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The Mylapore Hindu Permanent Fund Ltd., Suing by their Secretary, Sri K. Vinayakam Vs. K.S. Subramaniya Iyer - Court Judgment

LegalCrystal Citation
SubjectTenancy
CourtChennai High Court
Decided On
Reported in(1964)1MLJ213
AppellantThe Mylapore Hindu Permanent Fund Ltd., Suing by their Secretary, Sri K. Vinayakam
RespondentK.S. Subramaniya Iyer
Cases Referred and Poonnambala Achary v. Mani
Excerpt:
- .....which contained an express stipulation that the tenants should not put up a superstructure on the land leased. the tenants put up a superstructure, in violation of this stipulation, and then claimed the benefit of the city tenants' protection act. it was held that it was implicit from section 12, that the legislature contemplated only cases where buildings were put up on the land, and not cases in which there was an agreement not to put up any building, and that the benefits of the act were not intended to be conferred on those tenants, where there is a stipulation between the landlord and the tenants not to put up any building on the property. in this view, the decision in narasram naraindas v. venkataswami naidu : (1963)1mlj140 , did not follow certain observations in an earlier case.....
Judgment:

P. Ramakrishnan, J.

1. This appeal from the Judgment and decree of the learned First Assistant Judge of the City Civil Court, Madras, in O.S. No. 796 of 1958; raises a question regarding the application of the provisions of the Madras City Tenants' Protection Act, 1921, as amended by Madras Act XIX of 1955.

2. The plaintiffs, the Mylapore Hindu Permanent Fund Ltd., represented by their Secretary, own the vacant land bearing No. 4/7, Ponnambala Vathiar Street, Mylapore, Madras. The defendant is a paper merchant and printer. A lease deed, Exhibit A-1, was executed between the parties on 30th April, 1947, in respect of the above-mentioned vacant land, for a period of 10 years commencing from 1st May, 1947. During the continuance of the above lease, in accordance with the stipulation made in the lease deed, the defendant put up a building on the land. The plaintiffs alleged that, under the terms of the lease deed, the defendant was to surrender possession of the land with the superstructure to the plaintiffs, and the plaintiffs would have to pay him the value of the superstructure or a sum of Rs. 5,000 whichever was less. Though the plaintiffs were willing to fulfil the terms of the above-said lease deed and pay the value of superstructure put up by the defendant as stated above, the defendant failed to deliver possession of the property in spite of notice, and therefore the plaintiffs, filed the suit for recovery of possession of the land and the superstructure with mesne profits.

3. In paragraph 4 (a) of the plaint, there was also an allegation that, on the date when the lease was granted, the property leased out was not merely a vacant land belonging to the lessor (plaintiffs), but there was also a garage put up by lessor and it was at that time occupied by one Mr. P. Somasundaram as a tenant. Consequently, the lease was not in any event, of the vacant land as such, and therefore the provisions of the City Tenants' Protection Act could not be availed of by the defendant. This plea was added to the plaint by a subsequent amendment permitted by the Court.

4. The plea of the defendant was that he had acquired rights under the City Tenants' Protection Act as amended in 1955, that the property leased was only vacant land that the garage mentioned in paragraph 4 (a) of the plaint was agreed to be dismantled and removed by the plaintiffs, that subsequently the defendant in his individual capacity purchased the dismantled materials and that the tenant of the garage was provided with an alternative accommodation. The superstructure put up by him was worth nearly three times the sum of Rs. 5,000 offered by the plaintiffs. Under Section 9 of the City Tenants' Protection Act, the defendant was entitled to purchase the suit site from the plaintiffs, and pay the proper value for the site.

5. The learned Judge of the City Civil Court came to the conclusion that the property leased was a vacant land and not a land with the superstructure. He held that the term in the contract under which the defendant was to surrender possession of the superstructure to the plaintiffs, on receipt of a certain amount, was a condition which abrogated the valuable rights which the defendant had acquired under the Madras City Tenants' Protection Act, and that a party could not be enabled to contract out of the provisions of the statute. In the meantime, the defendant had made an application under Section 9 of the Madras City Tenants' Protection Act, for the appointment of a Commissioner to value the land. The lower Court held that the defendant was entitled to obtain the relief under Section 9 of the Act by paying the value of the site as per the Commissioner's report and getting the land assigned to him. But in the event of his failure to pay the value as per Commissioner's report, the plaintiffs would then got a decree for possession after payment of Rs. 5,000 to the defendant as compensation. Plaintiffs were, however, given in the meantime, a decree for arrears of rent, and the plaintiffs were directed to pay the costs of the suit to the defendant. The plaintiffs have appealed from the above decision.

6. Sri R. Gopalaswamy Iyengar, learned Counsel who appeared for the appellants, urged that the very terms of the Preamble of the City Tenants' Protection Act, would show that it was intended to give protection to tenants' who had constructed buildings on the lands of others in the hope that they would not be evicted so long as they paid fair rent for the land. It was urged that the lease deed in this case was executed in 1947, that the City Tenants' Protection Act (Act III of 1922) applied only to tenancies created before the commencement of the Act, that the very terms of the lease deed would show that it was distinctly understood between the landlord and the tenant, that the latter could construct the superstructure only on the condition of its being surrendered to the landlord at the end of the period of the lease, on payment of the stipulated amount. No hope was thus given to the tenant that he would not be evicted, so long as he paid fair rent for the land. Therefore this is not a case where the above-mentioned Act could be applied. In the alternative, it was contended by the learned Counsel that, by the very terms of the lease deed, it was the landlord who became the owner of the plot, on the expiry of the period of the lease and that consequently, Section 3 of the Act would not apply in the present case, because the defendant was no longer the owner of the superstructure. Thirdly, the learned Counsel also urged the same ground relied on in the lower Court by the defendant, namely, that, by reason of the existence of a garage on the demised land at the time of the lease, the property demised was not a vacant land but the land with its existing superstructure.

7. The point for consideration in the appeal is whether the defendant in entitled to the protection of Section 9 of the Madras City Tenants' Protection Act, in the circumstances of the suit lease.

8. It will be useful to consider the terms of the suit lease deed, Exhibit A-1 which is dated 30th April, 1947. The preamble states that the lessors are the owners of the vacant land No. 4/7, Ponnambala Vathiar Street, Mylapore, and that the lessee had requested the lessors to lease to him the above land for the purpose of erecting a building and the lessors had agreed to lease out the above land on the conditions mentioned thereafter. It is clear from this preamble that what was contemplated as the subject-matter of the lease between the parties was the vacant land. Clause 1 refers to payment of a ground rent of Rs. 45 per month by the lessee to the lessors. If the property demised was land with superstructure, one would expect the money payment to be described as rent for a building. Reference to ground rent lays emphasis on the fact that vacant land was the subject of the lease, and not land and superstructure. Clause 6 of the lease slates:

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

It is this clause that was relied upon by the plaintiff at the time of the trial of the case in the lower Court, for urging that the defendant was not entitled to protection of the City Tenants' Protection Act, because the land included the superstructure. The very terms of the clause extracted above show that it was agreed to demolish the garage on the land which was then occupied by one Somasundaram, and the tenant of the garage was to be given some other accommodation. This circumstance will not at all lead to the inference that the land with the garage formed the subject-matter of the lease. On the other hand, it points to the contrary, because of the earlier provision about the vacant land being the subject of the lease and the provision contained in Clause 6 that the garage should be removed. Clause 10 of the lease deed also shows that it was the vacant site that was leased. The subsequent conduct of the parties as alleged by the defendant, namely, the sale of the superstructure and the purchase of the materials go to support the same inference about the land alone being the subject-matter of the demise.

9. Coming to the principal argument urged before me by the learned Counsel for the appellants about the tenant not being the owner of the building put up, it turns upon the construction to be placed upon subsequent clauses of the lease deed. They are Clauses 2 and 4. Clause 2 states:

The lessee is permitted to put up a building at a cost of not more than Rs. 10,000 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.

Clause 4 states:

The lease shall be in force for a terms of ten years commencing from 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. 5,000 whichever is less.

One can also briefly refer at this stage to the correspondence that passed between the parties, before the execution of the lease deed, to find out the background against which the agreement was entered into. In Exhibit A-2 dated 30th January, 1947, the defendant wrote to the plaintiffs saying that he wanted the vacant site to be leased to him so that he could put up a building with upstairs on the land at a cost not more than Rs. 7,500 that on expiry of the lease, the plaintiffs might continue the lease to the defendant for whatever period they liked, but if they did not want the lease to be continued, he should be paid the cost of the superstructure (Rs. 6,500) or the then estimated value of the improvement. He also wanted to know the price at which the plaintiffs would sell the site to the defendant, if they were willing to do so. In Exhibit A-3 dated 8th February, 1947, he accepted the rent of Rs. 45 as settled by the President of the plaintiffs' Fund and agreed to make his own arrangement for providing a garage for the existing tenant, Somasundaram. He reiterated his intention to construct a building with upstairs at a cost of not more than Rs. 7,500 and after expiry of the lease period of ten years, agreed to take back the amount less depreciation or the market value whichever is less. In Exhibit A-5 the defendant again wrote to the plaintiffs saying that in their mutual interest, it would be better if they were agreed about the amount payable being Rs. 5,000 or the then market value whichever is less, when the building was to be surrendered after ten years.

10. No doubt, at the time when this agreement was entered into the City Tenants'' Protection Act, 1922, did not govern the relationship between the parties. But the Transfer of Property Act applied. It is well-known that in India the maxim of the English law quic quid in edificatory solo, solo cedit will not apply but Section 108(h) of the Transfer of Property Act is the provision to be applied. Under that section, the lessee, after the determination of the lease but while still in possession of the property leased, can remove the superstructure which he has put up, but if he fails to do so, the superstructure belongs to the lessor of the site. But this will be subject to a contract or local usage to the contrary. The lease deed in this case provided certain terms to govern the construction of the superstructure by the defendant. The learned Counsel for the appellant contended that the moment the superstructure was built on the plot, it became the property of the landlord, and that the only question that remained to be determined at the end of the lease was one of compensation which according to the terms of the lease deed, was Rs. 5,000 or the value of the superstructure, whichever was less. Butit has to be pointed out that the terms of the lease deed in this case do not contain any clause which makes the superstructure, the property of the landlord, the moment it is put up. The terms in Clause 2 that the Board of Directors of the lessors should approve the plan of the building might have reference to clause in the lease deed whereunder they had agreed to take the superstructure on payment of the valuation current at the expiry of the lease limited to a maximum of Rs. 5,000. Clause 2 would also show that they desired to have a building put up which will be suitable for their purposes after it is surrendered to them. But this provision for approval by the Directors of the plan of the superstructure, will not by itself show that, under the agreement, it was intended to convey the superstructure to the landlord, the moment it was put up on the land. Clause 4 requires that the landlord has to pay the valuation of the construction if any on the property on the expiry of the lease. Therefore, if there is no superstructure remaining on the land at the expiry of the lease, the landlord need not pay any value therefor. It is also an open question as to whether, if the lessee had put up a. building on the plot without the approval of the plan by the Board of Directors of the lessors, as provided in Clause 2, the lessee could insist upon the lessors taking the building, and paying him the current valuation or Rs. 5,000 whichever is less, under Clause 4. The lessor in a proper case could urge that he was not bound to comply with the terms of Clause 4, as the lessee had not complied with the terms of Clause 2 in the matter of submitting the plan for approval. Therefore in the absence of specific clauses in the lease deed, which made the superstructure the property of the landlord, the moment it was put up on the land, and in view of the reasons above-mentioned, it appeals to me that this is not a case where the superstructure should be deemed to have become the property of the landlord, the moment it was put up. On the other hand, the background as well as the terms of the lease deed show that what the landlord and the lessee agreed to was to make a provision under which in lieu of the then existing provisions of the Transfer of Property Act under Section 108(A), the landlord was to take the building of the tenant for its valuation, limiting the value to an amount of Rs. 5,000.

11. The further argument of the learned Counsel for the appellant, was that under the terms of the lease deed, on the expiry of the period of the lease, the landlord in any event became the owner of the superstructure, subject to his paying a specified amount as compensation or value therefor, and that to such a case, the Proviso to Section 12 of the City Tenants' Protection Act will apply. In this connection the appellant cited certain authorities, relating to the interpretation of Section 12 of the City Tenants' Protection Act, which reads:

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 stipulations made by the tenant in writing registered as to the erection of buildings in so far as they relate to buildings erected after the date of the contract.

The first part of the section has been interpreted by prior decisions to the effect that it embodies the principle that no party could contract himself out of the statute. In view of the terms of this first part of Section 12, the Proviso to Section 12 which saves any stipulation made by the tenant in writing registered as to the erection of buildings in so far as they relate to buildings erected after the date of the contract has been held to refer to collateral stipulations regarding the size, cost, situation and so on of the superstructure, but will not refer to a stipulation ' cutting down or extinguishing altogether the right of the tenant to get compensation in respect of a building built by him which is given by the Act '--vide Vedavalli Thayarammal v. Jurats Chettiar : AIR1936Mad844 . This decision which was by Pandrang Row, J., was reversed in appeal by a Bench of this Court in V : AIR1939Mad744 edavalli Thayarammal v. Junus Chettiar : AIR1939Mad744 , on the :ground that the tenant in that case was not the owner of the superstructure, but the rest of the observations of Pandrang Row, J., has remained good law, and they were followed by Ramachandra Iyer, J., (as he then was) in Ponnambala Achary v. Mani : (1958)2MLJ516 , as well as by a Bench of this Court consisting of Rajammanar, C.J. and Ganapatia Pillai, J., in Vajrapuri v. Mew Theatres Carnatic Talkies Ltd. : (1959)2MLJ469 . In the last mentioned decision, it was observed that the Proviso to Section 12 should not be construed in a manner which would lead to the result of abrogating the protection given to the tenant by the first part of the section.

12. Both Ponnambal Achayr v. Mani : (1958)2MLJ516 and Vajrapuri v. Mew Theatres Carnatic Talkies Ltd. : (1959)2MLJ469 dealt with cases where the lease deed contained a stipulation that the lessee should remove the superstructure and deliver vacant possession on the expiry of the lease. It was held that this stipulation would not fall under the Proviso to Section 12 bearing in mind the observations of Pandrang Row, J., and that it would not deprive the tenant of the protection given under the first part of Section 12 of the Act. The matter came up again before a Bench of this Court consisting of Ramachandra Iyer, C.J. and Kunhamed Kutti, J., in Marsram Naraindas v. Venkataswami Naidu : (1963)1MLJ140 . In that case, the learned Judges had to interpret a lease deed, which contained an express stipulation that the tenants should not put up a superstructure on the land leased. The tenants put up a superstructure, in violation of this stipulation, and then claimed the benefit of the City Tenants' Protection Act. It was held that it was implicit from Section 12, that the Legislature contemplated only cases where buildings were put up on the land, and not cases in which there was an agreement not to put up any building, and that the benefits of the Act were not intended to be conferred on those tenants, where there is a stipulation between the landlord and the tenants not to put up any building on the property. In this view, the decision in Narasram Naraindas v. Venkataswami Naidu : (1963)1MLJ140 , did not follow certain observations in an earlier case in Kannammal v. Kanakasabhai : AIR1931Mad629 , and also differed from certain observations made in the course of the judgment in Vajrapuri v. New Thearters Carnatic Talkies Ltd. : (1959)2MLJ469 , which were considered to be obiter.

13. Next learned Counsel for the appellant relied upon on an unreported decision of Ganapatia Pillai, J., and Venkatadri, J., in Appeal No. 355 of 1959 Since reported P.K. Palaniappa Gounder v. K.M. Sridharan Nair and Ors. (1963) 2 M.L.J. 559. In that case the landlord, who owned a vacant site in Coimbatore City, leased it to the tenant for a period of 12 years commencing from 27th September, 1945. The rent agreed was Rs. 25 per month for the first six years, and Rs. 30 per month for the next six years. It was agreed that the lessee should put up a building at the site as per specifications contained in the lease deed, and surrender possession of the building along with the site to the appellant therein without any claim for compensation for the superstructure. There was also a provision that, if the lessee did not put up the structure, the rent payable would be Rs. 40 per month. The tenant put up the superstructure, as per the conditions in the lease deed. The lease expired on 27th September, 1957. The Madras City Tenants' Protection, Act was extended to Coimbatore Municipality on 19th February, 1958. The tenant claimed the benefits of the Act. The landlord, however, urged that even before the City Tenants' Protection Act was made applicable to Coimbatore Municipality, he had become the owner of the superstructure, and that, therefore, the tenant could not rely upon the City Tenants' Protection Act in his favour. Secondly, it was contended in the alternative for the landlord that under the contract of tenancy the building became the property of the landlord, on the expiration of the lease, and such a stipulation would fall within the ambit of the Proviso to Section 12. The learned Judges constituting the Bench after referring to the earlier decision above cited, also referred to two decisions of Supreme Court in Bhatia Co-operative Housing Society Ltd. v. D.C. Patel (1952) S.C.J. 642 : (1963) S.C.R. 185 and Dr. K.A. Dhairyawan and Ors. v. J.R. Thakur and Ors. : [1959]1SCR799 , and laid down that the terms in the contract providing for the transfer of the ownership of the building at the termination of the lease, was a stipulation as to the erection of the building, and was therefore saved by the Proviso to section -12 of the Act. They also stated that, despite Section 12, this class of cases where-under the tenants had agreed to the transfer of ownership of the building to the landlord at the expiration of the term of the lease would fall outside the ambit of the Act, provided that at the time when the Act came into force, the landlord had become the owner of the building according to the terms of the contract. The Bench also referred to the earlier decisions in Vajrapuri v. New Theatres Carnatic Talkies Ltd. : (1959)2MLJ469 and Poonnambala Achary v. Mani (1958) 2 M.L.J. 560, and pointed out that those decisions were only concerned with instances where a tenant had contracted himself out of the right to claim either compensation for the building erected or the right to purchase the landlord's interest in the site, by reason of the term of the contract that on the expiry of the lease period, the tenant shall vacate the premises and give vacant possession of the land. In those decisions there was no stipulation in the contract which provided for the transfer of ownership of the building put up by the tenant to the landlord. The two Supreme Court decisions cited above were relied upon by the Bench to find out the legal effect of a term in the lease deed providing for the transfer of the ownership of the building put up by the tenant. The Supreme Court decisions however dealt with the provisions of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947.

14. No doubt in this case, before the period of the lease had been terminated in 1957 the amendment of the City Tenants' Protection Act, had come into force from 1955. However the view of the Bench of this Court, in the decision last cited regarding the application of the Proviso to Section 12 of the Act to a case where the landlord and the tenant agreed to the transfer of the ownership of the building on the expiry of the lease, to the landlord on certain specified conditions, is binding on me. In the case which came up before the Bench, no specific amount of compensation was provided for, but there was a clause in the lease deed providing for a more favourable rate of rent if the lessee was to put up a building as stipulated by the landlord. But in the present case, the contract itself provided for a fixed amount of compensation limited to a maximum and it was also stipulated that while putting up the building the lessee should not exceed a fixed amount, and also should get the plans and estimates of the building approved by the landlord. These circumstances reinforce the contention that, both at the inception of the lease agreement and also during the continuance of the lease agreement it was understood between the landlord and the tenant that the building put up for the purpose should be transferred to the landlord, at the expiry of the lease deed, subject to the landlord paying its: value, limited to a maximum of Rs. 5,000 as compensation. Adopting the view of the Bench, I hold that this stipulation is one which falls within the Proviso to Section 12, and, therefore, it has to be enforced in this case, notwithstanding the provisions of the. City Tenants' Protection Act.

15. In this view, I allow the appeal and set aside the decree of the lower Court, The suit will be decreed for possession of the suit property on condition of the plaintiffs depositing Rs. 5,000 (as offered by him) representing the value of the superstructure within one month from the date of the receipt of this decree with lower Court. The quantum of mesne profits will be decided by separate application in the lower Court.

16. There will be no order as to costs in this appeal.


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