Holding

The Supreme Court dismissed the appeal, holding that the High Court was justified in restoring the eviction decree on the landlord’s bona‑fide requirement and that the doctrine of in pari delicto did not bar the eviction.

Summary

The case concerned a long‑standing tenancy that began in 1932, where the rent was progressively increased from Rs.16 to Rs.60 in violation of the Bihar Buildings (Lease, Rent and Eviction) Control Act. After the landlord, who became the Karta of the joint family, served a notice of termination, the tenants were sued for eviction on grounds of rent default and the landlord's bona‑fide requirement of the premises. The trial court ordered eviction; the appellate court reversed, allowing the tenants to adjust the excess rent paid and rejecting the landlord's bona‑fide claim. The Patna High Court (Full Bench) restored the eviction decree, applying the doctrine of in pari delicto to the tenants for voluntarily paying excess rent and correcting the appellate court’s erroneous finding on bona‑fide requirement. On special leave, the Supreme Court dismissed the appeal, holding that the High Court was justified in upholding the eviction and that the doctrine of in pari delicto was not applicable where there was no compulsion or exploitation. Consequently, the tenants were ordered to vacate the premises by 30‑June‑1987.

Issues considered

The applicability of the doctrine of in pari delicto to tenants who voluntarily pay rent in excess of the statutory ceiling.
Whether a second appeal can disturb findings of fact of lower courts when those findings are based on erroneous tests or assumptions.
The sufficiency of the landlord's bona‑fide requirement under the Bihar Buildings (Lease, Rent and Eviction) Control Act as a ground for eviction.
The entitlement of tenants to adjust excess rent paid against alleged arrears under the Act.

Legislation cited

Subjects

in pari delictorent restrictionevictionbona fide requirementsecond appealCivil Procedure Codetenancyunjust enrichment

Judgment

BUDHWANTI AND ANR.
A
v.
GULAB CHAND PRASAD

MARCH 4, 1987

B [SABYASACHI MUKHARJI AND S. NATARAJAN, JJ.]

Doctrine of "Jn pari delicto", applicability of-Whether it applies
to tenants also who pay enhanced rents in contravention of the Rent ~
/ Restriction Acts, and therefore, cannot claim later adjustment of excess
rent paid contrary to law, in eviction cas.~s on the plea of default of rent
C and applicability of the doctrine. __,._\ ""

Second Appeal, scope of-Interference with the finding of fact by
the High Court, when permissible-Section JOO of the Code of Civil
Procedure. >-
D The first appellant, widow of one Dir. Ramachandra, a tenant
since 1932 of one room used as a medical shop was recognised as tenant
on the death of her husband in or ahont 1%1~ by Bahn Lal, the original
landlord. The rent was fixed at Rs.16 per month. Over the years the
rent came to be increased from Rs.16 to 60 per month, i.e. both when
Dr. Ramachandra was alive and also later. Babnlal died on 14.11.1973
E and the respondent became the Karla of the family as the senior most
male member of the joint family. The respondent issued a notice on
12.6.1974 terminating the tenancy with effect from 30.6.1974 and called
upon the first appellant wife to surrender possesssion of the leased shop
from 1.7.74. As the appellants (wife and son of Dr. Ramachandra)
failed to deliver possession a suit for eviction was filed under the Bihar
F Buildings (Lease, Rent and Eviction) Control Act on two grounds: (a)
default of rent and (b) honafide requirements of the junior members of
the joint family. The trial conrt allowed the eviction petition. In appeal,
the appellate conrt reversed the f'mdiugs of the Trial Court and apply-
ing the principle of unjust enrichment contrary to statutory law, held
that the appeUants were entitled to have the excess payment adjusted
G towards arrears of rent as well as future. payments of rent since 1943.
However, in the Second Appeal, the FuU Bench of the Patna High Court
held that the rule of "in pari delicto" would squarely apply to tenants
who pay enhanced rents ·in contravention of the terms of the Rent
Restriction Acts and therefore the appellants cannot claim adjustment
-
of excess rent paid and seek avoidance of their eviction. The High Court
H also reversed the f'mding of the appellate conrt on the question of bona

534
BUDHWANTI v. G.C. PRASAD [NATARAJAN, J.] 535

fide requirement as being vitiated by misreading of facts and mlsappli- A
cation of law. Hence the tenant's appeal by special leave.

Dismissing the appeal, the court,

ffELD: 1. lo Mohd: Salimuddin v. Misrila/ & Anr., [1986] 2
SCC 378, the Supreme Court have taken care to set out that the doct- B
rine of "in pari delicto" will not be attracted when there is no element
~ of compnlsion or exploitation and both parties have by consensus con-
travened the provisions of law for their mntoal advantage. [5390-E)

2. It is true that in a second appeal a finding on fact even if
erroneous will generally not be disturbed but where it is found that the C
finding is vitiated by application of wrong tests or on the basis of con-
jectnres and assumptions then a High Court will be well within its rights
in setting aside in a second appeal a patently erroneous rmding in order
to render justice to the party affected by the erroneous finding. [540F -GI

CIVIL APPELATE JURISDICTION: Civil Appeal No. 4110 D
of 1985.

From the Judgment and Order dated 22.5.1985 of the Patna High
,. Court in Appeal from Appellate Decree No. 51of1982.

S.S. Javali, B.P. Singh and Ranjit Kumar for the Appellants. E

S.N. Kacker, M.S. Singh and K.K. Gupta for the Respondent.

The Judgment of the Court was delivered by,

NATARAJAN, J. This appeal by special leave by the tenants is F
directed against the judgment of a Full Bench of the Patna High
Court in a Second Appeal against Appellate Decree No. 51 of 1982.
By the impugned judgment the High Court allowed the appeal prefer-
red by the landlord (respondent herein) and restored the order of evic-
tion passed by the Trial Court against the appellants herein on grounds
of default in payment of rent and bona fide requirement of the leased G
premises for the business.needs of the landlord.

The circumstances 1•.nder which the suit came to be filed and the
contentions of the parties may be summarised as below.

One Babu Lal who died on 14.11.73 and the respondent were H
536 SUPREME COURT REPORTS (1987] 2 S.C.R.

A brothers and were members of a Joint Hindu Family governed by the
Mitakshra Law. The joint family was the owner of a non-residential
building in the G.B. Road, Gaya. One room in the said building was
given on rent in the year 1932 to one Dr. Ramachandra, the husband
of the first appellant and father of the second appellant for running a
medical shop known as Punjab Dental and Opticals Works. The joint
B family has been running its business in the other portions of the build-
•
ing. The rent was fixed at Rs.16 per month. Over the years the rent
came to be increased from Rs.16 to Rs.60 per month. It would appear
that the rent was increased to Rs.20 in 1943, to Rs.25 in 1946, to Rs.30
in 1947, to Rs .32 in 1951, to Rs .35 in 1963, to Rs.40 in 1967, to Rs.50
in 1970 and finally to Rs.60 in 1971. Dr. Ramachandra, the tenant died
C in or about 1960 and therefore his wife, the first appellant came to be
---~\ -
recognised as the tenant and rent receipts were issued in her name.
Before the Trial Court it was sought to be contended that the second
appellant had become the tenant after the demise of his father and as
such the notice of termination of tenancy issued to the first appellant
was not an effective and valid notice. The contention was repelled by
D the Trial Court and that finding has not been challenged before the
Appellate Court and the High Court.

As already stated Babu Lal the Karta of the family died on
14.11. 73. Consequent on his death the respondent herein became the j.,
Karta of the family as the seniormost male member of the joint family.
E The respondent issued notice on 12.6.74 terminating the tenancy with
effect from 30.6.74 and called upon the first appellant to surrender
possession of the leased shop from 1.7.74. It was the case of the
respondent that the first appellant had committed default in payment ~
of rent from November 1973 onwards and furthermore the leased por-
tion was required for expansion of the joint family business carried on
F in the other portion of the building. As the appellants failed to deliver ...
possession a suit for eviction was filed under the Bihar Buildings
(Lease, Rent and Eviction) Control Act (hereinafter referred to as the
'Act') for a decree for eviction against the appellants. A sum of Rs.540 ,.
was also claimed in the suit as arrears"of rent.

G The appellants contested the suit raising various defences. The
principal defences were that the respondent was not the Karta of the
family and one Ram Prakash Gupta, the eldest son of deceased Babu
Lal was the Karta, that rent was tendered to him after the death of
Babu Lal but the said Ram Prakash Gupta demanded rent at Rs.150
per month refused to receive the rent that was tendered, that there-
H upon the rent was sent by money order but it was refused and as such
BUDHWANTI v. G.C. PRASAD /NATARAJAN, J./ 537

there was bo default in payment of rent. It was alternatively contended A
that even if there had been default in payment of rent it would not
afford a cause of action for seeking eviction because the original rent
of Rs.16 had been illegally raised to Rs.60 per month in contravention
of the terms of the Act, that as such the appellants were entitled to
seek adjustment of the excess payments made by them towards the
alleged arrears of rent and consequently there can be no arrears of rent B
under law. In so far as the requirement of the shop for the business
needs of the respondent is concerned it was contended that it was not a
bona fide claim but only a make-belie~ story in order to get the
~ ~·,appellants evicted.

The Trial Court, after a detailed consideration of the oral and C
documentary evidence adduced by the parties, held that the appellants
.... had neither tendered the rent to Ram Prakash Gupta nor had the latter
refused to receive it, that in the absence of a refusal to receive rent the
appellants were not entitled under the Act to make remittances of the
rent by money order, that in any event the payment of rent to a junior
member of the family instead of to the Karta was not a valid payment D
and that as such the appellants had committed default in payment of
rent and were, therefore, liable to be evicted. On the other ground
also the Trial Court held that the leased portion was bona fide re-
,t quired by the Karla for the gainful engagement of two members of the
joint family who were unemployed and that was a second ground for
ordering eviction. Accordingly the Trial Court decreed the suit for E
==- eviction.

On the appellants preferring an appeal, the Appellate Court
reversed the findings of the Trial Court and dismissed the suit for
eviction. The Appellate Court held that even if the appellants had
• failed to pay the rent from, November 1973 onwards the appellants F
cannot be deemed to !tave committed default in payment of rent be-
cause the enhancement of rent from Rs.16 to Rs.60 was in contraven-
tion of the provisions of the Act and as such the appellants were
entitled to have the excess payments adjusted towards arrears of rent
as well as future payments of rent. The ground of bona fide require-
ment was also not accepted by the Appellate Court. G

Against the judgment of the Appellate Court the respondent
herein preferred a second appeal to the High Court. As there was a
conflict of decisions of different Benches of the High Court on the
question whether tenants paying rent in excess of the agreed rent H
would be affected by the rule of "in pari delicto" and cannot, there-
538 SUPREME COURT REPORTS [1987] 2 S.C.R.

A fore, seek adjustment of the excess payments towards arrears of rent
to resist a suit for eviction for default in payment of rent, the second
appeal was referred to a Full Bench. The Full Bench, after elaborately
considering the matter held that the rule of "in pari delicto" would
squarely apply to tenants who pay enhanced rents in contravention of
the terms of the Rent Restriction Acts and hence the appellants are
B guilty of pari delicto and cannot, therefore, seek adjustment of the
excess payments made by them and seek avoidance of their eviction for ~
default in paying the rent. The Full Bench further held that the finding
of the Appellate Court oh the question of the landlord's bona fide
~equirement of the l.eased.pre~ises was vitiated on account ~f misread-~
mg of facts and m1sapphcat10n of law and hence the Tnal Court's ·
finding warranted restoration. The. Full Bench, therefore, allowed the
c appeal and restored the decree of evicton passed by the Trial Court on
both the grounds set out in the plaint.

Mr. Javali, learned counsel for the appellants strenuously con-
tended that the High Court was not justified in allowing the second
D appeal since the appellants had not committed any default in payment
of rent and furthermore even if there was any default, due to their
erroneous tender, they were entitled to seek adjustment of the excess
payments made by them and avoid eviction. It was also submitted that
the appellants, being in the disadvantageous position of tenants, can- ~
not be placed on par with the landlord and held that they are "in pari
E delicto" and cannot seek adjustment of the excess payments towards
arrears of rent. The further submission was that the respondent's re-
quirement of the shop for the business needs of the members of the
joint family ws not established either by the pleadings or the evidence "'
and as such the Appellate Court was perfectly in order in rejecting the
second ground on which eviction was sought for and the High Court •
F had erred in interfering with a finding of fact in a second appeal.

In the view we propose taking of the matter we do not think it
necessary to go into the question whether the appellants had commit-
ted default in payment of rent and secondly even if they had commit-
ted default, they are entitled to adjust the excess rent paid by them
G over a span of 30 years without reference to the rule of "in pari de- ..A
licto". The reason for our refraining to go into these questions i~ 'P
because we find the decree for eviction passed against the appellants
can be sustained on the second ground viz. bona fide requirement of
the shop for the business requirements of the members of the joint
family. Even so we think it necessary to point out an error contained in
H the argument of Mr. Javali. The learned counsel submitted that the
BUDHWANTI v. G.C. PRASAD [NATARAJAN, J.] 539

decision of the High Court on the question of "in pari delicto" may not A
""t be good law in view of recent decision of this Court in Mohd; Salimud-
din v. Misri Lal & Anr., [ 1986) 2 SCC 378. It is true that the case
related to a dispute regarding default in payment of rent between a
landlord and a tenant and this Court held that it will be a judicial sin to
treat the landlord and tenant on a par and apply the doctrine of pari
delicto because the parties were placed in the position of "oppressor" B
l. and "oppressed". The learned counsel has failed to notice that the
'· facts in that case were entirely different. It was a case where a tenant
was obliged to advance a loan of Rs.2,000 to the landlord in order to
~· ·~ secure the lease of a premises. The agreement between the parties
specifically provided that the loan amount was to be adjusted against
the rent which accrued. In spite of it the landlord sought the tenant's C
eviction on the ground of arrears of rent and set up a plea of "in pari
-( delicto" against the tenant. It was in such circumstances this Court
held that the doctrine of pari delicto cannot be applied since the tenant
was perforce compelled to advance a loan to secure the lease even
though su~h advancement of loan was against the terms of the Rent
Act. The learned Judges have taken care to set out that the doctrine D
will not be attracted when there is no element of compulsion or exploi-
tation and both parties have by consensus contravened the provisions
of law for their mutual advantage. They, however, found that the
A tenant concerned in that case was a victim of exploitation and hence he
was not "in pari delicto". The relevant portion of the judgment reads
as follows:- E

"The doctrine is attracted only when none of the parties is
a victim of such exploitation and bo.th parties have volun-
tarily and by their free will joined hands to flout the law for
their mutual gain. Such being the position the said doctrine
embodying the rule that a party to a transaction prohibited F
by law cannot enforce his claim in a court of law is not
attracted in a situation like the present."

Coming now to the ground of eviction based on the bona fide
requirement of the respondent. Mr. Javali argued that the bona fides of
the claim is not established either by the pleadings or the evidence and G
hence the Trial Court and the High Court were in error in sustaining
the said ground of eviction. It was pointed out by the counsel that in
the plaint there is only a casual statement about the requirement of the
shop by the landlord and in the evidence it was not made clear whether
the shop was required for expansion of the existing business or for
starting a new business venture for the benefit of the younger members H
540 SUPREME COURT REPORTS [1987] ::' S.C.R.

A of the joint family. The Trial Court has discussed the case of bona fide
requirement in para 14 of its judgment and has held that the landlord is
bonafide in need of the shop to engage two members of the joint family
in business. The Appellate Judge has reversed the finding of the Trial
Court on four grounds viz. that the tenants were refugees from West
Pakistan and had no shop of their own in the town of Gaya, that from
B
the point of comparative hardship it would be the tenants who would
suffer more than the landlord by an adverse decision, that the shop
occupied by the appellants is only a small portion in a mas8ive building
in the occupation of the landlord and that the landlord's requirement
of the building was more attributable to a desire to recover possession
rather than on account of any genuine need for it. The High Court has
c pointed out that the Appellate Judge had completely misdirected him-
self in his approach to the question because of erroneous assumptions
of facts as well as law. Admittedly, the tenancy had commenced in
1932 which was long prior to the partition in 1947 and hence there can
be no question of the tenant being a refugee from West Pakistan.
D Likewise, the application of the test of comparative hardsi)ip between
the landlord and the tenant was an extraneous test because no such test
has been prescribed by the Act for going into the reckoning. Then
again it was noticed that without any evidence or materials the Appel-
late Judge has assumed that the main building in the occupation of the
joint family is a massive building and that the leased portion consti-
tutes only a negligible area. Likewise the Appellate Judge had no
E materia_ls to hold that the landlord's requirement of the building was
only borne out of desire and not on account of any genuine need. Since
the Appellate Judge had rendered his findings on the question of bona
fide requirement of the shop by the landlord on baseless assumptions
and wrong principles of law, the High Court was justified in setting
aside the finding of the Appellate Judge even though it was factual in
F
character. It is true that in a second appeal a finding on fact even if ~
erroneous will generally not be disturbed but where it is found that the
finding is vitiated by application of wrong tests or on the basis of
conjectures and assumptions then a High Court will be well within its
rights in setting aside in a second appeal a patently erroneous finding
in order to render justice to the party affected by the erroneous find-
G
ing. Mr. Javali tried to canvass that the Appellate Judge had rendered
his finding mainly with reference to the pleadings and the evidence and
his incidental references to other factors and circumstances were only
to reinforce his conclusion and as such his finding does not suffer from
any infirmity or error. We are not persuaded by this argument because
H it cannot be predicated as to how far the Appellate Judge's conclusion
BUDHWANTI v. G.C. PRASAD (NATARAJAN, J.( 541

was influenced by the mistaken tests applied by him to determine the A
issue.
i
' of the view that the finding of the Trial Court
We are, therefore,
which has been confirmed by the High Court regarding the respondent
being bona fide in need of the shop for the business needs of the joint B
family does not call for any interference by this Court in this appeal
under Article 136 of the Constitution.

In the result, the appeal fails and will stand dismissed. There will
-be no order as to costs. To enable the appellants to find alternate
accommodation to shift their business they are given time till 30.6.87
to vacate the premises. c
~ S.R. Appeal dismissed.