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India Automobiles and Co. and ors. Vs. Life Insurance Corporation of India - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtChennai High Court
Decided On
Reported in(1978)1MLJ178
AppellantIndia Automobiles and Co. and ors.
RespondentLife Insurance Corporation of India
Cases ReferredHari Ramjee Gore Sastri v. The Malabar Dt. Board
Excerpt:
- .....the defendants who are the appellants before us, are the owners of the superstructures over the land (item i of schedule a) covered by the demise under exhibit p-1. if it is found that the defendants are the owners of such superstructure, then it follows that the rent controller would have no jurisdiction to fix the fair rent and to that extent, therefore, the corpotation would not be entitled to a money decree for the alleged arrears of rent based on the fair rent fixed under the rent act. if, however, it is found that the superstructures were also purchased by the corporation and therefore, were not the property of the defendants, then the defendants should suffer the money decree as prayed for by the plaintiff.5. we shall first dispose of the legal contention that is raised in this.....
Judgment:

Ramaprasada Rao, J.

1. These appeals are against the judgment of N.S.Ramaswami, J. Two suits were tried by him together and he rendered a common judgment thereon. No oral evidence was let in but documentary evidence was entertained and marked in one of the suits. The parties are referred to with reference to their rank and description in C.S. No. 54 of 1969. C.S. No. 54 of 1969 is a suit filed by the Life Insurance Corporation of India against the defendants, the first defendant of which is M/s. India Automobiles & Co., and defendants 2 to 6 being its partners, the respondents herein, for recovery of arrears of rent as their tenants. C.S. No. 87 of 1972 is a suit filed by the first defendant in C.S. No. 54 of 1969 (India Automobiles Co.) against the Life Insurance Corporation of India for a declaration that they are entitled to the benefits under the provisions of the City Tenants Protection Act in respect of one of the demised items. Seven co-owners owned a large extent of land in Mount Road. The entire property bore Municipal Door Nos. 2/18 and 3/18, Mount Road, Madras. The second defendant is the senior partner of the first defendant. He along with six others owned the vast extent of land in Mount Road. Different portions of the suit land were leased out to different persons. One such portion of land measuring about 4 grounds 151 sq. ft. carved out of the totality of the land was leased by the seven co-owners in favour of one co-owner, the second defendant herein under Exhibit P-1 dated 22nd September, 1947 who was by then the sole proprietor of the India Automobiles. This firm later on, became a partnership with defendants 2 to 6 as partners therein. It is common ground that the second defendant was in possession of the land demised under Exhibit P-1 long prior to the lease and he has erected . superstructures of his own on the said land. Under another lease deed Exhibit P-2 the same co-owners including the second defendant let out 8700 sq. ft. of land together with a superstructure thereon to the second defendant who was also a co-owner thereto and defendants 1 to 6 are in possession of such demised land and superstructure under Exhibit P-2 dated 3rd October, 1947. Under Exhibit P-1, the defendants after they became partners along with the second defendant were to pay a monthly rent of Rs. 150 for the lease of the vacant land of an extent of four grounds 151 sq. ft. and similarly under Exhibit P-2 the defendants obliged to pay themselves rent for the land and superstructure at Rs. 200 per month. The learned Judge himself has noted that it is common ground that the subject-matter of the lease under Exhibit P-1 was only a vacant site and that under Exhibit P-2 was a site and superstructures. Several years thereafter, all the co-owners including the second defendant sold under Exhibit P-2 dated 30th July, 1953 the premises bearing municipal door Nos. 2/18 and 3/18, Mount Road, to the New Guardian of India Life Insurance Company Limited and the Official Trustee of Madras, who were predecessors-in-interest of the Life Insurance Corporation of India' The case of the Life Insurance Corporation of India herein after referred to as the respondents, is that by such purchase under Exhibit P-3 they have become the owners of not only the vacant land conveyed therein but also the Superstructures standing on it which were by then in the occupation of the defendants. It is not in dispute that after the purchase, the Insurance Company recognised the defendants as their tenants of the respective portions in their occupation and as deleniated in Exhibits P-1 and P-2 and were collecting rents from them. The defendants who were entitled to a renewal of the lease, made a written demand for such a recognition of their status and. in the documents filed it is seen that a draft lease deed was also prepared at one stage which was intended to further the interests of the defendants.

2. More than a decade after such consistent establishment of the jural relationship of landlord and tenant as between the Life Insurance Corporation of India, and the defendants, the Corporation filed an application for fixation of fair rent as regards the demise under Exhibits P-1 and P-2 and also contemporaneously filed an application for eviction of the defendants under the Madras Buildings (Lease and Rent Control) Act. The defendant's case was that the subject-matter of the lease was only a vacant site and the superstructure thereon always belonged to them and that, therefore, the Buildings Act would not apply at all. The Corporation was not successful before the Rent Controller. On appeal, a finding was called for regarding the ownership of the super-structure and ultimately the appellate Court held that the superstructures belonged to the Corporation. In so doing, the appellate authority fixed the fair rent in respect of item X in Schedule A to the plaint at Rs. 994 per mensem this item being the subject-matter of the demise under Exhibit P-1 and fixed the fair rent for item 2 in Schedule A to the plaint at Rs. 1,451 per mensem, this item being referable to 8700 sq. ft. plus the superstructure leased out under Exhibit P-2. The present suit C.S. No. 54 of 1962 is a suit filed by the Corporation for arrears of rent in respect of the occupation of their property by the defendants and covered by leases Exhibits P-1 and P-2. In this suit a sum of Rs. 39,294.71 is claimed as the arrears of lease in respect of item I of plaint Schedule A and another sum of Rs. 59,026.02 as arrears in respect of item No. 2 of the A Schedule. Obviously the difference between the fair rent as fixed and the contract rent was the subject-matter of the claim in this suit. In so far as item 2 in Schedule A to the plaint is concerned there is no dispute in these proceedings because this was the subject-matter of the lease under Exhibit P-2 and the demise itself was referable to both the lands and the superstructure. The right of the Corporation to claim the difference between the fair rent and the contract rent is not disputed before us. The only dispute raised is as to the date from when such a claim could be projected. As regards item I of the plaint A Schedule, the defendants' contention is that at all material times the superstructure belonged to them and the demise was only of the vacant land and that therefore, the Madras Buildings (Lease and Rent Control) Act, can have no application to such a demise and that fair rent cannot be fixed by a statutory Tribunal functioning under that Act and that the claim based on such fair rent is unsustainable. The learned Judge, who recast the issues, set the following issues for trial before him:

1. Whether the Rent Controller had no Jurisdiction to fix the air rent n respect of the property covered by the ease dated 22nd September, 1947 (i.e., Item No. I of Schedule A to the plaint)?

2. Whether the fixation of fair rent in respect of item No. 1 property is incompetent and not valid and binding on defendants and is of no legal effect?

3. Whether the plaintiff is the owner of the superstructures put up by the defendants on item No. 1 of Schedule A to the plaint?

4. Are the defendants not liable to pay the sum of Rs. 39,224.71 claimed for fair rent in respect of the No. 1 property?

5. Are the defendants liable to pay the fair rent from the date of the petition as claimed in the plaint in respect of both the items?

6. Are the defendants liable to pay the entire amount claimed as fair rent in respect of item No. 2?

7. To what relief the parties are entitled?

3. In the other suit C.S. No. 87 of 1972, the defendants as plaintiffs therein seek for a declaration that what was leased under Exhibit P-1 was only a vacant land and that the superstructure belongs to them and that, therefore, they are entitled to protection under the Madras City Tenant Protection Act. The decision in this suit would mainly depend upon the finding on the issue as to what was the subject matter of the lease under Exhibit P-1. It is now common ground that if the subject-matter of the demise under Exhibit P-1 was only a vacant land, then the defendants would not be entitled to a declaration as prayed for by them in C.S. No. 87 of 1972, since such rights could be projected only in a suit for ejectment filed by the landlords; that is not the case here.

4. Thus the only question which came up for decision before the learned Judge and which is the subject-matter of these appeals is, whether the defendants who are the appellants before us, are the owners of the superstructures over the land (item I of Schedule A) covered by the demise under Exhibit P-1. If it is found that the defendants are the owners of such superstructure, then it follows that the Rent Controller would have no jurisdiction to fix the fair rent and to that extent, therefore, the Corpotation would not be entitled to a money decree for the alleged arrears of rent based on the fair rent fixed under the Rent Act. If, however, it is found that the superstructures were also purchased by the Corporation and therefore, were not the property of the defendants, then the defendants should suffer the money decree as prayed for by the plaintiff.

5. We shall first dispose of the legal contention that is raised in this case that the co-owners of property cannot lease either the whole or part of such property owned by them to one amongst themselves and that, therefore, Exhibits P-1 and P-2 are void and unenforceable leases and there was no transfer of interest either in favour of the second defendant in the first instance or later, such interest was not acquired by defendants as partners of India Automobiles. Strong reliance was placed upon the decision in Girindra Chandra Pal Chowdhuri and Ors. v. Sree Nath Pal Chowdhuri and Ors. (1906) 3 C.L.J. 141, and a decision of the House of Lords referred to in Mulla's Transfer of Property Act (V Edition, page 638). We may at once state that the question which arose before the House of Lords in the above case was whether a person can grant a lease to himself. While negativing that contention the learned law lords hold that the law does not enable a person to grant himself a lease of land of which he is the owner. Lord Denning, who also gave a concurrent judgment, made certain observations which are apposite in the present case. We shall extract them as it would be convenient and better to do so. In Rue v. Rue (1962) A.C. 496, which is the case relied upon, Lord Denning observed as follows:

Has the Law of Property Act, 1925 charged all this? It has certainly changed it where two persons grant a tenancy by writing to one of themselves, as where A and B grant a yearly tenancy to B; and B enters into covenants with A and B to repair, and so forth. Such a tenancy is valid under Section 72(4) because it is a 'convenance'; and. the covenants are enforceable under Section 82(1) just as if B bad covenanted w t A alone. Notice to quit can be given by A to B or B to A. So no difficulty arises.

But what is the position when a person grants a tenancy by writing to himself (A lets to A) or two persons grant it to themselves (A and B let to A and B); and there are the usual express or implied covenants (A covenant with A or, A and B jointly covenant with A and B jointly)? such a tenancy does not come within Section 12(4); nor do the covenants come within Section 82(1) because both those Sub-sections as I read them, only apply where one of the persons at any rate is not on both sides.

6. On the basis of the rule in Rue v. Rue (1962) A.C. 496, the learned Judge thought that Exhibits P-1 and P-2 are unenforceable. But if we analyse the ratio of that decision, it is seen that if the parties to the document are not the same and if A and B are the lessers and A is the lessee, such a lease is possible and the covenants therein are enforceable. Even the decision in Girindra Chandra Pal Chowduri v. Sree Nath Pal Chowduri (1906) 3 C.L.J. 141, is distinguishable. That was a case where it was found that there was no relationship of landlord and tenant at all between the parties and in that context the claim for recovery of rent by the so-called landlord was negatived. The principle laid down by Lord Denning in Rue v. Rue (1962) A.C.496 is accepted by well-known authors. In Hill and Redman's Law of Landlord and Tenant-15th Edition, page 633, the above House of Lords case is quoted for the proposition that two or more persons can assign to one or more of themselves; but the number of assignees must be at least one less than the number of assignors. Woodfall on Landlord and Tenant, 27th Edition, page 61 refers to Rue v. Rue (1962) A.C.496, as authority for the proposition that joint tenants cannot grant a lease to themselves. We do not find any provision in the Transfer of Property Act or for the matter of that under the well-known principles in common law which prevents joint owners of property from leasing out the same to one amongst themselves. We hold, therefore, that Exhibits P-1 and P-2 are valid leases and the relationship between the defendants and the Corporation at all times was that of tenants and landlords.

7. That this jural relationship was correctly understood between the parties is also clear from the fact that the Corporation was regularly collecting the rents from the defendants, (sometimes from the second defendant when he was the proprietor of India Automobiles) and this again is demonstrative proof of the intention of parties that they recognised such a contractual relationship as between themselves. In fact, one of the documents disclosed in the course of trial is Exhibit P-9-a. That is a draft lease deed which was apparently exchanged between the parties (vide Exhibit P-8, P-10 and P-14). Here-again the Corporation harped upon the jural relationship of lesser and lessee as between itself and the defendants and would also give credence to the renewal clause contained in Exhibits P-1 and P-2. In fact, the draft lease deed was prepared in pursuance of the exercise of that option to renew the lease by the lessees (defendants). We shall, of course consider Exhibit P-9-a further while deciding the question as to who is the owner of the superstructure in item I of Schedule A to the plaint. But for the purpose of the present discussion it appears to us to be clear that the conduct of the Corporation in collecting the rents and their attitude in having recognised the right in the defendants to obtain renewal of the lease as lessee, are all pointers to the conclusion that the parties always understood that one was the landlord and the other was the tenant in respect of the properties which were the subject-matter of the demise under Exhibits P-1 and P-2.

8. We, therefore, hold that there was a valid lease which the defendants could enforce as against the successors-in-interest of the quondam owners of the totality of the property and that inparticular, Exhibits P-I and P-2 are valid instruments.

9. The next question, therefore, is as to what was the subject-matter of the lease under Exhibit P-1. We have already seen that under Exhibit P-2 both land and the superstructure were leased.

10. In Exhibit P-1 land measuring 4 grounds 151 sq. ft. was leased out by the co-owners to one amongst themselves. Therein, it was made clear that the buildings or sheds on that portion of the vacant land which was demised under Exhibit P-1 was already put up by the second defendant when he was the proprietor of Indian. Automobiles and that the said superstructures or buildings belonged to them. Even in the Schedule the description given is that 4 grounds and 151 sq. ft. vacant land were leased out and it was not covenanted that any superstructure thereon was the subject-matter of the lease. When the totality of the property from. which the above 4 grounds and 151 sq. ft. was carved out and leased to the defendants was sold under Exhibit P-3 dated 30th July, 1953, the co-owners harped upon the fact that there were some tenants in the suit property, who have put up superstructures on the leased land, that those structures belonged to them. It was also made clear that some buildings which were the subject-matter of sale under Exhibit P-3 were those buildings which belonged to the vendors. There was a candid and clear reference to the fact that some of the tenants, who were occupying the portions of the land sold under Exhibit P-3 have erected independently buildings of their own and that they were selling to the Corporation on their predecessor their right under the respective leases with those tenants to acquire buildingserected by them. Dichotomy therefore was maintained throughout the recitals in Exhibit P-3 as between the buildings owned by the entirety of the co-owners and those structures belonging to the tenants (one such tenant was a co-owner), who were in occupation of the portions of the land, which were the subject-matter of the sale under Exhibit P-3. We have already expressed the view that defendants 2 to 6 after they became partners of the first defendant and the second defendant as proprietor of India Automobiles put up structures on the leasehold land which they took on lease under Exhibit P-1 and at all material times these structures belonged to them. Having regard to the express recitals in Exhibit P-3 which made a distinct reference to the buildings owned by the tenants in occupation of the land which were conveyed under Exhibit P-3, it is impossible to come to the conclusion that the buildings which admittedly belonged to the defendants and constructed on the vacant land taken on lease by them under Exhibit P-1 was ever or could be the subject-matter of the sale under Exhibit P-3. In fact one of the recitals in Exhibit P-3 is that the co-owners have handed over to the Corporation or their predecessors the several lease deeds regarding the property conveyed. Obviously, one such lease deed is Exhibit P-1. This was acted upon by the Corporation as is seen from the admitted fact that they collected the rents from the defendants. They were even prepared to recognise the right vested in the defendants as lessees to renew the lease of the land only as per the terms of Exhibit P-1. This is clear from Exhibit P-9-a. Even in the Schedule to Exhibit P-3, emphasis was laid on the fact that what was sold was land together with the buildings belonging to the 'vendors'. It, therefore, follows that if the 'superstructure' did not belong to the vendors then it did not pass under Exhibit P-3. It is nobody's case that the superstructure which were standing on the land and which were the subject-matter of the lease under Exhibit P-1 were over the property of all the co-owners. In fact it is practically admitted that the superstructure or the buildings which were standing on the land which is the subject-matter of the demise under Exhibit P-1 was the property of the India Automobiles and thereafter the property of the defendants. What is however harped upon by the learned Judge is that there is no proof that the defendants paid property tax to the said superstructure belonging to them. This is a matter which does not arise strictly for consideration at all. If the defendants have avoided the payment of the property tax as per the provisions of the Madras Corporation Act, it is for the Corporation to take steps against them. Exhibits P-23 and P-24 no doubt would refer to the payment of property tax made by the Corporation by reason of their purchase of the land and the various other superstructures conveyed under Exhibit P-3. The mere exhibition of such receipts for payment of property tax cannot help the Corporation at all, nor would it be a document which can, categorically be said to be against the interests of the defendants. There is abundant proof in this case to show that the defendants are the owners of the Superstructures in question. It, therefore, fellows that in so far as item I of A Schedule to the plaint is concerned, the superstructures always belonged to the appellants in O.S. Appeal No. 62 of 1973 and, that, therefore, the statutory functionaries under the Madras Buildings (Lease and Rent Control) Act did not have the jurisdiction to entertain an application for fixation of fair rent to a property which was only a vacant land. In consequence therefore, the Corporation (respondent in this appeal) cannot lay a suit for recovery of rent based on the order made by such statutory Tribunal under the Rent Act, and claim the difference between the so-called fair rent and the contract rent. The claim of the Corporation for recovery of Rs. 39,224.71 as arrears of rent in respect of item I of the plaint Schedule A properties is not recoverable and the appeal O.S.A. No. 62 of 1973 is, therefore, allowed to that extent.

11. The contention of the appellant that the order fixing fair rent takes effect from the date of the order is not sustainable. In Rajammal v. The Chief Judge of Court of Small Causes : AIR1950Mad185 , a Division Bench of our Court presided over by Rajamannar, CJ., has made the position clear that such fair rent orders are effective from the date of application. The consistent view of our Court as is seen from the ratio in Hari Ramjee Gore Sastri v. The Malabar Dt. Board, Kozhikode : AIR1951Mad493 , is to the same effect as stated above. We are unable to accept that the order fixing fair rent under the Madras Buildings (Lease and Rent Control) Act is effective only from the date of the order of the statutory Tribunal.

12 As regards item II of the plaint A Schedule property, there is no dispute at all. The claim was for recovery of a sum of Rs. 59,026 towards the rent for this item; the learned Judge decreed the suit as claimed but granted interest thereon at 12 per cent per annum from the date when it became due. We do not find any justification for the grant of the interest at 12 per cent, per annum. There is no contract or implied understanding to pay such interest. We, therefore, modify the decree in so far as this item is concerned and direct the defendants to pay to the Corporation a sum of Rs. 59,026.26 together with interest thereon at 6 per cent per annum from the date of plaint to the date of payment.

13. The appeal O.S.A. No. 62 of 1973 is partly allowed to the extent indicated above with proportionate costs.

14. In view of our above findings, on the main issues in both the suits, O.S.A. No. 63 of 1973 against G.S. No. 87 of 1972 is dismissed and there will be no order as to costs.


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