while supporting the
B judgment of the High Court did not --- and rightly in our opinion --- lay
store by the other defences urged by the respondents as to the alleged
fresh-tenancy or as to the disputed ownership of the property. Sri
Rohtagi, however, sought to maintain that there having been an
earlier subsisting tenancy as found by the High Court, the purported
creation of a limited-tenancy thereafter was a nullity such as could
collaterally be urged against execution.
c
5. The contentions of Sri Rajinder Sachhar in support of the
appeal could be formulated thus:
"(i) that both the Rent Controller and the Appellate Tri-
D bunal having concurrently held that respondents' occupa-
tion of the premises from 5.3.1978 to 5.4.1978, even if true,
did not constitute a tenancy in that the other requisite indi-
cium of tenancy, namely, the stipulation of a consideration
was absertt and that the latter finding being a pure question
of fact, the High Court, in exercise of its jurisdiction under
E sec. 39 which permitted an appeal only on a substantial
question of law, could not re appreciate evidence and upset
the finality of that finding of fact;
(ii) that, at all events, even if the limited-tenancy under
Section 21 was obtained despite the subsistence of a
F tenancy created earlier, the Respondents were bound to
assail the validity of the limited-tenancy during its subsis-
tence and not as a collateral plea in the course of execution,
as held in J.R. Vohra v. Indian Export House Pvt. Ltd.,
[ 1985] 2 SCR 899; Inder Mohan Lal v. Ramesh Khanna,
[1987] 3 SCR 765; Joginder Kumar Butan v. R.P.Oberoi,
G [ 1987] 4 SCC 20; Shiv Chander Kapoor v. Amar Bose,
[1990] 1 SCC 234 and Yamuna Maloo v. Anand Swarup,
[1990! 3 sec 30.
6. On the first contention, Sri Sachhar said that the High Court
approached the matter as if in general appellate jurisdiction which
H clearly was not the scope and amplitude of an appeal under Section 39
PANKAJ v. MOHINDER (VENKATACHALIAH, J.l 515
of the Act, It was urged that the finding of the Tribunal that even
though respondents were shown to be in occupation, however, no A
inference of a lease was permissible as one of the essential twin
requirements, namely, the stipulation of rent had not been established
was essentially one of fact and that the High Court was in error in
assuming jurisdiction to reverse that finding of fact. Sir Sachhar said
that even if the question whether, upon its proper construction, the B
receipt Exhibit DW-1/3 was susceptible of an inference that the trans-
action envisaged by it was one of lease could be said to be a question of
law, by no standards it could be held to be a substantial question of law
within the meaning and for purposes of Section 39 of the Act.
· 7. The first limb of the argument that no question of law at all
arose can not be accepted. The receipt dated 5.3.1978 on which c
Respondents relied contained a recital that a cheque for Rs.18,000
mentioned in it was given as rent for the premises for the period of 12
· months w.e.f. 5th March, 1978. The Rent Controller and the Tribunal,
quite errorneously, proceeded to hold that the. mere fact that the
cheque had been shown to have been returned had the effect of taking D
away the consideration for the lease. These authorities mistook the
non-payment of rent in point of fact as equivalent to absence of con-
sideration in point of Jaw. This was clearly erroneous. A stipulation for
payment of rent was by itself sufficient to bring about a contract of
tenancy where, of course, the other element of exclusivity of posses-
sion was shown. The High Court held that a consideration promised is E
as valid as one paid, and that, therefore, the circumstance that the
cheque was returned would not detract from the legal consequence of
the stipulation to pay rent implicit in Exhibit DW 1/3. The High Court •
construed the receipt and found that a lease was intended. The con-
struction of a document which is the foundation of the rights of parties
raises a question of law. An inference from facts admitted or found is a F
question of law if such an inference is to be drawn on .the application of
proper principles of Jaw to the facts. Such determination is a mixed
question of fact and law. We cannot accept Sri Sachhar·s submission
that the High Court treaded on the forbidden ground of facts.But Sri
Sachar's other submission is that in any case this was not a 'substantial'
question of law·. We might as well examine this. G
8. What is a substantial question of law would certainly depend
upon facts and circumstances of every case and if a question of law had
been settled by the highest court of the country that question however
important and difficult it may have been regarded in the past~and
however large may be its effect on any of the parties, would not be H
516 SUPREME COURT REPORTS [1990] Supp. 3 S.C.R.
regarded as substantial question of law. In Raghunath Prasad v.
A Deputy Commissioner of Partabgarh, (1927] 54 I.A. 126 the Judicial
·Committee observed that a question of law to be considered a "sub-
stantial question of law" need not be one of general importance and it
could be a substantial question "as between the parties". This Court had
occasion to consider the views expressed on the point by the High
B Courts of Bombay, Nagpur and Madras in Kaikhushroo Pirojsha
Ghaira v. C.P. Syndicate Ltd., (1948] I. Born. L.R. 744; Dinkarrao v.
Rattansey, I.L.R. (1949) Nag. 224 and Rimmalapudi Subba Rao v.
Noony Veeraju, I.L.R. 1952 Mad. 264 respectively placing differing
emphasis on what was a "substantial" question of law between the
parties. It was held by this Court that while the view taken by the
Bombay High Court was too narrow, the one taken by the Nagpur
c High Court was too broadly stated. Approving the view taken by the
Madras High Court it was observed:
" ......... The proper test for determining whether
a question of law raised in the case is substantial would, in
D our opinion, be whether it is of general pubiic importance
or whether it directly and substantially affects the rights of
the parties and if so whether it is either an open question in
the sense that it is not finally settled by this Court or by the
Privy Council or by the Federal Court, or is not free from
difficulty or calls for discussion of alternative views. If the
E question is settled by the highest Court or the general
principles to be applied in determining the question are
well settled and there is a mere question of applying those
principles or that the plea raised is palpably absurd the
question would not be a substantial question of law."
(emphasis supplied)
F
(See: Sir Chunilal V. Mehta and Sons Ltd. v. The Century
Spinning and Manufacturing Co. Ltd., [1962] Supp. 3 SCR
549 at 557 and 558.
9. Thus tested, could the question involved in the second appeal
G before the High Court be said to be a substantial question of law? The
proposition emanated from the following discussion of the High
Court:
"A lease, as defined by Section 105 of the Transfer of
Property Act, is a transfer of a right to enjoy property in
H consideration of a price paid or promised. If it can be
PANKAJ v. MOHINDER [VENKATACHALIAH, J.] 517
shown in a given case that the transfer of the right to enjoy A
the property was made a consideration for a price promised
and not actually paid, even then it will amount to a lease. It
is manifest from the receipt of OW-1/3 that the cheque for
Rs.18,000 mentioned in it represented the 'rent' for the
premises for the period of 12 months with effect from 5th of
B
March, 1978. The question whether the rent was actually
'paid' is a no consequence for the determination of the
question whether a tenancy was created with effect from
the date mentioned in the receipt. Likewise, the fact that
the cheque for Rs.18,000 was never encashed and was
returned is immaterial for this purpose .......... "
c
It is trite proposition that mere reciprocal promises are sufficient
in law to sustain the formation of a contract. Pointing out the distinc-
tion between contracts of "executed" consideration and of "execut-
ory" consideration this Court, referring to and excerpting from Chi.tty
on Contracts, said:
D
"It is necessary to appreciate clearly the distinction
between the two classes of contracts where the considera-
tion is either executed or executory. "An executed consi-
deration consists of an act for a promise. It is the act which
forms the consideration ..... "
E
"In an executed consideration the liability is outstanding
on one side only; it is a present as opposed to a future
consideration.''
"In an executory consideration the liability is out-
standing on both sides. It is in fact a promise for a promise; F
one promise is bought by the other."
"If the contract has been fully and completely per-
formed on both sides, no question of any further rights and
liabilities under the contract is likely to arise. If, however,
G
the contract is one in which the consideration is executed
on one side, there will be a right no one side and an out-
standing liability on the other. If the consideration is
executory on both sides, there will be outstanding rights
and liabilities on both sides."
(emphasis supplied)
H
518 SUPREME COURT REPORTS [1990] Supp. 3 S.C.R.
[See: Union of India v. M/s. Chaman Lal & Co., AIR 1957
A SC 652 at 655 & 656]
The proposition hat reciprocal promises are sufficient to bring about
the formation of a contract is well settled, and indeed elementary. But,
the High Court does not appear to have been invited to examine the
B question whether this proposition in its application to the case assu-
med a substantial character as between the parties. The appeal did
involve a question of law. That question directly and substantially
affected the rights of the parties. It is possible to assume that the High
Court considered the question as a substantial one between the
parties. We do not think that it would be appropriate to fault the
judgment on this ground, though the point might well have been an
C eminently arguable one if it had been raised before the High Court. In
any event in the view we take of the second contention this point loses
its materiality.
JO. But Shri Sachhar's submission on the second contention is not
D without force. It is urged by him that even if there was an earlier
tenancy and permission under section 2 I was sought and obtained
suppressing that fact or where permission is procured by fraud the
remedy of the tenants is to bring-up a challenge to the limited tenancy
as soon as the tenants discover these facts --- and Sri Sachhar says that in
this case they knew it even at the time permission was sought --- and
E not to wait till the landlord makes his application for recovery of
possession. Sri Sachhar submitted that the essential conditions for the
exercise of jurisdiction under sec. 21 as indicated in S.B. Naronah v.
Prem Kumari Khanna, [1980] 1SCR281 are first, that the landlord did
not require the demised premises "for a particular period" only and
secondly, that the letting must be made for residential purposes. Sri
F Sachhar submitted while Subhash Kumar Lata's case to the extent it
holds that Section 21 was not intended to grant "post-facto" sanction
of a subsisting tenancy and a permission obtained by suppressing
material-facts which enables the landlord to straight-away recover pos-
session would be invalid accords with the earlier Rulings, however, to
the extent it expands the remedies and enables a defence based on
G such infirmity even after the period of the limited tenancy has expired
and in resistence to the execution would clearly be irreconcilable with
the view taken in J.R. Vohra v. Indian Export House Pvt. Ltd., [1985]
2 SCR 899; Joginder Kumar Butan v. R.P. Oberoi, [1987] 4 SCC 20;
Shiv Chander Kapoor v. Amar Bose, [1990] 1 SCC 234 and Yamuna
Maloo v. Anand Swarup, [1990] 3 SCC 30 some of which are pro-
H nouncements of larger benches than the one that decided Subhash
PANKAJ v. MOHINDER [VENKATACHALIAH, J.l 519
Kumar Lata's case. Shri Sachar submitted that the learned Judge who
A
spoke for the bench in Subhash Kumar Lata's case had himself in
Joginder Kumar Bulan v. R.P. Oberoi, [1987] 4 SCC 20 reiterated the
rule in Vohra's case and said:
" ....... It was observed by this Court in J.R. Vohra
v. India Export House, that the remedy available to a B
tenant in a case where there was only a ritualistic obser-
vance of the procedure while granting permission for the
creation of a limited tenancy or where such permission was
procured by fraud practised by the landlord or was a result
of collusion between the strong and the weak, would be for
the tenant approaching the Rent Controller during the cur-
rency of the limited tenancy itself for adjudication of his c
pleas as soon as he discovers facts and circumstances that
tend to vitiate ab initio the initial grant of permission and not
to wait till the landlord makes his application for recovery of
the premises, after the expiry of the period fixed under sec.
21." D
[Seep. 29] (emphasis supplied)
Sri Sachhar submitted that where permission for a limited-tenancy
under sec. 21 was obtained either by suppressing the fact that the
landlord did not at all require the premises for his own use or that the
letting was not for residential purposes or any other material circums- E
lance which if the Rent Controller had knowledge of would have
persuaded him to decline to exercise jurisdiction, the infirmities were
all of the same nature and in all such cases, it cannot be predicated that
there was a lack of inherent jurjsdiction so as to entitle the tenant to
treat and ignore the permission as non-est.
F
11. Shri Rohtagi, however, urged that Section 21 to the extent it
runs counter and forms an exception to the general scheme of the
statute, its operation was required to be restricted severely to the
express conditions and limitations contained in that section and that
wherever permission for a limited-tenancy was sought and obtained
suppressing any jurisdictional fact such as that the prospective limited G
tenant was already in occupation as a regular tenant, the transaction
amounted to a fraud on the statute, rendering the permission void
ab-initio. Shri Rohtagi submitted that Subhash Kumar Lata's case rec-
ognised.this species of nullity and illustrated the availability of a collat-
eral attack as a remedy. The case, says counsel, stood on a different
footing; where there was fraud on the statute the consequent nullity H
520 SUPREME COURT REPORTS [1990] Supp. 3 S.C.R.
could be set-up wherever and whenever the order was sought to be
A given effect to.
12. We have considered these rival contentions. What Sri
Rohtagi in substance says is that the jurisdiction of the Rent Controller
to grant permission is conditional and that if the conditions upon which
B alone permission can be granted are not fulfilled, permission cannot be
granted in invitum and that consequently the landlord cannot recover
possession. Learned counsel says that parties cannot give the Rent
Controller a jurisdiction which the legislature indicates he shall not
have. Sri Rohtagi relied upon S.B. Naronah v. Prem Kumari Khanna,
I 19so1 1sec s2.
c 13. It is true that in Nahronah'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, this Court _laid down that a tenant who assails the
permission under Section 21 on the ground that it was procured by
D 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 circumstances which, according to him, vitiate the permission. It
was held that whether it was a "mindless order" or one procured by
fraud practised by the landlord or was the result of a collusion between
E landlord and tenant there was no justification for the tenant to wait till
the landlord made his application for recovery of possession but there
was every reason why the tenant should have made an immediate
approach to the Rent Controller to have his pleas adjudicated as soon
as facts and circumstances giving ~ise to such pleas came to his
knowledge.
F
The reason why this requirement was built-in working the rights
and obligations under sec. 21 was the need to re-concile and harmonise
certain competing claims that arise in administering the scheme of sec.
21. This Court, referring to those competing claims observed:
G "What then is the remedy available to the tenant in a
case where there was in fact a mere ritualistic observance of
the procedure while granting permission for the creation of
a limited tenancy or where such permission was procured
by fraud practised by the landlord or was a result of collu-
sion between the strong and the weak? Must the tenant in
H such cases be unceremoniously evicted without his plea
PANKAJ v. MOHINDER !VENKATACHALIAH, J.] 521
being inquired into? The answer is obviously in the nega-
A
tive. At the same time must he be permitted to protract the
delivery of possession of the leased premises to the land-
lord on a false plea of fraud or collusion or that there was a
mechanical grant of permission and thus defeat the very
object of the special procedure provided for the benefit of
the landlord in sec. 21? The answer must again be in the B
negative .... "
[see. p. 911]
The manner in which the Court harmonised and reconciled these
, competing and conflicting claims and interests was by insisting upon
the tenant to approach the Rent Controller for adjudication of his
pleas as soon as he discovered that the initial grant of permission stood c
vitiated. This was evolved as a part of policy of law for the reconcilia-
tion of divergent and competing claims. It was held:
" .. .'.In our view these two competing claims must be
harmonised ................... by insisting upon his D
approaching the Rent Controller during the currency of the
limited tenancy for adjudication of his pleas no sooner he
discovers facts and circumstances that tend to vitiate ab
initio the initial grant of permission. Either it is a mechani-
cal grant of permission or it is procured by fraud practised
by the landlord or it is the result of collusion between two E
unequals but in each case there is no reason for the tenant
to wait till the landlord makes his application for recovery
of possession after the expiry of the fixed period under
sec. 21 but there is every reason why the tenant should
make an immediate approach to the Rent Controller to
have his pleas adjudicated by him as soon as facts and F
circumstances giving rise to such pleas come to his
knowledge or are discovered by him with due diligence
"
[seep. 911 & 912]
This has been reiterated in the cases of Shiv Chander Kapoor and G
Yamuna Maloo.
14. It is difficult to reconcile the observations in Subhash Kumar
Lata's case with the pronounce·ments in other earlier and later cases.
In view of the pronouncements of this Court as to the limitations on
the permissible challenge to the exercise of jurisdiction under sec. 21, H
522 SUPREME COURT REPORTS [1990) Supp. 3 S.C.R.
A any appeal to the remedy based on concept of nullity and collateral
attack is inappropriate. Suffice it to say that in a collaterai challenge
the exercise is not the invalidation of a decision, but only to ascertain
whether the decision "exists" in law at all and to rely upon incidents
and effect of its "non-existence". The authority of decided cases is to
the effect that the permission granted must be presumed to be valid till
B set aside. Doctrine of collateral challenge will not apply to a decision
which is valid ex-hypothesi and which has some presumptive existence,
validity and effect in law. Such a decision can be invalidated by the
right person in right pmceedings brought at the right time. It is only a
nullity stemming from lack of inherent jurisdiction or a proceeding
that wears the brand of invalidity of its forehead th&t might afford a·
defence even against enforcement. Shri Sachhar is right in his conten-
c tion that such a collateral challenge may not be available where there
is no lack of inherent jurisdiction but what is disputed is only the
existence or non-existence of facts which though collateral to the
merits do require investigation into and adjudication upon their exis-
tence or non-existence on the basis of evidence. If the parties before
D the Rent Controller have admitted that the fact or the event which
gives the Controller jurisdiction is in existence and there was no reason
for the Controller to doubt the bona /ides of that admission as to a fact
or event, the Controller is under no obligation to make further
enquiries on his own as to that factual state. The test of jurisdiction
over the subject matter is whether the court or Tribunal can decide the
E case at all and not whether the court has authority to issue a particular
kind of order in the course of deciding the case.
A learned author says:
"A court is said to have jurisdiction of the subject matter of
F a particular controversy if the court has authority to hear
and decide causes of a class to which the particular con-
troversy belongs. In defining jurisdiction of the subject
matter in these terms, the courts have emphasised that the
jurisdiction of a court depends upon its right to decide the
case and not upon the merits of its decision."
G
(See: Hugh B. Cox, "The Void Order and the Duty to
Obey", 16 U. Chi, L. Rev. 86 (1948).
15. The expressions 'void', 'voidable', 'nullity', as observed by
the Lord Chancellor in London & Clydeside Estates Ltd. v. Aberdeen
H D.C., [1980] 1 WLR 182, may be misleading in so far as they are
PANKAJ v. MOHINDER [VENKATACHALIAH, J.] 523
"supposed to present a court with the necessity of fitting a particular
A
case into one or other of mutually exclusive and starkly contrasted
compartments, compartments whic'i in some cases (e.g. 'void' and
'voidable') are borrowed from the language of contract or status, and
are not easily fitted to the requirements of administrative law." Some
observations of the Lord Chancellor are again worth re-calling:
B
" ......... In this appeal we are in the field of the
rapidly developing jurisprudence of administrative law,
and we are considering the effect of non-compliance by a
statutory authority with the statutory requirements affect-
ing the discharge of One of its functions .... "
"When Parliament Jays down a statutory requirement
c
for the exercise of legal authority it expects its authority to
be obeyed down to the minutest detail. But what the courts
have to decide in a particular case is the legel consequence
of non-compliance on the rights of the subject viewed in the
light of a concrete state of facts and a continuing chain of D
events. It may be that what the courts are faced with is not so
much a stark choice· of alternatives but a spectrum of pos-
sibilities in which one compartment or description fades
gradually into anotha. At one end of this spectrum thre
may be cases in which a fundamental obligation may have
been so outrageously and flagrantly ignored or defied that E
the subject may safely ignore what has been done and treat
it as having no legal consequences upon himself. In such a
case if the defaulting authority seeks to rely on its action it
may be that the subject is entitled to use the defect in
procedure simply as a shield or defence without having
taken any positive actior. of his own ................ . F
..................... But in a very great number of cases
it may be in a majority of them, it may be necessary for a
subject, in order to safeguard himself, to go to the court for
declaration of his rights .... "
[Seep. 189] (emphasis supplied)
G
The contention of Shri Rohtagi as to this particular remedy being
available to a tenant in such circumstances is, in the ultimate analysis,
not as sound as it might at first sight appear. The expression 'fraud on
the statute' is merely a figurative description of a colourable transac-
tion to evade the provisbns of a statute and does not, for purposes of
choice of the ,·emedy, distinguish itself from the consequences of fraud H
524 SUPREME COURT REPORTS [1990] Supp. 3 S.C.R.
A as vitiating the permission under Sec. 21 referred to in Vohra's case.
16. Indeed, in Dhanvanti v. D.D. Gupta, [1986] 3 SCC 1 it was
held that permission under sec. 21 ·for letting out the premises to the
same tenant for limited periods more than once successively would not
by itself and without more vitiate the subsequent grants. In one sense,
B the successive grants of permission would share the characteristics of
post-facto grant.
17. In the circumstances and for the foregoing reasons, this ap-
peal is allowed, the judgment of the High Court dated 29.11.1989 in
SAO No. 384 of 1987 set aside and the order of the Rent Control
C Tribunal dated 17.10.1987 affirming the order of the Rent Controller
dated 16.2.1987 restored
Parties are left to bear and pay their own costs in this appeal.
N.V.K. Appeal allowed.
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