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K.S. Subramania Iyer Vs. Mylapore Hindu Permanent Fund Ltd. - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtChennai High Court
Decided On
Case NumberLetter Patent Appeal No. 82 of 1963
Judge
Reported inAIR1965Mad484; (1965)2MLJ140
ActsMadras City Tenants Protection Act, 1921 - Sections 3, 9, 9(1) and 12; Presidency Small Cause Courts Act, 1882 - Sections 41; Transfer of Property Act - Sections 108
AppellantK.S. Subramania Iyer
RespondentMylapore Hindu Permanent Fund Ltd.
Cases ReferredPalaniappa Gounder v. Sridharan Nair
Excerpt:
.....applicable--tenant entitled to benefits of section 9 ; the plaintiffs, owner of vacant land leased that land to the defendant by a duly registered deed of lease, dated 30th april 1947, for a period of ten years. the lease deed contained several clauses. one clause laid down that on the expiry of ten years the lessee should surrender possession of the entire property and the construction, if any, thereon. on vacating or giving possession the lessors should pay the valuation thereof, then current, or the sum of rupees five thousand whichever was less.; on the question whether the above clause had to be construed as a stipulation binding upon the tenant, with regard to the erection of a building as per the proviso to section 12 of the madras city tenants' protection act, 1921..........herein contained shall affect any stipulation made by the tenant in writing registered as to the erection of building in so far as they relate to buildings erected after the date of the contract".the controversy on the present facts, may now be elucidated the lessee agreed to erect a building on the site according to certain specifications, and covenanted to surrender possession of the entire property, including the superstructure, on the expiry of the lease. he agreed to receive only the current value of the building or a sum of rs. 5000 whichever was less. if this has to be construed as a "stipulation" binding upon the tenant, with regard "to the erection of a building", the proviso to s. 12, will obviously inhibit the right of the tenant to invoke the benefits under s. 9 of the act......
Judgment:
(1) This Letters Patent Appeal is from the judgment of Ramakrishnan J. in A. S. 208 of 1960, and involves a point of some interest and importance regarding the scheme, and the application of certain provisions of the Madras City Tenants Protection Act, 1921, as amended by Madras Act XIX of 1955, to the established facts. It is true that the point centrally in issue is virtually concluded by the judgment of their Lordships of the Supreme Court in Vajrapani Naidu v. New Theatres Carnatic Talkies Ltd., C. A. No. 264 of 1962: . Still as it has been contended before us that the elucidation in that judgment of S. 12 of the Madras City Tenants Protection Act, 1921 (hereafter termed the "Act") may nevertheless not affect the particular contention of the landlord or lessor (The Mylapore Hindu Permanent Fund Ltd. Madras) on the facts, the matter deserves careful scrutiny.

(2) The background of the established facts may be set forth as follows: The plaintiffs are the Mylapore Hindu Permanent Fund Ltd. represented by their Secretary, and they are the proprietors of the vacant land bearing No. 4/7 Ponnambala Vadhiar St., Mylapore Admittedly, a lease deed was executed between the plaintiffs and the defendant (lessee) on 30-4-1946, Ex. A.1, with regard to this property for a period of ten years from 1-5-1947. As the controversy really impinges upon certain of the mutual rights and obligations under this lease, as well as on a contention that the lease was not merely of the vacant land but also of a superstructure in one sense at least, ab initio, it is necessary to set forth verbatim the relevant parts of this document.

(3) The document or the effective portion thereof, commence with the words:

"Whereas the lessor is the owner of vacant land No. 4/7 Ponnambala Vathiar St., Mylapore, more particularly described in the schedule given thereunder and whereas the lessee requested the lessors to lease to him the above land for the purpose of erecting a building and the lessors hereby agree to lease out the above land to the lessee...............

Stipulation or condition 2 of the document is in the following terms:

"The lessee is permitted to put up a building at a cost of not more than Rs. 10000 on the plot leased to him, after approval of the plan of the proposed building by the Board of Directors of the lessors, and the construction to be put up must be in accordance with the plan approved by the Directors of the lessors".

Stipulation or term No. 4, which is of considerable significance in the controversy, runs as follows:

"The lease shall be in force for a term of ten years commencing form the first day of May 1947, and on the expiry thereof the lessee shall surrender possession of the entire property and the constructions if any thereon. On vacating or giving possession as above the lessors shall pay the valuation thereof, then current, or the sum of Rs. 5000 whichever is less."

Stipulation No. 6 is to the following effect:

"The lessee shall make his own arrangements for providing a garage to Mr. P. Somasundaram who is now the tenant with the lessors. The present garage will be dismantled and the materials shall be taken by and sold by the lessors".

Term No. 9 is to the effect:

"In case of breach or infringement of any of the conditions above-mentioned by the lessee, the lessors are at liberty to determine the lease irrespective of the period provided herein by giving three months notice to the lessee and lessors may take possession of the property themselves without any compensation."

Under term No. 10 it is reiterated that the lease is "of the vacant site for ten years".

(4) In paragraph 4(a) of the plaint there was an averment that, on the very date of the lease, the property leased out was not merely a vacant land of the lessors, but also included a garage then occupied by Mr. P. Somasundaram as tenant. The argument was that, therefore, the lease was not of the vacant land per se, and that that defendant (tenant) hence is not entitled to the benefit of certain provisions of the Act. Dealing with this argument, the learned Judge (Ramakrishnan J.) referred to clause 6 of the lease, extracted above, and pointed out that he inference was not at all justified, on the facts, that the site with the garage therein formed the subject-matter of the lease. On the contrary, the document unambiguously affirms, in more than one operative part, that it was the vacant land that was the subject of the lease. We have no doubt, reading the document and the schedule thereto with care, that it was a vacant land which was the subject-matter of the demise, and that any building or garage was clearly excluded. It may also be mentioned that this view of the document is amply supported by the evidence on record averted to in the judgement of the trial court and that of Ramakrishnan J. The tenant (defendant) would certainly be entitled to the benefits of the City Tenants Protection Act unless the view of the learned Judge is to be upheld that he was not so entitled because stipulation No. 4 of the lease concerning the superstructure to be subsequently erected, fell within the proviso to S. 12 of the Act. It is in this context that we have to scrutinise the scheme of the Act itself and the prior case law, including the recent elucidation of the scope of the proviso in the judgment of the Supreme Court in C. A. No. 264 of 1962: .

(5) Section 2(4) of the Act contains the definition of "tenant" and this need not detain us further. We may briefly note that it would include a person who continues to be in possession of the land after the determination of the tenancy-agreement. Under S. 3 of the Act.

"Every tenant shall on ejectment be entitled to be paid as compensation on the value of building, which may have been erect by him or by any of his predecessors-in-an-interest, or by any person not in occupation at the time of the ejectment who derive title from either of them......................................"

Under section 9,

"Any tenant who is entitle to compensation under S. 3 and against whom a suit in ejectment has been instituted or proceeding under S. 41 of the Presidency Small Cause Courts Act, 1882, taken by the landlord may.....apply to the court for an order that the landlord shall be directed to sell for a price to be fixed by the court, the whole or part of the extent of land specified in the application."

Section 12, which is of cardinal significance on the present facts, is in two parts, a clause affirming the rights of the tenant to benefits under the Act, and a proviso thereto. It runs as follows:

"Nothing in any contract made by a tenant shall take away or limit his rights under this Act, provided that nothing herein contained shall affect any stipulation made by the tenant in writing registered as to the erection of building in so far as they relate to buildings erected after the date of the contract".

The controversy on the present facts, may now be elucidated the lessee agreed to erect a building on the site according to certain specifications, and covenanted to surrender possession of the entire property, including the superstructure, on the expiry of the lease. He agreed to receive only the current value of the building or a sum of Rs. 5000 whichever was less. If this has to be construed as a "stipulation" binding upon the tenant, with regard "to the erection of a building", the proviso to S. 12, will obviously inhibit the right of the tenant to invoke the benefits under S. 9 of the Act. If the matter is to be viewed apart form the Act, it would clearly be governed by the law of leasehold in this country, with particular reference to Section 108(h) of the Transfer of Property Act. In Narayanan Das v. Jatindranath, 54 Ind App 218: (AIR 1927 PC 135) the Judicial Committee, affirming the dicta of Sir Barnes Peacock in Thakoor Chunder Paramanick v. Ramdhone Bhuttacharjee, 6 Suth WR 228 expounded the situation in-law by the following citations:

"We have not been able to find in the laws or customs of this country any traces of the existence of an absolute rule of law that whatever is affixed or built on the soil becomes a part of it, and is subjected to the same rights of property as the soil itself............................We cannot, however apply to case arising in India the doctrine of the English Law as to buildings, viz., that they should belong to the owner of the land. The only doctrine which we can apply is the doctrine established in India that the party so building on another's land should be allowed to remove the materials" (vide alsoDr. K. A. Dhairyawan v. J. R. Thakur, ).

Upon this part of the case, obviously and as the learned judge has pointed out, the situation will be that the lessee has to remove the superstructure even while he is in possession of the property, but this is qualified by the opening part of S. 108 of the Transfer of Property Act. "In the absence of a contract or legal usage to the contrary". Hence, we have to look to he contract in the case, in conjunction with Ss. 3 and 9 of the Act, read along with S. 12, and, especially, the proviso forming the latter part of that section.

(6) The prior case-law on this matter may be briefly noted, but it is merely of historical interest, since the point in actual issue is concluded by the dicta of the Supreme Court in C. A. No. 264 of 1962: earlier referred to. In Thayarammal v. Junus

Chettiar, AIR 1936 Mad 844, Pandrang Row J., took the view that the proviso applied

"only to stipulations regarding the erection of buildings, that is to say, stipulations restraining the right of the tenant to build such buildings as he likes either as regards the size, their cost, their situation and so on, and it certainly cannot relate to stipulations cutting down or extinguishing altogether the right of the tenant to get compensation in respect of buildings built by him which is given to him by the Act".

In Ponnambala Achary v. K. Mani, 1958-2 Mad LJ 516 Ramachandra Iyer J. (As he then was) construed S. 9 itself as not being subject, in its terms, to any contract between the parties hence, S. 12 cannot be so construed as to enable the parties to contract out of the statute. It applied only to stipulations regarding "the erection of buildings" in the restricted sense. In Vajrapuri v. New Theatres Carnatic Talkies Ltd., which led to the Supreme Court appeal that we shall letter refer to the Bench of Rajamannar C. J. and Ganapatia Pillai J., held that the proviso to S. 12 should not be construed in a manner that would abrogate the protection given to the tenant by the first part of the section.

But another Bench decision of this court falls to be considered and that is Palaniappa Gounder v. Sridharan Nair, . The argument in that case was that he lessee was not entitled to claim compensation for the superstructure under S. 9 at all, because according to the terms of the contract, he agreed to give up possession of the building without claiming compensation at the expiry of the lease. If, by the terms of the contract, the building put by the tenant became the property of the landlord, on the date of termination of the tenancy, the tenant could not claim compensation or exercise any right under S. 9 of the Act. The latter part of the arguments in the case related to the proviso to S. 12 and the true scope of the expression "stipulations............... as to the erection of buildings" occurring therein. The Bench held that a term or condition that the building put up by the tenant becomes the property of the landlord, on the termination of the tenancy, will be such a stipulation, saved by the proviso to S. 12 of the Act, thereby disentitling the tenant to benefits under S. 9. At page 564 (of Mad LJ): (at p. 288 of AIR) definitions of the term "stipulation" form the Shorter Oxford Dictionary are extracted and set forth.

(7) We shall now turn to the judgment of the Supreme Court in C. A.264 of 1962: . That was also a case in which the

stipulation was that if, after the termination of the period, the lessee failed to pay the arrears of rent and to hand over possession of the site to the lessors had the right to take possession through court of the site, after demolition of the buildings thereon. The relevant part of the judgment of their Lordships which elucidates the true scope of S. 12 in relation to S. 9(1) is on the utmost importance, in the present context of facts, and with regard to cases very similar on the facts that arose previously in this court; hence, we are setting forth below this part of the judgement in entirety: :--

"Section 12 of the Act consists of two parts; by the first part it enacts that the rights conferred upon the tenant under the Act may not be taken away or limited by any contract made by a tenant. Such rights would, amongst others, include the right to claim compensation under Ss. 3 and 4 and the right to purchase the land from the lessor by order of the court under S. 9. By the second part of S. 12, the protection granted by the first part does not avail the tenant in certain conditions. If there be a stipulation 'as to the erection of buildings' made by the tenant in writing registered, in so far as by the tenant in writing registered, in so far as it relates to buildings erected after the date of the contract, the protection conferee by the first part of S. 12 shall not apply. A convenient in a lease which is duly registered that the tenant shall in expiry of the lease remove the building constructed by him and deliver vacant possession, undoubtedly a stipulation relating to the building, but it is not a stipulation as to 'erection of building'. Section 12 has manifestly been enacted to effectuate the object of the Act which is set out in the preamble viz., 'to give protection to tenants who...................have constructed buildings on other's lands in the hope that they would not be evicted so long as they pay a fair rent for the land.' The legislature has sought thereby to protect tenants against any contractual engagements which may have been made expressly or by implication to deprive themselves wholly or partially of the protection the only class of cases in which the protection becomes ineffective is where the tenant has made a stipulation in writing registered as to the erection of buildings, erected after the date of the contract of lease. The restriction is therefore made only in respect of a limited class of cases which expressly attract the description of the stipulations as to the erection of the buildings. Having regard to the object of the Act, and the language used by the legislature, the exception must be strictly construed, and a stipulation as to the erection of buildings would not, according to the ordinary meaning of the words used, encompass a stipulation to vacate and deliver possession of the land on the expiry of the lease without claiming to enforce the statutory rights conferred upon the tenant by S. 9. The stipulations not protected in S. 12 are only those in writing registered and relate to erection of buildings such as restrictions about the size and nature of the building constructed, the building materials to be used and the purpose for which the building is to be utilised. It is true that the operative part of S. 12 protects the tenant against the deprivation or limitation of his rights under the Act and the rights conferred by the Act do not directly relate to covenants relating to erection of buildings. But on that account it is not possible to give a wider meaning to the expression "as to the erection of buildings" that the stipulations as to the erection of buildings would include stipulations to remove buildings on the determination of the lease. It cannot be said that the literal meaning of the expressions likely to render the exception ineffective for stipulation concerning erection of buildings in registered leases or contracts subsequent to the leases providing for forfeiture failure to comply with the terms of the lease relating to the erection of buildings may undoubtedly involve limitations or deprivation of the rights of the tenant under the Act and to that extent the protection conferred by S. 12 in favour of the landlord may be lost. The construction for which the appellant contends assigns no meaning to the words "as to the erection of buildings" and makes them superfluous, besides it materially affects the scope of the relief which the Act obviously extends to he tenants falling under its provisions".

(8) Upon these criteria, the matter would thus appear to us to be clear beyond dispute. The proviso to S. 12 will not affect the rights of the lessee under S. 3 read with S. 9, on the recitals in Ex. A. 1 or similar recitals in a document of lease. It would have been a different matter, of course, if the stipulations concerning the size and nature of the building constructed, the building materials to be used therein, and the purpose for which the building is to be utilised" had been infringed, and thereby the tenant became disentitled to the benefits of Section 9; but that is not the argument here. It is very clear that any stipulation to surrender possession of that property with the superstructure, or to accept as compensation any value other than the value to be determined under S. 3, will not be such a term as will fall within the proviso to S. 12, thereby disentitling the tenant to the benefits of S. 9 of the Act.

(9) Learned counsel for the lessor (Sri R. Gopalaswami Iyengar) has drawn our attention to certain parts of the minority judgment delivered by Aiyangar J. in the very case. Particular reference is made to an argument conceded that a stipulation which would limit the quantum of compensation payable in respect of buildings constructed by a tenant, provided for by S. 3, would be one within the scope of the proviso to S. 12. It is also stressed that the construction of the language of the relevant part of the Act to the effect that the stipulation is intended to be one which "bears on or is in relation to the erection of buildings" would reconcile the proviso with the preamble, which sets out the object to be achieved by the Act. But, however, that aspect might be viewed, it is indisputable that the enunciation of the law by their Lordships is unambiguously to the effect that the expression "as to be erection of buildings" should be strictly construed, and would not include a stipulation to remove the building on the determination of the lease or to contract out of the benefits of S. 9 of the Act in any manner. In other words, any stipulation by the tenant not to exercise his right to obtain a conveyance of the site under S. 9 of the Act in any manner. In other words, any stipulation by the tenant not to exercise his right to obtain a conveyance of the site under S. 9 of the Act will be invalid and would not be saved by he proviso to S. 12. In this view, therefore, the conclusion of the learned Judge (Ramakrishnan J.) allowing the appeal cannot be sustained. The decree of the trial court has to be restored, and the matter has now to go back for due action being taken on the application of the tenant under S. 9, of the Act. The appellant (tenant) will have his costs throughout.

(10) Appeal allowed.


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