HAJAM HUSSEIN DADU Vs. BAI KUNVERBAI PRABHUDAS

JUDGEMENT

(1.) These two companion matters raise two common questions as to whether the consent decree operates as a lease and whether it contains a penal clause so that the equitable jurisdiction of the Court may be invoked to give relief against forfeiture or the penalty. In both these matters Mr. Mehta had amended the memo of appeal for raising the wider question as to whether the consent decree in these two cases which is passed under sec. 12 of the Rent Act and not under sec. 13 would be null and void as it is alleged to have been passed solely on the consent terms without the Court applying its mind to the relevant question. This third contention was raised at no stage of the proceeding and in the view which we are taking it would not be necessary to go into the third larger question in both these matters. Besides the decree-holder would be seriously prejudiced if these contentions would be allowed to be raised at this stage because he would have no opportunity to show the state of the original record by pointing out whether the Court had applied its mind for arriving at the relevant satisfaction as to the applicability of sec. 12 before passing the consent decree in question. There is no dispute that in both the cases at the relevant time the Saurashtra Rent Control Act 1951 was the law applicable.

(2.) The legal position is well-settled in this case after the two Full Bench decisions that even though ordinarily a consent decree cannot be modified except by consent of the parties equitable jurisdiction of the Court can be exercised in two well-known recognised exceptions :-(1) where the consent decree creates a lease with a forfeiture clause and (2) where the consent decree embodies a contract involving penal clause in which case the very legal incident arising from sec. 74 of the Contract Act would imply a provision for relief against such penalty. Therefore in both the cases exception from the normal rule is founded on the ground that the consent decree being a contract between the parties with the seal of the Court superadded it would be governed by the ordinary incidents of the contract between the parties. In the first category of cases it being a contract of lease with a forfeiture clause the normal incident of such a contract would be to imply a provision giving power to the Court to give relief against forfeiture and in the second category of cases the parties contract embodied in the consent terms would carry the legal incidents specified in sec. 74 of Contract Act which would necessarily imply power in the Court to give relief against any penal stipulation between the parties. The first exception has been recognised in Krishnabai v. Hira Govind 8 Bom.L.R. 813 by the Full Bench consisting of Sir Lawrence Jenkins C. J. Aston J. Beamon J. and Heaton J. The second exception was recognised by the decision in Waman v. Jaswant A.I.R. 1949 Bom. 97 by the Full Bench consisting of Chagla Ag. C. J. Bavdekar and Gajendragadkar JJ. In the later Full Bench decision the earlier Full Bench decision was not noticed. Their Lordships however held that it was the extreme view that a consent decree could not be modified except by consent and therefore equitable jurisdiction could not be invoked by the Court in case of a consent decree. Their Lordships also considered that out of the two rival views one laid down by the learned Chief Justice Sir John Beaumont and the other by Sir Norman Macleod the correct view was one laid down by Sir Beaumont C. J. that there was no general power in Courts of equity to disregard agreements which they thought unjust. That principle applies not only to consent decrees but also to decrees passed by the Court in invitum. In the case of a consent decree it is the question of the sanctity of contract while in the case of a decree it is the question of solemn adjudication by the Court of the rights of parties. Their Lordships overruled the other view which was sought to be propounded by Sir Norman Macleod that it was the privilege of the Court to administer equity and in following the principles of equity to relieve against forfeiture if it considered the nature of the case required it. Their Lordships in this later Full Bench decision overruled the other line of approach by pointing out that the Court could relieve both against penalties or against forfeiture but without going into the question whether the consent decree contained a clause of a penalty or a mere concession relief could not be granted so as to relieve from the effect of such a stipulation. In this later decision. Their Lordships approved the settled test for arriving at a concession as distinct from a penalty as under:-

(3.) Even the tests in this connection are well-settled. In Rammurti v. Gopinath A.I.R. 1968 S.C. 919 at page 921 their Lordships laid down the test which is decisive when the Court has to consider the question whether a compromise decree created a lease or not. The compromise in question before their Lordships in terms provided for an eviction decree by stipulating that the defendant shall vacate the said house on the expiry of five years term failing which the decree-holder would be entitled to execute the decree and recover possession through the Court. There was a default clause that if the rent for three consecutive months was not paid there was liberty reserved to the plaintiff not only to adjust the advance towards arrears but evict the defendant from the suit house without waiting till the expiry of the aforesaid five years term. In the context of such consent decree their Lordships held that what was a decisive consideration was the intention of the parties which had to be ascertained on a consideration of all the relevant provisions in the agreement. Mere delivery of exclusive possession or the use of the term rent or even the fact that five years period was granted to the judgment-debtor for continuation of the possession would not militate against the construction that the compromise only created a licence. In order that a lease may be created exclusive possession must be coupled with interest in the property. Their Lordships further pointed out that a golden rule which should be applied was that the law did not impute intention to enter into legal relationship where the circumstances and the conduct of the parties negative any intention of the kind. In the case before their Lordships the decree-holder had brought a suit for ejectment and therefore it was difficult to impute to him intention to create a fresh tenancy. That fact showed that his intention was to eject the judgment-debtor after having purported to terminate the tenancy and the eviction decree which was passed in that case was with a default clause which enabled the decree-holder to execute the decree even earlier if the judgment debtor failed to pay rent for any three consecutive months. Their Lordships held that that circumstance was conclusive to show intention of the parties not to enter into any relationship of a landlord and tenant. Their Lordships also considered the definition of the term tenant in sec. 2(5) of that Act which included a person continued in possession after termination of the tenancy and even against whom suit was pending but not a person against whom decree for eviction had been passed. Where such a categorical decree of possession had been passed against the judgment debtor giving concession or accommodating him for a term of five years with a default clause which would deprive the judgment-debtor of the concession at an earlier date if he failed to avail of it was held in these circumstances not to create any fresh lease. The conduct of the parties negatived any such intention.