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TMI Blog1963 (2) TMI 63X X X X Extracts X X X X X X X X Extracts X X X X ..... r, purchased the goodwill, goods and effects of Sharma Provision Stores and continued business in the shop under the style Sharma Provision Stores . The appellant represented to the District Magistrate that the shop had fallen vacant and on 20-2-1952 obtained from him an order under Section 7(2) of the Act (known popularly as allotment order ) calling upon the landlord to let it out to him. Thereupon the respondent instituted the suit giving rise to this appeal for an injunction. It was contested by the appellant and was decreed on the ground that the shop had not fallen vacant and the District Magistrate had no power to issue the order of allotment. An appeal from the decree was dismissed by a Civil Judge and the second appeal has been filed in this Court. The learned Judge before whom the second appeal came up for hearing referred it to a larger Bench in view of the importance of a question raised in it. 2. Under Section 7(1) every landlord and every tenant is required to inform the District Magistrate about an accommodation becoming, or having become, vacant under Section 7(2) every District Magistrate is empowered to require by a general or special order a landlord to let, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ract Act; under them an owner of an accommodation can let it out to any person on terms settled between them. The U. P. (Temporary) Control of Rent and Eviction Act simply takes away an owner's right to enter into a contract of tenancy with, any person of his choice by requiring him to enter, or not to enter, into a contract of tenancy with a particular person. Other provisions of the Transfer of Property and Contract Acts remain in force. A District Magistrate has the power only of restricting an owner's choice of a tenant, he has no right whatsoever to dictate the terms of the contract of tenancy or even to make a contract of tenancy on his behalf. The preamble to the Act shows that the object behind the Act was to control the letting and not to prohibit it. The freedom of the parties to fix rent is recognised by Section 5; see Daulat Ram v. Triloki Nath AIR1962All147 . If the vacancy of an accommodation is not reported or a person occupies an accommodation in contravention of an order issued under Section 7 (2), the District Magistrate may under Section 7-A (1) require him to show cause why he should not be evicted from it. If he fails to show cause, the District Ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any order issued by a District Magistrate. The effect does not depend upon the nature of the order. 5. Under Section 7(2) a District Magistrate has the option not to pass a general or special order; the word used is may . The provision is an empowering one and not a mandatory one. This means that this provision by itself does not prohibit a landlord from letting out an accommodation; it only empowers a District Magistrate to prohibit it and it is prohibited only if the District Magistrate has exercised the power. 6. Though the Act contains provisions referred to above punishing a person for letting out without permission or letting out in contravention of an order of allotment or refusing to let out in spite of an order of allotment and punishing abetment of the above acts and rendering a person liable to be evicted if he has occupied an accommodation in contravention of an allotment order or without vacancy of an accommodation having been reported, there is no provision whatsoever rendering a contract of tenancy entered into by a landlord and another person void or even illegal. If a landlord lets out an accommodation to Y when he was ordered by the District Magistrate to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er the consideration or the object in the case of either of the two agreements is of such a nature that it would defeat the provisions of any law. The U. P. (Temporary) Control of Rent and Eviction Act contains no provision which would be defeated by permitting either of the two considerations or either of the two objects. It must be noted that there must be something in the nature of the consideration or the object which would defeat the provisions of any law. It is not alleged that either of the considerations or either of the objects is fraudulent or involves or implies injury to the person or property of another or is opposed to public policy. Therefore, both the agreements in the instant case would be contracts unless they are declared by any provision in the Contract Act to be void. Sections 24, 25, 26, 27, 28, 29 and 30 are only provisions which declare agreements to be void and none of those provisions applies in the instant case. I must, therefore, hold that the agreements in the contract of tenancy referred to in the question are contracts. 8. It was argued by Sri Kirty that the consideration for the tenant's agreement is the use of the accommodation and that it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll347 Nigam and Misra, JJ., held that a contract of letting out an accommodation in contravention of an order made under Section 7(2) defeats provisions of law and also is against public policy and is therefore, void. The learned Judges observed that the U. P. (Temporary) Control of Rent and Eviction Act forbids a landlord from entering into an agreement of letting out an accommodation except in accordance with an order issued under Section 7(2). But this is not correct because there is no such provision. It is also wrong that allowing a contract in contravention of an order issued under Section 7(2) will defeat the very purpose of U. P. Act III of 194/ . Section 23 of the Contract Act requires the provisions of any law to be defeated and not the purpose of any law. Secondly, in view of the provisions in Section 7-A of the Act it cannot be said that the provisions of the Act would be defeated. Even if the contract entered into by a landlord in contravention of an order made under Section 7(2) remains valid the District Magistrate is competent under Section 1-A to evict a person occupying an accommodation in contravention of it. The learned Judges have tailed to notice the dist ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no general or special order of the District Magistrate was In existence on 1-2-1952, the question of disobedience of any such order on 1-2-1952, does not arise. In the circumstances of the present case the question formulated by the Division Bench does not arise. However, since the point is of general importance, I proceed to give my answer to the question. 15. The question has to be discussed in the light of the provisions of the U. P. (Temporary) Control of Rent and Eviction Act and the Indian Contract Act. It will be convenient to refer to the two Acts as the Rent Control Act, and the Contract Act respectively. According to the Contract Act, certain agreements are void. According to Section 10 of the Contract Act, an agreement constitutes a contract, unless the agreement is void. Validity of the tenancy under consideration has been questioned. 1, therefore, take it that, the expression 'contract of tenancy' in the question formulated by the Division Bench may be understood in the sense of agreement of tenancy . 16. Section 7 of the Rent Control Act deals with control on letting. According to Sub-section (1) of Section 7, landlords and tenants have to report vacanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nlawful is void . 21. Section 23 has got five clauses. Clause (iii) deals with fraudulent transactions. No question of fraud arises in the present case. The transaction under consideration does not Involve injury to the person or property of another person. So Clause (iv) also does not apply. The main question for consideration in the present case is whether the agreement of tenancy is hit by Clauses (i), (ii) and (v) of Section 23 Contract Act. 22. In Ramanayudu v. Seetharamayya (FB) the facts were these. Under Clause 27 of a certain notification issued under the Madras Abkari Act, partnership in Abkari business was prohibited unless previous permission of the Collector had been obtained. A promissory note was executed for advances to be made by the plaintiff for a partnership. The plaintiff was a partner in the firm. Defendant No. 1 obtained a licence without obtaining the Collector's permission to work in partnership. It was held by a Full Bench of Madras High Court that, the object of the partnership was to carry on business in contravention of Clause 27 of the Government notification. The plaintiff's suit on the promissory note was, therefore, dismissed. 23 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... feat the purpose of the Act without infringing any provision of the Act. A man is entitled to arrange his affairs in such a manner as to derive benefit for himself without violating any provision of law. I do not see how the act of letting out a shop is opposed to public policy. 29. In ILR 9 All 497 it was held that, the effect of a temporary injunction granted under Section 492 C.P.C. is not to make a subsequent mortgage of the property in question illegal and void under Section 23 of the Contract Act. The same view was taken in ILR 25 All 431. In AIR 1929 Oudh 235 it was held that, sale held in execution of a decree in spite of an injunction is not void on that ground. 30. It appears that it was the settled view of Allahabad High Court and Oudh Chief Court that,' disobedience of an injunction issued by a Court does not attract Section 23 of the Contract Act. There is no good reason why an administrative order authorised by a statute should be placed on a higher footing than an injunction issued by the Civil Court. 31. In AIR 1939 Rang 305 (FB) it was held by a fun Bench of Rangoon High Court that, the word 'law' as used In Clause (i) of Section 23 of the Cont ..... X X X X Extracts X X X X X X X X Extracts X X X X
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