Supreme Court upholds late allotment order, deems compromise void, eviction allowed under section 7A

The Supreme Court held that the order of allotment made beyond 30 days was valid, emphasizing the District Magistrate's authority to issue it even after the deadline. The compromise agreement in Suit No. 132/1962 was deemed void as it contravened public policy, allowing the third respondent to seek eviction under section 7A without disclosing the compromise. The order of allotment issued by the Rent Controller was upheld as it was made by the Additional District Magistrate in a quasi-judicial manner. Justice Bhagwati dissented on the disclosure issue but concurred with the majority on other aspects. The appeal was ultimately dismissed.

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Issues Involved:
1. Validity of the order of allotment made beyond 30 days.
2. Legality of the compromise agreement in Suit No. 132/1962.
3. Validity of the order of allotment issued by the Rent Controller.

Issue-wise Detailed Analysis:

1. Validity of the Order of Allotment Made Beyond 30 Days:

The appellant argued that the order of allotment was invalid as it was not made within 30 days of the receipt of the intimation sent by the landlord under section 7(1)(a) of the U.P. (Temporary) Control of Rent and Eviction Act, 1947, as required by Rule 3 of the Rules. The High Court held that the requirement of passing the order of allotment within 30 days is directory, not mandatory. The Supreme Court agreed, stating that the District Magistrate has the authority to make an allotment order even after the expiry of the 30-day period, provided the landlord does not nominate a tenant under Rule 4. The Court emphasized that the landlord's right to nominate a tenant arises only if the District Magistrate fails to make an allotment order within 30 days, and even then, the District Magistrate can override the landlord's nomination for recorded reasons. Therefore, the order of allotment made on 17th September 1962, two days after the 30-day period, was not invalid.

2. Legality of the Compromise Agreement in Suit No. 132/1962:

The appellant contended that the third respondent had no right to apply for possession under section 7A of the Act after entering into a compromise in Suit No. 132/1962. The High Court found that the compromise was a fraud on the officers empowered to act under the statute and was void under section 23 of the Contract Act as it was unlawful and against public policy. The Supreme Court concurred, stating that the compromise agreement attempted to curtail the powers of the District Magistrate, which is against the public policy of the Act and the Rules. The third respondent did not commit fraud by ignoring the void compromise when applying for eviction under section 7A. However, Justice Bhagwati dissented, arguing that the third respondent should have disclosed the compromise decree to the District Magistrate when applying under section 7A, as it was a material fact that could influence the exercise of discretion by the District Magistrate.

3. Validity of the Order of Allotment Issued by the Rent Controller:

The appellant argued that the order of allotment issued by the Rent Controller was bad as it was mechanically issued based on the order of the Additional District Magistrate without any application of mind. The High Court held that the order of allotment was made by the Additional District Magistrate after fully hearing the parties and was merely formalized by the Rent Controller. The Supreme Court agreed, stating that the order was made by the Additional District Magistrate in a quasi-judicial manner, and the Rent Controller merely issued the formal order. Therefore, the order of allotment was not invalid, nor was the order made by the Rent Controller under section 7A of the Act.

Separate Judgment by Justice Bhagwati:

Justice Bhagwati agreed with the majority on the first and third contentions but dissented on the second contention. He argued that the third respondent's non-disclosure of the compromise decree in the application under section 7A vitiated the order of the Rent Control and Eviction Officer. He emphasized that parties must disclose all material facts to the authority when seeking discretionary relief. Therefore, he would have allowed the appeal, quashed the order under section 7A, and directed the third respondent to hand over possession of the shop to the appellant.

Conclusion:

The appeal was dismissed with no order as to costs, based on the majority judgment.

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