1991 (12) TMI 271 - SC - Indian Laws

Scope of Section 21 of the Delhi Rent Control Act, 1958 - Held that - Letting under Section 21 is not hedged with any restriction. Throwing the whole or part of the premises by landlord for letting out is not linked with his existing accommodation, its number or sufficiency. The one is not dependent on the other. Even letting for paying instalment of loan, for constructing the premises or its re-letting has not been held to be contrary to Section 21. Validity of permission has to be judged on the date of grant of application. Availability of premises for indefinite letting cannot be judged by subsequent events or the failure of the landlord to occupy immediately for personal, financial, economic or other reasons. Therefore, the authorities committed manifest of error of law, both in entertaining the application of the tenant resisting the objection of the landlady by placing the burden on her erroneously and deciding against her by misapplication of law and misconstructions of the provisions of Section 21. Sri Rajeev Dhavan rightly urged that both the Controller and the Tribunal misdirected themselves in placing the burden on the landlady to prove that the permission obtained by her was genuine. According to him the primary burden was on the tenant to establish that the permission was obtained by playing fraud. Unfortunately, it appears, the authorities assumed fraud and misrepresentation on mere averment in the objection of the tenant and proceeded to record the finding on premise that the landlady was required to prove it. Apart from the procedural error even the finding that the premises were not needed by her after three years is not well founded. Appeal allowed

Issues Involved:

1. Scope and applicability of Section 21 of the Delhi Rent Control Act, 1958.
2. Conditions precedent for the exercise of power by the Controller under Section 21.
3. Protection of tenants against fraudulent conduct of landlords.
4. Definition and proof of fraud in the context of Section 21.
5. Procedural aspects and burden of proof in challenging the validity of permission granted under Section 21.

Detailed Analysis:

1. Scope and Applicability of Section 21:

The Supreme Court considered the scope of Section 21 of the Delhi Rent Control Act, 1958, which has been discussed in several prior decisions. The section embodies a legislative policy to increase the supply of accommodation by allowing landlords to let out premises for a limited period under specific conditions. Once the Controller grants permission, the relationship between the landlord and tenant is governed by the terms of their contract, notwithstanding any other law unless the contract or permission is vitiated by fraud.

2. Conditions Precedent for the Exercise of Power by the Controller:

The conditions precedent for the exercise of power by the Controller under Section 21 include:
- The landlord must not require the premises for a particular period.
- The landlord must obtain the Controller's permission in the prescribed manner.
- There must be a written agreement between the landlord and tenant for the lease of the premises as a residence for the agreed period.
- If the tenant refuses to vacate the premises on the expiry of the period, the landlord may apply to the Controller for eviction.

The section provides the Controller with extraordinary power to restore possession of the premises to the landlord through a quick and summary action, protected by a non-obstante clause from challenges based on other laws.

3. Protection of Tenants Against Fraudulent Conduct of Landlords:

While the Act generally protects tenants, Section 21 carves out an area where this protection is limited. The tenant is protected against fraudulent conduct by the landlord. The landlord must honestly believe that they do not require the premises for the specified period when seeking the Controller's permission. If the landlord's belief is honest, subsequent events proving otherwise do not invalidate the permission.

4. Definition and Proof of Fraud in the Context of Section 21:

Fraud is a question of fact, and the burden of proof lies on the party alleging it. Fraud involves a false representation made knowingly, without belief in its truth, or recklessly. In public law, fraud in relation to a statute means a colorable transaction to evade the provisions of the statute. The misrepresentation must relate to the conditions provided in the section, and non-disclosure of facts not required by law does not amount to fraud.

5. Procedural Aspects and Burden of Proof in Challenging the Validity of Permission Granted Under Section 21:

The law on procedural aspects has evolved, and the tenant must raise objections to the validity of the permission before the expiry of the lease or immediately upon discovering the fraud. The burden of proving fraud lies with the tenant, and a fishing or roving inquiry is not permitted at the stage of execution. The permission carries a presumption of correctness and can only be challenged on grounds of fraud or collusion.

Conclusion:

The Supreme Court found that the statutory authorities misunderstood the guiding principles of the burden of proof and misconstrued the requirements of Section 21. The authorities' conclusion that the original order of the Controller was obtained by fraud was unjustified. The High Court's affirmation of this conclusion was also incorrect. The appeal was allowed, and the impugned judgment of the High Court and the orders of the Additional Rent Controller and the Rent Control Tribunal were set aside. The appellant was entitled to costs assessed at Rs. 5,000.

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