ivil Appeal No 1504 of 1980
From the Judgment and Order dated 205
1980 of the Delhi High Court in Regular Second Appeal No 18 1 of 1979
SK Mehta D Mehta A Vachhar and Atul Nanda for the Appellant
Dr Shankar Ghosh and Ashok Grover for the Respondent
The Judgment of the Court was delivered by RANGANATHAN J
The appellant a cooperative society hereinafter referred to as the society  resists a suit for possession 650 laid by the respondent contending that the property in question is a building  within the meaning of the Delhi Rent Control Act 1958  the Act  the eviction of a tenant from which can be sought by the landlord only from a rent controller on grounds specified in the Act and not by a suit in a civil court under the Transfer of Property Act read with the Code of Civil Procedure CPC
This contention of the appellant has been rejected concurrently by the Assistant District Judge the Additional District Judge and the High Court
In this appeal counsel for the appellant seeks to persuade us that all the three courts have decided erroneously a substantial question of law raised by it and that they ought to have dismissed the suit instead of de creeing it
To get a cogent idea of the history of the litigation concerning this property and to properly appreci ate the contentions urged it is necessary to set out the relevant facts at some length
2a The property in question originally belonged to one Khan Din Hussain Din but it came to be vested in the Custo dian of Evacuee Property on the owner being declared an evacuee on the eve of the partition of the country
The Custodian leased it out to one Pritam Chand who occupied it in September 1947
There is on record an undated survey report in a proforma for residential premises which per tains to the period when Pritam Chand was in occupation
It described the property covered by it thus 1 Locality or street Hamilton Road Delhi 2
HC No III1403 1406 3
No  size of rooms 15  x 15  shed 3  x 8  10 x 10  10 x 10  10  x 10  Ver 40  x 8  shed 35  x 10  Open space 50  x 45  use as Motor Lorry Workshop
b Subsequently the allotment in favour of Pritam Chand appears to have got cancelled and the Society applied for the allotment of the property to it for starting a factory
The application was granted and the property was allotted by way of a lease to the Society by an order dated 2831949
It is necessary to extract this order in full ORDER Subject Allotment of industrial premises
651 With reference to your application dated I have to inform you that Indus trial Establishment known as open compound at Hamilton Road Portion of Jai Hind Motor Works with 25 Front and 50 deep together with all the machinery and accessories kept there in has been allotted to you
Possession of the factoryworkshopIndustrial establishment will be delivered to you immediately after your fulfilling the following conditions namely 1
Delivering at this office a communication addressed to the Custodian undertaking to pay such deposit and rent as may be assessed and required to be paid and to execute the lease on the prescribed form
Filling a duly attested affidavit as per form A  attached herewith
Possession of stocks of consuma ble goods and other stores and material if any will be given to you for safe custody as caretaker until the disposal thereof
Assistant Custodian Industrial is hereby required to deliver the possession of factoryworkshopIndustrial Establishment and other moveable property kept therein to the above named allottee after satisfying himself that he has fulfilled conditions laid down above
If necessary the enforcement section will help the Assistant Custodian and the allottee of the property in accordance with the procedure prescribed under law
 c A report on the use of the allotted plot submitted on 9151 is of some relevance
It clarifies that no machin ery had been allotted to the Society and that power was being fitted
It says then I have found nobody at the premises except a Gorkha Chowkidar
I remember it very well that in the presence I gave the possession of the above said plot to allottee who promised that they want to start a factory very soon but it is regretted that no advantageous use of the premises is being made by the Co operative
However I have seen new power connection being fitted on the premises
The work might have then set back due to non availability of power
Any how we must consult the file and subsequently call the allottee
 652 d It appears that Pritam Chand was attempting to get the allotment to the Society cancelled on the allegation that it had unauthorisedly sublet the property
A letter was written in this context by the Assistant Registrar of Cooperative Societies to the Custodian on 1551954
This letter on the subject ofAllotment of Industrial Premises reads as under Kindly refer to your order No DCIVA185 dated the 28th March 1949 on the above sub ject under which the house No 2939 III1403 1406 on Industrial Establishment known as open compound at Hamilton Road Portion of Jai Hind Motor Works with 25  front and 56  deep together with all machinery and accessories kept therein was allotted to the Prabhat Manufacturing Co operative Industrial Society Ltd
Before allotment one Shri Pritam Chand was occupying the whole premises
He is now again trying to take the premises allotted to the society
He therefore filed an applica tion to the Assistant Custodian against the Society alleging that the premises had been sublet to Shri Ajit Singh Duni Chand and Banwari Lal
The Assistant Custodian served the Society with a notice for cancellation of allotment of the said premise
The fact is that Shri Ajit Singh is the Secretary of the Society and Shri Duni Chand and Banwari Lal were its members
The question of subletting does not arise
A Government loan of Rs4000 was also advanced to the society under the Rehabilitation Scheme
Under the above circum stances I would request you to allow the Society to function in the allotted premises so that it may be able to repay the Government loan advanced to it e The Society made an attempt to have the assessment of rent reduced
The order of the Deputy Custodian dated 315
1955 under which this relief was granted reads thus This is revision petition by Ms Prabhat Mfg Cooperative Socio Industrial Society Ltd against the assessment of rent
The petitioner has got a plot
There is a small shed on this plot also
The petitioner was assessed on the rental of Rs50 on the basis of the MAR It is contended before me that there is no MAR for property No 2939 653 but there is joint MAR for house No 1403 6
From the copy of the assessment sheet it appears that 1403 1406 is equivalent to 2939 40
It is not clear therefore whether new number has got an assessment of Rs50 or there are several numbers included in this assess ment
I find that I inspected this house on 20th March 1953 and asked the SDO to let me know the value of the plot and probable rent
At that time he had assessed the value of the plot at Rs 10970
The present value of course will be more than that
However on the basis of this valuation the rent of the petition er s plot if it were a vacant plot would work out to Rs327 per month exclusive of house tax
There is a small shed also which is alleged to be self constructed
Considering therefore all the circumstances I fix the rent of the petitioners plot at Rs35 per month
As the petitioner is a cooperative society I direct that rate should have retrospective ef fect
The petitioner is however directed to clear the arrears within fortnight f After this order was passed a survey report was made on 1571955 which describes the property in the occu pation of the Society thus 1
No 2
Road Street lane or Mohalla Hamilton Road 3
Municipal House No old IIIl4 1403 6 old 2939 new 4 5
Accommodation available Plot with tin shed No  Size of rooms store 27 ft
North rooms verandah kitchen 61 ft
East bath courtyard etc
648 ft
West 24 ft
South 15
Description of present Manufacturing concern occupation ie business Motor accessories and service Govt
or Pvt tools Regd
No 199 other occupation dated 24349
Rent previously fixed Rs50 reduced to for the accommodation Rs35 3a Having thus got the plot on lease the Society tried to acquire the property for itself
There is on record a letter of the Society dated 2111957 requesting that the industrial plot may be perma 654 nently allotted to it
However the Custodian chose tO sell the property by auction on 15760 in favour of one Dina Nath the predecessor in interest of the present respondent Banwari Lal
The upset price was Rs21000 and the sale was for Rs23000
Unfortunately however except the informa tion that sale deed in favour of Dina Nath was executed on 13761 there is no document on record about the exact nature and condition of the property thus sold
b The Society moved to have the sale set aside on the ground that as the value of the property was less than Rs 10000 it should have been sold to the Society itself as the allottee and not to an outsider
In the course of these proceedings it made an application on 151060 to the concerned authority for a copy of the order declaring the property to be saleable the first paragraph of which reads thus The above mentioned property an Industrial Plot on Hamilton Road No 2939 old No 1403 1406 was sold by auction on 15760 c The application of the Society was eventually rejected by the Chief Settlement Commissioner on 2581961 and so the appellant filed a revision petition before the Government of India
In this petition it is seen the Society tried to take advantage of a Press Note of the Government which enabled an allottee who had invested more than Rs30000 in a property to get a priority when the property came to be allotted but this attempt was also unsuccessful
Certain reports submitted by the concerned authorities in the context of the Society s application have been placed on record
On 213
1962 the Executive Engineer reported
The land under property in question has been assessed at Rs 17500 while the structure value of it has been assessed at Rs3883 giving a total value of Rs21383
The reserve price of this property has been fixed at Rs21000 Reports submitted by one TC Dewan contain the following observations I have been to the premises and obtained a list of machinery now installed in the prem ises
The copy of the letter dated 21356 addressed to the CSC is also attached
Ms Prabhat Mfg
Co op
Industrial Society want to have the premises transferred to them as Industrial concern
655 The property has already been auctioned on 1571960
The sale certificate has been issued in favour of Dina Nath so Charan Das on 13661 I have to submit further that a part of the superstructure was evacuee and was valued with the plot
Some portion has been made as a temporary shed etc
The position can be made clear by consulting the valuation schedule on the property
The portion which was included in the valuation at that time means at the time of auction as noted it was definitely an evacuee structure
The rest is non evacuee raised by the occupant
 It also appears that in the course of these proceedings Ajit Singh on behalf of the Society made a statement to the following effect in May 1962 The above Society is in occupation of the premises since the year 1949
There was only a shed built in the premises but the other portion was open plot when it was allotted to us
The entire machinery has been installed by the Co op
Society
I can supply inventory of the machinery which has been installed by the Society would be produced on 8562 d The Society s revision petition was rejected on 6862
The order of the Joint Secretary to the Government of India starts with a recital that the Custodian had allot ted an open plot of land to the society for industrial purposes and that the Society had erected a temporary structure on this plot and also installed some machinery
In para 3 the contention of the Society is stated to be that the plot was allotted to the Society for industrial purposes and they erected a building and installed machinery worth about Rs30000 in it
 The order proceeds  the valuation officer was asked to assess the value of the land building and machinery
After a spot inspection he reported that the value of land and building was about Rs21000 whereas the value of the machinery installed in March 1956 according to the vouchers produced before him by the Society came to only Rs6585
Hence the value 656 of the machinery did not exceed that of the land and building
Further the Press Note of the 22nd March 1956 required such allottees to submit applications to the Regional Settle ment Commissioner concerned with a certificate from the Director of Industries of the State that they had established factories under the Commissioner New Delhi
It is therefore clear that this case is not covered by the Press Note of 22nd March 1956
The property in their occupation was rightly auctioned
Now we come to the third chapter of the story
Dina Nath the purchaser of the property filed suit No 155 162 in the court of Rent Controller Delhi seeking eviction of the appellant society from the property in question on the ground of sub letting misuser default in payment of rent and requirement of the premises for the bona fide use of the owner
The Rent Controller dismissed the petition
It is seen from the order of the Rent Controller that the owner had alleged that a portion of the demised premises had been sublet assigned or otherwise parted with to Ms Malviya Industries after 961952 without obtaining the written consent of the landlord
The respondent had shown that Malviya Industries was a proprietory concern of Ajit Singh who was in possession of the whole premises as a Secretary of the appellant society and that apart from the fact that the goods manufactured by the society were sold through Malviya Industries there was nothing to show that any particular portion of the property in question was exclu sively used by Malviya Industries
It also appears that the owner alleged that he required the premises in question for purposes of re building it
The controller held that as the property had been given to the tenant for residential pur poses and the proposed reconstruction would change the character of the premises this was not permissible under the Act and therefore the landlord could not be said to require the premises bona fide for re building
On behalf of the appellant it is urged that the fact the landlord filed a rent control eviction petition as well as a finding in the order of the Rent Controller dated 1611967 clearly show that the property in question was a building  falling within the scope of the Delhi Rent Control Act
It is also pointed out from a copy of the application for eviction placed on record that in para 5 of the application it was stated that a workshop was situated on the piece of land and about 20 people approx were working therein and the details of the accommodation were shown as comprising of one tin shed as shown in the attached plan
657 b In 1964 the society filed suit No 294 of 64 against Dina Nath and others
In this suit it prayed for an injunc tion restraining the defendants from interfering with its possession and lawful enjoyment of the property inter alia by preventing the plaintiff from carrying out the necessary repairs to the premises in question
This suit was filed during the pendency of the earlier suit filed in the rent controller s court
It was alleged that the portion of the roof had started leaking and that when the plaintiff began to make the necessary repairs to the premises the defend ants began to interfere illegally with its possession with the ulterior motive of securing the possession of the prem ises otherwise than in due course of law
The defendants resisted this suit
It appears that this suit was eventually dismissed but further details are not available
c It also appears that Banwari Lal had filed a suit for permanent injunction against the Society restraining it from erecting any new structure on or making any additions or alterations to the property in question
It is said that in one of the affidavits filed in the course of these pro ceedings Banwari Lal stated as follows 3
That the defendant is tenant of ground floor consisting of a tin shed in house No 2939 Hamilton Road Delhi at a monthly rent of Rs35 which is a single storeyed property
That the defendant has got no right title and interest to erect any new structure on the first floor or to make any additions and alterations in the aforesaid property without the consent of the plaintiff
 There is no further information available regarding this suit
d One more proceeding instituted by the appellant society has also to be referred to On 1521968 the appel lant filed an application under section 44 of the Delhi Rent Control Act 1958 Suit No 169 M of 1968 69 seeking permission to make repairs to the premises in question
This application was resisted by the owners on a preliminary objection that the petitioner were not tenants of any prem ises within the meaning of Delhi Rent Control Act
This application was dismissed on 931972
It is necessary to extract paragraph 5 of this order since it is relevant to the controversy presently in question 5
I also find it established on record that the petitioner society is a tenant only with respect to an open site and the 658 structure thereon namely the shed itself constructed by the tenant
It is admitted that by Ajit Singh who states himself to be the Secretary of the Society by the custodian as it was an evacuee property
A reference to the allotment order exhibit RW 11 which was produced by the clerk of the office concerned examined as RW 1 shows that the subject matter of the allotment of the petitioner society was an Open Compound 
It is further clear from the copy of an order exhibit RW 11 that it was stated by the tenant namely the petitioner society before the custodian  that the shed was self constructed and the rent was got reduced from Rs50 per month to Rs35 per month
This continues to be the rent upto date according to be that the petitioner society continues to be in occupation of the same property as it was when it was allotted to them by the Custodian and it is estab lished from the evidence of the clerk of the office of the Custodian
RW 1 and the orders produced by him namely RW 11 and RW 22 as well as the survey report exhibit RW 13 that what was allotted to the petitioner society was only a plot and that the shed was self constructed
The petitioner has failed to substantiate the contention that the respond ent himself has treated himthemas a tenant because no certified copy of the previous pleadings has been placed on the file
The petitioner therefore being a tenant only with respect to open site which does not come within the definition of a premises  as contemplated by the Delhi Rent Control Act the petition under sec
44 of the act is not entertainable
The suit out of which the present appeal arises has to be understood in the context of the above previous histo ry
In 1977 Banwari Lal instituted suit No 31877 against the Society seeking eviction of the Society from the plot of land in question
It was alleged that the plaintiff was the owner of the above said plot and that the defendant had put up a shed thereon
It was alleged that the Society had been occupying the property much earlier and that the plain tiff who came to the scene much later had mistakenly thought that the defendant was the tenant of both the land and the shed put up thereon and accordingly filed the petition under the Rent Control Act for evicting the Society
Subsequently it was said after examining the records of the Custodian and allotment letter in favour of the defendant he had come to know that the shed had been constructed by the defendant and that as such the property from which the eviction 659 was to be sought was only a plot of land and not premises  within the meaning of the Delhi Rent Control Act
In these circumstances it was claimed that the plaintiff had termi nated the tenancy of the defendants and that the suit was being filed to recover possession of the property from the tenants
As mentioned earlier the plaintiff has succeeded in all the three courts and hence the present appeal
Shri SK Mehta learned counsel for the Society contends that in this case both the parties had taken up inconsistent stands at different stages of the litigation and that in that state of affairs the courts below should have ignored the past conduct of both the parties and gone by the contents of the documents of title in order to decide the matter
Instead he complains the courts have held the conduct of the Society in some of the prior litigation as negativing its claim but when it came to a consideration of the like conduct on the part of the plaintiff they have chosen to make light of it accepting the lame excuses put forward on his behalf
We shall therefore consider at the outset the impact if any of the earlier proceedings in this case on the question at issue
The detailed narration of facts set out earlier will show that the parties have not been consistent in their stands and have tried to blow hot or cold as the occasion suited them
Taking up the stand of the Society first the Society in its application to the custodian for reduction of rent claimed successfully that what was allotted to it was only a plot of land and that the small shed thereon had been put up by the Society itself
So also in its applica tion for allotment dated 211
1957 and 15101960 it referred to the property only as an industrial plot
The letters addressed by the Society to the Custodian and Set tlement Commissioner as well as the application for reduc tion of rent and the order thereon are valuable pieces of evidence both because they are anterior to the litigation between these two parties and also because they reflect the representations of the Society to and the findings of the very authority that allotted the property to the Society
The Society represented that it had been allotted only a plot of land and that the shed had been put up thereon by itself and this plea would not have been accepted by the Custodian had it not been correct
Shri Mehta tried to argue that the Custodian has only reduced the rent on general grounds and has given no finding that only a plot had been allotted to the Society but we are unable to accept this contention as both in the opening sentences as well as in the body of order there is a clear finding to this effect
This is a very strong circumstance to show that what was allotted to the Society was only a plot of land
Secondly 660 the findings of the Rent Controller in the application under section 44 filed by the Society right or wrong have at tained finality as between the parties and it is not open to the Society on principles analogous to res judicata to take a contrary stand in these proceedings
It is true that in the suit for injunction filed in 1964 as well as in its application under section 44 of the Rent Control Act the Society took up a contrary position and claimed that the property was tenanted premises 
It is not clear why the Society filed the suit if the property was subject to the Rent Control Act and though it appears that the plaintiff pointed out that the property was the subject of proceedings under the Rent Control Act the suit was eventually dismissed without any findings
Again the Socie ty s claim in the second set of proceedings was rejected by the Rent Controller in a reasoned order on 931972
The statement of Ajit Singh of May 1962 is ambiguous as it says on the one hand that there was a shed but also says on the other that what was allotted to the Society was only an open plot
These are therefore not of much help to the Society
Turning next to the stand of the plaintiff in Decem ber 1962 soon after acquiring the property he applied to the Rent Controller though unsuccessfully for the eviction of the Society on the allegation that the property comprised a shed that it had been unauthorisedly sublet and that the plaintiff required it for reconstruction as residential premises
His explanation that this was due to some mistaken notion has been accepted by the first appellate court
Counsel for the appellant contends that this was a naive explanation which should not have been accepted as the material on record shows that Banwan Lal and Dina Nath were members of the Society and were fully aware of all the transactions and activities of the Society right from the inception and could not have been unaware of the nature of the property allotted to the Society as alleged
There is some truth in this but at the same time it should be appre ciated that when filing this application the plaintiff might not have been fully aware of all the legal implica tions of the situation
At the time of the action the property consisted of a land and shed
If the land belonged to the Custodian and the shed had been put up by the Socie ty what was sold to the plaintiff was really only the right title and interest of the Custodian and the plaintiff could not have become the owner of the shed superstructure
Strictly speaking the Society was the tenant only in re spect of the land but it is possible that without examining the niceties as to what was the original allotment and the effect of subsequent structure having been put up on it by the lessee the plaintiff may just have tried 661 to evict the Society by resort to the Rent Control Act
The question whether the property was premises  within the Rent Control Act was not put in issue in that case and the deci sion of the Rent Controller also rested on a very narrow finding which has no relevance to the point at issue
We therefore think that these proceedings do not affect the present case of the plaintiff particularly in view of the specific findings given by the Rent Controller in the Socie ty s application
Summing up the position therefore it seems to us that the history of the earlier litigation and findings given in the orders therein support the plaintiff s case rather than that of the Society as held by the courts below
That apart we do not think the position is different even_if as urged by Sri Mehta we ignore all these proceed ings as unhelpful to either side and concentrate only on the documents on which Shri Mehta relies as supporting his plea that the Society had got an allotment of not a mere plot of land but of a building as well
The first and most important document on which Shri Mehta places great reliance is the order of allotment dated 2831949 by the Custodian in favour of the Society
Counsel lays stress on the references in it to industrial premises to the industrial establishment known as open compound  portion of Jai Hind Motor Works to the factoryworkshopindustrial establishment to possession of stocks of consumable goods and other stores and material if any and other movable property kept therein and contends that the document clearly shows that what was allotted to the Society was not a mere plot of land but an industrial premises
We are unable to accept the above contention for a number of reasons
In the first place the reference to industrial premises  in this letter cannot be construed as a reference to premises  within the meaning of the Rent Control Act
The letter also refers to the allotted property as factory workshop and industrial establishment though admittedly there was no such factory workshop or estab lishment in existence on that date
The letter also refers to stocks of consumable goods stores and movable property on the property but it is common ground that there was none of these things on the site at the time
It was obviously a cyclostyled proforma allotting an item of evacuee property and except for the portion where it contains a description of the particular property in question viz open compound at Hamilton Road portion of Jai Hind Motor Works with 25 front and 50 deep it only contains terms applicable to allotments generally
In this case the 662 particular description is not of much help either
That the property was known as office compound does not necessarily mean that there were premises inside the compound as was sought to be suggested
It is equally consistent with the claim that it was only an open plot of land inside a com pound on which some motor works were located
Secondly in the absence of a clear indication of the nature of the property in the allotment letter we may refer to the other documentary evidence on record
The inspection report of the person who delivered the property to the Society dated 911951 the order dated 3131955 of the Deputy Custodian the letters of the Society dated 2111957 and 12101960 the revision petition filed by the Society as well as the order dated 681962 thereon clearly indicate that what was allotted to the Society was only a plot of land and that the Society had put up a temporary structure and installed some machinery on it
The importance of these documents as indicated earlier lies in the fact that they arise out of proceedings between the allotting authority and the Society and relate to a point of time anterior to the commencement of the litigation between the Society and the plaintiff
Shri Mehta invited our attention to the reports called for and submitted in connection with the application under section 33 of the Displaced Persons Act filed by the Society
He pointed out that the report of the Executive Engineer shows that the reserve price for the auction sale of the property was fixed at Rs21000 by taking into account the value of the land at Rs 17500 and the value of the structure of Rs3883 in all Rs21303 and that this had been further clarified by the report of TC Dewan
But as rightly pointed out by Dr Ghosh for the plaintiff these were only reports submitted in 1962 much later than the allotment in the context of justifying the action of the department in auctioning the property in 1960 instead of allotting it to the occupant Society
As men tioned earlier the Society itself had pleaded in its appli cation that it had been allotted the land and that it had put up structure and machinery thereon worth Rs31000
It is clear that the machinery installed by the Society on the land was not considerable
It is seen from the order on the revision petition that the Society could prove installation of machinery only to the extent of Rs6585
The effort of the Society was therefore apparently to contend that it had been allotted only the land for which an upset price of Rs21000 had been fixed and that since it had also put up a structure and installed machinery worth Rs31000 the property should not have been sold in auction
An inspection was ordered and report of the Executive Engineer indicates that the value of Rs21000 had been fixed taking into account both the land and the structure thereon and not merely for the 663 land
The report of TC Dewan was also to the effect that the upset price of Rs21000 fixed in 1960 had taken into account a part of an evacuee structure that had already existed on the land
These reports were thus drawn up in the context of a controversy between the parties as to the nature of the property allotted and the manner in which it had been valued at Rs21000
These reports drawn up several years after
the allotment and intended to justify the department s action cannot be of much evidentiary value
It is also significant that although Dewan s report states that the position can be made clear by consulting the valuation schedule  of the property no attempt was made to bring on record the valuation schedule which must have been drawn up at the time of the sale before fixing the upset price at Rs21000
These documents cannot therefore be relied upon as to the state of the property when it was allotted to the Society
Thirdly the survey reports referred to by us earli er are helpful in indicating how the confusion in the case could have arisen
The report made at the time of Pritam Chand s occupancy obviously covers a much more extensive property which consisted of an open space of area 50  x 45 which was used as motor lorry workshop and a number of sheds and a verandah
If we read the letter of allotment in the context of this report it is clear that what was allotted to the Society was only a portion of the Jai Hind Motor Works measuring 50  x 25 
This makes it abundantly clear that only an open space was allotted to the Society
Even the report of 1955 shows the property though somewhat larger in size than 50  x 25  shown in the allotment letter only as a plot with tin shed
As even on the Society s own showing it had put up a shed on the plot we again reach the position that what was originally allotted was only a plot of land
The allotment letter and the other documents re ferred to by counsel for the Society do not therefore further its case
On the contrary they only reinforce the conclusion of the courts below
Actually the findings on the point of all the three courts are concurrent findings on a question of fact
The Additional District Judge has co gently collected together all the circumstances which mili tate against the Society in its judgment and the High Court has approved this summing up
This Court does not normally reappraise the evidence or interfere with such concurrent findings of fact even if it is possible on the facts to come to a contrary conclusion
We have however discussed the material at great length and practically reviewed the entire evidence on record as Shri Mehta submitted that the property is at present occupied by a larger number of mem bers of the petitioner Society who are carrying on small business and that they will all be 664 thrown out on the road as a result of the decision of the courts below
Even so for reasons discussed above we do not think we can come to a contrary conclusion on the mate rial on record
The High Court has gone one step further
It has indicated that even if one accepted the best case of the appellant Society that there was a shed on the land even at the time of the original allotment such plot cum shed cannot convert the land into premises  within the meaning of the Rent Control Act
This was the prima facie view of the court as it did not hear arguments from the parties on this point
Counsel canvassed this point before us also
Shri Mehta referring to Corporation of City of Victoria vs Bishop of Vancouver Island AIR 1921 PC 240 Karnania Properties Ltd vs Augustin 1957 SCR 20 State of Bombay vs Sardar VenkatRao Krishna Rao Gujar  and Ghanshiam Das vs Devi Prasad  Another contended that the definition of premises envisages a build ing and that as per these decisions anything that is built on land even if it is only a kacha shed would be a build ing and this brings the property in question within the purview of the Act
On the other hand Dr Ghosh sought by analogy of the principle of the decisions in Uttam Chand vs SM Lalwani AIR 1965 SC 716 SM Gopalkrishna Chetty vs Ganeshan  Ors and Morarji Goculdas Deoji Trust  Ors
vs Mahadev Vithan Kutwa  to contend that what the Rent Control Act contemplates is a building let out qua building may be with appurtenant land but not a land let out for use as land merely because there may be a small building on it
The relevant question he says is what was the dominant subject matter of the allot ment the land or the building and this is a question which can only be decided in the respondent s favour
We do not consider it necessary to embark on a discussion of this aspect as we are satisfied for the reasons already dis cussed that the property allotted to the Society in respect of which it was a tenant initially under the custodian and later under the plaintiffs was only a plot of land and that the plaintiffs were justified in attempting to recover possession thereof by a suit for possession in the civil court
It is further directed that the decree for eviction will not be executed till 2821990 provided the persons who are in occupation of the premises in question file an undertak ing containing the usual terms within four weeks from today
The appeal therefore fails and is dismissed but in the circumstances we make no order as to costs
PSS Appeal dismissed


Summary:
Under an import licence dated 3rd March 1971 issued by the Chief Controller of Imports and Exports the respondent imported two fishing trawlers with the financial assistance of the second respondent Canara Bank
The respondent con ducted negotiations with the appellant for a charter party agreement in respect of the said trawlers
On 21st March 1977 an agreement between the parties was executed 470 under which the appellant agreed to take on charter hire the said two trawlers for the purpose of deep sea fishing for a period of two years with an option to continue the hire for a further period of three years
Under the terms of the agreement the respondent was to deliver the said trawlers to the appellant at Vishakhapatnam within seven days of the receipt of approval from the Chief Controller of Imports and Exports or no objection certificate from the Canara Bank for making the said trawlers fully operational and to ascer tain the cost of such repairs
The appellant charterer was then to conduct fishing trials to ascertain actual condi tions and thereafter the charter hiring was to commence from the date the fishing trials were ended
On 18th August 1977 the Chief Controller of Imports and Exports granted permission to the respondent to charter the said trawlers to the appellant on the conditions that the charter rent would be Rs50000 per month per trawler and that the charter would be for a period of three years
On 30th September 1977 the respondent delivered the said two trawlers for repairs to the appellant
On 2nd February 1978 the parties modified the agree ment revising the rate of charter hire and the date of commencement of hire to the extent that the charter hire would commence from 15th January 1978 and the revised rate of hire would be Rs625000 per trawler per year
The appellant charterer raised objections alleging that the trawlers suffered from inherent and latent defects in the refrigeration system which was an essential part of such trawlers and as such the trawlers were not fully operational because even after carrying out extensive repairs the re frigeration system could not be brought to the required standard of minus 20 degree F but attained only minus 10 degree F
On 2991978 the appellant instituted a suit in the original side of the Calcutta High Court claiming i a decree for a sum of Rs3964341 towards cost charges damages and compensation incurred on the said trawlers and ii a declaration that the agreement was contrary to the terms of the permission granted by the Chief Controller of Imports and Exports and consequently illegal and against public policy and void iii that the Parties had entered into the agreement on the basic fundamental assumption that by effecting necessary repairs the trawlers would be made fully operational but the assumption was subsequently dis covered to be mistaken because of the deficiency in the refrigeration system and it rendered the agreement void
471 The respondent filed an application under Section 34 of the praying that the suit instituted by the appellant and all proceedings therein be stayed because the disputes were wholly covered by the arbitration clause as contained in the modified agreement dated 2nd February 1978 which was binding between the parties
The Single Judge held that there was no invalidity for non compliance of the conditions of the licence granted because necessary permission was obtained in respect of the agreement from the Chief Controller of Imports and Exports and the modifications of the agreement did not impair its validity though in a particular case if there was any doubt about facts the matter had to be decided by trial on evi dence but in the instant case having regard to the admitted facts and conduct of the parties it was not necessary to set down the matter for trial on evidence there was no illegal ity or mutual mistake that the alleged fundamental breach was wholly covered by the arbitration clause that the arbitration clause was valid and binding between the par ties and that all the conditions of Section 34 were satis fied
Accordingly the Single Judge granted stay of the suit and directed the parties to take immediate steps for initia tion of reference under the arbitration agreement
The judgment and order of the Single Judge was confirmed by the Division Bench by dismissing the appeal
In this appeal by special leave it was contended on behalf of the appellants that i the subject matter of the suit namely the question whether the agreement was void ab initio for mutual mistake was not arbitrable and the courts below erred in holding so ii assuming that the subject matter was arbitrable the court should not have exercised its jurisdiction on the application under Section 34 because it involved complicated questions of fact and in exercising such jurisdiction the courts acted without jurisdiction iii the court should have decided only after taking oral and documentary evidence and not merely on affidavits iv the agreement was void being violative of the conditions of the permission granted by the Chief Controller of Imports and Exports v the agreement itself having been void ab initio due to mutual mistake the arbitration clause per ished with it and the courts below erred in holding that the disputes were arbitrable
Dismissing the appeal the Court HELD 1
Section 34 deals with the staying of a suit where there 472 is an arbitration agreement concerning the subject matter of the suit and between the same parties
For the Court to have power to exercise the discretion conferred upon it by this section there must have been a valid agreement to submit to arbitration
Where the objection is that the arbitration is a nullity it amounts to an objection of want of jurisdic tion
The term arbitration agreement includes agreement to refer and submission to Arbitrator
A submission forming part of a void contract is itself void and cannot be enforced
484B C 11 Whether a particular dispute arising out of a par ticular contract is referable to arbitration or not must necessarily depend on the intention of the parties as em bodied in the arbitration clause
If the dispute is squarely covered by the arbitration clause the relevant provisions of the Act will be attracted
The question whether the dispute in the suit fails within the arbitration clause really pre supposes that there is such agreement and in volves consideration of two matters that is i what is the dispute in the suit and ii what dispute the arbitration clause covers
It is incumbent upon the court to decide whether there is a binding contract for arbitration between the parties
If it is found that the dispute in the suit is not covered by the arbitration clause the application for stay may be dismissed
488H 489A 2
Where in an application under Section 34 of the Act an issue is raised as to the validity or existence of the contract containing the arbitration clause the court has to decide first of all whether there is a binding arbitration agreement even though it may involve incidentally a deci sion as to the validity or existence of the parent contract
If the arbitration clause is so wide as to have included the very validity or otherwise of the contract on the grounds of fraud mis representations mutual mistake or any valid reason the arbitrator will surely have jurisdiction to decide even that dispute
The proper approach would be to examine the issue raised in the suit and to ascertain wheth er it squarely falls within the compass of the arbitration clause and take a decision before granting the stay of the suit
If an issue is raised as to the formation existence or validity of the contract containing the arbitration clause the court has to exercise discretion to decide or not to decide the issue of validity or otherwise of the arbitration agreement even though it may involve incidental ly a decision as to validity or existence of the challenged contract
Should the Court find the parent contract to be void ab initio or illegal or non existent it will be with out jurisdiction to grant stay
If the challenged contract is found to be valid and binding and the dispute raised in the suit covered by the arbitration clause stay of the suit may be justified
491F G 492A B D F 473 21 In the instant case considering the issues raised the arbitration clause and the surrounding circumstances and the part played by the parties pursuant to the charter party since execution to the modification and thereafter till objection raised by the appellant plaintiff
it must be held that the trial court did not err in proceeding to decide the issue of validity or legality of the parent contract
492F G 3
Where the validity existence or legality of the contract is challenged in suit on grounds de hors independ ent of or external to the terms or stipulations of the contract the court in an application under Section 34 of the Act shall have no jurisdiction to go into the question and that in a large majority of cases it would be applica ble in appropriate cases having regard to the nature of the dispute raised in the pleadings of the suit the compass and scope of the arbitration clause in the contract the surrounding facts and circumstances of the case having a bearing on the question of genuine grievance failing outside or inside the arbitration agreement and the objects and spirit of the  the Court may be justified in deciding the validity existence or legality of the chal lenged contract containing the arbitration agreement
488A C 31 In the instant case the arbitration clause formed part of the agreement
The arbitration agreement is not the same as the contract in the charter party
It cannot there fore be said that the validity or otherwise of the charter party was covered by the arbitration clause
489D E Jee Lae vs Lord Dalmeny  Heyman vs Darwins  Monro vs Bognor Urban District Council  Jawaharlal Burman vs Union of India  Waverly Jute Mills Co Ltd vs Raymon  Co India Pvt Ltd 3 SCR 209  Khardah Co Ltd vs Raymon  Co India Ltd   Renusagar Co vs General Electric Co   Anderson Wright Ltd vs Moran and Company 1955 1 SCR 862 Damodar Valley Corporation vs
KK Kar   Hirji Mulji vs Cheong Yue Steamship Co  applied
Banwari Lal vs Hindu College AIR 1949 East Punjab 165 Johurmull Parasram vs Louis Dreyfus Co Ltd 52 CWN 1947 48 137 AIR 1949 Cal 179 Pramada Prasad vs Sagar Mal Aggarwal AIR 1952 Patna 352 Narsingh Prasad vs Dhanraj Mills
ILR 21 Patna 544 AIR 1943 Patna 53 Birla Jute Manufacturing Co Ltd vs Dulichand
AIR 1953 Calcutta 450 WF Ducat  Co Pvt Ltd vs 474 Hiralal Pannalal AIR 1976 Calcutta 126 General Enter prises vs Jardine Handerson Ltd AIR 1978 Calcutta 407 Khusiram vs Hanutmal  approved
In the instant case facts were admitted
493B C All the relevant documents and affidavits were before the Court and were considered by it
Therefore no illegality was committed by the trial court in not setting down the matter for trial on evidence and deciding the validity and legality of the matter without taking oral evidence
49211 493B 41 Even if it appears that the discretion could have also been exercised to decide the issue of invalidity in a trial on evidence adduced this court would not substitute its view for that of the trial court unless the ends of justice required it to be done
This Court would not lightly interfere under Article 136 of the Constitution with the concurrent exercise of discretion of the courts below under Section 34 of the 
Before it can justly do so the appellant must satisfy the Court on the relevant facts referred to by the Courts below that they exercised their discretion in a manifestly unreasonable or perverse way which was likely to defeat the ends of justice
The appellant has failed to do so in the instant case
493C E F Ormarod vs Todmordon  Charles Osenton and Co vs Johnston  Gardner vs Jay  Printers Mysore Pvt Ltd vs Pothan Joseph   applied
Where the parties make mutual mistake misunderstand ing each other and are at cross purposes there is no real correspondence of offer and acceptance and the parties are not really consensus ad idem
There is thus no agreement at all and the contract is void
Section 20 is concerned with common mistake of fact and not mutual mistake
A common mistake is there where both parties are mistaken about the same vital fact although both parties are ad idem eg the subject matter of the contract has already perished
A con tract in such a case is void
Where each party is mistaken as to the other s intention though neither realises that the respective promises have been misunderstood there is mutual mistake
1493H 494A B 6
A mistake will not affect assent unless it is the mistake of both parties and is as to the existence of some quality which makes the thing 475 without the quality essentially different from the thing as it was believed to be
Neither party can rely upon his own mistake to say that it was a nullity from the beginning no matter that it was a mistake which to his mind was fundamen tal and no matter that the other party knew that he was under a mistake
A fortiori if the other party did not know of the mistake but shared it
The question is not what the parties had in their minds but what reasonable third par ties would infer from their words or conduct
The court has to ascertain the sense of the promises
496E 495G H 7
The application of the doctrine of mutual mistake depends upon the true construction of the contract made between the parties
A mutual misunderstanding will not nullify a contract but only if the terms of contract con strued in the light of the nature of the contract and of the circumstances believed to exist at the time it was done show that it was never intended to apply to the situation which in reality existed at that time will the contract be held void
Thus a mistake as to an essential and integral element in the subject matter of the contract will avoid the con tract
A mistake as to the quality of the article contracted for may not always avoid the contract
A distinction there fore should be drawn between a mistake as to the substance of the thing contracted for which will avoid the contract and mistake as to its quality which will be without effect
According to circumstances even a mistake as to the sub stance of the thing contracted for may not necessarily render a contract void
Thus there must be a difference so complete that if the contract were enforced in the actual circumstances which have unexpectedly emerged this would involve an obligation fundamentally different from that which the parties believed they were undertaking
496A H 8
From the series of steps taken for repairs and the stipulations in the charter party including the modifica tions thereof it is not possible to hold that it was a case of mutual mistake as to a quality which made the trawlers transferred essentially different from the trawlers that the parties in their minds agreed to transfer
Therefore there was no mutual mistake and the contract would not be avoided on this ground
498C D Cooper vs Phibbs   EarBeauchamp vs Winn  Hudders field Banking Co vs Henry Lister  Sons 1895 2 Ch 273 Bell vs Laver Brs
Ltd   Kannedy vs Panama Royal Mail Co  Smith vs Hughes 1871 LR 6 QB 597 Solle vs Butcher 476 Fraderick E Rose London Ltd vs William H Pim Junior  Co Ltd  Sheikh Brothers LId
vs Arnold  referred to
UP Government vs Nanhoo Mal AIR 1960 All 420 approved
It is settled law that where the subject matter of a reference is illegal no award can be of any binding effect
If the contract itself was illegal the controversy as to whether it was illegal or not would not be a dispute arising out of the contract as also would be the question whether the contract was void ab initio
When however it is found that a binding contract was made which was not illegal what follows from such a contract would be covered by the expres sion dispute arising out of contract
To stay a suit under Section 34 the Court has to see whether there was a valid agreement to have the dispute settled by arbitration and that the proceedings are in respect of a dispute so agreed to be referred
498E  H 499A 10
Public policy imposes certain limitations on the freedom of contract by forbidding the making of certain contracts
In such cases though all other requisites for formation of the contract are complied with parties to such forbidden contracts are not allowed to enforce any rights under them
In clear cases the law strikes at the agreement itself by making the contract illegal
However the effect and nature of illegality are by no means uniform and will depend upon the facts and circumstances of each case
Where a statute makes a contract illegal or where a certain type of contract is expressly prohibited there can be no doubt that such a contract will not be enforcible
499B D 11
A contract which was not illegal from the beginning may be rendered illegal later by the method of performance which did not comply with the statutory requirements
The appellant s burden was to show that the charter party was illegal to take it out of the arbitration clause for if the contract is illegal and not binding on the parties the arbitration clause would also be not binding
Once it is shown to have been illegal it would be unenforcible as ex turpi causa non oritur actio
499G H 12
One who knowingly enters into a contract with im proper object cannot enforce his rights thereunder
The appellant in the instant case was also a party to the agree ment of charter party in respect of the two imported trawl ers
Though it purported to be actual user s licence 477 there was no violation of this condition in view of the express permission granted by the Controller of Imports and Exports allowing the chartering of the two imported trawl ers
The modifications to the contract did not make any alteration so as to make the agreement contrary to the terms and conditions of the permission inasmuch as the permission was for a period of three years
The option to continue hire of the trawlers for a further period of three years did not ipso facto violate the permission
There was also no viola tion as to the duration of the charter party
499H 500C E Taylor vs Barnett  Anderson Wright Ltd vs Moran and Company 1955 1 SCR 862 In Re arbi tration between Mahmoud and Isphani  applied 13
The Courts below were right in holding that the matters were arbitrable apart from the question of illegali ty invalidity of the contract
The question of invalidity of the contract due to the alleged mutual mistake would be de hors and independent of the contract and as such would not be referable under the arbitration clause
In so far as the question of illegality of the charter party is concerned as the appellant has not established that the charter party was illegal or void as initio the question whether the modification as alleged had rendered the contract illegal would be covered by the arbitration clause
500F G 14
In the instant case the reliefs claimed in the suit other than the question of ab initio invalidity or illegali ty of the contract would be referable
However it will be within the jurisdiction of the arbitrator to decide the scope of his jurisdiction
The Court cannot make a contract between the parties and its power ends with the interpreta tion of the contract between them
The same principle also applies to the arbitration agreement unless the parties to the arbitration agreement authorises the court to make and modify the agreement
The arbitrator shall proceed in ac cordance with law to decide the questions including that of jurisdiction if raised
501C 1