Tolaram Relumal & Ors. v. The State of Bombay

The court discusses the rule of construction of penal statutes that: if two possible and reasonable constructions can be put upon a penal provision, the Court must lean towards that construction which exempts the subject from penalty rather than the one which imposes penalty.
CITATIONAIR 1954 SC 496
COURTSupreme Court of India
JUDGES/CORAMChief Justice M.C. Mahajan, Justice B.K. Mukherjea, Justice N.H. Bhagwati, Justice Vivian Bose and Justice T.L. VenkataramaAiyyar
DATE OF JUDGEMENT13.05.1954

Introduction

The Legislature of India and its states are responsible for making statutes and laws to govern various aspects like sale, contracts, buildings, etc. It is the duty of the Judiciary (or the Courts) to interpret these statutes. All statutes need to be interpreted and construed in the light of the objectives of the same and the intention of the Legislature. It is the Court’s duty to ensure that the interpretation of the statute does not complicate the situations. The present case involves the interpretation of a penal statute.

Facts

The facts of the case are: Appellants were owners of an incomplete building who accepted Rs. 2,400 from the complainant. This money was paid after an oral agreement occurred between the two parties that the appellant were bound to give and the complainant was entitled to take possession of a specific flat in a specific building, as soon as the construction was completed. The appellants were charged under Section 18(1) of the Bombay Rent Restriction Act, 1947, for receiving the sum of Rs. 2,400 from Shankar Das Gupta through Mathra Das on 23rd November, 1950, as premium or pugree in respect of the grant of lease of the under-construction flat or building.

Issues

The main issue in the case is: Whether or not the acceptance of Rs. 2,400 by the appellants fell within the mischief of section 18 of Bombay Rent Restriction Act, 1947.

Summary of court decisions and judgement

The Magistrate held the appellants guilty of the charge and sentenced them to 2 months Rigorous Imprisonment and a fine of Rs. 1,200 whereas Mathra Das was convicted and sentenced to 1 day’s imprisonment and a fine of Rs. 100. The fourth accused, Roshanlal Kanjilal, was acquitted by the Magistrate.

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Appellants (except Mathra and Roshanlal) preferred an appeal to the High Court. The learned judges on the case expressed their view as the following: “There is only an agreement that the landlord would lease to the complainant a particular flat after the building has been fully and properly completed. It does appear that section 18(1) does not bring within its mischief executory agreements of this kind”. But, as a contrary view was expressed by another Bench of the High Court, the matter was referred to a Full Bench.

The Full Bench held that an oral agreement did not constitute a lease but it amounted to an agreement to grant a lease in future, and that the receipt of consideration for an executory agreement was within the mischief of section 18(1) of the Act. The appellants appealed the matter before the Supreme Court. The 5-judge bench held that the appellants were not guilty under Section 18 and set aside the judgements of the Magistrate and High Court.

Analysis

Section 18(1) of the Bombay Act provides:

“If any landlord either himself or through any person acting or purporting to act on his behalf………. receives any fine, premium or other like sum or deposit or any consideration, other than the standard rent………. in respect of the grant, renewal or continuance of a lease of any premises……….. such landlord or person shall be punished…..”

Thus, to be liable under the Section, the landlord (or his agent) must receive money but in respect of “grant, renewal or continuance of a lease”. So, the Section does not cover an executory agreement to grant lease, which was actually what happened in this case. The difference between a lease and an executor agreement to grant a lease is that a document is a lease if it contains words of present demise, whereas if it contains words of present demise and certain things have to be done by the lessor, before the lease is granted, it is an executory agreement to grant a lease. Thus, the Full Bench had correctly held that the oral agreement was only an agreement to grant a future lease, and not the lease itself.

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Hence, as per the present facts of the case and law applicable, the lease never came into operation. It is pertinent to note that Section 18(1) is penal in nature. Following the rule of construction of penal statutes that: if two possible and reasonable constructions can be put upon a penal provision, the Court must lean towards that construction which exempts the subject from penalty rather than the one which imposes penalty, the Apex Court appropriately held that the receipt of money did not make the appellants liable.

In short, as the lease never came into existence, it could not be renewed or granted or continued, as required under Section 18(1) and hence, the offence was not made out. The Court gave the same reasoning and held the appellants not guilty of the mischief under Section 18(1). Overall, the Court was correct in holding that the appellants had not done mischief under Section 18(1) and that the Presidency Magistrate and High Court had erred in convicting the appellants.

Conclusion

In this case, the Supreme Court by giving the correct judgment and setting aside the lower courts’ judgment indirectly emphasized the need for proper construction of statutes. If a certain statute is penal in nature, it cannot arbitrarily penalize all acts that ‘might’ seem connected to it. The construction has to be done in the light of prevailing circumstances as well as objectives of the statute.