K. S. Subramania Iyer v. The Mylapore Hindu Permanent Fund, Ltd. , Madras, suing by their Secretary Sri K. Vinayakam
1964-12-01
K.S.RAMAMURTI, M.ANANTANARAYANAN
body1964
DigiLaw.ai
Anantanarayanan, O.C.J.- This Letters Patent Appeal is from the Judgment of Ramakrishnan, J., in A.S. No. 208 of 1960, and involves a point of some interest and importance regarding the scheme, and the application of certain provisions of the Madras City Tenants’ Protection Act, 1922, as amended by Madras Act XIX of 1955, to the established facts. It is true that the point centrally in issue is virtually concluded by the judgment of their Lordships of the Supreme Court in N. Vajrapani Naidu v. The New Theatres Carnatic Talkies, Ltd.1, Still, as it has been contended before us that the elucidation in that judgment of section 12 of the Madras City Tenants’ Protection Act, 1921 (hereafter termed the Act), may nevertheless not affect the particular contention of the learned counsel for lessor (The Mylapore Hindu Permanent Fund Limited, Madras), on the facts, the matter deserves careful scrutiny. The background of the established facts may be set forth as follows. The plaintiffs are the Mylapore Hindu Permanent Fund Limited, represented by their Secretary, and they are the proprietors of the vacant land bearing No. 4/7, Ponnambala Vathiar Street, Mylapore. Admittedly a lease deed was executed between the plaintiffs and the defendant (lessee) on 30th April, 1947 (Exhibit A-1), with regard to this property for a period of ten years from 1st May, 1947. As the controversy really impinges upon certain of the mutual rights and obligations under this lease, as well as on a contention that the lease was not merely of the vacant land but also of a superstructure in one sense at least, ab initio, it is necessary to set forth verbatim the relevant parts of this document. The document, or the effective portion thereof, commences with the words: " Whereas the lessor is the owner of vacant land No. 4/7, Ponnambala Vathiar Street, Mylapore more particularly described in the schedule given hereunder and whereas the lessee requested the lessors to lease to him the above land for the purpose of erecting a building and the lessors hereby agree to lease out the above land to the lessee. Stipulation or condition 2 of the document is in the following terms: " The lessee is permitted to put up a building at a cost of not more than Rs.
Stipulation or condition 2 of the document is in the following terms: " The lessee is permitted to put up a building at a cost of not more than Rs. 10,000 on the plot leased to him, after approval of the plan of the proposed building by the Board of Directors of the lessors, and the construction to be put must be in accordance with the plan approved by the Directors of the lessors." Stipulation or Term No. 4, which is of considerable significance in the controversy, is as follows: " The lease shall be in force for a term of ten years commencing from the First day of May, 1947, and on the expiry thereof the lessee shall surrender possession of the entire property and the constructions if any thereon. On vacating or giving possession as above the lessors shall pay the valuation thereof, then current, or the sum of Rs. 5,000 whichever is less. Stipulation No. 6 is to the following effect: " The lessee shall make his own arrangements for providing a garage to Mr P. Somasundaram who is now the tenant with the lessors. The present garage will be dismantled and the materials shall be taken by and sold by the lessors." Term No. 9 is to the effect: " In case of breach or infringement of any of the conditions above mentioned by the lessee, the lessors are at liberty to determine the lease irrespective of the period provided herein by giving three months’ notice to the lessee and the lessors may take possession of the property themselves without any compensation." Under Term No. 10 it is reiterated that the lease is " of the vacant site for ten years " . In paragraph 4 (a) of the plaint there was an averment that, on the very date of the lease the property leased out was not merely a vacant land of the lessors, but also included a garage then occupied by Mr. P. Somasundaram as tenant.
In paragraph 4 (a) of the plaint there was an averment that, on the very date of the lease the property leased out was not merely a vacant land of the lessors, but also included a garage then occupied by Mr. P. Somasundaram as tenant. The argument was that, therefore, the lease was not of the vacant land per se, and that the defendant (tenant) hence is not entitled to the benefit of certain provisions of the Act Dealing with this argument, the learned Judge (Ramakrishnan, J.) referred to clause 6 of the lease, extracted above, and pointed out that the inference was not at all justified, on the facts, that the site with the garage thereon formed the subject-matter of the lease. On the contrary the document unambiguously affirms, in more than one operative part, that it was the vacant land that was the subject of the lease. We have no doubt, reading the document and the schedule thereto with care, that it was a vacant land which was the subject-matter of the demise, and that any building or garage was clearly excluded. It may also be mentioned that this view of the document is amply supported by the evidence on record adverted to in the judgment of the trial Court and that of Ramakrishnan, J. The tenant (defendant) would certainly be entitled to the benefits of the City Tenants’ Protection Act, unless the view of the learned Judge is to be upheld that he was not so entitled because stipulation No. 4 of the lease concerning the superstructure to be subsequently erected, fell within the proviso to section 12 of the Act. It is in this context that we have to scrutinise the scheme of the Act itself and the prior case-law, including the recent elucidation of the scope of the proviso in the judgment of the Supreme Court in N. Vajrapani Naidu v. The New Theatres Carnatic Talkies, Ltd.1. Section 2 (4) of the Act contains the definition of " Tenant " and this need not detain us further. We may briefly note that it would include a person who continues to be in possession of the land after the determination of the tenancy agreement.
Section 2 (4) of the Act contains the definition of " Tenant " and this need not detain us further. We may briefly note that it would include a person who continues to be in possession of the land after the determination of the tenancy agreement. Under section 3 of the Act, " Every tenant shall on ejectment be entitled to be paid as compensation the value of any building which may have been erected by him or by any of his predecessor in interest or by any person not in occupation at the time of the ejectment who derived title from either of them.......Under section 9, " Any tenant who is entitled to compensation under section 3 and against whom a suit in ejectment has been instituted or proceeding under section 41 of the Presidency Small Causes Courts Act, 1882, taken by the landlord may........apply to the Court for an order that the landlord shall be directed to sell for a price to be fixed by the Court, the whole or part of the extent of land specified in the application." Section 12, which is of cardinal significance on the present facts, is in two parts, a clause affirming the rights of the tenant to benefits under the Act, and a proviso thereto. It runs as follows:- " Nothing in any contract made by a tenant shall take away or limit his right under this Act, provided that nothing herein contained shall affect any stipulation made by the tenant in writing registered as to the erection of buildings in so far as they relate to buildings erected after the date of the contract." The controversy, on the present facts, may now be elucidated. The lessee agreed to erect a building on the site according to certain specifications, and covenanted to surrender possession of the entire property including the superstructure, on the expiry of the lease. He agreed to receive only the current value of the building or a sum of Rs. 5,000 whichever was less. If this has to be construed as a "stipulation" binding upon the tenant, with regard "to the erection of a building," the proviso to section 12, will obviously inhibit the right of the tenant to invoke the benefit under section 9 of the Act.
5,000 whichever was less. If this has to be construed as a "stipulation" binding upon the tenant, with regard "to the erection of a building," the proviso to section 12, will obviously inhibit the right of the tenant to invoke the benefit under section 9 of the Act. If the matter is to be viewed apart from the Act, it would clearly be governed by the law of leasehold in this country with particular reference to section 108 (h) of the Transfer of Property Act. In Narayan Das v. Jatindara Nath1, the Judicial Committee, affirming the dicta of Sir Barnes Peacock in Thakoor Chunder Poramanick v. Ramdhone Bhuttacharjee2, expounded the situation in law by the following citations: ‘We have not been able to find in the laws or customs of this country any traces of the existence of an absolute rule of law that whatever is affixed or built on the soil becomes a part of it, and is subjected to the same rights of property as the soil itself." "We cannot, however, apply to cases arising in India the doctrine of the English law as to buildings, viz., that they should belong to the owner of the land. The only doctrine which we can apply is the doctrine established in India that the party so building on another’s land should be allowed to remove the materials." Vallabhdas Naranji v. Development Officer, Bandra 3. (Vide also Dr. K. A. Dhairayawan v. J. R. Thakur.4) Upon this part of the case, obviously, and as the learned Judge has pointed out, the situation will be that the lessee has to remove the superstructure even while he is in possession of the property, but this is qualified by the opening part of section 108 of the Transfer of Property Act " In the absence of a contract or local usage to the contrary". Hence, we have to look to the contract in the case, in conjunction with sections 3 and 9 of the Act, read along with section 12, and, especially, the proviso forming the latter part of that section. The prior case-law on this matter may be briefly noted, but it is merely of historical interest, since the point in actual issue is concluded by the dicta of the Supreme Court in N. Vajrapani Naidu v. The New Theatres Carnatic Talkies, Ltd.5, earlier referred to.
The prior case-law on this matter may be briefly noted, but it is merely of historical interest, since the point in actual issue is concluded by the dicta of the Supreme Court in N. Vajrapani Naidu v. The New Theatres Carnatic Talkies, Ltd.5, earlier referred to. In Thayarammal v. Junus Chettiar6, Pandurang Rao, J., took the view that the proviso applied " only to stipulations regarding the erection of builings " that is to say, stipulations restraining the right of the tenant to build such buildings as he likes either as regards the size, their costs, their situation and so on, and it certainly cannot relate to stipulations cutting down or extinguishing altogether the right of the tenant to get compensation in respect of buildings built by him which is given to him by the Act. In Ponnambala Achary v. Mani7, Ramachandra Iyer, J., (as he then was) construed section 9 itself as not being subject, in its terms, to any contract between the parties; hence, section 12 cannot be so construed as to enable the parties to contract out of the statute. It applied only to stipulations regarding “ the erection of buildings” in the restricted sense. In Vajrapuri v. New Theatres Carnatic Talkies Ltd.1, which led to the Supreme Court appeal that we shall later refer to, the Bench of Rajamannar, C.J., and Ganapatia Pillai, J., held that the proviso to section 12 should not be construed in a manner that would abrogate the protection given to the tenant by the first part of the section. But another Bench decision of this Court falls to be considered, and that is Palaniappa Goundar v. Sridharan Nair2. The argument in that case was that the lessee was not entitled to claim compensation for the superstructure under section 9 at all, because according to the terms of the contract, he agreed to give up possession of the building without claiming compensation at the expiry of the lease. If, by the terms of the contract, the building put up by the tenant became the property of the landlord on the date of termination of the tenancy, the tenant could not claim compensation or exercise any right under section 9 of the Act.
If, by the terms of the contract, the building put up by the tenant became the property of the landlord on the date of termination of the tenancy, the tenant could not claim compensation or exercise any right under section 9 of the Act. The latter part of the arguments in the case related to the proviso to section 12, and the true scope of the expression “ stipulations..........as to the erection of buildings” occurring therein. The Bench held that a term or condition that the building put up by the tenant becomes the property of the landlord, on the termination of the tenancy, will be such a stipulation, saved by the proviso to section 12 of the Act, thereby disentitling the tenant to benefits under section 9. At page 564, definitions of the term “ stipulation” from the Shorter Oxford Dictionary are extracted, and set forth. We shall now turn to the judgment of the Supreme Court in N. Vajrapani Naidu v. The New Theatres Carnatic Talkies, Ltd.3. That was also a case in which the stipulation was that if, after the termination of the period, the lessees failed to pay the arrears of rent and to hand over possession of the site to the lessors, after dismantling the constructions, the lessors had the right to take possession through Court of the site, after demolition of the buildings thereon. The relevant part of the judgment of their Lordships which elucidates the true scope of section 12 in relation to section 9 (1) is of the utmost importance, in the present context of facts, and with regard to cases very similar on the facts that arose previously in this Court ; hence, we are setting forth below this part of the judgment in entirety ; “ Section 12 of the Act consists of two parts ; by the first part it enacts that the rights conferred upon the tenant under the Act may not be taken away or limited by any contract made by a - tenant. Such rights would, amongst others, include the right to claim compensation under sections 3 and 4 and the right to purchase the land from the lessor by order of the Court under section 9. By the second part of the section 12, the protection granted by the first part doe not avail the tenant in certain conditions.
Such rights would, amongst others, include the right to claim compensation under sections 3 and 4 and the right to purchase the land from the lessor by order of the Court under section 9. By the second part of the section 12, the protection granted by the first part doe not avail the tenant in certain conditions. If there be a ‘stipulation as to the erection of buildings’ made by the tenant in writing registered, in so far as it relates to buildings erected after the date of the contract, the protection conferred by the first part of section 12 shall not apply. A covenant in a lease which is duly registered that the teant shall on expiry of the lease remove the buildings constructed by him and deliver vacant possession, is undoubtedly a stipulation relating to the building, but it is not a stipulation as to erection of building. Section 2 has manifestly been enacted to effectuate the object of the Act which is set out in the Preamble viz., to give protection to tenants-----who have constructed buildings on others’ lands in the hope that they would not be evicted so long as they pay a fair rent for the land.” The Legislature has sought thereby to protect tenants against any contractual engagements which may have been made expressly or by implication to deprive themselves wholly or partially of the protection intended to be conferred by the statute. And the only class of cases in which the protection becomes ineffective is where the tenant has made a stipulation in writing registered as to the erection of buildings, erected after the date of the contract of lease. The restriction is therefore made only in respect of a limited class of cases which expressly attract the description of the stipulations as to the erection of buildings. Having regard to the object of the Act, and the language used by the Legislature, the exception must be strictly construed, and a stipulation as to the erection of buildings would not, according to the ordinary meaning of the words, used encompass a stipulation to vacate and deliver possession of the land on the expiry of the lease without claiming to enforce the statutory rights conferred upon the tenant by section 9.
The stipulations not protected in section 12 are only those in writing registered and relate to erection of buildings such as restrictions about the size and nature of the building constructed, the building materials to be used therein and the purpose for which the building is to be utilised. It as true that the operative part of section 12 protects the tenant against the deprivation of limitation of his rights under the Act and the rights conferred by the Act do not directly relate to covenants relating to erection of buildings. But on that account it is not possible to give a wider meaning to the expression ‘as to the erection of buildings’ that the stipulation as to the building would include stipulations to remove buildings on the determination of the lease. It cannot be said that the literal meaning of the expression is likely to render the exception ineffective, for stipulation concerning erection of buildings in registered leases or contracts subsequent to the leases providing for forfeiture on failure to comply with the terms of the lease relating to the erection of buildings may undoubtedly involve limitations or deprivation of the rights of the tenant under the Act and to that extent the protection conferred by section 12 in favour of the landlord may be lost. The construction for which the appellant contends assigns no meaning to the words " as to the erection of buildings" and makes them superfluous ; besides it materially affects the scope of the relief which the Act obviously extends to the tenants failing under its provisions." Upon these criteria, the matter would thus appear to us to be clear beyond dispute. The proviso to section 12 will not affect the rights of the lessee under section 3 read with section 9 or the recitals in Exhibit A-1 or similar recitals in a document of lease. It would have been a different matter, of course, if the stipulation concerning the "size and nature of the building constructed, the building materials to be used therein, and the purpose for which the building is to be utilised" had been infringed, and thereby the tenant became disentitled to benefits of section 9 ; but that is not the argument here.
It is very clear that any stipulation to surrender possession of the property with the superstructure, or to accept as compensation, any value other than the value to be determined under section 3, will not be such a term as will fall within the proviso to section 12, thereby disentitling the tenant to the benefits of section 9 of the Act. Learned Counsel for the lessor (Sri R. Gopalaswami Ayyangar) has drawn our attention to certain parts of the minority judgment delivered by Ayyangar, J., in the very case. Particular reference is made to an argument which conceded that a stipulation which would limit the quantum of compensation payable in respect of buildings constructed by a tenant, provided for by section 3, would be one within the scope of the proviso to section 12. It is also stressed that the construction of the language of the relevant part of the Act to the effect that the stipulation is intended to be one which " bears on or is in relation to the erection of buildings " would reconcile the proviso with the Preamble, which sets out the object to be achieved by the Act. But, however, that aspect might be viewed, it is indisputable that the enunciation of the law by their Lorsdhips is unambiguously to the effect that the expression " as to the erection of buildings " should be strictly construed and would not include a stipulation to remove the building on the determination of the lease or to contract out of the benefits of section 9 in any manner. In other words, any stipulation by the tenant not to exercise his right to obtain a conveyance of the site under section 9 of the Act will be invalid and would not be saved by the proviso to section 12. In this view, therefore, the conclusion of the learned Judge, (Ramakrishnan, J.) allowing the appeal cannot be sustained. The decree of the trial Court has to be restored and the matter has now to go back for the action being taken on the application of the tenant under section 9 of the Act. The appellant (tenant) will have his costs throughout. V. K. ----------------