Statutory conditions in construction-loan agreements are read in by law; non-registration and delay can attract penal consequences.

Statutory conditions governing construction-loan agreements under the Bombay Rents, Hotel and Lodging House Rates Control Act were held to be read into every such agreement by operation of law, whether oral or written. Non-compliance with the writing and registration requirements, and failure to complete the building within the statutory period without reasonable excuse, were treated as punishable breaches under Section 18(4). The omission to expressly state a charge on the building and land was not treated as a separate offence, because that condition also stood incorporated by law. Conviction was sustained on the proven breaches, while the sentence was reduced.

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Issues: (i) Whether the conditions governing a construction-loan agreement under Section 18(3) of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947 are incorporated by operation of law in such agreements and breach thereof is punishable under Section 18(4); (ii) Whether failure to register the agreement and failure to complete the building within the statutory period constituted offences under Section 18(4), and whether omission to expressly stipulate a charge on the building and land was also punishable.

Issue (i): Whether the conditions governing a construction-loan agreement under Section 18(3) of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947 are incorporated by operation of law in such agreements and breach thereof is punishable under Section 18(4).

Analysis: Section 18(3) was construed as a proviso of an exceptional nature and as a substantive provision dealing with a stage anterior to actual demise. A narrow reading that would confine its operation only to conditions physically written into the agreement was rejected as defeating the object of the legislation. The expression that the agreement shall include the stated conditions was held to mean that those conditions are read into every construction-loan agreement by force of law, whether the agreement is oral or written. The requirement that the agreement be in writing and registered was also treated as one of the statutory conditions. Non-compliance with any of those conditions, absent reasonable excuse, attracts Section 18(4).

Conclusion: The statutory conditions under Section 18(3) are incorporated by law into construction-loan agreements, and breach of those conditions is punishable under Section 18(4).

Issue (ii): Whether failure to register the agreement and failure to complete the building within the statutory period constituted offences under Section 18(4), and whether omission to expressly stipulate a charge on the building and land was also punishable.

Analysis: The agreement was not registered and there was no reasonable excuse for that omission. The evidence also showed that the building was not completed within the statutory period of two years, again without reasonable excuse. Those breaches were sufficient to sustain conviction under Section 18(4). However, the absence of an express clause creating a charge on the building and land was not treated as a separate offence, because the charge condition stood incorporated by operation of law.

Conclusion: The conviction was justified for non-registration and non-completion within time, but not for omission to expressly provide a charge.

Final Conclusion: The appeal failed on the main grounds of challenge, the conviction under Section 18(4) was sustained on two proven breaches, and only the sentence was reduced.

Ratio Decidendi: Where a penal provision governing a construction-loan agreement is framed as an exceptional proviso to a tenant-protective scheme, the statutory conditions are read into every such agreement by operation of law, and breach of those conditions without reasonable excuse is punishable even if the agreement omits them expressly.

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