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Indian Case Summary

Smt. Shrisht Dhawan vs M/S. Shaw Brothers on 13 December, 1991 – Case Summary

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In the case of Smt. Shrisht Dhawan vs M/S. Shaw Brothers on 13 December, 1991, the Supreme Court of India deliberated on the scope of Section 21 of the Delhi Rent Control Act, 1958. The case was presided over by Justice D. Thommen and Justice R. Sahai. The decision of this case has had a significant impact on the interpretation and application of the Delhi Rent Control Act, particularly in relation to the rights and obligations of landlords and tenants.

Facts of the Case

The case revolved around the interpretation of Section 21 of the Delhi Rent Control Act, 1958. The section embodies the legislative policy to devise a special mechanism to increase the supply of accommodation to meet the rising demands of a growing metropolis. It operates in limited circumstances and allows the parties, once permitted to regulate their relationship in accordance with the section, to be totally governed by the terms of their contract.

Issues Raised

The main issue in this case was the interpretation of Section 21 of the Delhi Rent Control Act, 1958. The court had to determine whether the contract itself, or the permission of the Controller, could be vitiated by fraud. The court also had to consider whether the Act, which is meant for the protection of the tenant, could carve out an area free of that protection under certain conditions.

Court’s Observations

The court observed that the section operates in terms thereof, notwithstanding any other law, unless the contract itself, or the permission of the Controller is vitiated by fraud. Absent such vitiating circumstance, and once the Controller has accorded sanction, the parties to the contract are presumed to have entered into their relationship at arm’s length and the law binds them to the terms of their agreement.

The court also noted that while the Act is meant for the protection of the tenant, the legislative policy reflected in Section 21 is to carve out an area free of that protection. Where the conditions stipulated in Section 21 are satisfied, the prohibition contained in Section 14 against eviction of tenants except on the specified grounds or the requirements of the Transfer of Property Act or the Civil Procedure Code or any other law are removed or dispensed with.

The court further observed that the section is attracted in the specific circumstances postulated by it. The absence of requirement by the landlord of the whole or any part of the premises for a particular period, the permission of the Controller in the prescribed manner for the lease of the premises in question, the agreement in writing between the landlord and the tenant for the lease of such premises as a residence for the agreed period, the refusal of the tenant to vacate the premises on the expiry of that period, and an application made within the prescribed time by the landlord invoking the power of the Controller under this section: these are the conditions precedent to the exercise of power by the Controller to place the landlord in vacant possession of the premises by evicting the tenant or any other person in occupation of such premises.

The court concluded that the only protection that the tenant has is what Section 21 itself postulates. He is protected against the conduct of a fraudulent landlord. The law does not protect either party whose actions are tainted by fraud. A landlord seeking recovery in terms of that section must satisfy that he has strictly complied with the provisions of that section. The landlord must obtain the permission of the Controller in the manner prescribed. He is not entitled to the permission unless the condition specified for the purpose in Section 21 is satisfied, namely, the absence of his requirement of the building for a particular period. The period must be clear and definite. The lack of requirement must be honestly felt by the landlord. That the landlord does not require the building is a question of honest belief held by him

at the relevant time, that is, at the time of his seeking the Controller’s permission. The landlord must have honestly and reasonably believed that he would not require the building for the period specified in his application to the Controller for permission to let out the premises.

The court also clarified that the section requires that the premises have to be let out solely for the purpose of residence for the period agreed to in writing. If the agreement does not so stipulate, the section is not attracted, and the Controller cannot sanction the lease in terms of the section. No non-residential premises can come within the protection of the section.

The court further observed that fraud is essentially a question of fact, the burden to prove which is upon him who alleges it. He who alleges fraud must do so promptly. There is a presumption of legality in favor of a statutory order. The Controller’s order under Section 21 is presumed to be valid until proved to be vitiated by fraud or mala fide.

Conclusion

The court concluded that the statutory authorities in the present proceedings addressed themselves to the wrong questions, misunderstood the guiding principle of burden of proof, misconstrued the requirements of the section, and reached a totally irrational, unreasonable and unsustainable conclusion that the original order of the Controller was obtained by fraud. The High Court was wrong in affirming the totally unsustainable conclusion reached by the authorities.

This case is significant as it provides a detailed interpretation of Section 21 of the Delhi Rent Control Act, 1958, and lays down the principles for its application. It emphasizes the importance of honesty and good faith in the landlord-tenant relationship and the consequences of fraud in obtaining the Controller’s permission. It also underscores the presumption of legality in favor of a statutory order and the burden of proof on the party alleging fraud.