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R. Venkataswami Naidu and anr. Vs. Narasram Naraindas - Court Judgment

LegalCrystal Citation
CourtSupreme Court of India
Decided On
Reported inAIR1966SC361; [1966]1SCR110
ActsTransfer of Property Act - Sections 108
AppellantR. Venkataswami Naidu and anr.
RespondentNarasram Naraindas
Cases ReferredN. Vajrapani Naidu and Another v. New Theatres Carnatic TalkiesLtd.
Books referredMaxwell on Interpretation of Statutes, 11th Edn.
.....and tenants made application under section 9 for order of direction to respondent to sell his land to tenants - trial court and high court opined that tenants entitled to get order - division bench however took contrary view in letters patent appeal - appeal before supreme court - tenants entitled to purchase tenanted land under section 9 if they are tenants entitled to compensation under section 3 - appellants are tenants and their rights under sections 3 and 9 cannot be taken away by any covenant - act of 1921 passed to protect rights of tenants - order of division bench set aside and order of single judge of high court restored. - section 7: [dr. arijit pasayat, v.s. sirpurkar & asok kumar ganguly, jj] arbitration agreement - agreement clause providing for mandatory they relate to buildings erected after thedate of the contract.' 8. it will be noticed that a tenant entitled to purchase under s. 9 must bea tenant entitled to compensation under s. 3. the real question, therefore, iswhether the tenants in the present case were entitled to compensation under s.3. we may observe that we shall not in the present case be concerned with theproviso to s. 12 as the lease was not by a registered document and hencereferences in this judgment to that section will be to that section without theproviso. we should also state that by virtue of s. 10, s. 9 is applicable tosuits pending in coimbatore courts when the act was applied to that city. 9. it was not disputed in this court that if the covenant was left out ofconsideration, the tenants would be entitled.....

Sarkar, J.

1. By an unregistered instrument of lease dated February 3, 1953, therespondent let out a piece of vacant land in the town of Coimbatore to theappellants for the term of one year at a rent of Rs. 30/- per month. Thetenants held over after the expiry of the term reserved and the tenancy wascontinued. The lease provided that the tenants 'shall not raise anybuilding whatsoever in the vacant site' but they committed a branch of thecovenant by putting up a building on the land.

2. On December 4, 1956, the lessor filed a suit for ejectment of the tenantsand their sub-tenants. Pending the suit, the Madras City Tenants' ProtectionAct, 1921, was on February 19, 1958 made applicable to the town of Coimbatoreand thereupon the tenants made an application in the suit under s. 9 of the Actfor an order directing the lessor to sell the land to them. The trial Court, alearned Sub- Judge in first appeal and Anantanarayanan J. in second appeal tothe High Court of Madras held that the tenants were entitled to the order. ADivision Bench of the High Court took a contrary view in a Letters PatentAppeal preferred by the lessor. The tenants have appealed to this Court againstthe judgment of the Division Bench.

3. The question naturally turns upon the provisions of the Act the relevantparts of which we will, therefore, set out at once.

4. S. 2(4).'Tenant means tenant of land liable to pay rent onit.......'

5. S. 3. 'Every tenant shall on ejectment be entitled to be paid ascompensation the value of any building which may have been erected byhim.'

6. S. 9. 'Any tenant who is entitled to compensation under section 3and against whom a suit in ejectment has been instituted.... may..... apply tothe court for an order that the landlord shall be directed to sell..... theextent of land to be specified in the application.'

7. S. 12. 'Nothing in any contract made by a tenant shall take away orlimit his rights under this Act, provided that nothing herein contained shallaffect any stipulations made by the tenant in writing registered as to theerection of buildings in so far as they relate to buildings erected after thedate of the contract.'

8. It will be noticed that a tenant entitled to purchase under s. 9 must bea tenant entitled to compensation under s. 3. The real question, therefore, iswhether the tenants in the present case were entitled to compensation under s.3. We may observe that we shall not in the present case be concerned with theproviso to s. 12 as the lease was not by a registered document and hencereferences in this judgment to that section will be to that section without theproviso. We should also state that by virtue of s. 10, s. 9 is applicable tosuits pending in Coimbatore courts when the Act was applied to that city.

9. It was not disputed in this Court that if the covenant was left out ofconsideration, the tenants would be entitled to the benefit of Sections 3 and 9.They would be tenants within the definition of that word in the Act and theingredients of the other two sections would be fully satisfied. The learnedJudges of the Division Bench also accepted this position.

10. The question then is, Does the covenant make any difference Thelearned Judges thought, in our opinion wrongly, that it did. They put thematter in this way : A covenant not to build is valid. If it is valid, it mustbe enforceable all along and, therefore, also after the termination of the leaseby an order for demolition. If it can be so enforced, s. 3 which gives thetenant a right to compensation for the building cannot be applicable to a casewhere there was such a covenant for the Act could not at the same time havecountenanced a compulsory demolition of a building at the instance of thelessor and a right in the tenant to compensation for that building. Theenforceability of the covenant, therefore, indicated the scope of s. 3 in spiteof its wide terms and the equally wide definition of the word'tenant' in the Act. That scope was that the section had noapplication here there was such a covenant. Learned counsel for the lessoradvanced the same reasoning summarising the position by the observation thatthe erection contemplated by s. 3 was a lawful erection, that is, not in breachof any covenant not to build.

11. It seems to us that this reasoning is clearly fallacious. The learnedJudges held that the covenant not to build was valid. They, therefore, musthave held that it did not affect a right under s. 3 for if it did, it must havebeen ineffective under s. 12. Now when the learned Judges held that thecovenant did not affect the right under s. 3, they must have decided what thatright was and who were the tenants entitled to it. In deciding the validity ofthe covenant they must, therefore have fully and finally interpreted thesection and decided its scope and effect. After that they could not againproceed to ascertain the scope of the section. But this is what they did andthis is where their principal error lay. Basing themselves on oneinterpretation of the section they held the covenant to be valid and basingthemselves on the validity of the covenant so found, they gave the section asecond and a different interpretation. In deciding the validity of the covenantthey had not said that s. 3 had no application where the covenant existed. Ifthey had, they would have decided what they called the scope of the sectionwithout any aid from the covenant and there would have been no need fordeciding the scope of the section again on the basis of the validity of thecovenant. Therefore, on the second occasion they found the scope to bedifferent from what they had found it to be on the first occasion. But, ofcourse, a section has only one interpretation and one scope; a processresulting in more than one interpretation and scope is clearly erroneous.

12. Now when deciding that the covenant did not affect the right of tenantsunder s. 3 and was, therefore, valid, the learned Judges did not say that atenant who built in breach of it was not a tenant as contemplated by s. 3 andwas not entitled to its benefits; in fact they expressly took a contrary view.They said, and in our view rightly, 'there is no express provision in theAct, limiting the operation of section 3. ..... to the tenants who wereauthorised by the terms of the lease to put up a building. Prima facie,therefore, the term 'tenant' might not exclude one who puts up a superstructureon the land in breach of a covenant not to build. ' They stated that thiswas the view to be gathered from a consideration of the entire Act. But clearlythere was nothing else they could legitimately consider for interpreting s. 3.It would, therefore, appear that the words 'prima facie' with whichthey qualified their observation were in apposite. In effect then the learnedJudges said this : The contract was valid as it did not affect the right unders. 3 of any tenant as defined in the Act and since the contract was valid, atenant who had built in breach of it was not entitled to any right under s. 3.This is a wholly untenable proposition.

13. We think that the word 'tenant' in s. 3 must be understoodonly in the sense that that word is defined in the Act. We repeat that there isno reason for saying that the word 'tenant' in s. 3 does not includeall tenants as defined in the Act. None has been shown apart from that given bythe learned Judges which we think is ill founded. Therefore the appellants aretenants as contemplated by s. 3. Now the covenant says that the tenants shallnot build. Either that affects the right of the tenants to claim compensationfor the buildings constructed in breach of it at the termination of the leaseor it does not. If it does not, then no further question arises; there willthen be nothing purporting to disentitle the tenants of their rights under s. 3and the case will be the same as where there is no covenant at all. If such isthe case then, as we have said earlier, there is no dispute that the tenantsare entitled to their rights under Sections 3 and 9. If however, the covenant not tobuild affects the right to claim compensation under s. 3, such a covenant wouldbe of no effect, for under s. 12 nothing in any contract shall take away atenant's rights under the Act. The case will then also be the same as if therewas no covenant at all. That is why we think that the covenant not to builddoes not affect the question in hand. The tenants must be held entitled totheir rights under Sections 3 and 9 in spite of the covenant not to build and abreach of it by them.

14. Before Anantanarayanan J. - The argument for the lessor was somewhatdifferent. It was said that s. 3 had to be read in harmony with the generallaw, that is, s. 108(h) of the Transfer of Property Act, which gave the tenanta right to build when the lease did not prohibit building and, therefore, theerection under s. 3 must be one permitted by law. The learned Judge rejectedthis contention, in our opinion rightly, on the ground that s. 3 and s. 9contained no words justifying it and under s. 12 no contract could be madeaffecting the sections earlier mentioned. He also pointed out that s. 13 of theAct specifically provided that the Transfer of Property Act must be deemed tohave been repealed to the extent necessary to give effect to the Act so thatthere was no scope for harmonising the Act with the Transfer of Property Act.We entirely agree with the learned Judge's views. We must however observe thatthis argument was not advanced in this Court.

15. Before leaving this matter a reference to the preamble of the Act isnecessary. It states that the Act was passed 'to give protection totenants who..... have constructed buildings on others' lands in the hope thatthey would not be evicted.' The learned Judges of the Division Bench foundit to be too vague to be taken as defining a definite ascertained class oftenants. In any case, no resort to the preamble would, we think, be justifiedin interpreting the definition of tenant in s. 2(4) as the words used in it areclear and unambiguous. We observe that the language used in Sections 3 and 9 alsoadmits of no doubt as to the meaning intended. A preamble cannot of courseoperate to annul a section. We must here also say that learned counsel for thelessor did not rely on the preamble to support his contention.

16. We think it right to point out before we conclude that N. VairapaniNaidu v. New Theatre Carnatic Talkies Ltd. to which our attention was drawn,does not touch the point with which we are concerned, for it turned on theproviso to s. 12 and that proviso has no application to the present case.

17. For these reasons we think that the judgment under appeal was erroneousand must be set aside. We agree with Anantanarayanan J. that the appellanttenants had a right under s. 9 of the Act to purchase the land leased in spiteof the covenant not to build and the breach of it by them. The covenant cannotbe used for interpreting s. 3 or s. 9.

18. The appeal is allowed. The judgment of the Division Bench is set asideand that of Anantanarayanan J. is restored. The appellants will get the costsin this Court and in the Division Court.

Hidayatullah, J.

19. I agree that this appeal must succeeded but I would like to state thereasons somewhat differently. Appellants 1 and 2, who were tenants of therespondent landlord, seek the enforcement of s. 9 of the Madras City Tenants'Protection Act, 1921, which was extended to Coimbatore on February 19, 1958. Bya written (but not registered) lease-deed the appellants 1 and 2 took on leasefor a year from February 10, 1953, a vacant site on a rent of Rs. 35 per month.The lease-deed contained a term that no building should be built on the land.Without the knowledge and consent of the landlord the appellants 1 and 2 builtstructures on the vacant site and continued to hold over even after the expiryof the year. They inducted sub- tenants. The respondent-landlord sued inejectment in 1956 and the suit stood closed for arguments on February 25, 1958.On that date appellants 1 and 2 applied under s. 9 of the above Act claimingthe right to purchase the land. The case was re-opened and some more evidencewas received. The District Munsif, Coimbatore by his judgment dated April 8,1958 accepted the claim of appellants 1 and 2 and took action to determine theprice for the land as required by the Act. An appeal by the respondent-landlordbefore the Subordinate Judge, Coimbatore and a second appeal in the High Courtfailed. The present appeal is from the judgment dated September 21, 1962 of theDivision Bench in an appeal filed under Clause 15 of the Letters Patent and bycertificate from the Division Bench. By that judgment the decision of theSingle Judge was reversed and the application under s. 9 of the Act was orderedto be dismissed. There was, however, a remit for disposal on other points.

20. The Act which is relied upon by the appellants is an Act which wasintended to apply in the first instance to the Madras City but could beextended to other towns and villages. It was, as the long title shows, intended'to give protection to certain classes of tenants in Municipal towns andadjoining areas in the State of Madras'. The last eleven words weresubstituted for the words 'in the City of Madras' by an amending Actof 1955. The preamble of the Act reads :

'Whereas it is necessary to give protection totenants who in municipal towns and adjoining areas in the State of Madras haveconstructed buildings on others' lands in the hope that they would not beevicted so long as they pay a fair rent for the land;............ '.

21. The words underlined were substituted for the words 'in many partsof the city of Madras' by the same amending Act.

22. The Act defines the word 'building' so as to include everystructure, permanent or temporary and 'land' to exclude 'buildings'and 'tenants' as 'tenant of land liable to pay rent on it, everyperson deriving title from him', and including 'persons who continuein possession after the termination of the tenancy'. The appellants 1 and2 were thus tenants of land excluding the buildings. The Act then give newrights of various sorts to tenants, and some of the sections are set out below:

'3. Payment of compensationon ejectment.

Every tenant shall on ejectmentbe entitled to be paid as compensation the value of any building, which mayhave been erected by him, by any of his predecessors-in-interest, or by anyperson not in occupation at the time of the ejectment who derived title fromeither of them, and for which compensation has not already been paid. A tenantwho is entitled to compensation for the value of any building shall also bepaid the value of trees which may have been planted by him on the land (and ofany improvements which may have been made by him).'

23. The section is general and applies to every tenant and would include alland sundry tenants as also tenants holding over. In other words, the appellantswould be included. Sections 4 and 5 lay down the procedure for determination ofcompensation. Section 6 provides for determination of rent. They are notrelevants here and we not concerned with Sections 7 7A and 8. Section 9 (omittingportions not relevant here) then states :

'9. Application to court fordirecting the landlord to sell land.

(1) Any tenant who is entitledto compensation under section 3 and against whom a suit in ejectment has beeninstituted or proceeding under section 41 of the Presidency Small Cause CourtsAct, 1882, taken by the landlord, may, within one month of the date of MadrasCity Tenants' Protection (Amendment) Act, 1955, coming into force or of thedate with effect from which this Act is extended to the municipal town orvillage in which the land is situate or within one month after the service onhim of summons, apply to the court for an order that the landlord shall bedirected to sell the land for a price to be fixed by the court. The court shallfix the price according to the lowest market value prevalent within seven yearspreceding the date of the order and shall order that, within a period to bedetermined by the court, not being less that three months and not more thanthree years from the date of the order, the tenant shall pay into court or otherwiseas directed the price so fixed in one or more instalments with or withoutinterest.


(3) On payment of the price thecourt shall pass a final order directing the conveyance of the land by thelandlord to the tenant. On such order being made the suit or proceeding shallstand dismissed, and any decree or order in ejectment that may have been passedtherein but which has not been executed shall be vacated.


24. Section 10 expressly applies Sections 4, 5, 6, 8 and 9 to pending suits in ejectmentand to decrees passed in such suits but not yet executed. Section 1 provides asfollows :

'12. Effect of contractsmade by tenants.

Nothing in any contract made by atenant shall take away or limit his rights under this Act, provided thatnothing herein contained shall affect any stipulations made by the tenant inwriting registered as to the erection of buildings, in so far as they relate tobuildings erected after the date of the contract.'

25. Section 13 provides that the provisions of the Transfer of Property Actin its application to the area where the Act was in force, to the extentnecessary to give effect to the provisions of the Act, shall be deemed to havebeen repealed or modified. The Act is thus self- contained and the ordinary lawof transfer of property has no application.

26. The first point to notice is that the kind of building hinted at in thepreamble, namely, one constructed 'in the hope' of the continuance ofthe tenancy does not find any mention in the operative part of the Act or inthe definition of building. It is, therefore, difficult to read this limitation(as was contended) in Sections 3 and 9 where 'building' is used withoutany qualification and implies only a construction. A preamble is a key to theinterpretation of a Statute but is not ordinarily an independent enactmentconferring rights or taking them away and cannot restrict or widen the enactingpart which is clear and unambiguous. The motive for legislation is oftenrecited in the preamble but the remedy may extend beyond the cure of the evilintended to be removed. See Maxwell on Interpretation of Statutes, 11th Edn. p.45. If the enacting portion takes in all buildings without qualification, it isnot possible to give the less extensive import of the preamble a greater valueagainst the enacted provision. See Deo v. Brandling --(1828) 7 B&C; 643per Lord Tentterden.

27. What then is the position Sections 3 and 9 are imperative and s. 9 isexpressly made applicable to pending suits in ejectment such as this was.Appellants 1 and 2 made the application within a week of the extension of theAct to Coimbatore and were within the time limited for their action. The resultmust obviously follow unless the latter part of s. 12 can save the respondent.That can only be if the stipulations by the tenant as to the erection of thebuilding in so far as they related to buildings erected after the date of thelease- deed had been 'in writing registered'. The lease-deed is inwriting but is not registered. By the first part of s. 12 the tenant isprotected against his own contract. The landlord is protected by the secondpart, but the landlord here cannot seek the protection of the second partbecause the lease-deed is not registered.

28. The appellants also claimed that the words 'stipulations as to theerection of buildings' cannot take in a covenant not to construct at all,as laid down in N. Vajrapani Naidu and Another v. New Theatres Carnatic TalkiesLtd. (1) : [1964]6SCR1015 . The ruling certainly is in the appellants'favour but it is not necessary to rely on it for the disposal of this case. Asat present advised, I would not like to rest my judgment on that point of view.

29. I agree with the order proposed but for the reasons given here.

30. Appeal allowed.

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