' This First appeal is directed against the judgment and decree of Ilnd Senior Civil Judge, Hyderabad dismissing F.C.S. No,172/1968 filed by the appellant for recovery of Rs,25,017 from the respondent on account of lease money of the hotel in Gur Market, Hyderabad. Following are the reasons for the short order allowing the appeal made on 11-12-1985.
2. The appellant had auctioned lease rights of its hotel at Hyderabad in favour of the respondent at Rs,2,050 per month on 1-11-1966. The possession of the hotel was taken by the respondent after confirmation of the auction by the Commissioner. The lease of the hotel was executed on 14-6-1967 by the Chief Officer of Hyderabad Municipality in favour of the respondent. The respondent had paid only 14.214 towards rent. Ejectment proceedings were initiated against him and during the pendency of the same he delivered back the possession of the hotel to the appellant.
3. The appellant filed suit for recovery of the arrears in the sum of Rs,25,017 after allowing the adjustment of Rs,14,214 paid by the respondent.
4. The respondent in his written statement denied that he was liable to pay any rent and pleaded that the lease deed was not properly executed and hence suit was not maintainable. He further asserted that the accommodation provided to him was short by one room while he had been promised 15 rooms. He further asserted that he could not enjoy the property peacefully as seven of the rooms overlooked the privacy of the Mohalla houses and they remained out of use. That the premises at the time of taking over of possession by him were not in a tenantable condition and lacked many items which had to be provided by him and that hotel remained out of use from 7-5- 1967. It was further asserted in the written statement that lease was cancelled on 24-3-1967 and 5- 8-1967 and that licence of hotel was not issued.
5. Following issues were framed:-- "(1) Whether the suit is not maintainable?
(2) Whether the Court has not jurisdiction?
(3) Whether the plaintiff is entitled to charge the rent from defendant? If so how much rent is due against the defendant?
(4) Whether the plaintiff has committed any breaches of terms of agreement? If so, it's effect?
(5) Whether the plaintiff has forcibly occupied the hotel without preparing the inventory?
(6) Whether any tenancy deed was executed or existed between the parties? If so its effect?
(7) Relief.
(8) What should the decree be?"
6. The appellant examined Rasool Bux Octroi Superintendent, and the respondent examined him'self and one Anwar Khan. Supervisor of Taxes. Correspondence between the parties was exhibited.
(9) The Civil Judge dismissed the suit on the ground that since the lease was not signed by the Chairman as required by Rule 5 of West Pakistan Municipal Committee (Contract) Rules, 1970, therefore, the same is not an agreement as required under section 26 of Municipal Ordinance, 1960 and, therefore, the suit was not maintainable. But the jurisdiction of the Court to try the suit was not pressed by the respondent.
(10) In respect of issue No,3 the Civil Judge held that since the accommodation in the hotel was short by one room and licence to run the business of hotel was not granted by the appellant and that the privacy of Mohallah was infringed, therefore, the appellant was not entitled to charge the rent.
(11) Issue No,4 was also decided in the light of Issue No,3. However, it could not be proved by the respondent that the appellant had forcibly occupied the hotel.
(12) In respect of issue No,6 it was held that the lease executed was illegal. No relief was held to be available to the appellant. The plea of set off and the claim of Rs,18,000 made by the respondent was held to be not proved.
(13) The respondent had not filed any appeal or cross-objection in respect of not allowing their claim.
(14) The appellant's counsel has not challenged the finding in respect of the lease executed by the Chief Officer of Hyderabad Municipality having been illegally executed. He had however, taken up the position that the Civil Court should have granted decree for compensation for the use of the hotel made by the respondent under section 65 of the contract Act. The appellant's counsel submitted that the same should be awarded to the appellant now. The respondent's counsel objected that the same could not be done as the appellant had not raised such a contention before the lower Court and nor he raised the same in the appeal.
(15) The appellant's counsel relied upon 1985 CLC 1730 where an Hon'ble Judge of this Court had held that when a contract is unenforceable on account of non-compliance of statutory provision regarding execution of the Contract, sections 65 and 70 of the Contract Act can be relied upon for the purposes of awarding compensation. In the same judgment the Hon'ble Judge had allowed the appellant to argue the point about compensation under section 65 of the Contract Act after the judgment had been reserved. The respondent's counsel, on the other hand, relied upon a decision of another Hon'ble Judge of this Court in Suit No,171 of 1972 where it was observed .That if a person disregards the express and clear statutory provision governing the making of contract as unenforceable then in such case an agreement is not discovered to be void within the meaning of sections 65 and 70 of the Contract Act, and moreover, the doing of an act in violation of the express terms of statutes can possibly confirm no right by virtue of the same act because initially it was not lawful or in accordance with law. It was further observed by the same Hon'ble Judge that considering the effect of sections 65 and 70 of the Contract Act, he would sum up by saying that the subsequent oral contract should initially be made by any authorised person and in a lawful manner but on the other hand if it is made by another person in violation of law these provisions will not be attracted.
(16) However, the above view in Suit No,171 of 1972 was not followed in 1985 CLC 1730 and the same was dissented from after a detailed discussion of the various rulings on this point.
(17) The view in 1985 CLC 1730 is supported by AIR 1922 P C 403 where section 65 of the Contract Act was held to include an agreement which are destitute of legal effect from their inception.
(18) The said view is also in accordance with the view taken in PLD 1968 Kar. 87 where it was held that in the event of the contract being found void within the meaning of section 2(g) of the Contract Act, the plaintiff could claim compensation in terms of section 65 of the Contract Act.
(19) I am in agreement with the view taken in 1985 CLC 1730. I also find that the view taken in Suit No,171 of 1972 is based on AIR 1941 Mad. 887 but the said judgment is rather to the effect that the principle of quantum of merit is applied wherein for some technical reasons contract is held to be invalid. Therefore, this judgment rather supports the view that compensation can be awarded to a person where a contract in his favour is found to be hit by an legality.
(20) I am, therefore, of the view that section 65 of the Contract Act should have been followed in this case and I have allowed the appellant to urge the same because from the very beginning of the hearing of this appeal he had urged it and there was no additional evidence required for consideration of the same as it was purely a legal question.
(21) It is an admitted position that the respondent had made a bit for the lease of this hotel at Rs,2,050 per month and the same was sanctioned by the Commissioner of Hyderabad. The possession of the hotel was taken by the respondent on 1-11-1966 and he had not denied to have remained in possession of the same upto 2-6-1968 and, therefore, suit should have been held to be maintainable in respect of the compensation under section 65 of the Contract Act and compensation a the agreed rate of Rs,2,050 per month minus Rs,33 p.m. On account of shortage of one room should have been allowed for to period that the respondent was in possession of the hotel with the result that the sui should have been decreed as such but the decree should have been for compensation and not for arrears of rent. I, therefore, hold in respect A of issue No,1, that the suit was maintainable as a suit for compensation under section 65 of the Contract Act. In respect of issue No,3, I hold that appellant was entitled to charge compensation from the respondent at Rs,2,050 per month minus a sum of Rs,33 per month which I would deduct on account of the shortage of one room from the promised accommodation of 19 rooms. I have made the deduction in accordant with the letter of appellant, dated 8-5-1967 where a shop had been offered to the appellant in order to make up the shortage in accommodation but the appellant had demanded Rs,33 per month as rent of the same and the said shop had been accepted by the respondent by his letter, dated 3-6-1967 but he wanted the said shop to be free of rent. It is, therefore, directed that Rs,33 per month should be deducted out of the compensation of Rs,2,050 which should have been paid by the respondent.
(22) I may note here that the respondent in his letter of 9-3-1967 had clearly admitted that he had started the hotel with effect from 7th February, 1967 and, therefore, the contention of the respondent that he had not been able to run the hotel was completely misconceived. The respondent had taken up the position that he had stopped renting out the 7 rooms on the northern and eastern side of the hotel in June, 1967 but the same means that he had admitted that he had used the said rooms earlier. However, in respect of the non-use of this hotel the respondent has not produced any reliable documentary evidence to the effect that he did not, in fact, make use of the said room. It was easy for the respondent to produce the register of occupancy of the hotel rooms in order to prove that the disputed 7 rooms have completely remained out of use but the respondent has failed to do so and, therefore, it is reasonable to infer that the respondent has made use of the rooms whenever, the customers were available to him. The contention of the respondent that since the lease had been terminate in March, 1967, therefore, he was not liable to pay rent is completely misconcieved. The respondent had been put in possession of the hotel on 1- 11-1966 and he had admitted that all the rooms of the hotel were open for inspection at the time of auction and, therefore, he was I use of the hotel from 1-11-1966 and he inaugurated the hotel in February, 1967 after making whatever arrangement he wanted to make and, therefore, mere giving of notice of termination of tenancy by the appellant cannot have the effect of stopping the liability for compensation for the use of the hotel.
(23) In respect of the allegation made by the respondent that th residence of nearby locality had made complaints that their privacy was being infringed. The respondent has filed certain letters which he has sent to the K.M.C. In respect of the protest. However, he has not been able to prove by convincing documentary evidence that the room have remained out of use and, therefore, he cannot be allowed an benefit in respect of the non-use.
(24) In any case, the non-use, if any, was not on account of an defect in the premises or any breach of any agreed term of implied condition by the Hyderabad Municipality and, therefore, the respondent cannot claim any adjustment out of rent on that account.
(25) The lower Court has found that the respondent has not been able to prove his claim of the expense of Rs,18,000 having been spent on the repairs he had allegedly carried out and it is, therefore, obvious that the respondent cannot be allowed any adjustment or set off on that account. Since the plaintiff had not committed any breach of any term of auction, therefore, issue No,4 had to be answered in the negative.
(26) The civil Judge has held that the appellant had not forcibly occupied the hotel on 2-6-1968 and I find that there was justification for that finding under issue No,5 because the respondent had admitted that in the rent application filed by the Hyderabad Municipality against him he has made a statement in that Court that the respondent was prepared to handover the possession of the hotel. The possession was handed over in the presence of the brother of the respondent.
(27) The result is that in spite of the fact that the tenancy deed having been found to be illegal and not validly executed between the parties but since the respondent had remained in possession of the hotel in question from 1-11-1966 till 2-6-1968 and had made use of the same and had failed to prove that he had not in fact used some of the rooms, therefore, I had by my short order allowed the appeal on 11-12-1985 and decreed the suit for compensation of Rs,24,390 plus interest at 6% per annum from the date of the suit till realization plus the cost of the suit and of this appeal.
Appeal allowed.