ivil Appeal Nos
1594 1595 0f 1986
From the Judgment and Order dated 2381985 of the Delhi High Court in SAO No 185 and I84 of 1983
Avadh Behari Rohtagi MS Maan and BS Maan for the Appellant
Harish N Salve SK Mehta Vijay Makhija R Jaganath Goulay SA Sarin and Aman Vachhar for the Respondents
The Judgment of the Court was delivered by NATARAJAN J
Both the appeals by special leave have been filed by the same appellant and are directed against a common judgment delivered by the High Court of Delhi in two connected second appeals dismissing the Execution Applications filed by the appellant against the respondents in the two appeals under Section 21 of the Delhi Rent Control Act for sho rt the Act  hereinafter
The Execution Applications were dismissed by the Rent Controller but on appeal by the appellant herein they were allowed and the tenantrespondent in each of the applications was directed to surrender possession in a month s time
The High Court however reversed the order of the Rent Control Tribunal in the Second Appeals preferred by the respondents a dismissed the Execution Applications
The aggrieved appellant has preferred these appeals
It was the appellant s case that she had obtained the sanction of the Additional Rent Controller New Delhi on 2627276 and there after leased out specified portions in her property bearing No N 57 Panchseel Park New Delhi to the respondents under separate leases of a limited period of two years commencing from 1376
According to here the rear portion in the ground floor consisting of a drawing cum dining hall a bed room a bath room and other facilities were leased out to the tenant Maj
RC Chhiba respondent in CA No 1594 of 1986and the first and second floors comprising of four bed rooms with attached bath rooms and other facilities were leased out to the tenant Tewari respondent in CA 1595 of 1986 and each of the tenants was to pay a sum of Rs50 per month for the respective portion PG NO 245 leased out to them
On the ground the two respondents failed to vacate the portions leased out to them at the end of the two years period the appellant filed Execution Applications under Section 21 of the Act to seek an order from the Rent Controller for delivery of possession of the leased portions The common defence put forth by the two respondents was that there was a single tenancy and not two tenancies and they were jointly inducted into possession of the entire leased portion even in the month of December 1975 under an oral lease and as such their tenancy was not referable to the sanction given by the Rent Controller on 2627276
To substantiate their contentions the respondents placed reliance on the payment of a sum of Rs1700 by them on 10121975 as security deposit and the payment of a sum of Rs5100 by means of cheque on 29121975 towards advance payment of rent for three months
They alleged that inspite of their having been inducted into possession in December 1975 itself the respondent mislead them by saying that the oral tenancy required formal sanction by the Rent Controller and hence they should appear before the Rent Controller and have their statements recorded by him
It ws only after giving their statements before the Rent Controller they suspected the motives of the appellant and hence they refused to execute lease deeds in the month of March 1976 as desired by the appellant
The Rent Controller
After a detailed consideration of the evidence adduced by the parties accepted the case of the respondents and held that an oral tenancy had been created in favour of the respondents even in the month of December 1975 and as such their tenancy rights were not governed by the sanction given by the Rent Controller under Section 21 of the Act and further more the sanction of the Rent Controller was vitiated by fraud in that it was obtained by suppressing the true facts from the notice of the Rent Controller
It was further held that the order of sanction of the Rent Controller suffered from an infirmity due to the appellant failing to glove the reasons for her wanting to let out the property for a limited period
We need not however concern ourselves about that aspect of the matter
The Rent Control Tribunal in the appeals preferred to it however differed from the Rent Controller and held that even if he respondents had been inducted into possession in December 1975 under an oral tenancy they must be deemed to have impliedly surrendered their earlier tenancy and consented to acquire fresh tenancy under the sanction granted by the Rent Controller on 2627276
On the PG NO 246 question whether the sanction of the Rent Controller was vitiated by fraud the Appellate Tribunal held that the respondents ought to have brought to the notice of the Rent Controller without delay the fraud practised by the appellant and since they had failed to act promptly they were not entitled to seek nullification of the sanction of the Rent Controller on the ground of fraud
In accordance with its conclusions the Tribunal allowed the appeals preferred by the appellant and held that the Execution Applications were maintainable and directed the respondents to deliver possession to the appellant of the leased portions in a month s time
It was then the turn of the respondents file second appeals to the High Court against the order of the Rent Control Tribunal
The High Court allowed the appeals holding that since the respondents were already given tenancy rights they would not be governed by the sanction given by the Rent Controller on 2627276 and furthermore the sanction order itself was unenforceable as it was vitiated by fraud
The High Court also held that no question of implied surrender of the earlier tenancy would arise when the Rent Controller gave sanction for limited tenancy rights being given to the respondents in as much as the purported new lease was void in law and incapable of affording scope for any surrender of a pre existing lease
Consequently the High Court allowed the second appeals and restored the order of the Rent Controller dismissing the Execution Applications
Mr Rohtagi learned counsel for the appellant formulated his propositions as under to contend that the High Court had erred in allowing the appeals and dismissing the Execution Applications 1
The sanction given by the Rent Controller on 2627276 to the appellant permitting her to grant limited tenancy rights to the respondents was fully in accordance with Section 21 of the Act and it did not suffer from any defect or infirmity
2 The order of sanction was not vitiated by fraud as the respondents were fully in the know of things and were aware of the nature and purpose of the application made before the Rent Controller and had willingly appeared before the Rent Controller and solemnly declared before him that they were willing to take the premises on lease for a limited period of two years commencing from 131976
3 In any event the respondents are dis entitled under law to set up a plea of fraud to seek nullification of the PG NO 247 sanction granted by the Rent Controller because the respondents had not only failed to bring forthwith to the notice of the Rent Controller the fraud committed by the appellant but on the other hand they had availed of the benefit of the permission given by the Rent Controller for the full period of two years and thereby they had lost their power of avoidance of the transaction
4 Even if the order of sanction was vitiated by fraud the tenancy created thereunder was only a voidable transaction and not a void one and as such by reason of the respondents having failed to avoid the contract and instead having availed the benefit of it for the full period of two years they were not entitled to refute the validity or the binding nature of the sanction granted by the Rent Controller for creation of limited tenancy rights in their favour
5 Even if it were to be held that the respondents had already been inducted into possession of the leased premises on an oral tenancy in the month of December 1975 itself they must be deemed to have impliedly surrendered their tenancy rights under the oral lease when they agreed to accept the limited tenancy rights given to them in pursuance of the sanction of the Rent Controller
Before we examine the contentions of Mr Rohtagi we may appositely advert to certain facts emerging from the evidence and the inferences resulting therefrom
The relevant factors requiring mention are as follows
The two respondents are not stranger but are brothers and they have been inducted into possession on one and the same day ie on 10th December 1975
Though the appellant would say that different portions of the house were leased out to them under separate tenancies the fact remains that a sum of Rs1700 had been paid by them towards security deposit on 10121975
The appellant has no doubt acknowledged the payment under two receipts but both the receipts have been typed on the same paper
The receipts would read as if a sum of Rs850 had been received separately from each one of them but the recital is of no consequence because the respondents have paid the appellant a sum of Rs5100 by means of a single cheque towards advance rent for a period of three months at the rate of Rs170 per month
The appellant has tried to explain away the payment by saying that the payment represented a sum of PG NO 248 Rs2550 given by each of the respondents for meeting the expenses of white washing colour washing and for effecting repairs to the premises
It has how ever been found that no such works were carried out
There is the further fact that while the ground floor portion leased out consisted of only a drawing cum dining hall one bed room and one bathroom the first and second floors consisted of four bed rooms together with bathrooms etc
It is inconceivable that irrespective of the difference in the size and nature of the two portions the respondents would have consented to pay the same rate of rent to the appellant for the portions alleged to have been leased out to them
It is also worthy of note that the tenancies said to have been granted to the two respondents are for the same period ie from 1376 to 28278
If all these factors are taken note of the only conclusion that can be reached is that only a single tenancy in favour of both the respondents should have been created for the entire portion leased out and not two tenancies viz one for the ground floor and the other for the first and second floors and that the story of two tenancies put forward by the appellant is a make believe affair It is in this background the appellant s contentions have to be examined
It is true that the appellant as well as the respondents appeared before the Rent Controller on 2627276 and gave statements to the effect that the appellant did not require the use of the leased premises for a period of two years commencing from 1376 and that the respondents were willing to take the respective portions marked in the plan exhibit A I produced by the appellant for a limited period but even so the question would arise whether the order passed by the Rent Controller can be deemed a valid and legal sanction given under Section 21
The answer has to be clearly in the negative because the appellant had already let out the premises to the respondents and as such there was no question of the appellant not being in need of the leased portion for a period of two years from 1376
It has been held in Inder Mohan Lal vs Ramesh Khanna l l987 IV SCC 1 at page 9 that in order to attract Section 21 four conditions must be fulfilled
The relevant portion reads as follows Therefore the first condition must be that the landlord must not require the premises either in whole or part of any premises for a particular period
Secondly the landlord must obtain the permission of the Controller in the prescribed manner
Thirdly letting of the whole or part of the premises must be for residence
Fourthly such letting out must be for such period as may be agreed in writing
 PG NO 249 Applying the above tests it may be seen that in this case the very first condition has not been fulfilled
When the appellant had already parted with her possession of the leased portions by inducting the respondents into possession in December 1975 itself the statement of the appellant before the Rent Controller on 2627276 made as if she was in possession of the house and she would not be needing the house for her occupation for a period of two years from 13 976 was a meaningless statement besides being a subversive statement as well
As pointed out in SB Noronah vs Prem Kumari 1980 l SCR 281 Section 2 I has been provided in the Act to offer a pragmatic compromise formula to satisfy the ever increasing demand of rental accommodation by non owners of houses on the one hand and the reluctance of the owners of houses due to genuine apprehension entertained by them on the other in letting out their houses in whole or in part even when they were not in need of the house or portion of it lest the tenants should set up statutory tenancy rights and refuse to vacate the premises at the end of the lease period
What the Section envisages is the creation of tenancy rights after getting the sanction of the Rent Controller
Such being the case the landlord should make known to the Rent Controller if there is already a tenant in occupation of the premises the factum of his possession and the terms of the tenancy and satisfy the Rent Controller that notwithstanding a tenant being in occupation of the premises under an earlier tenancy he should be granted sanction under section I to confer limited tenancy rights in favour of the existing tenant himself or in favour of I new tenant
Section  I was not intended to obtain post facto sanction of a tenancy that had already been created by suppressing relevant information from the Rent Controller so as to enable the landlord to straightaway recover possession of the leased property by filling an application under Section 2l of the Act after the expiry of the period for which permission to lease had been granted by the Rent Controller
Such being the case when the appellant had already put the respondents in possession of the property in December 1975 she could not have bona fide made a statement before the Rent Controller that she would not be requiring the premises for her own occupation from l31976 onwards for a period of two years
he fact that the respondents also appeared before the Rent Controller and gave statements in tune with the statement made by the appellant cannot improve the situation in any manner because a statement made in contravention of facts
whether made by one or both the contracting parties cannot alter the truth of the situation or cure the lacuna of withholding of relevant information from the Rent PG NO 250 Controller
We cannot therefore accept the contention of the appellant s counsel that the order passed by the Rent Controller on 2627276 granting sanction to the appellant to confer limited tenancy rights on the respondents did not suffer from any defect or infirmity
As regards the next contention of Mr Rohtagi that the appellant had not committed any fraud when she sought for and obtained sanction from the Rent Controller to grant limited tenancy rights to the respondents and that in any event the respondents were fully in the know of things and were therefore estopped from raising a plea of fraud to resist the Execution Applications the argument is based on a misconception of the real perspective from which the matter Should be viewed
What is of relevance is not whether the appellant had committed any fraud upon the respondents but whether the appellant had fraudulently suppressed relevant materials from the notice of the Rent Controller and had thereby obtained an order of sanction from the Rent Controller to lease out the property for a period of two years from 131976
There is no denying the fact that the appellant had failed to disclose to the Rent Controller that she had already inducted the respondents into possession and inspite of it she was seeking permission under Section 21 in order to restrict the tenancy rights of the respondents to a period of two years with effect from 131976
Had she disclosed the real state of affairs it is doubtful whether the Rent Controller would have given his approval to the appellant to restrict the tenancy rights of the respondents who were already in possession to a period of two years in substitution of the rights available to them as statutory tenants under the Act
We do not however rule out the possibility of a Rent Controller granting sanction under Section 21 to a landlord to let out his premises in whole or in part for a limited period to a tenant even if the tenant had already been inducted into possession but such sanction has to be obtained after a full an i frank disclosure of all factors including the circumstances under which the tenant had been put in possession even before the Rent Controller s sanction was obtained and before an agreement in writing was entered into between the parties in terms of the sanction
It could be that the tenant may have been in urgent need of the premises and could not afford to wait to take possession of the house till the legal and procedural formalities were gone through on account of some exigency such as immediate requirement of the house to celebrate a wedding or for a family member to undergo treatment or for the confinement of a daughter or daughter in law etc
but in all such cases the parties must place all the materials before the Rent Controller while PG NO 251 seeking his sanction under Section 21
The fact that the respondents had also appeared before the Rent Controller and agreed to take the property on lease for a limited period of two years without demur cannot obliterate or nullify the fraud committed on the statute
This position has been succinctly pointed out in SB Noronah vs Prema Kumari supra at page 287 in the following words The fact that a landlord and a potential tenant together apply setting out the formal ingredients of Section 21 does not relieve the Controller from being vigilant to inquire and satisfy himself about the requisites of the landlord s non requirement for a particular period and the letting itself being as a residence Therefore besides what the parties say the Rent Controller has to apply his mind before granting sanction under Section 21 because the order passed by him has legal consequences and will govern the rights of the parties to the tenancy that is to follow in terms of the sanction
This is the proper perspective from which the matter should be viewed
Forgetting this position Mr Rohtagi based his arguments on the footing that what has been held against the appellant was her perpetration of a fraud on the respondents and the respondents being the sufferers thereby
It was proceeding on those lines Mr Rohtagi argued that the respondents were not illiterate but highly educated persons that they were fully aware of the nature of the transaction and that they had willingly consented to the creation of limited tenancy rights in their favour and it was only after deriving full benefit under the tenancy rights given to them for two years they were brazenly setting forth a plea of fraud and refusing to deliver possession of the leased premises
The argument does not merit consideration because we have already pointed out that the relevant factor for consideration is not whether the respondent were victims of a fraud but whether the appellant by herself or in collusion with the respondents had fraudulently suppressed the truth from the Rent Controller and induced him to give his sanction under Section 21 so as to restrict the tenancy rights already conferred upon the respondents to a period of two years and to enable the appellant to initiate execution proceedings straightaway against the respondents at the expiry of the lease period and have them evicted through process of court from the leased premises
What is now left is the further contention of the appellant s counsel regarding the failure of the respondents to have speedily brought to the notice of the Rent Controller the fraud committed by the appellant and to have PG NO 252 sought for an annulment of the permission granted under Section 21
The appellant s counsel placed reliance on the observations of this Court in three cases viz
JR Vohra vs Indian export House Pvt Ltd 1985 I SCC 712 at 723 Inder Mohan Lal scase supra para 28 page 17 and Joginder Kumar Butani vs RP Oberai  1987 IV SCC 20 at 29 which are all to the effect that the delay on the part of the tenant to impugn the permission granted under Section 21 by the Rent Controller on the ground of fraud is a relevant factor to be taken into consideration by the Court while determining the question whether a tenant should not be summarily evicted under Section 21
The observations in those cases cannot be of any assistance to the appellant for in none of those cases was it found that the sanction granted by the Rent Controller under Section 21 was vitiated by fraud and was therefore a nullity
None of the decisions lay down that where a sanction granted by the Rent Controller under Section 21 is rendered void by reason of a fraud practised upon the statute the delay on the part of the tenant in seeking annulment of the order of sanction will cure the order of its voidness
Turning now to the last of the contentions of the appellant s counsel viz that by reason of the respondents having agreed to take limited tenancy rights under the order of the Rent Controller for a period of two years commencing from 131976 they must be deemed to have impliedly surrendered their earlier tenancy rights as envisaged under Clause f of Section 111 of the Transfer of Property Act it has no merit in it because the High Court has rightly pointed out after referring to Does d Earl of Egrement vs Courtenay and some decisions of the High Courts that when a new lease does not pass are interest according to the contract the acceptance of it will not operate as a surrender of the former lease that in the case of a surrender implied by law from the acceptance of a new leasethe condition ought also to be understood as implied by law making void the surrender in case the new lease should be made void
 For all the aforesaid reasonsthe appeals have to fail and will accordingly stand dismissed but there will to no order as to costs
NVK Appeals dismissed


Summary:
A who was a tenant of N sub let the premises to B and C N filed a suit for ejectment against A B and C in the Court of Small Causes Bombay on the ground of illegal sub letting
The suit was decreed
Thereafter A B and C filed the present suit in the Bombay City Civil Court for a declaration that A was a tenant of N and was protected from eviction by the provisions of the Bombay Rents Hotel and Lodging House Rates Control Act 1947 and that B and C were lawful sub tenants of A and were as such entitled to possession use and occupation of the premises
The City Civil Court held that it had jurisdiction to entertain the suit but dismissed it on the ground that there was no lawful subletting
On appeal the Bombay High Court held that the City Civil Court had no jurisdiction to entertain the suit and dismissed the appeal without going into the merits  Held that the High Court was right in holding that section 28 of the Act barred the City Civil Court from entertaining the suit
Section 28 explicitly confers on courts specified therein jurisdiction to entertain a suit between a landlord and a tenant in respect of a claim which arose out of the Act or any of its provisions 368 and expressly prohibits any other court exercising jurisdiction with respect thereto
In the present suit the claim being one which arose out of the Act and the City Civil Court not being a court specified in section 28 it could not entertain the suit
Though section 29A of the Act allows questions of title to be regarded in a civil court it applies only to titles which do not arise out of the Act or any of its provisions and titles which could riot be established outside the Act but which arose under the provisions of the Act by virtue of a claim made thereunder must be determined by a court specified in section 28