1. This is a group of four appeals filed by the Collector of Bombay against the decision of the learned Revenue Judge in Suit Nos. 2 of 1943, 3 of 1943, 4 of 1943 and 5 of 1943 respectively to the effect that the plaintiffs were not liable to pay land revenue to the Government of Bombay as superior holders of the lands taken on lease by them from the Central Government.
2. There was a group of 20 suits including the present suits, all filed at about the same time in the year 1943, in which the right of the Government of Bombay to levy assessment on the various plots of land in those suits was challenged. The majority of these plots were situated on Sleater Road near the Grant Road Station, which were originally held by the Central Government for the purposes of the B.B. & C.I. Railway and a few of them were situated at Mazagaon or on Hornby Road and were originally held by the Central Government for the purposes of the G.I.P. Railway. When these plots were no longer needed by the respective Railways, they were transferred by the Central Government to various parties. The plaintiffs in all these suits were either the original transferees or lessees from the transferees or lessees from the Central Government. As regards the lands situated at leater Road, the transfers were made by conveyances out and out, and as regards the lands situated at Mazagaon and Hornby Road, the transfers were effected by means of leases for various terms.
3. Out of this group of suits, one suit, being No. 7 of 1943, which was consolidated with Suit No. 23 of 1943, filed by Nusserwanji Rattanji Mistri and others against the Collector of Bombay, was taken up first as a sort of a test case, it being agreed that the other suits should be postponed until after the said suit was finally disposed of, since the main issues in the entire group of suits were identical. These two suits were heard and decided by the then learned Revenue Judge Mr. Brown on March 17, 1945, in favour of the plaintiffs holding that the Collector of Bombay was not entitled to assess the lands in suit. From this decision, the Collector of Bombay took an appeal to this Court, being First Appeal No. 274 of 1945. On November 10, 1948, this Court dismissed the appeal of the Collector and confirmed the decision of the learned Revenue Judge. The Collector of Bombay then filed an appeal in the Supreme Court, being Civil Appeal No. 74 of 1952. The Supreme Court allowed this appeal on February 28, 1955, set aside the judgments of the Courts below and dismissed the plaintiff's suit with costs throughout. The judgment of the Supreme Court is reported in The Collector of Bombay v. Nusserwanji Rattanji Mistri : 1SCR1311 .
4. After the decision of the Supreme Court in Mistri's case, the other suits in the group were taken up by the learned Revenue Judge for hearing and final disposal. The plaintiffs in most of those suits applied for certain amendments of the plaint, which being allowed, the defendant put in his supplementary written statements. The issues were thereafter settled and all the suits were put up for final disposal before the learned Judge on October 18, 1955. Two of the suits were filed by Poonegars, who had purchased some plots of land from the Governor General-in-Council by a conveyance executed in their favour in 1938. Some of the other suits were filed by the lessees from Poonegars. Some others were filed by the lessees from Mistri and others, and the present four suits were filed by the lessees under leases directly granted by the Governor-General-in-Council. The learned Revenue Judge disposed of the two suits filed by Poonegars by a separate judgment and decreed them in favour of the plaintiffs. An appeal, being First Appeal No. 559 of 1956, was filed by the Collector of Bombay against that decree to this Court, which we have disposed of to-day. The suits filed by the lessees from Poonegars as well as the lessees from Mistri and others were also disposed of by the learned Revenue Judge by separate judgments in favour of the plaintiffs in those suits. Appeals were filed by the Collector of Bombay against the decision of the learned Revenue Judge in each of those suits to this Court. The appeals that arose out of suits filed by Mistri's lessees have been disposed of by us to-day by a common judgment, and those arising out of suits filed by Poonegar's lessees have also been disposed of by us to-day by a common judgment. The present appeals are quite different in their nature from those which we have disposed of, inasmuch as it was the Governor-General-in-Council who had granted the leases to the different, plaintiffs in these suits in respect of different plots of land situated at Mazagaon and Hornby Road, and the question that we have to determine in these appeals is as to whether the plaintiffs-respondents in each of these appeals are superior holders in respect of the lands respectively taken by them on lease from the Governor-General-in-Council, so that they would be liable to pay land revenue to the Provincial Government in respect of those lands.
5. The facts in all these appeals, as the learned Revenue Judge has observed, are very much the same, except as regards the area, rent and the date of the lease. The lease in Suit No. 2 of 1943 is dated November 14, 1939, for a period of 99 years, commencing from April 29, 1939, and the plot covered by the lease admeasures about 525 sq. yds. In Suit No. 3 of 1943, the lease is dated November 14, 1940, for a period of 99 years, commencing from April 29, 1939, and the area covered by the lease is about 653 sq. yds. In Suit No. 4 of 1943, the lease is dated November 14, 1940, for a period of 99 years, also commencing from April 29, 1939, and the area of the plot covered by the lease is about 786 sq. yds. In Suit No. 5 of 1943, the lease is dated November 14, 1940, for a period of 99 years, also commencing from April 29, 1939, and the plot covered by the lease admeasures about 340 sq. yds.
6. It appears that all these plots were portions of a larger piece of land admeasuring about 14,600 sq. yds., bearing Cadestral S. No. 383 of Mazagaon Division. It was held on lease by Sir Gocaldas Khandas Parekh from the Secretary of State for India in Council under a lease dated November 8, 1914, for a term of 21 years, commencing from March 11, 1912, on payment of Rs. 166-9-8 per annum as and by way of rent. That lease was perpetually renewable on the same terms but on payment of a fine or premium of Rs. 100 by the lessee to the Secretary of State for India in Council at the time of each renewal. In 1920, this large piece of land, along with other land in the vicinity, was sought to he acquired by Government to enable the G.I.P. Railway to remodel its yard at Mazagaon. The proceedings in acquisition which took place in 1920-22 in respect inter alia of the plots in the different suits were put in and marked as exh. B. The award in those proceedings which was made on March 20, 1922, was also put in and marked as exh. C. Under this award, a sum of Rs. 4,74,680 became payable by the G.I.P. Railway to Sir Gocaldas as compensation and a sum of Rs. 4,240 was ordered to be paid to Government on account of the capitalised value of the rent payable to Government. These amounts were paid by book adjustments by the G.I.P. Railway and the large piece of land was transferred to the G.I.P. Railway. Sir Gocaldas, being dissatisfied by this award, asked for a reference to be made to the High Court and on this reference he was awarded a further amount of compensation which, with 15 per cent, for compulsory acquisition and interest totalled up to Rs. 70,477, which was also paid to .him by the Government, and the G.I.P. Railway was debited with the amount. The learned Revenue Judge has in this connection referred to the Resolution of the Government of Bombay, Development Department, No. S. A. 613 dated April 21, 1923, and also Resolution No. S.D. 4 dated January 3, 1924. Both these Resolutions were put in and marked exh. G collectively. Central Government thereafter, as stated above, granted the surplus plots of land to the various plaintiffs in these suits.
7. In 1941, the Collector of Bombay sought to assess these plots. He issued to the plaintiffs in these suits notices dated July 14, 1941, under Section 9 of the Bombay City Land Revenue Act, II of 1876. After some correspondence between the plaintiffs and the Collector of Bombay, the Collector by a notice dated May 13, 1943, levied an assessment on all these plots in different amounts per annum with a guarantee period of 50 years from April 29, 1939, and called upon the plaintiffs to pay the assessment, for four years from April 29, 1939, to April 28, 1943, duo from them respectively. The plaintiffs thereupon filed the present suits, contending that the Collector had no right to fix or levy any assessment of land revenue on their plots and that his notices were all illegal, void and inoperative. They contended that, by reason of the acquisition proceedings and the award, all interests of the Government of Bombay in those plots were satisfied and that the land became vested as freehold land in the Secretary of State for India in Council as owner and Administrator of the G.T.P. Railway. They further contended that on Part III of the Government of India Act, 1935, coming into force on April 1, 1937, the land became vested in the Governor-General-in-Council for and on behalf of His Majesty for the purposes of the Government of India and that the Government of the Province of Bombay had no claim or interest of any kind whatever in the same land. According to the plaintiffs, when, the different plots were leased to them by the Governor-General-in-Council, they held the same directly from the Governor-General-in-Council and that, accordingly, they had a right in limitation of the right of the Provincial Government to assess those plots. The plaintiffs also assailed the notices given by the Collector on the ground that they were not superior holders within the meaning of the Bombay City Land Revenue Act, 1876, and as such they were outside the scope of the operation of Sections 8 and 9 of the Act. The notices were also impugned on the ground that they were retrospective in their operation, and, therefore, inoperative and void.
8. After the decision of the Supreme Court in 'Mistri's case the plaintiffs in these suits applied for and obtained an amendment of the plaint. By this amendment the plaintiffs in each of these suits contended that their lessor, the Governor-General-in-Council, also was not a superior holder within the meaning of the Bombay City Land Revenue Act, 1876, and for that reason also the plots of land in these suits were outside the operation of Sections 8 and 9 of the Act. In the light of these allegations, the plaintiffs in each of these suits prayed (a) for a declaration that the defendant had no right to fix or levy or claim to recover assessment of land revenue, as intimated by him to the plaintiffs in his letter dated May 3, 1943, in respect of the said plots of land; (b) for a declaration that the decision of the defendant as embodied in the said letter was illegal and void and inoperative in law and not binding on the plaintiffs and that the same be superseded and set aside; (c) alternatively, for a declaration that the decision of the defendant in so far as it purported to relate to the period prior to the, issue of the said notices was, in any event, illegal, void and inoperative in law; and (d) that the defendant might be ordered to pay to the plaintiffs the costs of their respective suits.
9. The defendant in his written statement in all these suits admitted the leases granted by the Governor-General-in-Council to the different plaintiffs, but pointed out that all those leases provided that the lessee would
also pay all rates, taxes, charges, assessments and outgoings now payable or hereafter to become payable in respect of the said land and any buildings for the time being standing thereon or on any part thereof.
The defendant, however, did not admit that the Government of Bombay was paid a sum of Rs. 4,240 as representing all subsisting as Well as future interest of the State Government in the said land. He averred that the said sum was payable to the Government of Bombay 'by way of adjustment' and stated that he would rely upon the acquisition proceedings, when produced, in that behalf. The defendant denied that by reason of the acquisition proceedings and the award the interests of the Government of Bombay were satisfied or extinguished. He admitted that on coming into operation of Part III of the Government of India Act, 1935, the land became vested in. His Majesty for the purposes of the Government of India, but he denied that the Government of the Province of Bombay had no right to assess the laud to land revenue. According to him, when the different plots were leased to the plaintiffs, they ceased to vest in His Majesty for the purposes of the Government of India and they were accordingly liable to be assessed. He denied that there was a right in the plaintiff in limitation of the right of the Provincial Government to assess the lands to land revenue. He also denied that the plaintiff was not a superior holder within the meaning of the Act. He further denied that the notices issued by him to the plaintiffs were void or inoperative.
10. In the supplementary written statements that the defendant! filed in all the suits, after the amendment of the plaints, the defendant denied that the plaintiffs' lessor, viz., the Governor-General-in-Council, was not a superior holder within the meaning of the Act.
11. On these pleadings the learned Revenue Judge raised as many as eighteen issues. For the purpose of the present appeals, however, it is not necessary for us to set out the several issues raised by the learned Revenue Judge and the findings arrived at by him on those issues. The only material issues to which we should like to refer out of those issues are issues Nos. 10 and 13. Those issues are in the following terms:-
10. Whether the plaintiff is a superior holder within the meaning of that expression as used in the Bombay City Land Revenue Act, 1876?
13. Whether the plaintiffs' lessor, the Governor General-in-Council, is not a superior holder within the meaning of that expression as defined in Section 3 (4) of the Bombay City Land Revenue Act, 1876?
The learned Revenue Judge answered both these issues in the negative. In relation to these issues, the learned Revenue Judge observed in para. 30 of his judgment in Suit No. 2 of 1943 as follows:-
Whether this conclusion is or is not well founded, it is quite clear that the plaintiff is not a 'superior holder' within the meaning of Section 3(4) of the Bombay City Land Revenue Act, 1876; and, therefore, no settlement of assessment can be made with her (plaintiff) and no assessment can be levied on her under Sections 9 and 8 of the said Act, On the face of the lease (Exh. A) itself, the plaintiff does not hold the land 'under the Provincial Government'. The Governor-General-in-Council is the lessor; and the Provincial Government does not come into the picture at all. Even the rent is to be paid to the Chief Cashier of the G. I. P. Railway (Central Railway) for and on behalf of the Governor-General. By an amendment of the plaint, an averment was added that the plaintiffs' lessor, the Governor-General, is also not a superior holder. The defendant has controverted that point; and Mr. Thakore has submitted that the Governor-General-in-Council, i.e., now the Central Government, is a superior holder. As the Central Government is not a party to the proceedings before me, it would not be correct to decide the point whether the Central Government can be said to be the 'superior holder'. An opinion cannot be pronounced on this point so as to affect the Central Government. But so far as it may be necessary to determine this point for the purpose of the plaintiff's liability, I may state that it seems to me to be quite fantastic to suggest that the Central Government is a 'superior holder' under the Provincial Government within the meaning of Section 3(4) of the Act.
The learned Revenue Judge also held on the question of the validity of the notices issued by the Collector to the plaintiffs in these suits that they were wholly invalid for the reasons given by him in his judgment in Poonegar's case. In the result, the learned Revenue Judge passed a decree in favour of the plaintiffs in all the suits in terms of prayers (a), (b) and (d) of the respective plaints. It is against this decree that the Collector of Bombay has filed these four appeals in this Court.
12. The only point that was canvassed before us by the learned Advocate General in these appeals was that on a true construction of the definition of 'superior holder' as given in Section 3(4) of the Bombay City Land Revenue Act, 1876, the plaintiffs in all these suits were superior holders, inasmuch as it was they who had been holding the highest title to the lands in their occupation under the Provincial Government and not the Governor-General-Council who had granted the leases to the plaintiffs. On the other hand, it was urged by counsel appearing for the plaintiffs that the plaintiffs were only the lessees of the plots granted to them on lease; that despite the lease the ownership of the lands continued to vest in the Governor-General-in-Council and it was the Governor-General-in-Council who was really the person having the highest title to the lands granted by him to the plaintiffs on lease under the Provincial Government.
13. Before dealing with these contentions, it may be noted that each of the leases executed by the Governor-General-in-Council in favour of the plaintiffs in all these cases contains a provision that it would be open to the lessee during the first 49 years of the term of the lease to surrender the lease and take a new lease for a term of 999 years, subject to and containing the covenants, provisions and conditions similar to those of the present lease but) reserving a yearly rent of rupee one only. In such a case, however, the lessee is required to give three months' previous notice in writing to the Governor-General-in-Council expressing his intention to exercise this option, and upon the expiration of the notice the lessee is required to pay a fairly large sum of money as and by way of premium. Upon such payment being made, the Governor-General-in-Council would accept the surrender of the present lease and grant a new lease for a term of 999 years commencing from April 29, 1939.
14. It may further be noted that in respect of these different plots of land which the Governor-General-in-Council leased to the plaintiffs in these suits, the Governor-General -in-Council had issued a certificate under Section 173(1) of the Government of India Act, 1935, stating that they had been retained for future use of the Federal Government or had been retained temporarily for the purpose of a more advantageous disposal by sale or otherwise. A similar certificate was also issued by the Railway Board in respect of all these plots.
15. The learned Advocate General contended that the plots in these various suits were disposed of by the Governor-General-in-Council to the different plaintiffs by granting a lease thereof in their favour, first for a period of 99 years and, in case of the exercise of the option by the lessees within the first 49 years of the lease, for a period of 999 years and that, therefore, each of the leases should be treated as if it was virtually a sale for all practical purposes. He, however, conceded that the word 'disposal' would connote 'getting rid of' and he himself cited an observation of Farwell J. in Attorney General v. Ponty pridd Urban Council  2 Ch. 441, which is as follows (p. 450) :-.I think the words 'dispose of in clause 8 (of the schedule to the Electric Lighting (Clauses) Act, 1899) mean to sell out and out;...
and yet he urged that by creating these leases in favour of the plaintiffs the Governor-General-in-Council had actually got rid of these plots as much as he would get rid of them by an outright sale. 'We are afraid, we cannot accept this contention of the learned Advocate General. A sale of land can never be put on the same footing as a lease thereof. By a sale a person does really get rid of the land in question both in fact and in law, in the sense that he does not retain in himself even the slightest interest therein. The entire ownership of the land with all the incidents is transferred to the purchaser and the vendor would not thereafter be able to claim any right, title or interest in that land. In the case of a lease, however, the owner of the land only creates a limited right in favour of the lessee and that is the right of enjoyment of the land; the rest of the incidents of ownership which, in legal terminology, are called reversion, still continue to vest in the owner irrespective of the term for which such lease is created. It would not, therefore, be correct to say that the owner of a land would be able to get rid of it by a lease in the same way as he would be able to do it by sale. The term of a lease may be 5 years, 50 years. 99 years or even 999 years. Nevertheless, the transaction is only a lease and there is always a reversion which continues to vest in the owner for the entire term of the lease. It cannot be disputed, and it was not disputed at the Bar by the learned Advocate General, that a reversion is a kind of interest in land, and to the extent that the owner of a land has this reversion in him he is possessed of this interest in the land of which he has Created a lease. He does not cease to be the owner of the land and he cannot be said to have got rid of the land, so that ho could never have anything whatever to do therewith.
16. The learned Advocate General then contended that as between the Lessor and the lessee for a term of 99 years or 999 years, the latter should be regarded as superior holder within the meaning of Section 3(4) of the Bombay City Land Revenue Act, inasmuch as such lessee would both in fact and in law be said to be 'having the highest title under the Provincial Government to the land' in question. In support of this argument he invited our attention to the definition of 'title' as given in Jowitt's Dictionary of English Law, Vol. 2, at page 1754. That definition is as follows:-.a general head, comprising particulars, as in a book; an appellation of honour or dignity; the means whereby the owner of lands has the just possession of his property, titulus est justa causa possidendi id qudo nostrum est.
From this definition the learned Advocate General urged that the emphasis was on possession and that, therefore, a person having possession of land should be deemed to be a person having the highest title therein. We are afraid, the definition does not justify this contention. The definition only says that title means 'the means whereby the owner of lands has the just possession of his property'. In other words, the emphasis is upon the word 'owner' and possession is only one of the important incidents of ownership. When a person is the owner of a land, he may or may not have the actual possession thereof. In case he has not got actual possession, the word 'title' would mean the means whereby he would get such possession. In other words, the owner of a land must have a right to obtain possession thereof at some time or the other. This position is made clear in the following paragraph of the same Dictionary on the same page:-
The lowest and most imperfect degree of title consists in the mere naked possession, or actual occupation of the estate, without any apparent right or any shadow or pretence of right to hold and continue such possession. The next step to a good and perfect title is the right of possession, which may reside in one man while the actual possession is not in himself but in another.
From this paragraph it would be clear that in case of a lease, the lessor has got a right of possession on the expiry of the lease in any event, whereas the actual possession is with the lessee, and, therefore, as between a lessor and a lessee it would be the lessor who would be regarded as having the highest title to the land and not the lessee. This conclusion would appear to be borne out by the definition of 'reversion' given in the same Dictionary at page 1553, which is as follows:-
That portion left of an interest after a grant of a particular portion of it, short of the whole interest, has been made by the owner to another person. When a person has an interest in lands, and grants a portion of that interest, the possession of the lands, on the determination of the interest granted, returns or reverts to the grantor. This interest is what is called the grantor's reversion, or, more properly, his right of reverter. Thus a grant by the owner of a fee simple to A for life leaves in the grantor the reversion in fee simple, which is a present and vested interest which will commence in possession after the determination of A's life interest; and this is called the particular interest; particular, as being a part (particula) carved or sliced out of the larger interest or reversion.
Settled reversions of freehold or leasehold estates are reduced to equitable interests by the Law of Property Act, 1925, but the word is also used to mean the freehold or leasehold reversion to a lease or term of years absolute in which case there is an estate in possession of the rents and profits as well as in the freehold or leasehold reversion, which together may form a legal estate subject to the term.
From this paragraph it would be clear that the owner of a land only carves or slices out of his larger interest a particular interest in the land in favour of the lessee by granting a lease for any number of years to another person. Nevertheless, he does not cease to have a right to possession of the property, though such right may be exercisable on the expiry of the terra of the lease. In the meantime, in the words of the second paragraph quoted above, there is in such owner:
an estate in possession of the rents and profits as well as in the leasehold reversion which together form a legal estate subject to the term of the lease.
It would thus appear that a person in order that he should have the highest title to a land need not necessarily be in actual possession of the land; nor should he have an immediate right to possession thereof. It would be enough if in case of an estate created by him for a term of years he is entitled to possession, of the land on the expiry of the term, and in such a case he would, as between himself and the holder of the estate which he has created, be the person having' the highest title to the land.
17. The learned Advocate General also invited our attention to the definition of 'possession' at page 1367 of Jowitt's Dictionary of English Law, Vol. 2, in support of the well-known proposition that possession is nine points of the law. That definition is as follows:-
Possession may connote different kinds of control according to the nature of the thing or right over which it is being exercised. A man may possess an estate of land; if he leases it he will be in possession of the rents and profits and the reversion, but not of the land which is in the lessee who may bring an action of trespass against the lessor. In regard to real property a mere right without possession is not sufficient to found an action of trespass;...
The learned Advocate-General, in view of this passage, contended that a lessee had so much of a right to possession over the land granted to him that the lessor could not enter upon the land during the continuance of the lease except with the consent of the lessee and, if he did, the lessee would be entitled- to bring an action against him for trespass. Accordingly, he urged that it would he the lessee who should be said to be having the highest title to the land and not the lessor. It may be mentioned, however, that in the same passage it has been pointed out that despite the lease and the actual possession of the demised land with the lessee, the lessor has an estate in possession of rents and profits and also reversion. As already observed by us, this estate in possession connotes a constructive possession of the lessor himself. Besides, the reversion which continues in the lessor gives him ,a right to recover possession on the expiry of the term of the lease. In bur opinion, therefore, it cannot properly be said that the lessor has no right, to possession of the land demised by him and accordingly, it cannot be said that despite the lease, for whatever term, the lessor is not the person having the highest title to the land demised.
18. In support of the view that we are taking, a reference may be made to Kally Dass Ahiri v. Monmohini Dassee I.L.R (1897) Cal. 440. That was a case in which a holder of permanent lease had impugned his landlord's title and it was held that such action on the part of the lessee, although a permanent one, rendered the lease liable to forfeiture. It was contended on behalf of the lessee that though the words of Sections 105 and 111 of the Transfer of Property Act, 1882, were wide enough to authorise the forfeiture of a lease in perpetuity, still in fact that result was impossible and that in any case those provisions would not apply to a lease which had come into existence before the passing of that Act. Jenkins J. dealt with these contentions at page 447 of the report in the following words:
The impossibility on which the defendant relies is based upon the assumption that a lesser has no reversion. There seems to me to lurk in this assumption a fallacy based on the theories of English real property law.
A man who being owner of land grants a lease in perpetuity carves a subordinate interest out of his own and does not annihilate his own interest. This result is to be inferred by the use of the word 'lease,' which implies an interest still remaining in the lessor. Before the lease the owner had the right to enjoy the possession of the land, and by the lease he excludes himself during its currency from that right, but the determination of the lease is a removal of that barrier, and there is nothing to prevent the enjoyment from which he had been excluded by the lease.
Again, at page 448 the learned Judge observed as follows:-
Mr. Pugh himself admitted that a perpetual lease would be forfeitable, if there were a right of re-entry, and then if that view is correct, it implies that the lessor has still a superior estate in the land, for I imagine that an unlimited right of entry not incident to an estate but simply creative of a fresh estate would be an infringement of the rule against perpetuity.
I, therefore, come to the conclusion that if the lease set up by the defendant be one to which the Transfer of Property Act is applicable, it is forfeitable, notwithstanding that it is permanent.
From these observations it is abundantly clear that, even in the case of a permanent lease of land, which is certainly longer in term than a lease for 99 or 999 years, the lessor has got a superior estate in the land, and when we say that his estate is superior, it, only means superior to the estate of the lessee. It we remember that in granting a lease the owner of a land only carves out a subordinate interest out of his ownership thereof, the superior title to the land would always reside in such owner and, as between himself and the lessee, he would always be having a superior title to the land.
19. The view taken by Jenkins J. in the Calcutta case was approved of by the Privy Council in Abhiram Goswami v. Shyama Charan Nandi (1909) L.R. 36 LA. 148 : 11 Bom. L.R. 1234. In that case it was urged that a mokurari pottah ah was tantamount to a conveyance in fee simple and that, accordingly, the grantee thereof was a purchaser for valuable consideration within the meaning of Article 134 of the Limitation Act, 1877, Sir Andrew Scoble, who delivered the judgment of the Board, dealt with this contention at p. 166 of the report as follows:-. Sir Robert Finlay, in his able argument for the respondents, contended that a mokurari lease is tantamount to conveyance in fee simple, and that the lessee must therefore be treated as a purchaser within the meaning of the Limitation Act. But the distinction between the two transactions has been well pointed out by Jenkins J. in his judgment in the case of Rally Dass Ahiri v, Monmohini Dassee I.L.R (1897) 24 Cal. 440. 'Because at the present day', says the learned Judge, 'a conveyance in fee simple leaves nothing in the grantor, it does not follow that a lease in perpetuity here has any such result...The law in this country does undoubtedly allow of a lease in perpetuity...A man who, being owner of land, grants a lease in perpetuity carves a subordinate interest out of his own, and does not annihilate his own interest. This result is to be inferred by the use of the word lease, which implies an interest still remaining in the lessor,' He held, therefore, that, whether the Transfer of Property Act applied or not, such a lease is forfeitable, notwithstanding that it is permanent. In this opinion their Lordships concur, and it follows that they are unable to give to the Limitation Act the wider interpretation adopted by the High Court, and to treat the lessee as a purchaser under Article 134 of the Act. The purchaser must be the purchaser of an absolute title.
This approval of Jenkins J.'s observations by the Privy Council was later referred to in Baghunath Roy Marwari v. Raja of Jheria . In the light of these observations both of Jenkins J., and the Privy Council, we are of the opinion that as between the lessor and the lessee, it would be the lessor who would always be having the highest title to the land demised by him. The lease created by him may be for any number of years or even in perpetuity. The position in law, however, that the lessor will have a title superior to the title of the lessee under the lease will never be affected.
20. The learned Advocate General next urged that for the purpose of determining the higher title as between a lessor and a lessee, the principles on which compensation is allowed to a lessor and a lessee of a land on acquisition thereof by the Government should be applied, and that on such application there would not be any doubt that it would be the lessee who would be having the better title to the land than the lessor. He urged that a larger amount of compensation is allowed to the lessee than to the lessor and that, itself clearly indicated that the lessee had a larger interest in, and consequently title to, land than the lessor. In support of this contention the learned Advocate General referred to Government v. Century Spg. & Mfg. Co., Ltd. (1941) 44 Bom. L.R. 57 and relied upon the observations of Beaumont C.J. at page 82, which are as follows:. The difference between a freehold piece of land, and a piece of land leased for 999 years at a nominal rent, and with no restrictive covenants, would be purely sentimental. But where you have restrictive covenants, experience shows that as time passes, and lands change hands, it becomes difficult to enforce covenants between freeholders, whilst it is not difficult to enforce covenants against lessees, I think covenants are more detrimental in the case of leaseholds than in the case of freeholds, and I think also that, on the whole, the covenants are rather more severe in the case of these two leasehold properties than in the case of the land to be acquired.
That was a case where the Government had acquired a certain piece of land under the Land Acquisition Act, and the learned Chief Justice was of the view that in assessing the value of the land for the purpose of compensation, increased value should be allowed for the land to be acquired which is freehold than if it is leasehold. In our opinion, these observations of the learned Chief Justice do not support the contention urged by the learned Advocate General that the interest of a lessee is always superior to and higher in value than that of the lessor. The question which the learned Chief Justice was there considering was as to whether there could be any comparison between the compensation allowed in the case of freehold land and the one that may be allowed in the case of a leasehold land. As the learned Chief Justice has observed in the course of the judgment in that case, the value of a leasehold land for the purpose of compensation under the Land Acquisition Act would vary according to the restrictions and covenants contained in the lease. As a matter of fact, the rate of compensation allowed to lessees has never been uniform, obviously because the interest, of a lessee in the demised premises is always hedged in by various types of restrictive covenants. We have had cases in which a lessor has been given a larger share of compensation than a kssee. For instance, in Dossibai Nanalhoy v. P.M. Bharucha : (1958)60BOMLR1208 a Division Bench of this Court allowed 10 annas of the compensation awarded by the Government to the lessor and only 6 annas to the lessee. Mr. Justice J.O. Shah, while dealing with the question of apportionment of compensation between a lessor and a lessee observed as follows at page 1219 of the report:-.Indisputably, in apportioning compensation the Court cannot proceed upon hypothetical considerations but must proceed as far as possible to make an accurate determination of the value of the respective interests which are lost. The Court must, in each case, having regard to the circumstances and the possibility of a precise determination of the value having regard to the materials available, adopt that method of valuation which equitably distributes the compensation between the persons entitled thereto.
21. It was in the light of 'these observations and on a careful consideration of various restrictive covenants contained in the lease in that case that the Court came to the conclusion that the lessor should be given 10 annas and the lessee should he given 6 annas of the compensation awarded by Government. Accordingly, it will appear that there can never be a hard and fast rule with regard to the rate of distribution of compensation between a lessor and a lessee; and inasmuch as there is no such rule-and there cannot be such a rule, the principles which the learned Advocate General asked us to apply, cannot properly be applied in the sense in which he seeks to do. His argument proceeded upon the basis as if the lessee was always entitled to a higher rate of compensation than the lessor irrespective of the terms and conditions of a lease. This argument, however, in view of what we have stated above, does not seem t|0 be well-founded and, therefore, there is no question of applying any such principles as between a lessor and a lessee in the present case for the purpose of determining the question as to which of the two parties, viz., the plaintiffs or the Central Government, has the highest title to the lands in question for the purpose of assessment under the Bombay City Land Revenue Act, 1876.
22. In view of this finding, we do not think, it is necessary for us to refer to certain standard books on valuation referred to by the learned Advocate General. It may be that normally speaking, in a straight-forward lease with hardly any restrictive covenant, the value of a lessee's interest may exceed the value of the lessor's. But that does not necessarily mean that the same would be the result in all cases, because, as we have already observed, the value of the respective interests of the lessor and the lessee would ultimately depend upon the kind of restrictive covenants that have been incorporated in the instrument of lease. As we have already held, however, the question as to whether the lessor or the lessee has the highest title to land does not depend upon the amount of compensation to which they may be respectively entitled in proceedings under the Land Acquisition Act.
23. The two submissions, therefore, which the learned Advocate General made before us, viz., (1) that the leases in this case should be treated as disposal, in the sense of a conveyance out and out, and (2) that the higher interest belonged to the lessee and not the lessor on the footing that both the lessee and the lessor held their respective title under the Provincial Government, cannot be accepted.
24. We have already held in Poonegars' case that until the Central Government conveyed the lands to Poonegars in 1938 the Central Government held the same as 'superior holders' within the meaning of Section 3(4) of the Bombay City Land Revenue Act, 1876, ever since April 1, 1937, on which date the Government of India Act, 1935, came into force. This conclusion was arrived at on the basis that on April 1, 1937, when that Act came into force, the sovereignty of the Crown over the territories which constituted the Province of Bombay became vested in the Provincial Government and ever since that date all the lands situated within those territories came to be held by their respective superior holders under the Provincial Government for the purposes of land revenue leviable under the Bombay City Land Revenue Act, 1876. In these suits also, we necessarily come to the same conclusion. As a matter of fact, it was conceded by the learned Advocate-General in the course of his arguments that as from the date the autonomous provinces came into existence in this country under the Government of India Act, 1935, the Central Government started holding their lands situated in any of those provinces as 'superior holder' under the Government of that province for the purposes of land revenue, and therefore, so far as Poonegars' case was concerned, it was urged that on the execution of the conveyance of the lands in Poonegars' suit by the Central Government in favour of Poonegars, Poonegars, in their turn, became 'superior holders' under the Provincial Government. In the present case, therefore, we hold that the Central Government became the 'superior holder' of the lands in these suits under the Provincial Government ever since April 1, 1937, but they were not liable to pay any assessment to the Provincial Government by reason of the exemption provided by Section 154 of the Government of India Act, 1935, and that they still continue to be superior holders, despite the leases granted by them in favour of the different plaintiffs in these suits. In any event, the plaintiffs in these suits are not 'superior holders' within the meaning of Section 3(4) of the Bombay City Land Revenue Act, 1876, and, therefore, they are not liable to pay any land revenue to the Provincial Government in respect of the lands held by them on lease from the Central Government,
25. The learned Revenue Judge, as already seated above, has come to the same conclusion, though he expressed the opinion that the Central Government was not a superior holder in respect of these, lands, Whether. the Central Government is or is not a superior holder is not really material in these suits, because it is the lessees who actually claimed that they were not superior holders within the meaning of the Bombay City Land Revenue Act, 1876, though by the amendment of their plaints they also contended that their lessor, the Central Government, was also not a superior holder. It is interesting to note that in the supplementary written statements filed by the Collector of Bombay it was denied that the Central Government, the plaintiffs' lessor, was not a superior holder, which would mean that, according to the Collector of Bombay, the Central Government was a superior holder, As a matter of fact, as already pointed out above, the learned Advocate General himself conceded in the course of his arguments that the Central Government was a superior holder under the Provincial Government, and the contention that he had raised was that the plaintiffs became the superior holders in consequence of leases in their favour, that it was a case of competition between two title-holders, and the question was as to which of them had the highest title to the land under the Provincial Government. In our opinion, there is a clear fallacy in the contention raised by the learned Advocate General that both the lessor and the lessees in these suits were title-holders under the Provincial Government. The lessees, in our judgment, cannot be said to hold the lands in their occupation under the Provincial Government. Accordingly, irrespective of whether the Central Government is or is not the superior holder under the Provincial Government, we are definitely of the view that the plaintiffs in these suits are not superior holders as contemplated by Section 3(4) of that Act, and that, therefore, they are not liable to pay any assessment to the Provincial Government in respect of the plots of land held by them on lease from the Central Government.
26. This was the only contention that we had to decide in these cases, and for the reasons that we have already given, we dismiss all these appeals with costs. The basis for costs shall be the same as the one adopted by the learned Revenue Judge and specified in his judgment in Suit Nos. 8 and 24 of 1943. The Rules of the Appellate Side with regard to taxation of costs shall apply so far as costs of these appeals are concerned. Appeal dismissed.