MOHD. SALIMUDDINversusMISRI LAL AND ANOTHER

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    622

A
                            MOHD, SALIMUDDIN
                                    v.
                                                                     .
                                                                     - -


                         MISRI LAL AND ANOTHER

                              MARCH 12, 1986

B              [E. S. VENKATARAMIAH AND M. P. THAKKAR, J J. ]

          Bihar Buildings (Lease, Rent & Eviction) Control Act :>-
    1947, s.3 - Loan advanced by tenant in violation of Act -
    Tenant - Whether entl.tled to claim adjustment of loan aioount
    against rent accrued subsequently.
c
          Warns & Phrases - Doctrine of pari delicto - Meaning and
    applicability of.

           The appellant-t:enant had advanced a sum of Rs.2,000 to
     the landlord in order to secilre the tenancy under an agreement ,
D    which provided that loan aioount was to be adjusted against the
     rent which accrued subsequently. The respondent-landlord filed
     a suit against the appellant-t:enant for eviction on the ground
     of arrears of rent, The lower appellate court dismissed the
     suit holding that the tenant was not in arrears of rent since
     the amount advanced by the tenant was sufficient to cover the
E    landlord's claim of arrears. But, the High Court in appeal by
     the respondent-landlord set aside the judgment of the lower
     appellate court holding that the loan advanced by the tenant
    ·was in violation of the prohLbition contained in s. 3 of the
     Bihar Buildings (Lease, Rent & Eviction) Control Act and i
     therefore he was in arrears of rent and liable to be evicted.
F
          Allowing the appeal,
                                                                             .'
          HELD : l.(i) The tenant was not in arrears of rent, The              .
    judgment and decree passed by the High Court are set aside and
    the judgment and decree of the lower appellate court are
G   restored. (626 G]
                                                                     I.
           l(ii) A greater judicial sin than the sin of treating '
     the 'oppressor' and the 'oppressed' on a par, or that of
     rewarding the oppressor and punishing the oppressed, whilst

H
                        MOHD. SALIMUDDI:N v. MIS RI LAL             623

                                                                          A
     ·t.dministering the law designed to protect the oppressed cannot
      be conceived. The Court would be guilty of committing this sin
      if it upholds the view that the tenant who advances a loan to
      the landlord in order to secure the tenancy (in violation of
      the prohibition to do so embodied in the statute enacted for
      his benefit) is in pari delicto. [ 624 B)                           B

               In the instant case, the parties to the contract were
       --Unequal. It was the landlord, who was in the position of an
         oppressor, who wanted to exploit the situation obtaining in
         the context of the acute housing shortage which prevailed. The
         tenant had either to yield to the unlawful demand of the
         landlord, or go without a roof, for- otherwise, the landlord     C
         would not have granted the lease. The relevant provision
         prohibiting the payment of rent in advance embodied in the
         Rent Act was enacted precisely to protect the tenant from such
         exploitation. To deny access to justice to a tenant who is
     --1 obliged to yield to the unlawful demands of the landlord in
         this scenerio by invoking the doctrine of pari-delicto is to     D
         add insult to injury, and to negate the very purpose of the
         provision designed for his protection. The doctrine of pari
         delicto eJDl>odying the rule that a party to a transaction
         prohibited by law cannot enforce his claim in a court of law
         is not attracted in a situation like the present. [624 H;
         625 A-D]                                                         E

             2. The doctrine of pari -delicto is not designed to
       reward the 'wrong-doer' or to penalize the 'wronged', by
      )denying to the victim of exploitation access to justice. The
      -doctrine is attracted only when none of the parties is a
      victim of such exploitation and both parties have voluntarily       F
      and by their free will joined hands to flout the law for their
-i    mutual gain. [625 D-E]

""    1986.
              CIVIL APPELLATE JURISDICTION      Civil Appeal No, 917 of

                                                                          G
     __,     From the Judgment and Order dated 5,9,1985 of the Patna
      'High Court in Decree No. 300 of 1983,

              S.K. Sinha for the Appellant.

              P.P. Singh for the Respondents.                             H
    624                 SUPREME COURT REPORTS       [1986] 1 S.C.R.
A

          The Judgment of the Court was delivered by                  •·   .
          THAKKAR, J, One cannot conceive of a greater judicial
    sin than the sin of treating the 'oppressor' and the
    'oppressed' on a par. Or that of rewarding the oppressor and
B   punishing the oppressed whilst administering the law designed
    to protect the oppressed. We would be guilty of committing
    this sin if. we uphold the view that the tenant who advances a ,....
    loan to the landlord. in order to secure the tenancy (i? "
    violation of the prohibition to do so embodied in the statute """'
    enacted for his benefit) is in pari delicto. And that the
C   Court will not assist the tenant in claiming adjustment of the
    loan amount against the landlord's claim for rent.

          The lower appellate Court dismissed the respondent-
    landlord' s suit for eviction against the appellant-tenant
    holding that the tenant was not in arrears of rent. The
0   following facts are not 'in dispute:-

               1) The tenant had advanced a sum of Rs. 2000 under
               an agreement which interalia contained a stipula-
               tion that the loan amount was to be adjusted
               against the rent which accrued.
E
               2) The amount so advanced by the tenant was suffi-
               cient to cover the landlord's claim of arrears.

               3) If the loan amount was accordingly adjusted
               towards the rent which accrued, the tenant was not1
F              in arrears of rent.

         The High Court has taken the view that since the loan
    advanced by the, tenant was in violation of the prohibition
    contained in the Rent Act, [Section 3 of the Bihar Buildings
    (Lease·, Rent and Eviction) Control Act. ] the tenant was not
    entitled to claim adjustment of the loan amount against the
                                                                           ••
G
    rent which accrued subsequently. The tenant was therefore in
    arrears of rent and liable to be evicted according to the High\.           '
    Court.

          The view taken by the High Court is unsustainable
H   inas!Dlch as the High Court has lost sight of the fact that the
    parties to the contract were unequal. The tenant was acting
            MOHD. SALIMUDDIN v. MISRI LAL (THAKKAR, J,]       625


.~under   compulsion of circumstances and was obliged to succumb    A
  'to the will of the landlord, who was in a dominating position.
    If the tenant had not agreed to advance the loan he would not
   have been able to secure the tenancy. It .was the landlord who
   was in the position of an oppressor who wanted to exploit the
   situation obtaining in the context of the acute housing
    shortage which prevailed. The tenant had either to yield to     B
   the unlawful demand of the landlord or go without a roof, for,
 ._.otherwise, the landlord would not have granted the lease. The
   relevant provision prohibiting the payment of rent in advance
   embodied in the Rent Act was enacted precisely to protect the
   tenant from such exploitation. Obviously, he had to succumb to
   such exploitation, the protective law notwithstanding, as he
   would have been obliged to remain roofless. The law extended     c
   the protection but did not guarantee the roof. To deny
   accecess to justice to a tenant who is obliged to yield to the
   unlawful demands of the landlord in this scenerio by invoking
    the doctrine of pari delicto is to add insult to injury, and
·\to negate the very purpose of the provision designed for his
   protection. The doctrine of pari-delicto is not designed to      D
   reward the 'wrong-doer', or. to penalize the ''Wronged', by
   denying to the victim of exploitation access to justice. The
   doctrine is attracted only when none of the parties is a
   victim of such exploitation and both parties have voluntarily
   and by their free will joined hands to flout the law for their
   mutual gain. Such being the position the said doctrine embody-   E
   ing the rule that a party to a transaction prohibited by law
   cannot enforce his claim in a Court of law is not attracted in
   a situation like the present. The law enunciated by this Court
   \in v.s. Rabi and Anr. v. Smt. Ram Chambeli [1984] 2 s.C.R. p.
   290, t0 which one of us (Venkataramiah, J) was a party fully
   buttresses this proposition. Says the Court speaking through     F
   Venkataramiah, J :-

            "The above view is fully in consonance with the
            spirit behind the rule of oppression whiQh is
            recognised as an exception. to the doctrine that a
            party cannot recover what he has given to the other     G
            party under an illegal contract. 'It can never be
            predicted as pari delicto where one holds the rod
            and the other bows to it', (Per Lord Ellenborough
            in Smith v. Cuff (1817] 6 M & S 160 at 165). Cases
            which call for appropriate relief to be given to an
                                                                    H
    626                SUPREME COURT REPORTS        [1986] i s.c.R.
A
               innocent party where 'one has the power to dictate,.,
               the other has no alternative but to submit are not
               uncommon. Cheshire and Piffot's Law of Contract
               (10th Edn.) refers to another type of case belong-
               ing to this category."
B              At page 338 of that treatise is · the following
               passage:
                                                                      ~·

               "Another type of case where the parties are not
               regarded as equally delictual is where the contract
               is rendered illegal by a statu.te, the object of
c              which is to protect one class of persons from the
               machinations of another class, as for example where
               it forbids a landlord to take a premium from a
               prospective tenant. Here, the duty of observing the
               law is placed squarely upon the shoulders of the
               landlord, and the protected person, the tenant, may
D              recover an illegal premium in an action for money'·
               had and received, even if the statute omits to
               afford him this remedy either expressly or by
               implication. In the words of Lord Mansfield :

               Where contracts or transactions are prohibited by
E              positive statutes, for the sake of protecting one
               set of men from another set of men; the one from
               their situation and condition being liable to be
               oppressed and imposed upon by the other; there the
               parties are not in pari delicto; and in furtherance         ~
               of these statutes, person injured after the trans~
F              action is finished and completed, may bring his
               action and defeat the contract."

         The lower appell&te Court was therefore right, and the
    High Court wrong. The tenant was not in arrears of rent.
G        The appeal succeeds. The judgment actd decree passed by
    the High Court are set aside and the judgment and decree of
    the lower Appellate Court are restored. The suit for evictioJ!..
    stands dismissed. No costs.

H   M.L.A.                                          Appeal allowed.