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Laxmipat Singhania Vs. Larsen and Toubro Ltd. - Court Judgment

LegalCrystal Citation
SubjectProperty;Civil
CourtMumbai
Decided On
Case NumberO.C.J. Suit Nos. 2043 and 2222 of 1948
Judge
Reported inAIR1951Bom205; (1950)52BOMLR688
ActsTransfer of Property Act, 1882 - Sections 108; Bombay Rents, Hotel and Lodging House Rates Control Act, 1947 - Sections 4(1) and 5(8)
AppellantLaxmipat Singhania
RespondentLarsen and Toubro Ltd.
Appellant AdvocateM.P. Laud and ;H.D. Banaji, Advs.
Respondent AdvocateS.T. Desai, ;Sir Jamshedji Kanga and ;K.H. Bhabha, Advs. (in No. 2043 of 1948), ;H.M. Seervai and ;K.H. Bhabha, Advs. (in No. 2222 of 1948)
DispositionSuit dismissed
Excerpt:
.....section 4(1) of the bombay rents, hotel and lodging house rates control act, import a concept of ownership. they mean very much the same thing as 'of the ownership of', though not necessarily 'of the absolute ownership of.';the nile (1875) l. r. 4 adm, & eccl. 449, the sarpen [1916] p. 306, and admiralty commissioners v. page [1919] 1 k.b. 299, referred to. - - the words of that sub-section are :this act shall not apply to any premises belonging to the government or a local authority or apply as against the government to any tenancy or other like relationship created by a grant from the government in respect of premises taken on lease or requisitioned by the government; i have, therefore, to consider the provisions of the agreement to lease as well as the lease. were it necessary..........by him although it is put up on the land belonging to the lessor. there may thus be two distinct ownerships, one of the land and the other of the structure. that such a position is possible was recognised by their lordships of the privy council in narayan das v. jatindra nath . in that case a plot of land, upon which there was a house erected by a lessee of the plot, had been sold for payment of arrears of revenue; and before the removal of the house, the whole property was acquired under the land acquisition act, 1894, and the question that arose was whether the auction-purchaser or the person who put up the house was entitled to compensation in respect of the structures. the learned subordinate judge who tried the suit held that the house passed with the land to the auction purchaser.....
Judgment:

1. These two suits are ejectment suits filed by a landlord against his two ten-ants. Since the passing of the Bombay Rents, Hotels and Lodging House Rates Control Act (LVII [57] of 1947), this Court has no jurisdiction to entertain or try any suits between a landlord and a tenant to which the provisions of the Act apply; and they are exclusively triable under that Act in Greater Bombay by the Court of Small Causes. The defendants in both these suits have contended that this Court has no jurisdiction to try these suits; and that issue has been ordered by my learned brother Bhagwati J, to be tried as a preliminary issue.

2. Now, the only facts that are relevant for the determination of the question of jurisdiction are that by an agreement of lease dated 12.11. 1918, between the Trustees of the Port of Bombay and one Abraham Jacob Reymond, Reymond agreed to obtain from the trustees and the trustees agreed to grant him a lease of a certain plot of land, for the purpose of putting up a building thereon, for a period of 99 years. To the detailed provisions of this agreement I will revert later. The lease was accordingly granted on 30-1-1923, and the plaintiff is the successor-in-title of Reymond, The short question for determination is whether these suits relate to premises which belong to a local authority, because if they do, by the terms of Section 4(1), Bombay Rents, Hotel and Lodging House Rates Control Act, the Act does not apply to such premises. The words of that sub-section are :

'This Act shall not apply to any premises belonging to the Government or a local authority or apply as against the Government to any tenancy or other like relationship created by a grant from the Government in respect of premises taken on lease or requisitioned by the Government; but it shall apply in respect of premises let to the Government or a local authority.'

It is admitted that the Trustees of the Port of Bombay are 'a local authority' by reason of the definition of that term in the General Clauses Act. The only dispute is whether the premises in suit belong to that local authority. Now the word 'premises' is defined by Section 5(8) of the Act as meaning

'(a) any land not being used for agricultural purpose ;

'(b) any building or part of building let separately, etc......'

In the present case the premises consist of parts of a building let separately. The question is whether that building belongs to the Trustees of the Port of Bombay.

3. Now, before turning to the provisions of the agreement to lease and the lease which I will have to construe in these suits, it would be convenient to see what the legal position is in India regarding the rights of the lessor and the lessee in cases in which a lease of a plot of land is obtained and the lessee puts up a structure thereon. The law in England is that anything affixed to the earth belongs to the lessor and it is not open to the lessee to take it away or to remove it at any rate in cases where it cannot be removed without causing serious damage to the structure. But under the provisions of the T. P. Act the law in India is quite different; and under Section 108(h) of that Act, in the absence of a contract to the contrary, a lessee may, even after the determination of the lease, remove all things which he has attached to the earth, which of course include structures or buildings put up by him. The effect of this provision is that the lessee is the owner of the building put up by him although it is put up on the land belonging to the lessor. There may thus be two distinct ownerships, one of the land and the other of the structure. That such a position is possible was recognised by their Lordships of the Privy Council in Narayan Das v. Jatindra Nath . In that case a plot of land, upon which there was a house erected by a lessee of the plot, had been sold for payment of arrears of revenue; and before the removal of the house, the whole property was acquired under the Land Acquisition Act, 1894, and the question that arose was whether the auction-purchaser or the person who put up the house was entitled to compensation in respect of the structures. The learned Subordinate Judge who tried the suit held that the house passed with the land to the auction purchaser by virtue of the revenue sale. On appeal, the learned Judges of the High Court held that the ownership of the building did not pass to the plaintiff on the auction sale; but those who had put up the structure remained owners thereof. Their Lordships of the Privy Council held that what was transferred to the auction-purchaser was land only and not the house. Their Lord,ships pointed out that in India there was noabsolute rule of law that whatever was affixedor built on the soil because a part of it and subject to the same rights of property as the soilitself. This decision to my mind is clear authority for the proposition that a building can beowned by one man and the land by another inIndia; and that in a case where a lessee puts upa building on a vacant plot of land taken onlease by him, although the lessor may be the owner of the land, the building belongs to thelessee and not to the lessor.

4. But it is urged in this case that although this may be the correct position under Section 108(h), T. P. Act, the Act applies to cases where there is no agreement to the contrary. I have, therefore, to consider the provisions of the agreement to lease as well as the lease. In doing so, the Court is not bound to look, merely to the form which the transaction has taken. The Court is not only entitled but, indeed, bound to consider what is the true nature of the transaction and to give effect to it.

5. The agreement to lease contains inter alia the following provisions which are important. It provides in Clause 3 thereof that the intended lessee shall within 36 calendar months at his own expense erect a building on the said land of a design approved by the trustees and use materials also approved by the trustees. Clause 10 provides that the intended lessee shall not, prior to obtaining the lease from the trustees and without the consent of the trustees in writing, assign any interest in the piece of land or in the building or materials for the time being on the land. Clause 12 then provides as follows :

'Upon the production by the said intended lessee of a certificate which must be dated and signed by the said Engineer certifying that the said building has bean built in carcase ..... the said intended lessee shall accept & lease of the building to be erected as aforesaid and of the said piece of land hereinbefore described for a term of 99 years.'

In the portion of the clause which I have omitted is set out what is meant by the building being built in carcase.

6. In pursuance of the terms of this agreement, a lease was granted on 30 1-1923. That lease recites that the building agreed to be erected had been duly constructed in carcase and that the said building is intended to be demised. Then in its operative part, it states that 'the said trustees do hereby demise .... all that piece or parcel of land .... together with the buildings and erections now erected thereon.' So that in form, there is no question that the demise is of the land together with the building by the trustees to the lessee. Then the covenants in that lease inter alia provide that 'the lessee shall at his own expense forthwith complete and finish and fit for habitation and use the said building.' There is also a covenant that on the expiration or determination of the leass the lessee shall 'quietly deliver up to the said trustees the said demised premises together with all erections which shall have been built thereon during the said term. There is also a proviso for re-entry in certain contingencies. In addition to this, there are covenants in this lease which restrain the user of this building by the lessee. Can it be said that the transaction witnessed by these two documents is a demise of a plot of land and a building of the ownership of the trustees; or is the substantial nature of the transaction merely a demise of the land by the trustees and a building put up on it by the lessee at his own expense. I have no doubt in my mind that the latter is the correct construction. It is obvious that the entire building is put up by the lessee. It is further clear that the building was not even ready in the sense of being completed when the lease was granted. It was ready in carcase only and the lessee covenanted to complete it at his own expense. The provision that on the expiration of the lease or upon determination thereof the building shall be delivered to the trustees to my mind does not affect the question of their present ownership. It only provides that whenever that eventuality happens, the lessee shall not be at liberty to take away the buildings as he would have been under the provisions of the Transfer of Property Act but the building shall be delivered over to the trustees.

7. Were the true position regarding the ownership of this property any different in law it would lead to many startling results. It is a matter of common knowledge that most of the properties in Bombay are held under similar leases either from the Trustees of the Port of Bombay, or from the City Improvement Trust, or from the Bombay Municipality or from the Government; and if buildings put up under these circumstances were exempted from the operation of the Rent Act, most of the tenants in Bombay to-day would be deprived of the protection of that Act. Were it necessary for me to consider what the intention of the Legislature was in inserting the exemption which is to be found in Section 4, I would have bad no hesitation in saying that nothing could have been further from the intention of the legislature than to deprive the tenants of practically all the premises in Bombay of the protection of the Rent Act. But this consideration does not become relevant because I have come to the conclusion that I have arrived at on a plain reading of Section 4(1); and I am not required to read into that section any word or words which do not exist therein for the purpose of giving effect to the obvious intention of the Legislature.

8. I may incidentally refer to the provisions of Section 9, Income-tax Act, 1922. Under that section tax on property is payable by an assessee in respect of 'property consisting of any buildings or land pertaining thereto of which he is the owner.' Can it be said that a person in the position of the plaintiff in these cases is not the owner within the meaning of Section 9, Income-tax Act? Of course there is no separate definition of 'owner' given for the purpose of that Act. I do not think it can. If authorities were needed for that proposition they are to be found in the decision of the Madras High Court in Commr. of Income-tax v. Madras Cricket Club : [1934]2ITR209(Mad) and of the Calcutta High Court, Ballygunge Bank Ltd., Calcutta v. Comm. of Income Tax, Bengal : AIR1947Cal159 . If Mr. Laud can persuade any Court to hold that a person in the position of the plaintiff was not the owner of the building, he would equally succeed in persuading the Court to hold that he was not liable to pay tax under Section 9, Income-tax Act.

9. The arguments in this case have covered a very wide field. In the view that I have taken of Section 4 I do not consider it necessary to go into other arguments that have been advanced at the bar. I will, however, deal only with one of those arguments which arises if I am wrong in my interpretation of the agreement of lease and the lease; and if the true position under these two documents is that there is a demise of the land together with the building, In such a case, to whom do the premises, viz. the building or parts of the building let separately belong during the period that the lease subsists? In order to determine that question it is necessary to consider what meaning can be given to the words 'belonging, to'. There is no doubt that these words import a concept of ownership. To my mind they mean very much the same thing as 'of the ownership of' though not necessarily 'of the absolute ownership of.' These words have been interpreted in cases that have arisen for determination in the English Courts under Section 557, Merchant Shipping Act, 1894, which provides that if salvage services are rendered by any ship 'belonging to Her Majesty' no claim shall be allowed for any loss, damage, etc. In connection with this provision, a question arose as to whether ships which were owned by private individuals but were being used by the Admiralty for its own purposes 'belonged to' the Admiralty. The first of such cases was the case of The Nile (1875) 4 A. & E. 449 : 44 L .J. A. 38. In that case the Finisterre had been chartered by the Government by a charter not demising the ship. All damage to the ship was at the risk of the owners; and it was therefore held that there was no transfer of ownership to Her Majesty. The section came up for consideration again before the Court of appeal in The Sarpen (1916) P.C 306 : 85 L J. P. 209. In this ease the tug Simla had been requisitioned by the Admiralty; but the judgment did not proceed on the footing that it had been acquired by the Admiralty under the power of requisition, because subsequent to the date of the requisition an agreement had been arrived at between the admiralty and the tug owners regarding the terms on which the Admiralty should use this vessel and the matter was treated by the Court as arising on the footing of an agreement for use of the Simla by the Admiralty. The terms of the agreement provided that the owners were to pay wages and health insurance of the crew as well as for all stores and necessary equipment of the vessel. They also took the risk of the sea. The Admiralty accepted war risk and agreed to provide coal. On the basis of these teems Swinfen-Eady L. J. held that the ship did not belong to the Admiralty. The learned Judge referred to the case of The Nile 1875 A. &. E. 449 : 44 L. J. A 38 and pointed out that that case would have been differently decided if there had been an actual demise of the Finisterre and if sea damage had been at the risk of the Admiralty. In the case before him, the learned Judge on the terms of the agreement between the parties held that the Simla could not be regarded as the King's ship, because there was no demise of the ship to the Admiralty and sea risks were on the real owner of the ship. Pickford L. J. in delivering judgment stated that he rested his judgment on the ground that sea risk was left on the owner and the dominion as well as the control of the ship were not fully with the Admiralty. Bankes L. J. observed (p. 321) :

''..... it is therefore unnecessary to consider the cases, to several of which we have been referred, in which it has been held that for certain purposes a vessel may be considered as having a dual ownership,--the ownership of what I may call actual owner, and the ownership of the temporary owner. In the present case there is no question that the actual owners of the ship are the plaintiffs in the action. The only question is whether the requisitioning of the Simla by the Government placed her for the time being in the temporary ownership of the Government so as to constitute her a vessel belonging to His Majesty, and as such it is disentitled to earn salvage.'

He then proceeded to hold that the ship did not belong to His Majesty. The test laid down in this case was applied in a later case, Admiralty Commissioners v. Page (1919) 1 K. B. 299 : 88 L. J. K. B. 325. By this time, the Merchant Shipping (Salvage) Act, 1916, had been passed, which by Section 1 thereof provided that not with standing the provisions of Section 557, Merchant Shipping Act, 1894 :

'Where salvage services are rendered by any ship belonging to His Majesty and that ship is a ship specially aquipped with a salvage plant, or is a tug, the Admiralty shall ... be entitled to claim salvage.'

The question for determination in this case was whether the tug Conqueror was a ship belonging to His Majesty. The tug had been taken up under a charter-party for Government service under which the owners engaged and paid the crew and found stores other than coal and worked the ship, ran the marina risks, the Admiralty bearing risks of war and finding the coal. By letters passed between the Admiralty and the owners an alteration was made in the terms of the charter, the result of which was that the ship was commandeered by His Majesty, a commander holding His Majesty's commission and belonging to the Royal Navy Volunteer Reserves wearing His Majesty's uniform was in charge of the ship, the Admiralty bore all expenses of cunning the ship, entering articles with the crew, paying wages, buying ships stores, bearing all marine as well as war risks. Upon these facts it was held by the Court of Appeal that the tug belonged to His Majesty. Swiufen-Eady M. R., who was also a party to the judgment in The Sarpen, observed (p. 305) :

'A ship taken up on these terms is effectively demised to the Crown, The owners are no longer managers of the ship, but it is managed by the Admiralty. Under these circumstances, how is it possible to hold that the owners can have any claim whatever for the salvage They incur no expenses, run no risks. The whole of that is for the Admiralty.'

Duke L. J. observed (p. 306) :

'The effect of the transactions in this case on the part of the Grown has been to vest the vessel, at any rate for the period when the vesting and divesting occurred, absolutely and undisputedly in the Crown as a King's ship, with a King's officer in command, a King's crew in charge, the whole of the expenses being at the public charge through the Admiralty, and the whole of the risk at the cost of the public. I cannot conceive how in that state of facts it could be contended successfully that owners of the tug, who are ultimately entitled to have the ship revested in them, can be regarded as having rendered the salvage services which were here rendered. The services were rendered by His Majesty's servants and his ship, which was at the risk of the State. That being so, it seems to me clear that the owners could not be entitled to the salvage here.'

10. These decisions in my opinion establish that there may be in relation to property a dual ownership for a limited period of time; and it would be possible to say in such cases that even a person who was not the absolute owner but had a right of ownership limited to that period was a person to whom the property belonged. No doubt these cases related to moveable property; bit I do not conceive that the principle is any different when we are dealing with immoveable property. The tests as to whether for a limited period of time a temporary ownership has been created is according to the cases (1) whether there is a demise of the property, (2) whether there is full dominion and control over the property in the demisee and (S) whether the risk of the property falls on the demisee, of the absolute owner.

11. Applying these principles to the case ofa lease of land together with the building for alimited period of time--particularly a period aslong as 99 years--it appears to me that if thelease demises the land with the building andconfers on the transferee full dominion andcontrol over the property, the transferee takingthe risk of the property, then, for that limitedperiod, the lessee is the owner of the property andthe property can be said to belong to him. Ownership is nothing more than a bundle of rights in relation to property. The aggregate of rights constitutes absolute ownership. It may be that duringa stated period some of these rights are vestedin one person and some in others. In the case ofa lessor and a lessee such as we are considering,the lessee has the right of reversion which ofcourse is not tangible immoveable property but anintangible thing. He has also a right of re-entryunder the terms of the lease and he has furthera right by covenant to claim the building upontermination of the lease or upon its determination in any other manner provided by the lease.With regard to all other rights in the property,these vest completely in the lessee for the limited period of time. It seems to me that it is theleseee who is under the circumstances the ownerqua at any rate those to whom he has let or sublet such premises. It is consistent with dual ownership that qua the lessee it may be that the lessoris the owner of the property; and in any proceedings between the lessor and the lessee itwould be possible to say that the premisesbelonged to the lessor and not to the lessee.That is not the case before me. The case herearises between the lessee and those to whom hehas let the premises. I have no doubt in mymind that qua the defendants in these twosuits the premises in suit belong to the plaintiffand to nobody else so long as the lease is subsisting. That being so, those premises are notexcluded from the operation of the BombayRents, Hotel and Lodging House Rates Control Act, and this Court has therefore no jurisdiction to entertain or try either of these suits.The result, therefore, will be that the suits willbe dismissed with costs.


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