Mohan Lal Bakolia. vs Bishan Pawar
2011 Latest Caselaw 2931 Del

*     IN THE HIGH COURT OF DELHI AT NEW DELHI

%                             Judgment reserved on : 27.05.2011
                              Judgment delivered on: 31.05.2011

+                 R.S.A.No. 144/2008 & CM No. 8861/2008

MOHAN LAL BAKOLIA.                          ...........Appellant
                  Through:            Mr. S.C. Arora, Advocate.

                  Versus

BISHAN PAWAR                                ..........Respondent
                        Through:      Mr. Sunil Mittal & Mr. Kshitij
                                      Mittal, Advocates.

CORAM:
HON'BLE MS. JUSTICE INDERMEET KAUR

    1. Whether the Reporters of local papers may be allowed to
       see the judgment?

    2. To be referred to the Reporter or not?                   Yes

    3. Whether the judgment should be reported in the Digest?
                                                         Yes

INDERMEET KAUR, J.

1 This appeal has impugned the judgment and decree dated

25.03.2008 which has reversed the finding of the trial Judge dated

16.10.2007. Vide judgment and decree dated 16.10.2007 the suit

filed by the plaintiff Mohan Lal Bakolia seeking recovery of

`50,000/- against the defendant had been decreed along with

interest @ 6% per annum. The impugned judgment had reversed

this finding; suit stood dismissed.

2 The plaintiff is a resident of house No. 16/1291-92, Padam

Singh Road, Bapa Nagar, Karol Bagh, New Delhi. This house is in

the name of his wife; she had given a shop to the defendant on

rent; the plaintiff was collecting rent from the defendant on behalf

of his wife upto 30.06.1992; thereafter the defendant stopped

paying the rent. It was agreed between the parties that the

defendant will handover the suit shop by 10.04.1997 and the

plaintiff will pay `3,50,000/-; this agreement dated 13.09.1996

was reduced into writing and a sum of `50,000/- was paid to the

defendant. The defendant did not abide by the agreement; he

instead filed a suit for permanent injunction against the plaintiff.

The payment of `50,000/- was made by the plaintiff on 13.09.1996

for vacating the shop which had to be vacated by 10.04.1997;

present suit filed on 17.01.2000 is within limitation.

3 In the written statement the defence of limitation was taken.

It was stated that the defendant was inducted as a tenant; it was

denied that the defendant had stopped paying rent. The

agreement referred to by the plaintiff was also denied; it was

denied that the plaintiff had paid any money to the defendant.

4 On the pleadings of the parties, the following four issues

were framed:-

"1. Whether suit does not disclose any cause of action in favour of the plaintiff? OPD

2. Whether the plaintiff is entitled for decree as prayed for? OPP.

3. Whether the suit is barred by limitation? OPD

4. Relief."

5 The case of the plaintiff was hinged upon the document

dated 13.09.1996 by virtue of which the defendant had agreed to

vacate the premises by 10.04.1997; in lieu of this, the plaintiff had

paid a sum of `50,000/- to the defendant. The plaintiff had also

proved on record Ex. DW-1/X1 which was the judgment in the suit

filed by the defendant against the plaintiff. It had been held that

the wife of the plaintiff and the defendant are landlord-tenants;

there is no relationship of landlord-tenant between the plaintiff

and the defendant; however in view of the fact that the plaintiff

had paid this amount to the defendant (in terms of the aforenoted

agreement) the plaintiff was held entitled to the decree of the

aforenoted amount.

6 The impugned judgment had reversed this finding. The first

appellate court was of the view that the finding of the trial Judge

holding that the agreement dated 13.09.1996 is void and at the

same time allowing relief under the said document is an illegality.

The court was also of the view that the suit is time barred. Suit

stood dismissed.

7 This is a second appeal. Although the formal order of

admission had not been passed but on 19.07.2010, the following

substantial questions of law were formulated:-

"1. Whether the appellant/plaintiff is entitled to the refund of the amount of

Rs.50,000/- even if the agreement dated 13.9.1996 executed between the

parties was void/illegal ?

2. Whether mark A i.e. the agreement dated 13.9.1996 can be relied upon by

the appellant/plaintiff for the purpose of limitation?"

8 On behalf of the appellant, it has been urged that the finding

in the impugned judgment is perverse; the testimony of PW-1 had

proved the agreement Ex.PW-1/2 dated 13.09.1996 which had

remained unchallenged; no cross-examination had been effected

of this witness; it had been established that a sum of `50,000/- had

been paid by the plaintiff to the defendant and in terms of Section

65 of the Indian Contract Act, 1872 such a payment; even

presuming that the agreement between the parties was a void

agreement; is liable to be refunded back to the plaintiff. Learned

counsel for the appellant has placed reliance upon the judgment

reported in 80 (1999) DLT 179 Sita Holiday Resorts Limited Vs.

M/s Mahanlal Harbans Lal Bhayana to support his submission that

a party who had received an advantage under a void agreement is

liable to pay back the amount. For the same proposition reliance

has also been placed upon D.L.F. United Private Ltd. Vs. Pt. Prem

Raj & others.

9 It is pointed out that the amount paid by the plaintiff to the

defendant was in the nature of a deposit; under Article 22, the

cause of action to claim a deposit arises only when the demand for

return of the deposit is made; suit was clearly within limitation.

For this proposition, reliance has been placed upon AIR 1971 MP

243 Brij Mohandas Gokulchand Vs. Narsinghdas Manoharlal &

others and 1971 (1) SCC 477 Ram Janki Devi and Another Vs. M/s

Juggilal Kamlapati.

10 Arguments have been countered. It is pointed out that the

agreement which is illegal per se which in this case is Ex.PW-1/2;

having been entered into for an unlawful purpose, is void under

Section 23 of the Indian Contract Act and this has rightly been

noted in the impugned judgment. Such a void agreement cannot

be looked into for any purpose. Payment of `50,000/- has not been

proved by the plaintiff; he has not led any independent evidence

apart from Ex.PW-1/2; moreover the date of 10.04.1997

mentioned in Ex.PW-1/2 also cannot be adverted to as the

agreement Ex.PW-1/2 is void per se.

11 Record shows that the plaintiff has filed the present suit for

recovery of a sum of `50,000/- which as per his averment had

been paid in terms of an agreement dated 13.09.1996 whereby it

had been agreed that the defendant will hand over the possession

of the suit shop by 10.04.1997; he not having vacated the

property, the present suit was filed for recovery of the said

amount. Defence of the defendant that he had not taken this shop

on rent from the wife of the plaintiff; his defence was that he had

been inducted into the suit property by the plaintiff himself; he

denied the agreement dated 13.09.1996 or that he had agreed to

vacate the suit property therein.

12 Trial Judge had framed the abovementioned four issues.

Agreement dated 13.09.1996 has been proved through the version

of PW-1. Said document has been proved as Ex.PW-1/2. This

agreement recites that a sum of `50,000/- has been paid by the

plaintiff to the defendant as an advance out of a total amount of

`3,50,000/- and the defendant has promised to vacate the suit

shop by 10.04.1997; there was no relationship of landlord-tenant

between the plaintiff and the defendant; it was between the wife

of the plaintiff and the defendant and this is clear from Ex. DW-

1/X1 [judgment of the Civil Judge wherein it was held that

Dayawanti (wife of the plaintiff) is the landlord of Bishan Pawar

(defendant herein)].

13 Section 24 of the Indian Contract Act reads as under:-

"24. Agreements void, if consideration and object unlawful in part.- If any part of a single consideration for one or more objects, or any one or any part of any one of several considerations for a single object, is unlawful, the agreement is void."

14 Section 24 states that an agreement is void if the

consideration and its object is unlawful in part.

15 Section 5 (3) of the Delhi Rent Control Act (DRCA) reads as

under:-

"5. Unlawful charges not to be claimed or received.- (1) Subject to the provisions of this Act, no person shall claim or receive any rent in excess of the standard rent, notwithstanding any agreement to the contrary (2)xxxxxxxxxxxxxxxxx (3) It shall not be lawful for the tenant or any other person acting or purporting to act on behalf of the tenant or a sub-tenant to claim or receive any payment in consideration of the relinquishment, transfer or assignment of his tenancy or sub-tenancy, as the case may be, of any premises."

16 Under this provision a tenant or any other person claiming

under him is not legally entitled to receive any payment in

consideration of an assignment, transfer of relinquishment of the

premises; such a payment is unlawful.

17 In the facts of the present case, the agreement Ex.PW-1/2

admittedly being for an unlawful and illegal purpose i.e. for an

unlawful object and an unlawful consideration is void under

Section 24.

18 The question that now has to be answered is as to what is

the effect of such a void agreement.

19 Section 65 of the said Act is relevant. It reads as under:-

"65. Obligation of person who has received advantage under void agreement, or contract that becomes void.- When an agreement is discovered to be void, or when a contract becomes void, any person who has received any advantage under such agreement or contract is bound to restore it, or to make compensation for it, to the person from whom he received it."

20 This provision postulates a position that when a contract has

been discovered to be void or becomes void, person who has

received advantage under the said void contract is bound to

restore the benefit or advantage received under this agreement or

make compensation for it to the person from whom he has

received it.

21 Section 65 is based on the principle of an unjust enrichment

and ensures refund or return of such an amount; Section 65 in

fact proceeds on the basis of there being an agreement or a

contract between competent parties; it has no application to a

case where there never was and never could have been any

contract. Section 65 per se applies to a situation wherein

agreement is discovered to be void or the contract become void

subsequently; the unjust and enrichment received in terms thereof

is liable to be refunded back.

22 In this case the contract on the day when it was contracted

i.e. on 13.09.1996 itself was void, application of Section 65 of the

Indian Contract Act would not be attracted. The latin maxim "ex

turpi causa non oritur actio" is based on the principle that a

claimant will be unable to pursue a cause of action if it arises in

connection with his own illegal act. Thus, if money has been paid

or goods have been delivered in pursuance of such an illegal

contract which is void for illegality as opposed to being merely

nugatory, this maxim is applicable; in such a situation the money

received under such an illegal transaction is not within the

domain of Section 65 of the Contract Act. It is also not the case of

the plaintiff the he was either induced, duped or coerced to enter

into this contract; he had entered into this contract which was

illegal from its very inception; it was against the law; Section 5(3)

of the DRCA prohibits such a transaction. Money paid under such

an illegal contract which is void ab initio could not be recovered;

court cannot become a party for recovery of such an illegal

amount.

23 Question of limitation is also answered against the appellant.

The covenant contained in the contract that the premises would be

vacated by the defendant on 10.04.1997 on the plaintiff‟s paying

`3,50,000/- out of which `50,000/- has been paid as an advance was the

substratum of the contract; contention of the appellant that 10.04.1997

would be the date for the purposes of limitation is misconstrued;

agreement itself being void, this term of the vacation of the suit

property by 10.04.1997, which was its substratum could not be looked

into. Even presuming that the testimony of PW-1 on the factum of

payment of `50,000/- on 13.09.1996 remained unchallenged; yet the suit

filed more than three years after 13.09.1996 i.e. in January, 2000 is time

barred. The judgment relied upon by learned counsel for the appellant

reported in Sita Holiday Resorts Limited (Supra) and D.L.F. United

Private Ltd. (Supra) are thus inapplicable. The judgment of Ram Janki

Devi (Supra) and Brij Mohandas Gokulchand (Supra) are also not

applicable; the payment of `50,000/- by no stretch of imagination can be

termed as a „deposit‟.

24 Substantial questions of law are answered in favour of the

respondent and against the appellant. There is no merit in this appeal.

Appeal as also pending application are dismissed.

INDERMEET KAUR, J.

MAY 31, 2011, a