The Collector of Bombay Vs.
Nusserwanji Rattanji Mistri & Ors  INSC 8 (28 February 1955)
AIYYAR, T.L. VENKATARAMA BOSE, VIVIAN
SINHA, BHUVNESHWAR P.
CITATION: 1955 AIR 298 1955 SCR (1)1311
Land revenue-Assessment-Bight of Government
to levy-Forastcnure-Incidents-Foras Land Act (Bombay Act VI o@ 1851), s. 2Land
acquisition, effect of-Land Acquisition Act (VI of 1857), s. 8 -Crown Grants
Act (XV of 1857), s. 3-Scope ofBombay City Land Bevenue Act (Bombay Act II of
In the island of Bombay certain lands were
held on a tenure known as "Foras". Under s. 2 of Bombay Act VI of
1851 the occupants were entitled to hold the lands subject only to the payment
of revenue then payable. Between 1864 and 1867 the Government of India acquired
these lands under the provisions of the Land Acquisition Act (VI of 1857). On
2211-1938 the Governor-General sold them to certain persons under whom the
present respondents claimed. In April 1942 the appellant acting under the
Bombay City Land Revenue Act (Bombay Act II of 1876) issued notices to the
respondents proposing to levy assessment on the lands at the rates mentioned
therein. The respondents thereupon instituted two suits disputing the right of
the appellant to assess the lands to revenue. They contended that under the
Foras Land Act the occupants had acquired the right to hold the lands on
payment of revenue not exceeding what was then payable, that the right to levy
even that assessment was extinguished when the Government acquired the lands
under the Land Acquisition Act, that the Governor-General having conveyed the
lands absolutely under the sale deed dated 22-11-1938 the respondents were
entitled to hold them revenue-free and that even if revenue was payable it
could not exceed what was payable under the Foras Land Act.
Held, (i) that under the Foras Land Act (VI
of 1851) the occupants of For as lands acquired a specific right to hold them
on payment of assessment not exceeding what was then payable.
(ii) that the right of the Government to levy
assessment was not the subject-matter of the land acquisition proceedings and
that the effect of those proceedings was only to extinguish the rights of the
occupants in the lands and to vest them absolutely in the Government.
(iii) that where there is an absolute sale by
the Crown it does not necessarily import that the land is conveyed revenuefree.
The question is one of construction of the
grant. The rule is that a grantee from the Crown gets only what is granted by
the 168 1312 deed and nothing passes by implication. When the grant is embodied
in a deed the question ultimately reduces itself to a determination of what was
granted thereunder. Section 3 of the Crown Grants Act (XV of 1895) that
"all provisions, restrictions conditions and limitations over shall take
effect according to their tenor" does not apply when the question is as to
the liability to pay revenue.
(iv)that the Foras tenure became extinguished
when the lands were acquired under the Land Acquisition proceedings and it was
incapable of coming back to life when the lands were sold on 22-11-1938 and the
respondents cannot claim a right to pay assessment only at the rate at which it
was payable under the Foras Land Act.
Goswammi Shri Kamala Vahooji v. Collector of
Bombay ( L.R. 64 I.A. 334), Shapurji Jivanji v. The Collector of Bombay
( I.L.E. 9 Bom. 483, 488), Naoroji Beramji v.
Rogers (4 Bom. H.C.R. 1), Deputy Collector,
Calicut Division v. Aiyavu Pillay ( 9 I.C. 341), Dadoba v.
Collector of Bombay ( I.L.R. 25 Bom.
714), Thakur Jagannoth Baksh Singh v. The United Provinces ( F.L.J.
88) and Collector of Bombay v. Municipal
Corpration of the City of Bombay and others ( S.C.R. 43), referred to.
CIVIL APPELLATE JURISDICTION: Civil Appeal
No. 74 of 1952.
Appeal by Special Leave from the Judgment and
Decree dated the 10th November 1948 of the High Court of Judicature at Bombay
in Appeal from Original Decree No. 274 of 1945 arising out of the decree dated
the 17th March 1945 of the Court of Revenue Judge, Bombay in Suits Nos. 7 and
23 of 1943.
C. K. Daphtary, Solicitor-General for India
(Porus A. Mehta, with him), for the appellant.
M. C. Setalvad, Attorney-General for India
and Jamshedji Kanga,, (R. J. Kolah and Rajinder Narain, with them), for the
1955. February 28. The Judgment of the Court
was delivered by VENKATARAMA AYYAR J.-The point for decision in this appeal is
as to the liability of certain lands situated within the City of Bombay to be
assessed to revenue under the Bombay City Land Revenue Act No. II of 1876.
These lands were originally known as Foras lands, and the rights of the
occupants of 1313 those lands were settled by Bombay Act No. VI of 1851, called
the Foras Act. What these rights are, is a matter in controversy between the
parties, and will be presently considered. Between 1864 and 1867 the Government
acquired these lands for the purpose of the B.B. C.I. Railway under the
provisions of Land Acquisition Act No. VI of 1857. On 22-11-1938 these lands,
being no longer required for the purpose of the Railway, were sold by the
Governor-General to Lady Pochkhanawalla and others as joint tenants under a
deed, Exhibit A. On 28-3-1939 the survivor of the purchasers under Exhibit A
conveyed the lands in trust under Exhibit B, and the respondents are the
trustees appointed under that deed.
In April 1942 the appellant acting under the
provisions of Bombay Act No. II of 1876, issued notices to the respondents
proposing to levy assessment on the lands at the rates mentioned therein, and
calling for their representation. In their reply, the respondents denied the
right of the appellant to assess the lands to revenue, and followed it up by
instituting two suits before the Revenue Judge for establishing their rights.
In their plaints, they alleged that under the provisions of the Foras Act the
maximum assessment leviable on the lands was 9 reas per burga, and that the
Government had no right to enhance it; that the effect of the land acquisition
proceedings between 1864 and 1867 was to extinguish the right of the State to
levy even this assessment, and that further, having purchased the properties
absolutely from the Governor-General under Exhibit A. they were entitled to
bold them without any liability to pay revenue thereon. They accordingly prayed
for a declaration that the Government had no right to levy any assessment on
these lands, or, in the alternative, that such assessment should not exceed
what was payable under Bombay Act No. VI of 1851. The appellant contested the
suit. The Revenue Judge held that as a result of the land acquisition
proceedings between 1864 and 1867, the lands vested in the Government freed
from any liability to pay assessment, and that when the Governor-General
transferred them under 1314 Exhibit A without reserving the right to assess
them, the purchasers had the right to hold them without any liability to pay
revenue. He accordingly granted a declaration that the appellant had no right
to levy assessment, and -that the notices issued by him under Act No. II of
1876 were illegal.
On appeal by the defendants to the High Court
of Bombay, it was held by Chagla, C.J., Bhagwati, J. concurring, that Act No.
VI of 1851 imposed a specific limit on the right of the Government to levy
assessments on the lands in question that, further, by reason of the land
acquisition proceedings the right of the Provincial Government to levy
assessment even within the limits prescribed by Act No. VI of 1851 was
extinguished, and that when the lands were transferred by the Central
Government to Lady Pochkhanawalla and others, they got them as revenue-free
lands. In the result, the appeal was dismissed. This appeal by special leave is
directed against this decision.
The statutory authority under which the
appellant seeks to levy assessment on the lands is section 8 of Bombay Act No.
11 of 1876, and it is as follows:
"It shall be the duty of the Collector,
subject to the orders of Government, to fix and to levy the assessment for land
When there is no right on the part of the
superior holder in limitation of the right of Government to assess, the
assessment shall be fixed at the discretion of the Collector subject to the
control of Government.
When there is a right on the part of the
superior bolder in limitation of the right of Government, in consequence of a
specific limit to assessment having been established and preserved, the
assessment shall not exceed such specific limit".
It was on the footing that the respondents
were 'superior holders' as defined in the Act, that the appellant issued
notices to them in April 1942. In their reply notices and in the plaints, the
respondents did not dispute that position, but only contended in terms of
section 8 that they had a specific right in limitation of the right of the
Government to assess the 1315 lands; and the entire controversy in the Courts
below was whether they had established that right. No contention was raised
that they were not superior holders as defined in the Act, and that, in
consequence, no assessment could be imposed on the lands under section 8 of the
In the argument before us, the contention was
sought to be raised for the first time by the learned Attorney-General that the
proceedings taken by the Collector under section 8 were incompetent, as that
section would apply only to lands held by superior holders, that the definition
of 'superior' holier' in section 3 (4) as meaning "the person having the
highest title under the Provincial Government to any land in the City of
Bombay" would take in only persons who held on a derivative tenure from
the Government, that persons who acquired lands from the Government under an
outright sale could not be described as 'superior holders' within section 3
(4), and that the lands held by the respondents were therefore outside the
operation of section 8.
On behalf of the appellant, the learned
Solicitor General objected to this question being allowed to be raised at this
stage of the proceedings, as that would involve investigation of questions of
fact and of law, such as whether under the tenures in the City of Bombay,
owners held the lands as superior holders, whether under Indian jurisprudence
what was paid by the occupier of land was rent or revenue, whether the prerogative
right of the Crown to assess lands subsisted in the Presidency Towns of
Calcutta, Bombay and Madras and several other questions, for the decision of
which there were not sufficient materials. This objection must be upheld. In
view of the fact that the respondents have, at all stages, claimed immunity
from assessment on the basis of section 8, we do not consider that it would be
proper to allow them now to change their front, and take up a stand wholly
inconsistent with what they had taken, when that involves an investigation into
facts which has not been made. We must, therefore, proceed on the footing that
the respondents are `superior holders' as defined 1316 in section 3 (4) of Act
No. 11 of 1876, and that their rights are to be determined in accordance with
section 8 of the Act.
Construing that section, the Privy Council
laid down in Goswamini' Shri Kamala Vahooji v. Collector of Bombay(1) two
propositions: that though the language of the section would more appropriately
apply when the dispute was as to the quantum of assessment', the right to levy
it not being itself controverted, it was open to the superior holder under this
section to plead and prove that the State had no right to levy any assessment;
and that the burden was on the person who pleaded a limitation on the right of
the State to assess, to clearly and unequivocally establish it. It is,
therefore, open to the respondents to plead that the lands are wholly exempt
from revenue; but the onus of making it jut lies heavily on them.
The learned Attorney-General has sought to
establish a right in the respondents in limitation of the right of the
appellant to assess the lands on three grounds: (1) the Foras Act No. VI of
1851, (2) the land acquisition proceedings under Act No. VI of 1857, and (3)
the sale deed, Exhibit A. Taking first the Foras Act: For a correct
appreciation of its provisions, it is necessary to refer -Co the history of the
lands, which are dealt with therein. The Island of Bombay once formed part of
the Portuguese Dominions in India. In 1661 when Princess Infant Catherine was
married to King Charles 11 of England, it was ceded by the King of Portugal to
the British Crown as dowry, and by a Royal Charter dated 27th March 1668 King
Charles 11 granted it to the East India Company. At that time the Island
consisted only of the Fort and the town, and "outside the walls of the
town it was scarcely more than rock and marsh which became a group of islands
every day on high tide".
Vide Shapurji Jivanji v. The Collector of
Bombay(1). It appears from Warden's Report on the Landed Tenures in Bombay and
Le Mesurier's Report on the Foras lands, that during the 18th Century the East
India Company started (1) (1937) L.R. 64 I.A. 334.
(2)  I.L.R. 9 Bom. 483, 488, 1317
reclaiming these lands, and invited the inhabitants to cultivate them, at first
without payment of any assessment and subsequently on favourable rates. These
payments were called "Foras". The meaning of this word is thus
explained by Westropp, J. in his note at page 40 in Naoroji Beramji v.
Rogers(1):" foras' is derived from the
Portuguese word fora (Latine foras, from foris a door), signifying outside. It
here indicates the rent or revenue derived from outlying lands.
The whole island of Bombay fell under that
denomination when under Portuguese rule, being then a mere outlying dependency
of Bassein. Subsequently the term foras was, for the most part, though perhaps
not quite exclusively, limited to the new salt batty ground reclaimed from the
sea, or other waste ground lying outside the Fort, Native Town, and other the
more ancient settled and cultivated grounds in the island, or to the quitrent
arising from that new salt batty ground and outlying ground".
Thus, the salt batty lands reclaimed from the
sea came to be known as Foras lands by association with the assessments payable
thereon called "Foras". The nature of the interest which the
occupants had in the Foras lands was the subject of considerable debate in the
beginning of the 19th Century.
In 1804, the Company resumed some of the
Foras lands for settling persons displaced in the Town area, and that resulted
in a suit by one Sheik Abdul Ambly, wherein the right of the Company to resume
the lands was challenged.
The action failed, the Court upholding the
claim of the Company to resume them, but at the same time, it observed that its
action in dispossessing the occupants would "appear and be felt as a
grievous hardship, if not an open and downright injury". Vide Warden's
Report on the Landed Tenures of Bombay, pages 60 and 61. Thereafter, the
Company had the matter further investigated, and there were reports on the
subject by Warden in 1814 and Le Mesurier in 1843.
And finally the Company decided to recognise
(1) 4 Boni. H.C.R. 1.
1318 the rights of the 'Occupants, and that
resulted in the enactment of Act VI of 1851.
The relevant provisions of the Act may now be
noticed. The preamble to the Act states that, "Whereas the East India
Company are legally entitled to the freehold reversion of the several lands heretofore
paying a render called foras, the outline whereof is delineated in a plan and
numbered 1, subject to certain tenancies therein at will, or from year to year;
whereas it is considered expedient as of grace and favour that the rights of
the said East India Company in all of the lands included in the said plan
should be extinguished, save as hereinafter mentioned.
It is enacted as follows:" Section 2
"From and after the said 1st day of
July, the rights of the said Company in all of the said lands mentioned in the
said plan No. 1, except those mentioned in the said plan No. 2, shall be
extinguished in favour of the persons who shall then hold the same respectively
as the immediate rent-payers to the said Company, saving the rents now severally
payable in respect of such lands, which shall continue payable and recoverable
by distress, or by any means by which land revenue in Bombay is or shall be
recoverable, under any Act or Regulation Section 4 provides:
"Nothing herein contained shall exempt
such lands from being liable-to any further general taxes on land in Bombay
" According to the appellant, the effect of these provisions was to grant
the lands to the occupants on a permanent tenure, heritable and alienable, but
not further to grant them on a permanent assessment. Reliance was also placed
on the decision in Shapurji Jivanji v. The Collector of Bombay(1), where it was
held generally that the Government had the right under section 8 of the Act to
enhance the assessments on Foras lands. There is some support for this
contention in the provisions of the Act. The preamble (1)  I.L.R. 9 Bom.
1319 expressly recites that the occupants
were tenants at will or from year to year, and that the reversion was with the
East India Company. One consequence of that was that the Company had the right
to eject the occupants. Now, what the Company did under the Act was to give up
that right as a matter of grace, because, as already mentioned, it would appear
to have invited them to settle on the lands and cultivate them, and it did that
by extinguishing its reversion as landlord.
In other words, it agreed to confer on the
tenants the status of owners of lands. If that was all the scope of Act No. VI
of 1851, it could not be doubted that the rights of the State to enhance the
assessments would not be affected, because ownership of land does not per se
carry with it an immunity from enhancement of assessment in exercise of
sovereign rights, and occupants of Foras lands cannot claim to be in a better
position by reason of the Act than owners of lands in ryotwari tracts, the
assessments on which are liable to periodic revision. But what is against the
appellant is that section 2 does not stop with merely extinguishing the
reversionary rights of the Company. It goes further, and saves expressly
"the rents now severally payable in respect of such lands", rent
being used here in the sense of assessment, and adds "which shall continue
to be payable". Now, the contention of the respondents is that those words
conferred on the Government a right to recover only the assessment which was
then payable, and that there was thus a limitation on its right to enhance it.
It is common ground that the assessment payable on these lands at that time was
9 reas per burga, and Exhibit N shows that it was at that rate that the
assessment was collected from 1858 until the lands were acquired by the
Government in land acquisition proceedings. It is accordingly contended for the
respondents that under the Act, the Government could not claim anything more
than 9 reas per burga as assessment on the lands.
It is urged for the appellant that the words
"now severally payable" could not be construed as imposing a
limitation on the right of the Government to enhance the assessment, as they
occur in a saving clause, the scope of which was to reserve the rights of the
Company and not to confer on the occupants rights in addition to what the body
of the section had granted to them. It is true that the setting in which these
words occur is more appropriate for reserving rights in favour of the Company
than for declaring any in favour of the occupants. But to adopt the
construction contended for by the appellant would be to render the words
"now severally payable" and "which shall continue to be
payable" wholly meaningless. Notwithstanding that the drafting is
inartistic, the true import of the clause unmistakably is that while, on the
one hand, the right of the Government to recover the assessment is saved, it
is, on the other hand, limited to the amount then payable by the occupants. The
contention of the respondents that under the Foras Act they acquired a specific
right to hold the lands on payment of assessment not exceeding what was then
payable, must, therefore, be accepted We have next to decide what effect the
proceedings taken by the Government under the Land Acquisition Act No. VI of
1857 during the years 1864 to 1867 have on the rights of the parties. Section
VIII of the Act is as follows:
"When the Collector or other officer has
made an award or directed a reference to arbitration, be may take immediate
possession of the land which shall thenceforward be vested absolutely in the
Government, free from all other estates, rights, titles and interests".
The contention of the respondents which has
found favour with the Courts below is that under that section the effect of the
vesting of the lands in the Government was to extinguish whatever interests
were previously held over them, that the right of the Government to levy
assessment was such an interest, and that it was also extinguished. It is
argued that when lands are acquired under the Act, the valuation that is made
is of all the interests subsisting thereon, including the 1321 rights of the
Crown to assess the lands, as well as the interests of the claimants therein,
that what is paid to the owners is not the full value of the lands but the
value of their interests therein, deduction being made of the value of the
right of the Government to assess from out of the full value, and that, in
effect, there was an award of compensation for the right to assess, and that,
therefore, that right equally with the rights of the claimants over the lands
would be extinguished. One of the awards has been marked as Exhibit P, and the respondents
rely on the recitals therein that the compensation to the claimants was
"for their interest in the said lands". The award, it must be
mentioned, directs the Government to pay the claimants the amounts specified
therein, but contains no provision for payment of any sum as compensation to
the Government for its right to assess the lands; nor does it even value that
right. But the respondents contended that the Government being the authority to
pay must be deemed to have paid itself, and that, in any event, if they were
entitled to compensation, their failure to claim it could not affect the
result, which was that the right to levy assessment would be extinguished.
We are unable to accept this contention. When
the Government acquires lands under the provisions of the Land Acquisition Act,
it must be for a public purpose, and with a view to put them to that purpose,
the Government acquires the sum total of all private interests subsisting in
If the Government has itself an interest in
the land, it has only to acquire the other interests outstanding therein, so
that it might be in a position to pass it on absolutely for public user. In the
Matter of the Land Acquisition Act: The Government of Bombay v. Esupali
Salebhai(1) Batchelor, J.
"In other words Government, as it seems
to me, are not debarred from acquiring and paying for the only outstanding
interests merely because the Act, which primarily contemplates all interests as
held outside Government, directs that the entire compensation based upon the
market value of the whole of land, must be distributed among the
claimants". There, the Government claimed ownership of the land on which
there stood buildings belonging to the claimants, and it was held that the
Government was bound to acquire and pay only for the superstructure, as it was
already the owner of the site.
Similarly in Deputy Collector, Calicut
Division v. Aiyavu Pillay(1), Wallis, J. (as he then was) observed:
'It is, in my opinion, clear that the Act
does not contemplate or provide for the acquisition of any interest which
already belongs to Government in land which is being acquired under the Act,
but only for the acquisition of such interests in the land as do not already belong
to the Government".
With these observations, we are in entire
agreement. When Government possesses an interest in land which is the subject
of acquisition under the Act, that interest is itself outside such acquisition,
because there can be no question of Government acquiring what is its own. An
investigation into the nature and value of that interest will no doubt be
necessary for determining the compensation payable for the interest outstanding
in the claimants, but that would not make it the subject of acquisition. The
language of section VIII of Act No. VI of 1857 also supports this construction.
Under that section, the lands vest in the Government "free from all other
estates, rights, titles and interests", which must clearly mean other than
those possessed by the Government. It is on this understanding of the section
that the award, Exhibit p, is framed. The scheme of it is that the interests of
the occupants are ascertained and valued, and the Government is -directed to
pay the compensation fixed for them. There is no valuation of the right of the
Government to levy assessment on the lands, and there is no award of
compensation there for.
We have so far assumed with the respondents
that the right of the Government to levy assessment is an interest in land
within the meaning of section VIII (1)  9 I-C-341. 1323 of Act VI of
1857. But is this assumption well founded? We think not. In its normal
acceptation, "interest" means one or more of those rights which go to
make up "ownership". It will include for example, mortgage, lease,
charge, easement and the like. but the right to impose a tax on land is a
prerogative right of the Crown, paramount to the ownership over the land and
outside it. Under the scheme of the Land Acquisition Act, what is acquired is
only the ownership over the lands, or the inferior rights comprised therein.
Section 3(b) of the Land Acquisition Act No.
I of 1894 defines a "person interested" as including "all
persons claiming an interest in compensation to be made on account of the
acquisition of land under this Act, and a person shall be deemed to be
interested in land if he is interested in an easement affecting the land".
Section 9 requires that notices should be given to all persons who are
interested in the land. Under section 11, the Collector has to value the land,
and apportion the compensation among the claimants according to their interest
in the land. Under section 16, when the Collector make an award "he may
take possession of the land which shall thereupon vest absolutely in the
Government free from all encumbrance". The word "encumbrance" in
this section can only mean interests in respect of which a compensation was
made under section 11, or could have been claimed. It cannot include the right
of the Government to levy assessment on the lands. The Government is not a
"person interested" within the definition in section 3 (b), and, as
already stated, the Act does not contemplate its interest being valued or
compensation being awarded there for.
It is true that there is in Act No. VI of
1857 nothing corresponding to section 3(b) of Act No. I of 1984, but an
examination of the provisions of Act No. VI of 1857 clearly shows that the
subject-matter of acquisition under that Act was only ownership over the lands
or its constituent rights and not the right of the Government to levy
assessment. The provisions relating to the issue of notices to persons
interested 1324 and the apportionment of compensation among them are
substantially the same. Moreover, under section VIII the Government is to take
the lands free from all other "estates, rights, title and interest",
and "interest" must, in the context, be construed ejusdem generis
with "estates" etc., as meaning right over lands, of the character
of, but not amounting to an estate, and cannot include the prerogative right to
assess the lands. It must accordingly be held that the effect of the land
acquisition proceedings was only to extinguish the rights of the occupants in
the lands and to vest them absolutely in the Government, that the right of the
latter to levy assessment was not the subject-matter of those proceedings, and
that if after the award the lands were not assessed to revenue, it was because
there could be no question of the Government levying assessment on its own
Then there remains the question whether the
sale deed, Exhibit A, imposes any limitation on the right of the Crown to
assess the lands. The deed conveys the lands to the purchasers absolutely
"with all rights, easements and appurtenances whatsoever" to be held
"for ever". It does not, however, recite that they are to be held
But it is argued for the respondents that
where there is an absolute sale by the Crown as here, that necessarily imports
that the land is conveyed revenue-free; and section 3 of the Crown Grants Act
No. XV of 1895 and certain observations in Dadoba v. Collector of Bombay(1)
were relied on as supporting this contention. Section 3 of Act No. XV of 1895
is as follows:
"All provisions restrictions, conditions
and limitations over contained in any such grant or transfer as aforesaid shall
be valid and take effect according to their tenor any rule of law, statute or
enactment of the Legislature to the contrary notwithstanding".
The contention is that as the grant is of a
freehold estate without any reservation it must, to take effect according to
its tenor, be construed as granting exemption from assessment to revenue. But
that will be extending the bounds of section 3 beyond its contents (1) (1901]
I.L.R. 25 Bom. 714, 1325. The object of the Act as declared in the preamble is
to remove certain doubts "as to the extent and operation of the Transfer
of Property Act, 1882, and, as to the power of the Crown to impose limitations
and restrictions upon grants and other transfers of land made by it or under
its authority". Section 2 enacts that the provisions of the Transfer of
Property Act do not apply to Crown grants. Then follows section 3 with a
positive declaration that "all provisions, restrictions, conditions and
limitations over" shall take effect according to their tenor. Reading the
enactment as a whole, the scope of section 3 is that it saves "provisions,
restrictions, conditions and limitations over" which would be bad under
the provisions of the Transfer of Property Act, such as conditions in restraint
of alienations or enjoyment repugnant to the nature of the estate, limitations
offending the rule against perpetuities and the like. But no question arises
here as to the validity of any provision, restriction, condition, or limitation
over, contained in Exhibit A on the ground that it is in contravention of any
of the provisions of the Transfer of Property Act, and there is accordingly
nothing on which section 3 could take effect.
It is argued by the learned Attorney-General
that this limitation on the scope of the Act applies in terms only to section
2, and that section 3 goes much further, and is general and unqualified in its
operation. The scope of section 3 came up for consideration before the Privy
Council in Thakur Jagannath Baksh Singh v. The United Provinces(1).
After setting out that section, Lord Wright
"These general words cannot be read in
their apparent generality. The whole Act was intended to settle doubts which
had arisen as to the effect of the Transfer of Property Act, 1882, and must be
read with reference to the general context..............
In this view, section 3 must also be
construed in the light of the preamble, and so construed, it cannot, for the
reasons already given, have any bearing on (1) 1946 F.L.J. 88.
1326 the rights of the parties. Moreover,
that section only enacts that "all provisions, restrictions, conditions
and limitations over" shall take effect according to their tenor, and what
is relied on is not any provision, restriction, condition or limitation over,
in Exhibit A which according to its tenor entitles the respondents to hold the
lands rent-free, but the absolute character of the interest conveyed under
Exhibit A. Therefore, section 3 does not in terms apply.
The respondents also relied on certain
observations in Dadoba v. Collector of Bombay(1) as supporting their
contention. There, the -facts were that the Government had granted one parcel
of land to the Free Church Mission of Scotland revenue-free under a deed dated
1-10-1884. By another deed dated 20-12-1887 they released their right of reversion
on two other parcels of land held by the Mission as tenants but "subject
to the payment of taxes, rates, charges, assessments leviable or chargeable in
respect of the said premises or anything for the time being thereon".
On 16-1-1888 the Mission sold all the three
parcels to one Janardan Gopal, and the Secretary of State joined in the
conveyance for effectually releasing the reversion of the Government. Before
Janardan Gopal purchased the lands, there had been correspondence between his
solicitors and the Government as to the assessment payable on the lands, and
the Government had intimated that it would be 9 pies per square yard per annum.
Subsequent to the purchase, the Collector raised the assessment payable on the
lands, and the point for decision was whether he could lawfully do so.
In deciding that he could not, Sir Lawrence
Jenkins stated that the purchaser had paid full value for the lands in the
belief induced by the Government that the assessment of 9 pies per sq. yard
would be permanent, and that on the facts, the case fell within section 115 of
the Evidence Act, and that the Government was estopped from enhancing the
assessment. He was also prepared to hold that the correspondence between the
purchaser and the Government prior to (1)  I.L.R. 25 Bom. 714.
1327 the sale amounted to a collateral
contract not to raise the assessment. Chandavarkar, J., concurred in the
decision, and in the course of his judgment observed:
".... when we have regard to the nature
of the transaction, viz., that Government was selling the property out-and-out
as any private proprietor-when we look to the whole of the language used ....
the intention of the parties must be taken to have been that the purchaser was
to be liable to pay the amount of 9 pies per square yard per annum then levied
as assessment and no more".
These observations have been relied on as
supporting the contention that when there is an absolute sale by the
Government, it amounts to an agreement not to levy more assessment than was
payable at that time. But the remarks of the learned Judge have reference to
the recitals in the deed dated 20-12-1887 and the negotiations between the
purchaser and the Government which are referred to in the passage, and not to
the character of the transfer as an absolute sale; and the decision is based on
a finding of estoppel or collateral contract deducible from the correspondence
between the purchaser and the Government.
Neither section 3 of the Crown Grants Act,
nor the observations in Dadoba v. Collector of Bombay(1) lend any support to
the contention that an absolute sale of lands by the Government ipso facto
confers on the purchasers a right to hold the lands free of revenue.
The question then is whether on the, terms of
Exhibit A such a right could be held to have been granted. There was some
discussion at the Bar as to the correct rule of construction applicable to the
deed, Exhibit A. It was argued by the learned Solicitor. General for the
appellant that being a Crown grant, Exhibit A should be construed in favour of
the Crown and against the grantee. On the other hand, it was argued by the
learned Attorney-General that it should make no difference in the construction
of the grant, whether the grantor was the Crown or a subject, as (1) 
I.L.R. 25 Bom. 714. 170 1328 the question in either case was what had been
granted; and that must be determined on the language of the deed. When closely
examined, it will be seen that there is no real conflict between the two
propositions. The former is in the nature of a rule of substantive law; and its
scope is that where as the transferee from a subject acquires, unless the
contrary appears, all the rights which the transferor has in the property as
enacted in section 8 of the Transfer of Property Act, a grantee from the Crown
gets only what is granted by the deed, and nothing passes by implication. But
when the grant is embodied in a deed, the question ultimately reduces itself to
a determination of what was granted there under. What the Court has to do is to
ascertain the intention of the grantor from the words of the document, and as
the same words cannot be susceptible of two different meanings, it makes no
difference whether they occur in a grant by the Crown or by the subject. If the
words used in a grant by a subject would be effective to pass an interest, then
those words must equally be effective to pass the same interest when they occur
in a Crown grant.
Dealing with this question, Sir John
Coleridge observed in Lord v. Sydney(1):
"But it is unnecessary for their
Lordships to say more on this point, because they are clearly of opinion, that
upon the true construction of this grant, the creek where it bounds the land is
ad medium film, included within it. In so holding they do not intend to differ
from old authorities in respect to Crown grants; but upon a question of the
meaning of the words, the same rules of common sense and justice must apply,
whether the subject-matter of construction be a grant from the Crown, or from a
subject; it is always a question of intention, to be collected from the
language used with reference to the surrounding circumstancesí.
Exhibit A has to be construed in the light of
these principles. As already stated, there is no recital in the deed that the
purchasers are entitled to, hold the lands free of assessment. On the other
hand, it (1) (1859] 12 Moore P.C. 473, 496, 497; 14 E.R. 991, 1000.
1329 expressly provides that the properties
will be subject "to the payment of all cesses, taxes, rates, assessments,
dues and duties whatsoever now or hereafter to become payable in respect
thereof", which words would in their natural and ordinary sense cover the
present assessment. In Dadoba v. Collector of Bombay(1), the Court had to
consider a clause similar to the above contained in a deed executed by the
Government in favour of the Mission on 20-12-1887. Discussing the effect of
this clause on the rights of the plaintiff to hold the property permanently on
an assessment of 9 pies per sq. yard, Chandavarkar, J. observed:
"When that deed says that the property
was sold 'subject to the payment of all taxes, rates, charges, assessments
leviable or chargeable', it leaves the question open as to what the taxes etc.,
are which are `leviable or chargeable'.
Extrinsic evidence of that is admissible, for
it neither contradicts nor varies the terms of the deed, but explains the sense
in which the parties understood the words of the deed, which, taken by
themselves, are capable of explanation: see Bank of New Zealand v. Simpson (2)
In that case, the dispute was not as to the
liability to pay any assessment but to the quantum of assessment payable, and
it was a possible view to take that the clause in question was not decisive on
that question, and that it was left open. But here, the question is whether a
right was granted to the purchasers to hold the lands free from liability to be
assessed, and the clause in Exhibit A clearly negatives such a right. Even if
we are to regard the question as left open, as observed in Dadoba v. Collector
of Bombay(1), it will not assist the respondents, as they have not established
aliunde any right to hold the lands free from assessment. It must, therefore,
be held that far from exempting the lands from liability to be assessed to
revenue, Exhibit A expressly subjects them to it.
It was finally contended that even if the
land acquisition proceedings between 1864 and 1867 had not the (1) 
I.L.R. 25 Bom. 714.
(2) 1900 A.C. 182.
1330 effect of extinguishing the right of the
Government to levy assessment, and that even if Exhibit A conferred on the
purchasers no right to hold the land revenue-free, the assessment which the
Government was entitled to levy under section 8 of Act No. II of 1876 was
limited to what was payable under the Foras Act No. VI of 1851, and that the
appellant had no right to levy assessment at a rate exceeding the same. The
argument in support of the contention was that it was an incident of the Foras
tenure under which the lands wore held, that the occupants were bound to pay
only a fixed assessment, that the incident was annexed to the lands, and was
inseparable there from, that between the dates when the lands were acquired
under the Land Acquisition at No. VI of 1857 and 22-11-1938 when they were sold
under Exhibit A they continued to retain their character as Foras lands, that
if no assessment was paid on the lands during that period, it was because the
hand to pay and the hand to receive were the same, that when they came to the
respondents under Exhibit A, they became impressed with the Foras tenure, and
that, in consequence, they were liable to be assessed only at the rate payable
under Act No. VI of 1851.
This contention is, in our judgment, wholly
untenable. When the lands were acquired under the Land Acquisition Act No. VI
of 1857, the entire "estate, right, title and interest" subsisting
thereon became extinguished, and the lands vested in the Government absolutely
freed from Foras tenure, and when they were sold by the Government under
Exhibit A the purchasers obtained them as freehold and not as Foras lands.
As the tenure under which the lands were
originally held had become extinguished as a result of the land acquisition
proceedings, it was incapable of coming back to life, when the lands were sold
under Exhibit A.
In support of the contention that the
incidents of the Foras tenure continued to attach to the lands in the hands of
the respondents, the learned Attorney General relied on the following
observations of 1331 Das, J. in Collector of Bombay v. Municipal Corporation of
the City of Bombay and others(1):"The immunity from the liability to pay
rent is just as much an integral part or an in severable incident of the title
so acquired as is the obligation to hold the land for the purposes of a market
and for no other purpose".
But the point for decision there was whether
the Municipal Corporation of Bombay could acquire by prescription a right to
hold the lands rent-free, they having entered into possession under a
resolution of the Government that no rent would be charged. And the passage
quoted above merely laid down that when title to the land was acquired by the
Municipal Corporation by prescription, one of the rights acquired as part of
the prescriptive title 'was the right to hold the lands revenue-free. But the
question here is whether the right to hold the lands under a fixed assessment
survived after the acquisition by the Government under the land acquisition
proceedings, and that depends on the effect of section VIII of Act VI of 1857.
If, as observed in the above passage, the liability to pay assessment was
"an integral part or an in severable incident of the title", then
surely it was also extinguished along with the title of the occupants under
section VIII of Act No. VI of 1857.
There is another difficulty in the way of
accepting the contention of the respondents. The Foras Act was repealed in 1870
by Act No. XIV of 1870 long prior to the date of Exhibit A, and therefore, even
if we hold that the Foras tenure revived in the hands of the purchasers under
Exhibit A, the rights under the Foras Act were no longer available in respect
of the lands. Section I of Act No. XIV of 1870 saves rights "already
acquired or accrued", and it is argued that the rights now claimed are
within the saving clause.
But as the lands had all been acquired under
Act No. VI of 1857 between 1864 and 1867 there were no rights in respect of the
lands which could subsist at the date of the repeal, and the rights now claimed
(1) 1952 S.C.R. 43, 52, 1332 by the respondents are not within the saving
clause. In the result, it must be held that the right of the appellant to levy
assessment under section 8 of Act No. II of 1876 is not limited by any right in
We accordingly allow the appeal, set aside
the judgments of the Courts below, and dismiss both the suits instituted by the
respondents with costs throughout.