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

2. It is necessary to state the following facts in order to bring out the nature and scope of the controversy. It is not necessary to refer in detail to the facts of each case separately for the purpose of these appeals. The Committee built in 1945 what is known as the Central Municipal Market Lodi Colony. This Market has 32 shops, with residential flats on 28 of them. In April 1945, the Committee, in pursuance of a resolution passed by it, invited tenders from intending bidders for those shops and premises. On receipt of tenders, the highest bidders were allotted various shops on rents varying from Rs. 135-8-0 to Rs. 520 per mensem. The allottees occupied the shops and the premises in accordance with the allotments made by the Committee and continued to pay the respective amounts which may be characterised as rents, without prejudice to our decision on the question whether it was legally a rent because as will presently appear, one of the controversies between the parties is whether it is rent within the meaning of the Act. Towards the end of 1952, 30 of the occupants filed applications under S. 8 of the Act praying for the fixation of standard rent in respect of the premises in their respective occupation. The Committee raised a preliminary objection to the maintainability of the aforesaid applications on the ground that there was no relationship of landlord and tenant between the applicants and the Committee, within the meaning of the Act. The Trial Court accordingly framed the following issue for determination in the firstthe relationship of tenant and landlord exists between the parties, therefore, those applications are competent and the Court has jurisdiction to fix the standardlearned Subordinate Judge, who dealt with these cases in the first instance came to the conclusion that the several applicants were tenants within the meaning of the Act, and that therefore, the applications were competent. The Committee moved the High Court in its revisional jurisdiction, and the learned Chief Justice, sitting singly, referred those cases to be heard by a Division Bench, as they raised questions of general importance. The matter was thus heard by a Division Bench composed of G. D. Khosla and Dulat, JJ. The High Court, by its judgment dated April 25, 1956, set aside the aforesaid finding of the Trial Court, but made no order as to costs. The High Court in an elaborate judgment, on an examination of the relevant provisions of the Act, came to the conclusion that there was no relationship of landlord and tenant between the parties, inasmuch as there was no letting. there being no properly executed lease, and the doctrine of part performance was not attracted to the acts and circumstances of the case. For coming to the conclusion that there was no valid lease between the parties, the High Court relied upon the provisions of S. 47 of the Punjab Municipal Act (Punjab Act III of 1911). The High Court also negatived the contention that the Committee was estopped from questioning the status of the applicants as tenants, having all along admittedly accepted rent from them. The appellants moved the High Court and obtained the necessary certificates of fitness for coming up in appeal to this Court. The certificates of the High Court are dated October 28, 1957. That is how the matter has come before this Court.

Court's reasoning:
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.