Smt. Shrisht Dhawan v. Shaw Brothers

THOMMEN, J. Leave granted. The scope of section 21 * of the Delhi Rent Control Act, 1958 has been * Section 21 reads: " Recovery of possession in case of tenancies for limited period.-(1) Where a landlord does not require the whole or any part of any premises for a particular period, and the landlord, after obtaining the pennission of the Controller in the prescribed manner, lets the whole of the premises or pan thereof as a residence for such period as may be agreed to in writing between the landlord and the tenant and the tenant does not, on the el\ll.i!Y of the said period, vacate such premises, then, not withstanding anything contained in Section 14 or in any other law, the Controller may, on an application made to him in this behalf by the landlord within such time as may be prescribed, place the landlord in vacant possession of the premises or part thereof by evicting the tenant and every other person who may be in occupation of such premises. (2) While making an order under sub-section (1 ), the Controller may award to the landlord such damages for the use or occupation of the premises at such rates as he considers proper in the circumstances of the case for the period from the date of such order till the date of actual vacation by the tenant." A considered by this Court in a number of decisions* .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, strictly within those bounds, and subject to the vigilant enquiry of the Controller before according his permis­ sion, the parties are, once permitted to regulate their relationship in accordance B with the section, totally governed by the terms of their contract. 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 C accorded sanction, the paxties 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. 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. D 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 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 G *Shiv Chander Kapoor v. Amar Bose, [1990] l sec 234; /nder Mohan Lal v. Ramesh Khanna, [1987] 4 SCC l; SubhashKumor Lota v. R.C.Chhibo and Another, [1988] 4 SCC 709; V.S.Rahi andAnotherv. Smi.RamChombe/i, [1984] l SCC 612;JR.Vohro v.JndiaExportHou.se Pvt.lt.d. and Another, (1985] l SCC 712; Yamuna·Maloo v. Anand Swarup, (1990] 3 SCC 30; Pankaj Bhargava and Another ·v. Mohinder_Nath and An:,iher, AIR 1991SC1233; Smi. Dhanwonti v. DD.Gupta, [1986] 3 SCC l; SB.Noronah v. Prem Kumori Khanna, [1980] 1 SCC 52 and H Pukhroj Jain v. Podmo Kashyap and Another, [1990] 2 sec 431. SMT. DHA WAN v. SHAW BROS. [THOMMEN, J.] 457 other person in occupation of such premises. The person in occupation of the A premises has no right in law to resist eviction once the section is attracted. This is an extraordinary power vested in the Controller to restore possession of the premises to the landlord by a quick and summary action. The non obstante clause contained in the section protects the action of the Controller from challenge on any ground postulated in section 14 of the Act or any other law. This is a wide protection of any action duly taken in terms of the section, but B the requirements of the section must be strictly complied with before action is taken under it. The order of the Controller in the circumstances warranted by the section is a self-executing order requiring no further proceeding. It is at once a sanction C for the lease and for eviction on expiry of the period of. the lease. Neither can the landlord evict the tenant during the period of the lease nor can the tenant remain in possession beyond that period. Parties are bound by their contract, as sanctioned by the Controller, and the provisions of section 14 are of no avail to either party to circumvent section 21. Once the period has expired, there is no question of any further notice to the tenant or any other person in occupation D of the premises and there is no scope for any further proceeding. None has any right outside the section which operates strictly in terms thereof provided the conditions stipulated therein are unquestionably satisfied. See JR.Vohra v. India Export House Pvt. Ltd. & Anr., [1985) 1 SCC 712. The only protection that the tenant has is what section 21 itself postu­ lates. He is protected against the conduct of a fraudulent landlord. The law does not protect either pany 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 bui.lding for the period specified in his application to the Controller for permission to let out the premises. If that belief was truthfully held by him at the time of his application to the Controller, the fact that subsequent events proved him wrong, and that he did not require the 458 SUPREME COURT REPORTS [19?11 SUPP. J S. C.R. A building not only for the period stated in the application, but also for a longer _.,.._ period, or that he required it earlier than anticipated, would not make the belief ' any less honest or valid. All that the landlord is required to state in his application for permission of the Controller is the absence of his requirement of the premises for the particular period, but he is not bound to state its reasons: Inder Mohan Lal v. Ramesh Khanna, [1987] 4 SCC 1. What the section postulates is the bona fide belief of an honest and reasonable landlord, and not the reckless and casual opinion of ah irresponsible and careless person. The question is, did the landlord make a fraudulent P-= representation to the Controller about the absence of his requirement of the premises, i.e., knowingly that his statement was false or without belief in its truth or recklessly careless whether it was true or false. Did the landlord honestly believe that what he stated in his application to be a true and fair representation of the facts? There is no fraud if what he honestly believed to be true turned out to be false. The section does not place any higher degree of responsibility on the landlord. D 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. On the other hand, if the premises let out as a E residence in terms of the section is deliberately used by the tenant for non- residential purposes, he loses the protection of the statute for the period of the lease and the Controller can, on an application by the landlord, evict the tenant, or any other person in occupation, and restore possession of the premises to the .....,, landlord forthwith. The section protects the landlord and the tenant strictly in terms thereof, and on the fraud or deliberate breach by either party of the terms F of the !ease as contemplated by the section, the protection is withdrawn from the guilty party. This means, if the permission of the Controller has been fraudulently obtained by the landlord, and the tenant has been let into the premises, the landlord loses the right to seek eviction of the tenant by the ..-' summary procedure contemplated by the section. Likewise, if the tenant has -deliberately-but not accidently-violated the terms of the lease by using the G premises otherwise than as permitted by the section, he is liable to be evicted on an application by the landlord, although the stipulated period of the lease has not expired. All this is because the very basis of the Controller's order has been violated by the fundamental breach of the guilty party. The section thus postulates that both the landlord and the tenant act honestly. Ne_ither of them can take advantage of his own deceit or breach. No sanction of the statutory -:- SMT. DHA WAN v. SHAW BROS. [SAHAI, J.] 459 ~ authority procured by fraud can protect the guilty or harm the innocent. A ' 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 favour of a statutory order. The Controller's order under section 21 is presumed to be valid until proved to be vitiated by fraud or malafide. If his order was obtained by the fraud of the party seeking it or if he B made a 'mindless order' in the sense of acting malafide by illegitimate exercise of power owing to non-application of his mind to the strict requirements of the ._., section, then the special mechanism of the section would not operate. (See SBNoronah v. Prem Kumari Khanna, (1980] 1 SCC 52]. My learned brother, R.M.Sahai, J. has exhaustively dealt with various c aspects of the questions raised in this appeal. He has eome to the conclusion that there was no evidence of fraud or non-application of the mind of the Controller to the essential requirements of the section, and the burden to prove the same has not been discharged by the tenant. He has further found that the evidence on record amply proved that the landlady honestly believed that sl'fe D required the premises at the end of stipulated period; that her request to the Controller for permission in terms of section 21 was not in any manner tainted by lack of good faith; and that the order obtained by her under section 21 was not liable to be upset by conducting a roving enquiry and by placing th.e burden wrongly on her to prove that she did not act dishonestly. I agree that the statutory authorities in the present proceedings addressed E 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. There was no justification on the part of the authorities for coming to that conclusion on the basis of a belated F - plea and far from satisfactory or reliable evidence. The High Court was wrong in affirming the totally unsustainable conclusion reached by the authorities. In the. circumstances, I respectfully agree with the findings reached by my learned brother Sahai, J. ·--.- G R.M.SAHAI, J. Economically equally matched tenant, resisted execu- tion, successfully, under Section 21 of Delhi Rent Control Act, (in short the Act) by accusing landlady of fraud, misrepresentation and lies thus giving rise to a very important issue in this landlady's appeal as to the nature and extent of fraud which could vitiate the sanction granted under Section 21 of the Act by the Rent Control Officer. H A Short durational tenancy, a provision unique of its kind in a rent control legislation, with a fresh look on eviction ensuring vacant possess,ionstatutorily, after expiry of lease period 'without notice even'* or hazard of establishing bonafide need,** due to social necessity, peculiar to Delhi, favourably inclined towards landlord, was subjected to inherent and implied limitations by this Court in Noronah,*** in larger social interest of fairness and justice, which per- B meates our jurisprudence, to avoid any abuse of provision or arbitrary exercise of power, by directing such sanction or permission to pass the test of being clear of fraud or collusion. Even a mindless order was held to vitiate the procet"Alings. And the tenant was permitted to raise the objection in execution. Another was added to it in V.S.Rahe**** when an order on incorrect facts was also held to be invalid. But the decision not only created misapprehension C amongst tenants who seized upon it to raise all possible objections frivolous and otherwise but was misunderstood by the authorities, too, who applied er­ roneously and tested validity of the permission on requirement on the date of execution, or it was bad because the reason due to which sanction was obtained did not materialise even at time of execution. At times the yardstick applied D was of bonafide necessity as understood in Section 14 of the Act. Consequently short term tenancy became an illusion and in a span of ten years from Noronah (supra) there came to be rendered at least a dozen reported decisions by this Court only. Although Noronah (supra) has, since, been substantially watered down, in subsequent decisions, yet it still furnishes the basis for assailing the sanction therefore it is necessary to examine, in brief, how much of it survives today and to what extent the law may be taken as settled. * For this it is worthwhile extracting the Section 21 which reads as under:- "21. Recovery of possession in case of tenancies for limited period.-(1) Where a landlord does not require the whole or any part of any premises for a particular period, and the landlord; after obtaining the permission of the controller in the prescribed man­ ner, lets the whole of the premises or part thereof as a residence for such period as may be agreed to in writing between the landlord and the tenant and the tenant does not, on the expiry of the said period, vacate such premises, then, notwithstanding anything contained in Section 14 or in any other law, the Controller may, on J.R.Vohra vlndiaExporl House PYt.Lld. & Anr ... [1985]1SCC172. Shiv Chand Kapoor, [1990]1SCC234. Pukhraj Jainv PadmaKashyap , [1990] 2 SCC 431. *** SB.Noronahv,PremKwnari Khanna, [1980] l SCC 52. H **** V.S.Rahe v, Ram Chambeli, [I 984] l sec 612. ... SMT. DHAW AN v. SHAW BROS. [SAHAI, J.] 461 an application made to him in this behalf by the landlord within such time as may be prescribed, place the landlord in vacant possession of the premises or part thereof by evicting the tenant and every other person who may be in occupation of such prem­ ises." What strikes one is, the simplicity of the ianguage and oneness of purpo~e. As observed in Noronah (supra) the Parliament was keen on maximising accom­ modation available for letting, due to scarcity crisis. The objective was sought to be achieved by simplifying the provision for letting and assuring possession after expiry of lease. The only condition for applicability of the Section is non­ requirement of it by the landlord for short period. It is not subjected to any restriction by requiring the landlord to disclose any reason nor whether it shall be required thereafter for self or any family member. Othe_r conditions, namely, passing of order, letting it for residential purpose, and entering of agreement with tenant, are incidental only. Use of non-obstante clause further leaves no room for doubt that the legislature intended it to operate on its own. That is why it has been held to be a self-contained code*. Neither creation of tenancy nor recovery of possession after expiry of period has been hedged in with any statutory restriction or condition. However, Noronah (supra) culled out, dual protection for tenants one substantive and other procedural by providing that validity of sanction could be assailed on fraud etc. and the objection could be taken in execution. But the latter, that is, procedural safeguard has been diluted in four sub~equent decisions of Llrree Judge Bench. In Vohra (supra) warrant of possession issued under Section 21, without service of notice, to the tenant was upheld as after expiry of-short term tenancy the tenant had no right to continue. However, to avoid a tenant from being completely shut out even where the permission was obtained by 'a mere ritualistic observance of procedure' or, 'where such permission was procured by fraud' or, 'was a result of collusion' the court held that competing claims could be harmonised by "insisting upon his approaching (tenant) the Rent Controller during the currency of the limited tenancy for adjudication of his sooner he discovers facts and circumstances that tend to vitiate ab initio the initial grant of permission." It was reiterated in Shiv Chand Kapoor (supra). Yamuna Maloo **narrowed it down further when it held that; "if the tenant has objection to raise to the validity of the limited vacancy it has to be done prior to ~e lapse of lease and not as a * Shiv Chand kapoor v. Amar Bose, (1991] l SCC 234. **Yamuna Maloo v. Anand Saroop, [1990] 3 SCC 30. 462 SUPREME COURT REPORTS [1991) SUPP. 3 S. C.R. defence to the tenants application for being put in possession. We would like to reiterate that even if such an exercise is available that must be taken to be very limited and made applicable in excep­ tional cases." In Pankaj Bhargava,• it was observed; "It is true that in Noronah' s case a challenge to the validity of the limited tenancy was permitted even after the period of limited lease. But later cases have substantially denuded this position. In Vohra' s case (AIR 1985 SC 4 75), this Court laid down that a tenant who assails the permission was procured by fraud a ground not dissimilar to the one urged in the present case must approach the Rent Controller during the currency of the limited tenancy for an adjudication of his pleas as soon as he discovers facts and circum- stances which, according to him, vitiate the permission." Thus a tenant cannot wait for the entire period of lease and then raise objection to execution on fraud or"collusion unless he is able to establish that it was not D known to him and he came to know of it, for the first time only at the time of execution. In other words the Controller shall not be justified in entertaining an objection in execution unless the tenant establishes, affirmatively, that he was not aware of fraud before expiry of the period of lease. To the following extent, therefore, the law on procedural aspect should be taken as settled. E (1) Any objection to the validity of sanction should be raised prior to expiry of the lease. (2) The objection should be made immediately on becoming aware of fraud, collusion etc. (3) A tenant may be permitted to raise objection after expiry of lease F in exceptional circumsta.'lCes only. (4) Burden to prove fraud or collusion is on the person alleging iL Tested in the light of what has been stated above the tenant was not entitled to claim the protection as the objection filed by him to execution G application was in defence to landlord's application for delivery of possession. The application is conspicuously silent on knowledge of fraud. It did not whisper that the tenant was unaware of facts stated therein during subsistence of lease. In fact, from a letter sent, twenty days, before expiry of lease to the landlord it is clear that the tenant was not only aware that he was required to vacate the premises after expiry of the time but he requested the landlady to H • Panaj Bhargava v. Mohinder Nath, AIR 1991 SC 1233. ., l - SMT. DHA WAN v. SHAW BROS. [SAHAI, J.] 463 grant him some more reasonable time for vacating the premises. In any case in A absence of any averment in the application that he was not aware of various allegations made against the landlady in the application seeking invalidity of the permission granted by Controller the application was liable to be dismissed. No exceptional circumstance so as to bring it within the principle laid down in Yamuna Maloo' s (supra) case could be deciphered either from the application or from the statement of the tenant. Neither the Controller nor the Appellate B Authority found any exceptional circumstance which could justify the tenant to resist the execution after expiry of the period. Therefore, the Controller was not justified in entertaining his objection and entering upon an enquiry which was roving in nature and whqlly uncalled for. But since law was not so clear when the objection was decided by the Controller it is appropriate to examine if the finding on merits is sustainable. C With this the more difficult and important aspect, namely, the objections or grounds on which a tenant can challenge validity of sanction granted under Section 21 of the Act by the Controller either during subsistence of lease or after its expiry in execution may now be examined. In Noronah (supra) even though law was declared and a tenant was pennitted to raise objections that sanction was obtained by fraud or collusion or the Controller passed L'le order mindlessly the Court clid not decide what constitutes fraud or collusion in relation to Section 21 of the Act or when an order passed by the Controller could be held to be mindless. An action is mindless when it is thoughtless or without any care or caution. In law it is passing of an order without any regard to the provision of law. If the section requires the authority to pass an order on· inquiry or on being satisfied of existence or non-existence of a fact then the duty cast is higher and an order which is passed without due regard to duty to investigate then the order may be mindless. But in absence of any statutory requirement it may utmost be regulatory oversight. In the context of Section 21 it is clear that there is no statutory requirement for the Controller to enter into enquiry on application made by a landlord supported by a statement and agreed to by the tenant. Even though in Noronah' s case it was said that an application to be beyond suspicion must contain special reasons but in subsequent decisions this has been explained· and it has been held that in absence of any requirement in the Section to disclose any reason an application filed without reason could not be said to be bad in law nor a permission granted on it could be said to be mechanical or mindless. An order may be mindless if at the time of granting permission there is material to indicate that the premises were being let out for a short period even though it was available for indefinite letting. But in absence of any material to indicate to the contrary if the Controller grants permission on the mere statement in the application that the premises was available for being let out for a short time as it was not required 464 SUPREME COURT REPORTS (1991] SUPP. 3 S. C.R. A by the landlord and it is supported by a statement recorded before Controller which is not objected to by the tenant rather agreed then it would be too much to say that the exercise of power was made thoughtlessly. In Shiv Chand Kapoor this Court did not approve of the decision of the High Court that a permission granted under Section 21 was mindless only because on the date of expiry of the period of limited tenancy the age of the landlord's son was about B 19 or 20 years whereas the minimum age prescribed by law for marriage was 21 years when the reason for requirement of the premises after expiry of lease period was marriage of the son. The Bench further deprecated the practice of the Authorities of entering into roving inquiry at the instance of tenant as that would frustrate the very purpose of limited period of tenancy contemplated by Section 21. In Smt. Dhanwanti Devi* it was held that even successive letting C under Section 21 prior to grant of sanction could not adversely reflect on the permission as it was reasonable for landlord to let out looking to immediate future. Nor could the permission be said to be vitiated because after expiry of the period the landlord may in. changed circumstances, decide to let out again. In lnder Mohan Lal** it was held that the landlord was under no obligation to disclose reasons for letting out for a short period. It was' held that omission D to do so did not render the order invalid nor it could justify the inference that the sanction was granted mindlessly. In Joginder Kumar Butan *** even letting of ground floor or first floor to the tenants on earlier occasions which was not disclosed in the application, for grant of permission, under Section 21 was not considered fatal as the landlord might have done so on basis of bona fide grounds and genuine calculations which may have gone wrong. All these decisions were examined in Shiv Chand Kapoor (supra). The Bench explicitly ruled out sufficiency of accommodation or bona fide need, provided for in Section 14, as beyond scope of the enquiry under Section 21 of the Act. It was held that the invalidity which could vitiate sanction was error in jurisdictional fact at the time of grant of permission, as valid sanction was sine qua non for Controller's jurisdiction. What, then, is an error in respect of jurisdictional fact? A jurisdictional fact is one on existence or non-existence of which depends assumption or refusal to assume jurisdiction by a Court, tribunal or an. authority. In Black's Legal Dictionary it is explained as a fact which must exist before a court can properly assume jurisdiction of a particular G case. Mistake of fact in relation to jurisdiction is an error of jurisdictional fact. No statutory authority or tribunal can assume jurisdiction in respect of subject matter which the statute does not confer on it and if by deciding erroneously the fact on which jurisdiction depends the court or tribunal exercises the juris­ diction then the order is vitiated. Error of jurisidictional fact renders the ordrr • Smt. Dhanwanti v. DD. Gupta, [1986] 3 SCC 1. ** lnder Mohan Lal v. Ramesh Khanna, [1987] 4 SCC 1. *** Joginder Kumar Bulan v. R.P. Oberoi, [1987] 4 SCC 20. SMT. DHAW AN v. SHAW BROS. [SAHA!, J.] 465 ultra vires and• bad. In Raza Textiles*• it was held that a court or tribunal cannot confer jurisdiction on itself by deciding a jurisdictional fact wrongly. What are those facts which can be said to be jurisdictional fact under Section 21? Although the Section visualises four conditions, namely, that the landlord does not require the whole or part of premises for a particular period, the landlord must obtain the permission of the Controller in the prescribed manner, letting of the whole or part of the premises must be for residence and such letting must be for such period as may be agreed between the landlord and the tenant in writing. But the jurisdictional fact can be said to be two, availability of vacant premises which are not required by the landlord for the particular period and its letting out for residential purpose. For instance a pennission obtained under Section 21 may be vitiated if the premises were not vacant on the da~e of application. Similarly if the permission is obtained in respect of non­ residential premises. Whatis significant is that the declaration by the landlord that the premises were available for letting out for short period is not required to be backed by any reason. And an application filed under section 21 with or without reasons is neither bad nor contrary to law. It may be accompanied by statement of reasons or the application may merely state that the landlord does not require the premises for the period mentioned therein. In either case the ~pplication shall be in accordance with law. And if the Controller is satisfied . that -w:hat was stated was correct he is obliged to grant permission. This satisfaction may be arrived at by believing the statement or requiring a landlord to give reasons or furnish such information as the Controller may consider necessary to saitsfy himself that the statement made by landlord was correct. But once satisfaction is arrived at and the order is passed it becomes operative and final. It cannot be re-opened because of mere mistake or error or in the circumstances a more reasonable approach should have been to reject the application or allow it after obtaining better detaiis. Error in assumption of jurisdiction should not be confused wilh mistake, legal or factual in exercise of jurisdiction. In the former the order is void whereas in the latter it is final unless set aside by higher or competent court or authority. An order which is void can be challenged at any time in any proceeding. A permission granted under section 21 once permitted to attain finality becomes unassailable on error in exercise of jurisdiction. It could be challenged later or in execution only if it could be brought in the category of a void or ultra vires permission. Such invalidity can arise if jurisdiction is exercised by misrepresentation of facts either about existence of vacancy or nature of premises. In other words what attains finality in accordance with law cannot be permitted to be reagitated or reopened except in the larger social interest of preventing a person from practising deceit. Therefore an error of jurisdictional_ fact which could entitle * Wade Administrative Law; •• 1 ~aza Texlile v. lncomt Tax Officer ,RampU1, [1973 ]1 SCC 633. A a Controller to re-examine the matter in the context of section 21 is the same, namely, fraud or collusion. Ratio in Noronah(supra) to this extent was reitereated and accepted as correct exposition of law in Shiv Chand Kapoor (supra). It has to be understood as such. Fraud and collusion vitiate even the most solemn proceedings in any civilised system of jurisprudeQce. It is a concept descriptive of human conduct. Michael Levi likens a fraudster to Milton's sorcerer, Com us, who exulted in his ability to, 'wing me into the easy-hearted man and trap him into snares'. It has been defined as an act of trickery or deceit. In Webster fraud inequity has been defined as an act or omission to act or concealment· by which one person obtains an advantage against conscience over another or which equity or public forbids as being prejudicial to another. In Black's Legal Dictionary, fraud is defined as an intentional perversion of truth for the purpose of inducing another in reliance upon it to part some valuable thing belonging to him or surrender a legal right; a false representation of a matter of fact whether by words or by conduct, by false or misleading allegations, or by concealment of that which should have been disclosed, which deceives and is intended to deceive another so that he shall act upon it to his legal injury. In Oxford, it has been defined as criminal deception, use of false representation to gain unjust advantage; dishonest artifice or trick According to Halsbury's Laws of England, a representation is deemed to have been false, and therefore a misrepresentation, if it was at the material.date false in substance and in fact. Section 17 of the Contract Act defines fraud as act committed by a party to a contract with intent E . to deceive another. From dictionary meaning or even otherwise fraud arises out of deliberate active role of representator about a fact which he knows to be untrue yet he succeeds in misleading the representee by making him believe it to be true. The representation to become fraudulent must be of fact with knowledge that it was false. In a leading English• case what constitutes fraud was described thus, "fraud is proved when it is shown that a false representation has been made (1) knowingly, or (2) without belief in its truth, or (3) recklessly, careless whether it be true or false." But fraud in public law is not the same as fraud in private law. Nor can G the ingredients which establish fraud in commercial transaction can be of assistance in determining fraud in Administrative Law. It has been aptly observed by Lord Bridge in· Khawaja** that it is dangerous to introduce maxims of common law as to effect of fraud while determining fraud in relation * Derry v. Peek, [1889] 14 App. Cas. 337. H ** Khawaja v. Secretary of State for Home Depll., 1983 (1) All England Repons p. 765. :;._ ·\_ \. ( t I SMT. DHA WAN v. SHAW BROS. [SAHAI, J.] 467 to statutory law. In ·Pankaj Bhargava (supra) it was observed that fraud in relation to statute must be a colourable transaction to evade the provisions of a statute. 'If a statute has been passed for some one particular purpose, a court of law will not countenance any attempt which may be made to extend the operation of the Act to something else which is quite foreign to its object and beyond its scope•.' Present day concept of fraud on statute has veered round abuse of power or ma/afide exercise of power. It may arise due to overstepping' the limits of power or defeating the provision of statute by adopting subterfuge or the power may be exercised for extraneous or irrelevant considerations. The colour of fraud in public law or administrative law, as it is developing, is assuming different shade. It arises from a deception committed by disclosure of incorrect facts knowingly and deliberately to invoke exercise of power and procure an order from an authority or tribunaJ. It must result in exercise of jurisdiction which otherwise would not have been exercised. That is misrepre­ sentation must be in relation to the conditions provided in a section on existence or non-existence of which power can be exercised. But non-disclo­ sure of a fact not required by a statute to be disclosed may not amount to fraud. Even in commercial transactions non-disclosure of every fact does not vitiate the agreement, 'In a contmct every person must look for himself and ensures that he acquires the infonnation necessary to avoid bad bargain•• In public law the duty is not to deceive. For instance non-disclosure of any reason in the application under section 21 of the Act about its need after expiry of period or failure to.give reac;on that the premises shall be required by son, daughter or any other family member does not result in misrepresentation or fraud. It is not mis­ representation under section 21 to state that the premises shall be needed by the landlord after expiry of the lease even though the premises in occupation of the landlord 'on the date of application or, after expiry of period were or may be sufficient A non-disclosure of fact which is not required by law to be disclosed does not amount to misrepresentation. Section 21 does not place any positive or comprehensive duty on the landlord to disclose any fact except that he did not need the premises for the specified period. Even the Controller is not obliged with a pro-active duty to investigate. Silence or non-disclosure of facts not required by law to be disclosed does not amount to misrepresentation. Even in contracts it is excluded as is clear from explanation to Section 17 unless it relates to fact which is likely to effect willingness of a person to enter into a· contract Fraud or misrepresentation resulting in vitiation of permission in context to Section 21 therefore could mean disclosure of false facts but for which the Controller would not have exercised jurisdiction. On the substantive safeguard therefore the law that is settled and should • Craies on Statute Law, 7th Edition, p. 79. **Anson's law o/Contract. A be followed by the authorities may be stated thus: ·c (1) Permission granted under Section 21 of the Act can be assailed J by the tenant only if it can be established that it was vitiated by / fraud or collusion or jurisdictional error which in context· of 'I Section 21 is nothing else except fraud and collusion. (2) Fraud or collusion must relate to the date when permission was granted. (3) Permission carries a presumption of correctness which can be permitted to be challenged not only be raising objection but proving it prima facie to the satisfaction of Controller before landlord is called upon to file reply or enter into evidence. (4) No fishing or roving inquiry should be permitted at the stage of execution. (5) A permission does not suffer from any of these errors merely because no reason was disclosed in the application at the time of creation of short term tenancy. (6) Availability of sufficient accommodation·either at the time of grant of permission or at the stage of execution is not a relevant factor for deciding validity of permission. Turning to the facts now, is the sanction granted under Section 21 vitiated because the landlady in obtaining the permission committed fraud? On 3rd November 1978 the landlady filed an application before the Controller under Section 21 the material allegations of which were that the ground floor F of the house was. lying vacant and she desired to give it on rent for a short period of three years whereafter she needed the house for herself. It was mentioned that the premises were being given for residential purpose only and a proposed lease agreement between her and the tenant along with the plan was attached with the application. Her statement was recorded in which she stated that she would require the premises for her own use after three years. It was G ·also mentioned that the premises had not been let out earlier. Statement of tenant was also recorded in which he expressed his agreement to take the premises for a period of three years after expiry of which he agreed to vacate the same. In absence of any material on the record to establish that the statement was not correct the Controller assumed jurisdiction and granted the permission as required under Section 21 for a period of three years. Twenty H days before tenancy was to come to an end, the tenant, which is a firm, wrote . ' -- SMT. DHA WAN v. SHAW BROS. [SAHA!, J.] 469 a letter, through one of its partners to the landlady for sympathetic considera­ tion for renewal of lease as theft had occurred in the premises in which the tenant had lost valuable goods. There was a veiled, irrelevant, suggestion in the letter that no reason was disclosed by her for requiring the premises as her family was having sufficient accommodation for living. Since the landlaqy did not agree to extend the lease and filed an application under Section 21 of the Act for a direction to the Controller to place her in vacant possession of the premises an objection was filed by the tenant on all possible grounds which could be imagined from inaccuracy, lack of knowledge, fraud, collusion etc. One of the objections was that since the premises was taken by one of the partners of the firm, only, without any authority the agreement entered into by him for grant of permission under Section 21 was not binding. It was also alleged that this was done without knowledge of other partners. Therefore the permission was neither binding nor enforceable. But the partner who made the statement was neither examined nor it was stated that the firm was not aware that the tenancy was for short duration only. The tenant went to the length of averring that in fact they were already in occupation of the premises from a date before the tenancy was created, a plea which was rejected by the Rent Control Authorities. Even the plea that the premises were let out for residential-cum­ commercial purposes did not find favour with any of the authorities. Nor did the Controller find any merit in the claim that the order of permission was mindless or it was bad for non-disclosure of reason. But the challenge succeeded because the permission was obtained by playing . fraud as the landlady knew from the very beginning that premises were available for letting out indefinitely. The Controller found that in absence of any averment in the objection that she had let out: the premises in 1978 for three years as she would require it after expiry of this period for her younger son her statement in support of it could not be looked into. The authority further found that variance between pleading and proof, apart, the landlady failed to establish. that premises were let out with intention to get it back after three years for her second son. Inference was drawn against her due to non-production of the son who could have been the best person to throw light on it as later on he not only joined another service but purchased a flat in Bombay. It was held that even if it was assumed that the premises were not needed by her for son that could not validate the sanction. The Appellate Authority agreed with the finding of the Controller as there was no statement in the application, made at the time for grant of permission, that the premises shall be required after three years by her son. In other words since she stated that she required the premises for herself after three years and she was having an accommodation which was sufficient for her and family the permission obtained by her was vitiated by fraud. The High Court did not consider it proper to examine the matter as it was concluded by findings of fact. 470. SUPREME COURT REPORTS [1991] SUPP. 3 S. C.R. A Sri Rajeev Dhavan rightly urged that both the Controller and the Tribunal misdirected themselves in placing the burden on the landlady to prove that the permission obtained by her was genuine. According to him the primary burden · was on the tenant to establish that the permission was obtained by playing fraud. Unfortunately, it appears, the authorities assumed fraud and misrepre­ sentation on mere averment in the objection of the tenant and proceeded to B record the finding on premise that the landlady was required to prove it. Apart from the procedural error even the finding that the premises were not needed by her after three years is not well founded. The law does not require to give any reason on the date when the application is made. May be that one of her sons was in Army and the other was at Bombay and therefore she did not need the premises for them on the date of application; Yet the landlady could, well, C visualize that she would need the premises after three years either because her son who was in Military was to be posted at Delhi, who in fact ,was posted in the meantime, or because her other son who had been rendered jobless in 1978 and was not doing well in life may need the house for establishing a factory in NOIDA. In fact some land was allotted and licence too appears to have been issued in his favour. B.ut that is not relevant. What is relevant is a prima facie D evidence led by her to prove that her statement that she shall be requiring the premises after three years was not a mere make belief or a pretence but a genuine statement on the state of affairs as it stood then. The averment in the application that the premises shall be needed by her after three years could not be construed as misrepresentation. The requirement of a landlord iricludes the E requirement of a son or daughter or any member of the family. If she gave the premises for three years believing that in the meantime her son in Military might be posted at Delhi or the son at Bombay may start a business at NOIDA, which may not have come out to be exactly as she desired it to be it could not invalidate the permission. Further the landlady in her statement before Control­ ler, stated that she informed the partner who had taken the premises that she F shall need it after three years for her second son. And yet the tenant instead of producing that partner, without any excuse, chose to examine another partner and the authorities did not attach any weight to it. Letting under Section 21 is not hedged with any restriction. Throwing the whole or part of the premises by landlord for letting out is not linked with his G existing accommodation, its number or sufficiency. The one is not dependent on the other. Even letting for paying instalment of loan, for constructing the premises orits re-letting has not been held to be contrary to Section 21. Validity of permission has to be judged on the date of grant of application. A vailabiltty of premises for indefinite letting cannot be judged by subsequent events or the failure of the landlord to occupy immediately for personal, financial, economic H or other reasons. Therefore, the authorities committed manifest of error of law, -- .,-- SMT. DHAWANv. SHAW BROS. 471 both in entertaining the application of the tenant resisting the objection of the A landlady by placing the burden on her erroneously and deciding against her by misapplication of law and misconstructions of the provisions of Section 21. ORDER For the reasons stated by us in our concurring judgments dated December B 3, 1991 we set aside the impugned judgment of the High Court and the Order of the Additional Rent Controller dated 21.11.87 in Misc. Application No. M- 650of1978 and that of the Rent Control Tribunal dated 26.9.1988 in R.C.A. No. 1085 of 1987. The appeal shall accordingly stand allowed. The appellant shall be entitled to her costs assessed at Rs. 5,000/-. R.P. Appeal allowed.