Case: Dr. H.S. Rikhy &amp; Others Vs. New Delhi Municipal Committee

Act. It has not been contended before us that there is anything in the Act which in terms is inconsistent with the provisions of S. 47 of the Municipal Act. But it has been contended that such an inconsistency is implicit in the terms of the Act as they appear from the definitions of landlord, premises and tenant. In our opinion, there is no substance in this contention. We have already pointed out that those definitions postulate the relationship of landlord and tenant which can come into existence only by a transfer of interest in immovable property, in pursuance of a contract. These definitions are entirely silent as to the mode of creating the relationship of landlord and tenant. Therefore, the question is whether the complete silence as to the mode of creating the relationship between landlord and tenant can be construed as making a provision, by implication, inconsistent with the terms of S. 47 of the Municipal Act. In our opinion, the mere absence of such provisions does not create any inconsistency as would attract the application of S. 38 of the Act. It is noteworthy that the provisions of S. 38 of the Act were not relied upon either in the High Court or in the Court of first instance. In those Courts great reliance had been placed on the doctrine of part performance which has now been crystallised in S. 53A of the Transfer of Property Act (IV of 1882) and which in terms cannot apply. Rightly, therefore, no reliance was placed on behalf of the appellants on the provisions of S. 53A of the Transfer of Property Act.11. On the question of the validity of the transfer, it is necessary to consider the further argument raised on behalf of the appellants, namely, that the power of the Committee is contained in S. 18 and not in S. 47 of the Municipal Act, which only lays down the mode of executing contracts and transfer of property, as appears from the marginal note to the section, i.e., the words "Mode of Executing Contract and Transfer of Property". It is true that S. 18 contains the power to enter into a contract and to transfer any property held by the Committee, but S. 47 lays down the essential conditions of the exercise of the power and unless those conditions are fulfilled there could be no contract and no transfer of property. In this connection, it was further argued that sub-s. (3) of S. 47 only says that a contract or transfer of property contemplated in the section executed otherwise than in accordance with the provisions of the section shall not be binding on the Committee. Therefore, the argument further is that the contract may not be binding on the Committee but it is not void. Now, what is the legal significance of the expression "shall not be binding on the Committee"? It simply means that it shall not be enforceable against the Committee, and it is clear beyond doubt that an agreement not enforceable in law is void. It must, therefore, be held that the provisions of S. 47 aforesaid are essential ingredients of the power contained in S. 18 of the Act.12. The same argument was advanced in another form, viz., that the effect of S. 47 of the Municipal Act is not to render the transactions in question between the parties entirely void but it was only declared to be not binding on the Committee. In other words, the argument is that a distinction has to be made between acts which are ultra vires and those for the validity of which certain formalities are necessary and have not been gone through. This distinction assumes an importance where the rights of third parties have come into existence and those parties are not expected to know the true facts as to the fulfillment of those formalities. That it is so becomes clear from the following statement of the law in Halsburys Laws of England (3rd edition, Vol. 15) paragraph 428 at page 227 :"Distinction between ultra vires and irregular acts. A distinction must be made between acts which are ultra vires and those for the validity of which certain formalities are necessary. In the latter case, persons dealing without notice of any informality are entitled to presume omnia rite esse acta. Accordingly a company which, possessing the requisite powers, so conducts itself in issuing debentures as to represent to the public that they are legally transferable, cannot set up any irregularity in their issue against an equitable transferee for value who has no reason to suspect it."13. In this connection, it is also convenient here to notice the argument that the Committee is estopped by its conduct from challenging the enforceability of the contract. The answer to the argument is that where a statute makes a specific provision that a body corporate has to act in a particular manner, and in no other, that provision of law being mandatory and not directory, has to be strictly followed. The statement of the law in paragraph 427 of the same volume of Halsburys Laws of England to the following effect settles the controversy against the appellants :"Result must not be ultra vires-A party cannot by representation, any more than by other means, raise against himself an estoppel so as to create a state of things which he is legally disabled from creating. Thus, a corporate or statutory body cannot be estopped from denying that it has entered into a contract which it was ultra vires for it to make. No corporate body can be bound by estoppel to do something beyond its powers, or to refrain from doing what it is its duty to do........"14. In view of these considerations it must be held that there was no relationship of landlord and tenant between the parties and that, therefore, the applications under S. 8 of the Act made by the appellants had been rightly dismissed by the High Court as incompetent.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]Though the Act did not prescribe any form of letting the provisions of S. 47 of the Municipal Act applied, and as the provisions of that section are not in direct conflict with any of the provisions of the Act, there was no inconsistency between them. That being so, S. 38 of the Act was out of the way of the Committee. The Committee, being a corporation, has no capacity to contract or to transfer property except in accordance with the provisions of S. 47. Admittedly the provisions of S. 47 have not been complied with. Therefore, the Committee is not bound to recognise the transactions in question as creating an interest in immovable property; there being no interest in immovable property in favour of the appellants, they cannot be called tenants within the meaning of the Act, and as only a tenant can invoke the provisions of S. 8, the applications must be held to be incompetent. There could be no question of estoppel because both parties knew that under the law there had to be a transfer of property by the Committee in accordance with the provisions of S. 47 of the Municipal Act. It is well settled law that there cannot be an estoppel against the provisions of aAct does not stop to consider whether there is a lease, and if so, what are the terms contained in the lease regulating the relationship of landlord and tenant; and that if there is any inconsistency between the provisions of the Act and any other law for the time being in force, the former shall prevail, as laid down in S. 38 of thethis contention is correct, then there cannot be the least doubt that a licensee would also come within the ambit of the Act. But we are not prepared to hold that the Act, by its terms intended to be so comprehensive as to include within its sweep not only tenants properly so called, but also licensees. It is true that the dictionary meaning applies the terms letting to inducting a tenant and delivering possession to him as such, of the premises for a consideration which can be characterised as rent or a licensee who has been permitted to occupy the premises for a consideration which may be called hire. If the argument is correct, then a person hiring a room in a hotel as a licensee would also come within the purview of the Act.But the Act, in terms, has excluded a room in a hotel or a lodging house from the definition ofuse of the word rent is not conclusive of the matter. It may be used in the legal sense of recompense paid by the tenant to the landlord for the exclusive possession of premises occupied by him. It may also be used in the generic sense; without importing the legal significance aforesaid, of compensation for use and occuption. Rent in the legal sense can only be reserved on a demise of immovablethe use of the term rent cannot preclude the landlord from pleading, that there was no relationship of landlord and tenant.tenant.7. In our opinion, the Act applies only to that species of letting by which the relationship of landlord and tenant is created that is to say, by which an interest in the property, however limited in duration is created.But it has to be noted that it was not contended on behalf of the appellants that the provisions of S. 47(3) of the Municipal Act are not mandatory and are merely directory. Such an argument was not and could not have been advanced because it is settled law that the provisions of a Statute in those peremptory terms could not but be construed asis thus clear that neither of those cases, strongly relied upon by the counsel for the appellant, is an authority for the proposition that where the statute makes it obligatory that there should be a contract under seal, the absence of such a contract could be cured by mere receipt ofis note-worthy that neither of the two cases discussed above was even referred to at the bar or by their Lordships in the course of their judgment, though many cases appear to have been cited at the bar. That was apparently for the reason that these earlier cases, rather ancient, did not turn upon the construction of any statute like the one we are nowhas not been contended before us that there is anything in the Act which in terms is inconsistent with the provisions of S. 47 of the Municipal Act.In our opinion, there is no substance in this contention. We have already pointed out that those definitions postulate the relationship of landlord and tenant which can come into existence only by a transfer of interest in immovable property, in pursuance of a contract. These definitions are entirely silent as to the mode of creating the relationship of landlord and tenant. Therefore, the question is whether the complete silence as to the mode of creating the relationship between landlord and tenant can be construed as making a provision, by implication, inconsistent with the terms of S. 47 of the Municipal Act. In our opinion, the mere absence of such provisions does not create any inconsistency as would attract the application of S. 38 of the Act. It is noteworthy that the provisions of S. 38 of the Act were not relied upon either in the High Court or in the Court of first instance.It is true that S. 18 contains the power to enter into a contract and to transfer any property held by the Committee, but S. 47 lays down the essential conditions of the exercise of the power and unless those conditions are fulfilled there could be no contract and no transfer of property.simply means that it shall not be enforceable against the Committee, and it is clear beyond doubt that an agreement not enforceable in law is void. It must, therefore, be held that the provisions of S. 47 aforesaid are essential ingredients of the power contained in S. 18 of the Act.In this connection, it is also convenient here to notice the argument that the Committee is estopped by its conduct from challenging the enforceability of the contract. The answer to the argument is that where a statute makes a specific provision that a body corporate has to act in a particular manner, and in no other, that provision of law being mandatory and not directory, has to be strictly followed.In view of these considerations it must be held that there was no relationship of landlord and tenant between the parties and that, therefore, the applications under S. 8 of the Act made by the appellants had been rightly dismissed by the High Court as incompetent.