Case: Krishna Khanna Vs. Additional District Magistrate, Kanpur And Ors

1. There is building bearing No. 24/ 6. Tulsa Kothi, situated at the Mall in the City of Kanpur. The appellant in this appeal filed by certificate of the Allahabad High Court is the owner of the said building. He lives in the upper floor of the building with his son and other members of the family. There are two shops in the ground floor in which tenants had been inducted. One of the shops has come in possession of Raghunath Prasad Mehrotra, respondent No. 3 and his brother Kanahyalal Mehrotra who have been carrying on the business of Druggists and Chemists in the said shop as partners of the firm Pioneer Drug Stores. The other shop was in the tenancy of Bata Shoe Company Ltd. Since the said Company had taken another shop on rent sometime in the year 1961 it was about to vacate the shop in the building of the appellant. He, therefore, filed an application on 7-11-1961 before the Rent Control and Eviction Officer (for brevity, Rent Controller) with a copy to the District Magistrate, Kanpur under Rule 6 of the Control of Rent and Eviction Rules, 1949 framed under Section17 of the U.P. (Temporary) Control of Rent and Eviction Act, 1947 -hereinafter called respectively the Rules and the Act praying for the release of the shop in his favour on the ground that he required the accommodation for his own use for establishing a business for his son. On 2-5-1962, respondent No. 3 made an application under Section 7(2) of the Act for allotment of the accommodation to him. There were four more applicants under Section 7(2). The shop was actually vacated by Bata Shoe Company on 15-8-1962. On 16-8-l962 intimation was given by the appellant to the Rent Controller about the vacancy of the shop in accordance with Section 7(1). It may be stated here that the Additional District Magistrate, respondent No. I as also the Rent Controller, respondent No. 2 had been authorised by the District Magistrate of Kanpur to exercise powers under the Act. On 18-8-1962 the Rent Controller heard the matters and fixed 27-8-l962 for orders. Due to some reasons he felt difficulty in deciding the matter of the release of shop in favour of the appellant or its allotment to any of the five applicants including respondent No. 3. In due course, the District Magistrate transferred the proceedings to the Additional District Magistrate, respondent No. 1. After hearing all the parties concerned he made an order on 17-9-1962 refusing to release the shop to the appellant and directed its allotment to respondent No. 3. Thereupon a formal order of allotment allotting the shop accommodation to respondent No. 3 was issued by the Rent Controller, respondent No. 2 on 18-9-19622. It appears that the appellant had in the meantime occupied the shop when it was vacated by Bata Shoe Company. Respondent No. 3, therefore, filed an application under Section 7 A of the Act on 2-11-1962, which was allowed by the Rent Controller on 15-11-1962. The order was ex parte in absence of the appellant as he is said to have not responded to the notice issued and alleged to have been served on him under Section 7-A(1) of the Act. The shop was got vacated and actual possession delivered to respondent No. 3 with the help of the Police force on 16-11-l962 in accordance with Section 7-A(3) of the Act3. Before the filing of the application by the third respondent on 2-11-1962 under Section 7-A of the Act, the appellant had filed on 22-9-1962 Suit No. 132/1962 in the Court of First Civil Judge at Kanpur challenging the allotment order of the Additional District Magistrate and the Rent Controller impleading the third respondent as the sole defendant in the suit. A decree for interim injunction was granted. The suit ended in compromise on 11-10-1962. The terms of the compromise will have to be considered at the appropriate place in this judgment. It may also be noted here that Kanahyalal Mehrotra, brother of the third respondent, filed another suit to challenge the compromise decree dated 11-10-1962 claiming that the order of allotment had been made in favour of the partnership firm and the third respondent had no right to nullify the said order by the compromise. The suit was decreed and we were informed at the Bar that an appeal from the decision of the trial Court is pending4. The appellant filed an application for review on 17-11-1962 before the Rent Controller asking him to review his ex parte order dated 15-1 1-1962 made under Section 7-A of the Act chiefly on two grounds viz. ( 1 ) that no notice was served upon the appellant; (2) that the third respondent had obtained the order fraudulently by suppressing the fact of compromise entered in Suit No. 132 / 1962. The Rent Controller refused to review his order and dismissed the application on 8-1-1963. The appellant on the same date i.e. on 8-1-1963 filed a petition in the Allahabad High Court under Art. 226 of the Constitution to challenge the various orders of allotment and delivery of possession made by respondents 1 and 2 from time to time. The writ petition was dismissed by a learned single Judge on 7-5-1963. Special Appeal No. 254/ 1963 was dismissed by a Bench of the Allahabad High Court on 3-2-1964. The present appeal was preferred in this Court on grant of certificate by the High Court.

Reasoning:
7. The High Court in appeal has expressed the view that the requirement of passing the order of allotment within the period of 30 days is directory or in any view of the matter on the facts of this case it could not be made before disposing of the appellants application for release of the accommodation under Rule 6. In the opinion of the High Court the compromise was a fraud on the officers empowered to act under the Statute and was of no avail to the appellant. The order of allotment was in fact made by the Additional District Magistrate and the formality of issuing the order could be done either by him or by the Rent Controller, as it was an administrative order.9. Recently in the case of Jiwan Singh v. Rajindra Prasad, Civil Appeal No. 999 (N) of 1971 judgment of which was delivered by Mathew, J., on behalf of this very Bench on 1812-1974 (reported in AIR 1975 SC 412), it was pointed out that if the landlord failed to discharge his obligation of giving 7 days notice in accordance with Section 7(1)(a), he lost his right of making a nomination under Rule 4. It is to be noticed that on the failure of the District Magistrate to make an allotment order within the period provided in Rule 3 the landlord gets a right to nominate a tenant. The District Magistrate under Rule 4 has got to allot the accommodation to the nominee of the landlord unless for reasons to be recorded he allots it to somebody else. Under certain circumstances therefore the District Magistrate is empowered to make an order of allotment even after the expiry of the period of 30 days by ignoring the nomination made by the landlord. In such a situation and in the context of the Rules it is difficult to hold that the period fixed for the making of an allotment order in Rule 3 is mandatory in the sense of resulting in the nullification of the order of the District Magistrate if made after the expiry of the period. Without resorting to the well-known expressions of the requirement of the law being mandatory or directory we would rest our view on the plain reading of the language of the Rules. The District Magistrate as we have said above, has got to make the order of allotment within 30 days of the receipt of the intimation sent by the landlord under Section 7(1)(a) of the Act. He has, at the same time, to give notice of his order of allotment to the landlord. If the landlord receives no notice from the District Magistrate within 30 days, which as a matter of construction under Rule 4 must mean shortly after the expiry of 30 days of the receipt by the District Magistrate of the intimation given by the landlord under Section 7(1)(a), of an order of allotment having been made within that period, he gets a right to nominate a tenant. Ordinarily and generally the District Magistrate shall have to allot the accommodation to the nominee of the landlord but for special reasons to be recorded in writing he may depart from the nomination made by the landlord and allot the accommodation to some other person, even to a person who was an applicant before him before the expiry of the period of 30 days and due to one reason or the other no order of allotment could be made in his favour within the said period. If, however, the landlord does not make a nomination, in accordance with Rule 4 he cannot challenge the order of allotment subsequently made by the District Magistrate on the expiry of the period of 30 days only on the ground of its having been made beyond the time10. It is no doubt true that the liability for rent of the allottee begins only from the date of allotment under Rule 5 and the landlord suffers if there is delay in the making of the allotment by the District Magistrate. The landlord may move the legal machinery for forcing the District Magistrate to make the allotment. It may well be that in some cases the order of allotment made after undue delay will be found to be bad. In the instant case it is not correct to say that the order of allotment made on the 17 th Sept. 1962 two days after the expiry of the period of 30 days was invalid on that account alone. The High Court is also right in its view that no order of allotment was possible to be made in this case before disposal of the landlords claim under Rule 6. There is no time-limit fixed for disposal of such a claim. Of course it should be disposed of as quickly as possible, preferably within the period of 30 days mentioned in R. 3. That being so even in the light of Rule 6 it is difficult to nullify an order of allotment made by the District Magistrate merely on the ground of having been made on the expiry of the period of 30 days. On the facts of this case surely the order of allotment was not invalid11. The appellant filed Civil Suit No. 132/ 1962 against the third respondent to challenge the order of allotment made in his favour by respondents Nos. 1 and 2. Neither of the said two respondents was impleaded as a defendant in the suit. But that apart, the agreement entered into between the appellant and respondent No. 3 embodied in the compromise petitioner dated 11-10-1962 was void under Section 23 of the Contract Act as it was unlawful and against the Public Policy of the Act and the Rules.By clause (a) the parties agreed to the statement of the law which in our judgment was not sound and correct. It will be hazardous to permit a landlord and a tenant to agree to such a position of law. It was not open to respondent No. 3 to permit the appellant to utilize the accommodation for his own business or business of his son as was done under Cl. (b).Nor was it open to the appellant to agree to let out the shop, if in future he let it out to anybody, after giving first preference to the third respondent as was agreed to be done under clause (c).So long the Act and the Rules continued in force the control of letting vested in the -District Magistrate and not in the parties. By an agreement of the kind embodied in the compromise petition the parties could not curtail the powers of the District Magistrate. It was unlawful and against the public policy of the law to do so. The Public Policy behind the Act and the Rules is to vest the control of letting in the District Magistrate for the benefit of the general public or to be more precise such members thereof who were in need of accommodation on rent. In our opinion, therefore, respondent No. 3 committed no fraud in ignoring the void compromise when he applied for eviction of the appellant under Section 7-A of the Act and or delivery of actual, physical possession to him. We do not accept the alternative argument put forward by Mr. Bishan Narain as correct in respect of the compromise. It was not bad for the reason of having been entered into by respondent No. 3 alone. After perusing the application for allotment made by respondent No. 3 the order of allotment made by respondent No. 1 and the order made by respondent No. 2 under Section 7-A (3) of the Act, we have come to the conclusion that the allottee of the accommodation in question was respondent No. 3 although he may have taken it for the purpose of extending his business of Chemists and Drugists run in partnership with his brother12. The third submission made on behalf of the appellant has no force and must also be rejected. The order of allotment in this case was made by the Additional District Magistrate, respondent No, 1. It may not be quite correct to say that it was purely an administrative order as has been the view of the High Court in the Special Appeal.But the order was made by him in a quasi-judicial manner after hearing the parties concerned and after fully applying his mind. He being a delegate of the District Magistrate, was competent to make the order of allotment. So was the Rent Controller. But the latter merely issued the formal order made by the former. It was not a case where the authority competent to make the order mechanically did it on the direction or in pursuance of an order of a different authority not competent to pass the order. In our judgment, therefore, the order of allotment allotting the accommodation to respondent No. 3 was not bad. Nor had the order made by the Rent Controller under Section 7-A of the Act any infirmity.Rule 3 provides that the District Magistrate shall make an allotment order within thirty days of the receipt of the intimation sent by the landlord under Section 7(1)(a) and shall give notice thereof to the landlord. This Rule obviously contemplates that the District Magistrate must make an order requiring the landlord to let the accommodation to a specified person within thirty days of the receipt of the intimation of vacancy from the landlord. But does it also carry with it by necessary implication a negative prohibition that if the District Magistrate does not make such an order within the stipulated time, he shall be precluded from making such order thereafter. We do not think so. The only consequence of the District Magistrate not making an order of allotment within the period of thirty days is that set out in Rule 4. It confers a right on the landlord to nominate a tenant and where the landlord makes such a nomination, the District Magistrate is bound to allot the accommodation to such nominee unless for reasons to be recorded in writing he fortwith allots the accommodation to other persons. It is significant to note that Rule 4 does not provide that if the District Magistrate fails to make an order of allotment within the period of thirty days, the landlord may occupy the accommodation himself. The only right which ensures to the landlord in such a case is to nominate a tenant. This he may do or may not do depending on his volition. But he does not get a right to occupy the accommodation for himself. Moreover, even where the landlord nominates a tenant, the District Magistrate may, for reasons to be recorded in writing, disregard such nomination and allot the accommodation to another person notwithstanding the expiration of the period of thirty days. It would, therefore, be seen that the time limit of thirty days is not intended to operate as a fetter on the right of the District Magistrate to make an order of allotment in the sense that he cannot thereafter make such an order. The only reason why the period of thirty days is provided is that thereafter the landlord gets a right to nominate a tenant, though even this right can be displaced by the District Magistrate in a proper case. But if for some reason the landlord does not exercise this right and nominate a tenant, the power of the District Magistrate to make an order of allotment conferred, under Section 7(1)(a) is not affected. There is nothing in the Rules which says that the landlord shall be entitled to occupy the accommodation himself or that the District Magistrate shall be precluded from making an order of allotment after the expiration of the period of thirty days. Rule 4 in fact indicates to the contrary. And so also does Rule 6. That rule provides that if the landlord wants the accommodation bona fide for his own personal occupation, he must obtain permission of the District Magistrate to occupy it himself. This provision also suggests that the landlord does not become entitled to occupy the accommodation himself on the expiration of the period of thirty days, but he can do so only if the necessary permission is granted by the District Magistrate. It is, therefore, clear, on a conspectus of the provisions contained in Section 7, sub-sections (1) and (2) and Rules 3, 4 and 6, that even if an order of allotment is not made by the District Magistrate within the period of thirty days, the landlord does not become entitled to occupy the accommodation himself in defeasance of the power of the District Magistrate to make an order of allotment and the District Magistrate can, notwithstanding the expiration of the period of thirty days, make an order of allotment under Section 7(1)(a). The validity of the order of allotment made by the District Magistrate in favour of the third respondent could not, therefore, be assailed on the ground that it was made after the expiration of thirty days from the receipt of the intimation of vacancy from the appellant.