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Municipal Corporation of Greater Bombay Vs. Ramadevi Shri Nivas Ruja and anr. - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtMumbai High Court
Decided On
Case NumberAppeal No. 244 of 1976 and Land Acquisition Reference No. 80 of 1972
Judge
Reported inAIR1982Bom391; (1982)84BOMLR399; 1982MhLJ377
ActsLand Acquistion Act, 1894 - Sections 3 and 30; Transfer of Property Act, 1882 - Sections 40
AppellantMunicipal Corporation of Greater Bombay
RespondentRamadevi Shri Nivas Ruja and anr.
Appellant AdvocateK.K. Singhavi,;R.l. Dalal and;P.B. Karadkar, Advs.;T.R. Andhyarujina and;S.H. Kapadia, Advs.,;i/b., Gagrat & Co.
Respondent AdvocateP.L. Nain, Adv., ;i/b., Doru & Doru Co.,;B.E. Patel and;S.P. Kanuga, Advs.
Excerpt:
land acquisition act (1 of 1894), sections 3(b), 9, 30 - transfer of property act (iv of 1882), section 4,9 -- bombay municipal corporation act (bom. iii of 1888), sections 69(a), 70(1), 71 -- agreement to enter into agreement of lease in respect of corporation's plot of land between corporation and claimant -- offer of claimant to enter into agreement of lease accepted by corporation -- acquisition proceedings started in respect of the plot of land and award given determining compensation -- rival claims of corporation and claimant for compensation -- agreement to enter into agreement of lease whether creates enforceable right to or obligation in respect of land -- contract act (ix of 1872), section 10.;the municipal corporation of greater bombay had certain plots available to.....chandurkar, j.1. this is an appeal by the municipal corporation of greater bombay challenging the decision of a learned single judge of this court holding that respondent no.1 was entitled to apportionment of amount of compensation payable to the municipal corporation under the land acquisition act in the ratio of 10:6 in view of t he decision of t his court in dossibai nanabhoy jijeeebhoy v. p. m. bharucha : (1958)60bomlr1208 .2. the facts in this case are not in dispute. the municipal corporation of greater bombay (hereinafter referred to as 'the corporation') had certain plots available to be let out for building purposes on building lease. the practice of the corporation was to invite offers firstly to enter into an agreement to enter into a lease and then to execute the lease in.....
Judgment:

Chandurkar, J.

1. This is an appeal by the municipal corporation of Greater Bombay challenging the decision of a learned single judge of this court holding that respondent No.1 was entitled to apportionment of amount of compensation payable to the municipal corporation under the Land Acquisition Act in the ratio of 10:6 in view of t he decision of t his court in Dossibai Nanabhoy jijeeebhoy v. P. M. Bharucha : (1958)60BOMLR1208 .

2. The facts in this case are not in dispute. The municipal corporation of Greater Bombay (hereinafter referred to as 'the corporation') had certain plots available to be let out for building purposes on building lease. The practice of the corporation was to invite offers firstly to enter into an agreement to enter into a lease and then to execute the lease in respect of such plots. So far as the plot in question is concerned, respondent I wrote a letter to the municipal commissioner some time in 1956 offering 'to enter into an agreement in the terms set out in the accompanying draft for a building lease...........' The plot in question us 1600 square yards. Along with this leter, approved securities of the face value of Rs. 5,000/- duly endorsed to the corporation to be held by the corporation if the offer was accepted for due compliance with the obligations under the agreement were also sent. In addition, a sum of Rs. 300/- was sent 'to be held by the corporation. If this offer is accepted, as an advance on account of stamp duty, registration charges and other costs payable in respect of the abovementioned agreement.' The letter further stated that if respondent 1 failed to execute and complete the original and duplicate of the agreement within one English calendar month after the date of delivery thereof or within such extended period (if any) as the corporation may permit, the corporation was to forfeit the security deposit and the advance of Rs.300/- There is no dispute that this offer was accepted by the corporation on 15th Nov. 1956.

3. Now, the agreement which respondent 1 had undertaken to enter into is different from the lease itself. This agreement has several clauses and under this agreement, possession was to be given to the intending lessee and the tenant was required to submit the necessary plans of the construction for approval and take the necessary steps. The agreement reserved the power of inspection to the commissioner and the city Engineer or the Estate Agent and Land Manager in respect of the building and works erected and in the course of erection. The provision with regard to the lease is contained in para 14 of the agreement and it appears that the lease is to be granted only after completion of the structure and the relevant stipulation with regard to the lease is as follows :-

'So soon as the city Engineer has accepted the completion certificate granted by the approved architect and certified that the main building has been roofed in to the satisfaction of the city Engineer the corporation shall if this agreement has not previously been determined and if the tenant has otherwise fulfilled all the terms and conditions of this agreement grant to the tenant or to any nominee of the tenant who may be approved by the corporation and the tenant or such nominee shall accept a lease of the plot with the building thereon in perpetuity from the date of possession at the yearly rent mentioned in Cl. 13 hereof..........'

A separate form of the lease is also prescribed. Now, admittedly respondent 1 has not entered into the agreement of lease and clearly there was no question of any lease in his favour.

4. Now, the plot in question became t he subject-matter of land acquistion proceedings consequent upon a notification under section 4, Land Acquisition Act, being issued on 12th May 1961 and notification under sec. 6 having been issued on 7th feb. 1962 . Prior to this the corporation had already sent an intimation to respondent 1 on 20th Aug 1960. That the land was under acquistion.

5. The Land Acquistion officer by an award dated 30th March 1970 determined the compensation inclusive of 15% solatium at Rs. 1,56,400. Before the Land Acquisition officer the corporation claimed the entire amount of compensation. Respondent 1 also claimed the entire compensation on the ground that she had entered into an agreement with the corporation. The Land Acquisition Officer thus made a reference to the court under Sec. 30 to which the compensation amount was also directed to be sent. In his reference the Land Acquisition officer stated that there was no application for reference under section 18 L.A. Act. IT is this reference which came before the learned single judge.

6. The learned single judge passed a very brief order as follows :-

'Upon the authority of Dossibai Nanabhoy Jijeebhoy v. P. M. Bharucha : (1958)60BOMLR1208 , an intending lessee under an agreement to lease is a person interested in land and is entitled to claim apportionment .................'

Holding that the lessor and the lessee were entitled to compensation in the ratio of 10'6 the corporation was held entitled to Rs. 97,750/- and the lessee was held entitled to Rs. 68, 650/- The reference was accordingly answered by the learned judge. This view of the learned judge is being challenged in this appeal.

7. Mr. Singhavi appearing on behalf of the corporation has contended that the learned judge was not justified in relying upon the decision in Dossibai's case because the tenant who was held entitled to apportionment or compensation was in possession in pursuance of an agreement of lease. According to the learned counsel, all that respondent 1 has in her favour in the instant case is an agreement to enter into agreement to lease which is not even specifically enforceable and respondent 1 was not, therefore, a person interested within the meaning of sec. 3(b) , L.A. Act, and was not. Therefore, entitled to claim any compensation.

8. Mr. Nain appearing for respondent 1 has contended that the reference before the learned single judge has come. To be decided on the footing that there is an agreement of lease in favour of resdpendent 1 and that the appellant is not now entitled to contend that there is in fact no agreement of lease in favour of respondent 1. Reliance was placed by the learned counsel for respondent 1 almost exclusively on the decision in Dossibai's case and on the authority of that decision it was contended that it is not necessary that the interest of the claimant for the purpose of sec. 30 L.A. Act should be a proprietary interest b ut that such an interest could be in the nature of an obligation annexed to ownership and a corresponding right in t he claimant flowing from the agreement to have the property leased out to her. On the basis of the authority in Dossibai's case, it was contended that if there was a right to or claim to land, it was enough to make the claimant a person interested for the purposes of sec. 30 L.A. Act.

9. It appears that similar matters are pending in this court and Mr. Andhyarujina sought permission to intervene and he was also heard in the matter and the arguments advanced before us by Mr. Andhyarujina were a lso of the decision in Dossibai'scase : (1958)60BOMLR1208 .In addition.some reliance was placed on the decision of the supreme court in Bai Dossibai v. Mathuradas, : [1980]3SCR762 . To which we shall refer latter. Mr. Andhyarujina's arguments were then supplemented by Mr. Kapadia who wanted to go into the larger question as to whether the right in the instant case could be considered as property having regard to the decisions of the supreme court in Bank Nationalisation case in : [1970]3SCR530 , and another decision of the supreme court in M.M. Pathak v. Union of India, : (1978)ILLJ406SC .

10. We may at this stage refer to a judgment of vadkya J. On which reliance was placed by Mr. Singhave, where a similar question arose for consideration. That judgment is in first Appeals Nos. 367 to 389 of 1964 decided on 27th August 1973. The claimants in that case claimed a share of compensation awarded under the Requisitioning and Acquisition of Immovable property Act, 1952, and the argument on behalf of the municipal corporation was that the claimants were merely prospective lessees under the terms of a public auction of plots allotment for building leases for 999 years and no agreement of lease having been executed by any of them as required by secs. 69 and 70 of the Bombay municipal corporation Act, their status was merely that of prospective lessees who had agreed to execute in future agreements of leased and those agreements had become impossible of performance or execution on account of acquisition of land which were first requisitioned under the defence of India Rules and then under the Requisitioned Land (Discontinuance of powers) Act, 1947, and lastly under sec. 3 of the Requisitioning and Acquisition of Immovable property Act 1952. The learned Judge set out the terms of public auction and those whose bids were accepted had first to enter into an agreement and the agreement had to be under seal and had to be registered. In that case also, the offer of the claimants was accepted by the sanction of the Improvements committee. The agreements were. However, never executed nor registered nor was possession ever delivered. The learned judge held that the agreement, whether it is considered as an agreement to execute in future an agreement or an agreement to creator a lease, it became void on the issue of notification of acquisition and then the learned judge observed as follows :-

'Having regard to the nature of the agreements entered into by the claimants and the subsequent notification, the claimants had no interest whatsoever in any compensation money which the municipal corporation got from Government in respect of the lands claim of the claimants was thus rejected.

11. According to the learned counsel for the corporation, the judgment of the learned single judge is contrary to the view taken much earlier by Vaidya J. It does not appear that at the time when the reference in this case was argued, the decision of Vaidya J. Was brought to the notice of the learned single judge. However, since the matter has been fully argued before us, we will consider the contentions on their own merits.

12. It does appear that when the learned single judge decided the reference, he proceeded on the footing that respondent I was a lessee or a tenant of the plot in question. That, however, cannot be the basis on which the reference could be decided. Itis undisputed on facts that all that had happened in the instant case is that the offer to enter into an agreement was accepted on behalf of the corporation on 15th November, 1956. It is no doubt ture that the offer by respondent I refers to the draft of the agreement but admittedly if the agreement has not been actually signed or executed, the position is that beyond the acceptance of the offer to enter into an agreement to lease, nothing more had taken place and unless it is possible for us to hold that on these facts the claimant or respondent 1 can be said to be a person interested and entitled to apportionment, it will be difficult to sustain the order of the learned single judge.

13. Now, so far, as the Bombay municipal corporation Act is concerned, the contract has to be made on behalf of the corporation by the commissioner under Sec. 69 (a) and under sec. 70 (1) cl. (A) if any such contract entered into by the commissioner required to be under seal. It has to be sealed with the common seal of the corporation. It is not in dispute that under the terms of auction the agreement to lease was required to be under seal. The ,manner of executing a contract required to be under seal is specified in sec. 70 (2) which reads as follows :-

'The common seal of the corporation which shall remain in the custody of the municipal secretary. Shall be affixed in the presence of two members of the standing committee to every contract or other instrument (other than contract relating to the acquisition of immovable property or interest therein or a right thereto ), required to be under seal and such contract or instrument shall be signed by the said two members of the standing committee in token that the same was sealed in their presence. The signature of the said members shall be distinct from the signature of any witness to the execution of any such contract or instrutment.

Section 71 of the Act provides that no contract of the nature specified in sub sec. (2) of the last preceding section not executed as in the said section provided shall be binding on the corporation. Therefore, so far as the provisions of the B .M.C. Act are concerned , it is necessary that before any rights or liabilities are created against corporation the contract has to be under seal.

14.Now, sec. 30 L.A. Act provides as follows :-

' When the amount of compensation has been settled under Sec 11 if any dispute arises as to the apportionment of the same or any part thereof or as to the persons to whom the same or any part is payable the Collector may refer such dispute to the decision of the court.'

15. A reference was made before us to the definition of 'person interested' having regard to the decision in Dossibai's case . The definition of 'person interested' in Sec 3(b) is an inclusive definition and the first part thereof provides the expression 'person interested' includes all persons claiming an interest in compensation to be made on acquisition of land under this Act . In Sunderlal v. Paramsukhdas , : [1968]1SCR362 , while construing the words 'person interested' it was pointed out that it was not necessary that in order to fall within the definition, a person should claim an interest in land which has been acquired . Now , for the purpose of the present case , it is really not necessary for us to go into the extended definition because in so far as the claim to apportionment of compensation is concerned , unless respondent 1 is entitled to claim compensation qua compensation a claim by him under sec 30 L.A. Act , will not be maintainable . In order to claim apportionment of compensation under Sec 30 respondent 1 must show that she had some interest in or right to land .

16. Now, the maximum that can be said in favour of the present claimant respondent 1 is that she has an agreement in her favour to enter into an agreement of lease may be specifically enforceable an agreement to enter into an agreement is not recognised by law . In Harichand v. Govind AIR 1923 PC 47 the Privy Council has observed as follows :-

' Whether an agreement is a completed bargain or a merely a provincial arrangement depends on the intention of the parties as deducible from the language used by the parties on the occasion when the negotiations take a concrete shape . As observed by Lord Chancellor ( Lord Cranworth ) in Ridgway v. Wharton (1857) 6 HLC 238 the fact of a subsequent agreement being prepared may be evidence that the previous negotiations did not amount to an agreement but the mere fact that the persons wish to have a formal agreement does not establish the proposition that they cannot be bound by a previous agreement'.

Now, it is nobody's case that when an offer was made to respondent 1 to enter into an agreement to lease did in fact take place because it was clearly intended by the parties that respondent 1 would enter into an agreement of lease which would have to be under seal .

17. In Dhulipudi Namayya v. Union of India AIR 1958 AP 533 , a Division Bench of the Andhra Pradesh High Court was dealing with the question as to whether the agreement formed by the acceptance of the defendent's tender was provincial and subject to the execution of another formal document and the following observations are instructive (at p. 537) :-

' on the question whether the agreement formed by the acceptance of the defendent's tender was provincial and subject to the execution of another formal document the averment in the plaint was that no separate agreement was intended or contemplated and this was traversed in the defendent's written statement .

The position of the law on the subject has been summarised by Parker J. In Von Hatzfeldt Wildenburg v. Alexander 1912 1 Ch 284 in the following passage which has been approved by the judicial committee in Hukum Chand v. Ran Bahadur Singh ILR 3 Pat 625 : AIR 1924 PC 156 , Harichand Mancharam v. Govind Laxman ILR 47 Bom 335 : AIR 1923 PC 47 and Currimbhoy & Co . Ltd v. L.A. Creet .

' It appears to be well settled by the authorities that if the documents or letters relied on as constituting a contract contemplated the execution of a further contract between the parties it is a question of construction whether the execution of the further contract is a condition or the term of the bargain or whether it is a mere expression of the desire of the parties as to the manner in which the transaction already agreed to will in fact go through .

In the former case there is no enforceable contract either because the condition is unfulfilled or because the law does not recognise a contract to enter into a contract . In the latter case there is a binding contract and the reference to the more formal document may be ignored'.

Having regard to this statement of the law, it is clear that even on the offer which has been made by respondent I that she had undertaken to enter into an agreement of lease, the mere fact that this offer was accepted on behalf of the Corporation would not bring about any contract binding on the Corporation unless the contract was in compliance with the provisions of Sees. 69, 70 and 71, B, M, C. Act. It was, therefore, an essential term of the offer that an agreement to lease would to be executed and the said agreement was to be under seal. Unless that agreement was executed, there was not even a right which could be enforced specifically by respondent I against the Corporation requiring it to lease out the disputed property to her. We are in complete agreement with the view taken by Vaidya J. In First Appeals Nos. 367 to 389 of 1964 decided on 27th Aug., 1973 referred to carlier.

18. Once we come to the conclusion that all that respondent I had in her favour was an offer which was accepted by the Corporation and respondent I was herself to enter into the agreement of lease and if such a agreement is not recongnised by law as not creating any obligation or enforceable right, it is difficult for us to see how respondent I can be said to have any right to or interest in land because it is clear that there was no question of any proprietary interest in the land in the case of respondent 1.

19. As already pointed out, the contention on behalf of respondent I and the interveners is solely founded on the decision in Cossibal's case : (1958)60BOMLR1208 and that contention seems to have been accepted by the learned single Judge when he applied the ratio in Dossibal's case. It is, therefore, accessory to deal in some detail with Dossibal's case.

20. Dossibai has been described throughout in the judgment as claimant I and some of the lands which were under acquisition by the Government by notification dated 1st Octo., 1947 were agreed to be let by the owner Dossibal, claimant 1, to Trivedi, who was a nominee of claimant 2. P. M. Bharucha, at an annual rent of Rs. 500/- per acre for 99 years with an option of renewal for a further period of 99 years. Some other lands were also agreed to be let out by the owner Dossibai to Trivedi for 99 years and an agreement of lease was executed on 2nd June, 1947, Now, all these lands were agreed to be let out by claimant 2 to a co-operative housing society described as claimant 3 and all the three claimants claim compensation, when the lands were acquired, in respect of their respective interest in the (and. It appears that the compensation was divided between claimants 1and 3 in respect of certain lands and in respect of some lands. Compensation was awarded to all the three claimants and finally the dispute came to the High Court matter reference was decided by the District Court.

21. It is necessary to refer to the facts found in that case. The facts found were that the first claimant has put the second claimant in possession of the land agreed to be demised by her and in pursuance of the agreements, claimant 2 was in occupation of some of the lands and the remaining lands were in the occupation of the third claimant, It was undisputed that the second claimant had paid rent which was agreed to be paid by him and the second claimant was ready and willing to carry out his part of the contract. Claimant 2 was, therefore, entitled to claim the benefit of part performance under Section 53A. T. P. Act, and also to claim specific performance of the agreement to lease the lands in the event of the first claimant being unwilling to carry out her part of the contract. On the date of the notification, the first claimant was ready and willing to execute a conveyance on the terms agreed upon and the second claimant was willing to take a conveyance from the first claimant. There was also no dispute that the third claimant and the third claimant was ready and willing to carry out its part of the contract and the second claimant was also willing to carry out his part of the rentract. The third to the benefit of part performance under Sec 53A, T. P. Act, and also to obtain specific performance against the second claimant in the event of the second claimant being unwilling to carry out his part of the contract. As against the first claimant, the second claimant had possession of the lands agreed to be demised and he was entitled to hold possession of the lands and the first claimant was debarred from enforcing against the second claimant and persons claiming under him any right in respect of the lands agreed to be demised other than the right expressly provided by the terms of the agreement. The third claimant was also entitled to hold possession as against the second claimant. It was found that if the first claimant. That is, the owner, relying on the title, sought to obtain possession of the lands agreed to be demised to the second claimant, the latter could effectively resist the claim made by the second claimant, the latter could effectively resist the claim made by the first claimant except a claim arising out of any express terms of the agreement. The Division Bench found that though the second claimant has not acquired any interest of a tenant, there being no registered lease, he was entitled to remain in possession as if he had obtained a lease in his favour, similarly as against the second claimant, the third claimant had right to remain in possession as if it had obtained a lease.

22. Now, before we come to the legal position set out in the decision. It is necessary to appreciate the fact that the second and the third claimants, who claimed apportionment of compensation, were in possession in part performance of the agreement to lease and could, therefore, resist a claim for possession by the owner. A claim for possession by the second claimant against the third claimant could also be resisted by the third claimant. It is in the context that the passages relied upon heavily on behalf of respondent I must be read.

23. Dealing with the question as to who was the person interested in the land, the Division Bench observed as follows is the context of the contention that only those persons were entitled to claim compensation who had interest in the land compulsorily acquired and no others.

'A 'person interested in the land' under Sec. 9 will, in our judgment, by the definition in Sec. 3(b) include a persons who claims interest in compensation to be paid on account of the acquisition of land, and the interest in compensation to be paid on account of the acquisition of land, and the interest which is contemplated by Sec, 9 and the other sections to which we have referred is not restricted to legal proprietary extent or interest in the land but includes such interest as will sustain a claim to apportionment with the owner of the land. If a person has a right to remain in occupation or has a claim against the land, or some obligation or restriction is imposed upon the ownership of the land, the person is whom the right or claim is vested or who is entitled to the benefit of the obligation or restriction will, in our judgement, be entitled to compensation, even though the right, claim or the benefit may not amount to an interest or estate in the land, If a person has without having any interest a right to remain in occupation or possession of land of the ownership of another, compensation for extinction of that right by compulsory acquisition will be payable to the person having the right of occupation or possession. For instance, a person who has a licence which is irrevocable will be a person interested, even though the license does not amount to an interest in the land. The owner of a dominant tenement, having an easement over a servient tenement, even though the easement does not amount to an interest in the land, The owner of a dominant tenement, having an easement over a servient tenement, even though the easement does not amount to an interest in the lands, is by the definition declared expressly to be a persons interested in land. In our judgement. The right to receive compensation for compulsory acquisition of land is not restricted to those persons who have a legal or proprietary interest or estate in the land and is available to all persons who have a right or claim to land, even if such right or claim does into amount to legal or Propristary estate or interest in the land.'

24. Now, both Mr. Nain and Mr. Andhyarujina have laid emphasis on the observations of the Division Bench that it is not necessary to have a legal or proprietary interest or estate in land in order to sustain a claim to apportionment of compensation with the owner of the land and, according to the learned Counsel. If a person has a right to or interest in land, he will be entitled to compensation.

25. There can hardly be any quarrel with the proposition laid down by the Division Bench. But we cannot lose sight of the fact that the Division Bench in that case was dealing with the right of apportionment claimed by claimants 2 and 3 who were in possession in pursuance of an agreement of lease and though the lease was not registered. Though it was for 99 years. The Division Bench found that they were entitled to continue in possession in part performance of the agreement under S. 53A T. P. Act and that the agreement of lease could be specifically enforceable. It appears to us that when the Division Bench observed that the agreements of lease in that case were specifically enforceable even though they were not registered, the obvious reference was to the provisions of Sec 27 (a), Specific Relief Act, which section has now been deleted but with which we are not concerned because even in the instant case, the transactions are much prior to 1963: Section 49(c) Registration Act, requires even an agreement to lease to be registered if it is for a lease from year to year or for a period more than one month. Therefore, it is obvious that what weighed with the Division Bench was that although claimants 2 and 3 were in possession, they may not have any interest in land because no such interest was created in the absence of a registered lease deed, but they had a right to land inasmuch as their possession was protected by the doctrine of part performance under Sec. 53A, T. P. Act. When the Division Bench therefore, referred to a right to land, it was a right which enabled a person to continue in possession of the land. If there is merely an agreement which does not create any enforceable right, as in the instant case, it is difficult for us to appreciate how that can create either, a right to or an obligation in respect of that land. The ratio of Dossibal's case : (1958)60BOMLR1208 was wholly inapplicable to the though the Division Bench laid down that the person need not have proprietary interest or right, the observations clearly indicated that they had in view a right to land or an obligation attached to land which was of an enforceable nature.

26. Reference was made before us to the decision of the Supreme Court in Bai Dosabai's case : [1980]3SCR762 cited supra. That was a case which dealt with the doctrine of equitable ownership or an obligation annexed to the ownership of the property and we have not found anything in that case which will support the claim of present respondent I because basically she has not in her favour even an enforceable agreement which can be said to create an obligation in favour of respondent I which can be attached to the ownership of the land in dispute.

27. In Bai Dosabai's case, a deed of lease executed by the lessor on 25th Feb. 1946 provided that the lessor was to get a full sale price of Rs. 1,29,111-8-0 either from the lessee or by selling the property by public auction if the lessee did not want to buy it. If the price recovered by public auction if the lessee did not want to buy it. If the price recovered by public auction was less, the lessee was to made up the deficit. The lessee was to made up the deficit. The lessor was under an obligation to sell the land to the lessee, if the lessee so desired, within a period of 7 years and if he paid the purchase price, but if he did not so desire, the land could be sold by public auction sale price larger than that stipulated in the agreement, the excess had to be paid over to the lessee. The lessor had given a notice to the lessee demanding rent for 1950-51 and 1951-52 and he was informed that if rent was not paid, a suit would be instituted to recover possession and the property would be sold thereafter by public auction at the cost and risk of the lessee. After another notice demanding payment of rent for the next year and also for the first two years was given, a suit came to he filed for recovery of rent and a claim for possession as well as damages in lieu of rent was made. The suit was decreed. The property. It appears, was in the possession of a tenant of the lessee and the lessee had also filed a suit for possession against the tenant. Against the decree for possession in favour of the lessor the lessee filed an appeal which was dismissed. The lessor obtained possession in execution of the decree and thereafter the lessee filed a suit for specific performance of the agreement dated 25th Feb., 1946 directing the lessor to execute a sale deed in his favour after receiving from the plaintiff lessee that balance of the sale price or, in the alternative, to direct the lessor to sell the land by public auction and to retain a sum of Rs. 93,633-10-9 out of the sale proceeds to pay the excess amount fo the plaintiff. The claim for specific performance was given up. The suit of the lessee, though it was dismissed by the City Civil Court, was decreed in appeal by the High Court, was decreed in appeal by the High Court and the land was directed to be sold by public auction or by private treaty if the parties os agreed. Out of the sale price. The lessor was first to reimburse himself to the extent of the balance of the original purchase price with interest at the rate of 9% p.a. and thereafter the remaining amount was to be equally divided between the plaintiff and the defendant. If the price fetched was less, then the lessor was to recover the deficit form the lessee. The High Court took the view that the deed dated 26th Feb., 1946 had created an equitable interest in land in favour of the plaintiff that is, the lessee. The lessor then appealed to the Supreme Court against the decision of the High Court.

28. While disposing of the lessor's appeal, the Supreme Court pointed out that the concept and creation of duality of ownership. Legal and equitable, on the execution of an agreement to convey immovable property as understood in England, is alien to Indian Law which recognises one owner i.e. the legal owner. Reference was made to Sec 54 T. P. Act, which expressly stated that a contract for sale of immovable interest in or charge on such property and then the Supreme Court observed as follows (at p. 1338 of AIR) : -

'But the ultimate and penultimateparagraphs of Sec. 40. T. P. Act, make it clear that such a contract creates an obligation annexed to the ownership of immovable property, not amounting to an interest in the property, but which obligation may be enforced against a transfers with notice of the contract or a gratuitous transfers of the property. Thus the equitable ownership in property recognised by equity in England is translated into Indian law as and obligation annexed to the ownership of property. Not amounting to an interest in the property, but an obligation which may be enforced against a transfers with notice or a gratuitous transfers.' Analysing the right of the lessee, the Supreme Court found that the lessor was under an obligation to pay the excess price, if realised by public auction, in the lessee and then in para 10 of the judgment, the following observations were made:-

'We do not have any doubt, on a consideration of the terms of the deed and the relevant statutory provisions earlier referred, that the obligation of the lessor to sell the land by public auction and pay the excess price to the lessee is an obligation annexed to the ownership of the property, not amounting to an interest in the property, that is is an obligation in the nature of a trust, and therefore, an obligation which may be specifically enforced.'

29. Now, it is no doubt true that the principle of Sec 40 T. P. Act was invoked in Bai Dossibai' case : [1980]3SCR762 but it is difficult for us to see how that principle of Section. 40 can at all be invoked or attracted in the instant case. The obligation in Bai Dosabai's case arose from the agreement of sale. In so far as the case before us is concerned, there is not even an enforceable agreement and there was therefore no question of the provisions of Sec. 40 being attracted in the instance case.

30. It is wholly unnecessary for us to refer to the arguments advanced before us by Mr. Kapadia on the basis of the decision in the Life Insurance Corporations case : (1978)ILLJ406SC and the Bank Nationalisation case : [1970]3SCR530 as to the scope of the concept of property. Obviously the contention is that as a result of acquisition of land, a right or interest of respondent I has been extinguished and that was property for which she was entitled to compensation. The question really does not arise in the instant case because we have taken the view that there is not even an enforceable agreement in favour of respondent 1.

31. Some argument was advanced before us on behalf of the Corporation that there was a frustration of the contract. If there was any contract which vested some rights in respondent I enabling her to claim compensation she could not have been deprived of that right merely because there was trust ration of the contract but in any case that argument now does not survive. It therefore. Appears to us that the learned single Judge was in error in applying the ratio of the decision in Dossibai's case : (1958)60BOMLR1208 to the facts of the instant case. On the facts of the present case, the ratio of that cas was not at all attracted and consequently the order made by the learned single Judge is liable to be st aside.

32. Accordingly, the appeal is allowed, the order of the learned single Judge is set aside and it is held that respondent I is not entitled to made any claim in respect of the Compensation which is awarded by the Land Acquisition Officer in respect of the property in dispute. Respondent I to pay the costs of this appeal. We are informed that the amount awarded in respondent I was already withdrawn by her subject to guarantee furnished to the Prothonotary and Senior Master by order dated 11th Oct., 1976. If the amount is not deposited back within four weeks by respondent 1, the Corporation will be entitled to have the guarantee enforced.

33. Appeal allowed.


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