Dr. K. A. Dhairyawan & Ors Vs. J.
R. Thakur & Ors  INSC 48 (28 April 1958)
IMAM, SYED JAFFER SINHA, BHUVNESHWAR P.
CITATION: 1958 AIR 789 1959 SCR 799
Rent Control--Lease of land for fixed
period-Lessee constructing building on land--Covenant for delivery of
Possession of building to lessor on expiry of term of lease- Statute protecting
lessee from eviction-If applies to covenant--Whether statute extends Period of
lease-Bombay Rents, Hotel and Lodging House Control Act, 1947.
The lessors granted a lease of a parcel of
land to the lessees for 21 years at a rent of Rs. 50 per month. Under the terms
of the lease the lessees were to construct a double storeyed building on the
land at a cost of not less than Rs. 10,000. The construction had to be to the
satisfaction of the lessors' engineers, and the building had to be insured for
at least Rs. 12,000 in the joint names of the lessors and the lessees with an
insurance firm approved by the lessors. In case of damage or destruction the
building was to be repaired out of the money received from the insurance
company. On the termination of the lease either at the end Of 21 years or
earlier, the lessees were to surrender and yield up the demised premises
including the building with its fixtures and appurtenances to the lessors
without any compensation for the same. After the expiry of the 21 years the
lessors filed a suit for a declaration that they were entitled to the building,
and were entitled to claim possession of the same and to recover the rents and
profits thereof. The lessees pleaded that they were also lessees of the
building and were protected from eviction there from by the provisions of the
Bombay Rents, Hotel and Lodging House Control Act, 1947 and that the covenant
for delivery of possession of the building could not be enforced as the lease
in respect of the land could not be terminated on account of the protection
given by the Act.
Held, that upon a proper construction of the
lease there was a demise only of the land and not of the building and conse-
quently the provisions of the Act did not apply to the contract for delivery of
possession of the building. The ownership in the building was with the lessees
and in which the lessors had no right while the lease subsisted. There was no
absolute rule of law in India that whatever was affixed or built on the soil
became part of it, and was subject to the same rights of property as tile soil
Narayan Das Khettry v. Jatindra Nath Roy
Chowdhury, (1926) 54 I.A. 218 and Vallabhdas Narranji v. Development Officer,
Bandra (1928) 56 I.A. 259 followed.
102 800 Held, further, that the provisions of
the Act did not provide for a continuation of the lease beyond the specified
period stated therein. The Act merely gave to the lessee who continued in
possession even after the expiry of tile period of the lease the status of a
statutory tenant and protected him from eviction.
CIVIL APPELLATE JURISDICTION : Civil Appeal
No. 192 of 1954.
Appeal from the judgment and decree dated
August 29, 1952, of the Bombay High Court in Appeal No. 79 of 1952, arising out
of the judgment and decree dated June 27, 1952, of the said High Court
exercising its Ordinary Original Civil Jurisdiction in Suit No. 2325 of 1948.
A.V. Viswanatha Sastri and Naunit Lal, for
L.K. Jha, Rameshwar Nath, S. N. Andley and P.
L. Vohra, for the respondents.
1958. April 28. The Judgment of the Court was
delivered by IMAM J.-The appellants, as trustees, of the Mankeshwar Temple
Trust had filed suit No. 2325 of 1948 in the High Court of Bombay in its
Ordinary Original Civil Jurisdiction, for a declaration that they were entitled
to the building in suit and were entitled to claim possession of the same and
to recover the rents and profits thereof. The appellants further prayed that
the defendants may be ordered and decreed to obtain a letter of attornment from
the tenants of the said property attorning to the appellants, that the first
defendant may be ordered to render accounts of the rents received by him from
the tenants of the said property from May 23, 1948, and that pending the
hearing of the suit a Receiver may be appointed of the property in suit. The
appellants had obtained leave of the High Court under 0. 11, r. 2 of the Civil
Procedure Code reserving to them liberty to file a separate suit with respect
to the land on which the building was situated. The learned Judge who heard the
suit decreed it in part in favour of the appellants. He also passed an order of
injunction restraining the 801 defendants 1, 2 and 5, their agents and
servants, from interfering with the exercise of the right of the appellants in
obtaining possession of the building or otherwise effectuating their possession
consistently with the provisions of law. He further directed the first
defendant to account for the rents recovered by him from and after May 23,
1948, till the date of the decree. He refused to grant the prayer that the
defendants be directed to obtain letters of attornment from the tenants of the
building in favour of the appellants. Against this decision the defendants
appealed and a Division Bench of the High Court allowed the appeal, reversed
the decision of the trial Judge and dismissed the suit with costs.
On May 23, 1927, Krishnarao Ganpatrao and
Shamrao Ganpatrao, as trustees of the Mankeshwar Temple, executed a registered
lease, Exbt. A, in favour of Moreshwar Kasinath and Radhabal, wife of
Ramkrishna Bhai Thakore, whereby they demised a parcel of land specified in the
Schedule to the document. The lease was for twenty-one years. The area of land
was about 213.66 square yards and the rent reserved was Rs. 50 per month. Under
the terms of the lease the lessee had to construct within six months from the
date of the lease a double storeyed building consisting of shops on the ground
floor and residential rooms on the upper floor. The cost of construction was to
be not less than Rs. 10,000.
The construction had to be to the
satisfaction of the lessors' engineers. There were certain restrictive
covenants in the lease. The building had to be insured for at least Rs. 12,000
in the joint names of the lessors and the lessees with an insurance firm
approved by the lessors.
If the building was damaged or destroyed it
had to be repaired or restored by the use of the insurance money received from
the insurance company. On the termination of the lease either at the end of
twenty-one years or earlier, the lessees were to surrender and yield up the
demised premises including the building with its fixtures and appurtenances to
the lessors without any compensation for the same. On May 14, 1948, shortly
before the lease was to expire, the appellants who were 802 then the trustees
of the temple gave notice to the respondents to deliver possession of the demised
premises and the building on the expiry of the lease, that is to say, on May
22, 1948. On May 19, 1948, the respondents replied that they. were entitled to
the benefits of the provisions of the Bombay Rents, Hotel and Lodging House
Rates Control Act, 1947, hereinafter referred to as the Act, and that the
appellants were not to interfere with their possession. All that they could get
was the rent under the lease from the respondents. On July 23, 1948, the
appellants gave the respondents notice to quit the building only as in their
opinion the Act did not apply to it. On July 27, 1948, the respondents, replied
asserting that the Act did apply to it.
The appellants, accordingly, filed the
present suit in the High Court on September 1, 1948.
The period of the lease under Exbt. A having
expired and the respondents having been given notice to quit, they were bound
to vacate the demised premises unless they were protected by the provisions of
the Act. Land used for non- agricultural purposes is "premises" under
the Act. Although the period of the lease had expired the respondents continued
to remain in possession without the assent of the lessors. Under the Act they
would, therefore, be tenants of the land within the meaning of that expression
as defined in the Act. There can be no question that so far as the land demised
by the lease is concerned the respondents could not be evicted so long as they
complied with the provisions of the Act and the lessors, as landlords, were
unable to resort to any of the provisions of s. 13 of the Act to evict the
respondents from the land. Indeed, the appellants did not claim in the plaint
that they were entitled to evict the respondents from the demised land. The
plaint, as drafted, confined the reliefs claimed by the appellants only to the
building constructed on the land.
The substantial question in issue in this
appeal is whether on a proper construction of the lease, Exbt. A, it can be
held that not only the land but also the building to be constructed on it had
been demised under it, Other questions had also been raised in the 803 course
of arguments. It was argued on behalf of the respondents that the appellants
could not get possession of the building until the lease had been determined.
The lease could not be determined as under the law they could not be compelled
to give up possession of the land demised under the lease as they were tenants
of the land within the meaning of the Act. A further submission made was that
even if the lease did not purport to demise the building which was to be
constructed on the land demised under that document, the appellants were not
entitled to get a declaration to the effect that they were entitled to the
rents and profits from the building which had been let out to. several persons
by the respondents and the respondents could not be restrained from interfering
with the collection of the rents and profits from the building by the
appellants so long as the respondents were in possession of the land demised.
It was also urged that the suit must at any rate fail on the ground that
defendant No. 4 having died before the institution of the suit and her name
being struck off from the category of defendants and her legal heirs and
representatives not having been brought on to the record the suit was bad on
account of non-joinder of necessary parties.
A perusal of the Schedule to the lease shows
that what was demised there under was a parcel of land of an area of about 213
square yards with New Survey No. 1/2600 cadestral survey No. 96. The Schedule
leaves no room for doubt as to what was demised. Under the terms of the lease
the rent payable for this land was Rs. 50 per month. The terms of the lease
show that the land was demised for the purpose of constructing a building
thereon by the lessees. Clause 1 of the lease may be quoted as the respondents
have strongly relied upon this clause in support of their contention that what
was demised under the lease was not only the land but also the building to be
erected thereon. This clause runs as follows:
" In consideration of the Expenses to be
incurred by the Lessees in and about the erection and completion of the
building hereinafter mentioned and the rents hereinafter reserved and the
Lessee's covenants 804 hereinafter contained the Lessors do hereby demise UNTO
the Lessees ALL that piece or parcel of land situated at Supari Baug Road, more
particularly described in the Schedule hereto and delineated in the plan
thereof hereto annexed and marked " A " and therein bounded by a red
line TO HOLD the premises unto the LESSEES for the term of 21 (twenty-one)
years to be computed from the date of these presents yielding and paying
therefor on the 10th day of each and every Calendar month the first of such
payments to be made on 10th of next, upon the terms and subject to the
coventiits and conditions hereafter contained:" Another clause upon which
reliance had been placed was el. 6 which provides for the building to be
erected to be insured in the joint names of the lessors and the lessees with an
insurance company approved by the lessors. It was pointed out that the building
was to be handed over to the lessors at the end of the lease without
compensation to the lessees.
We have examined the various clauses of the
lease and find that in none of them has it been positively stated that the
building to be erected on the demised land would be in the ownership of the
lessors and that the building would be deemed to have been leased to the
lessees along with the demised land. Under the law there was no impediment in the
way of the parties to have had a clause, in a positive form, to that effect. In
the absence of such a clause the various clauses of the lease, as they exist,
will have to be construed in order to ascertain whether on a proper
construction thereof it can be said that there had also been a, demise of the
building. The Schedule to the lease, as already stated, specifically mentions
that the land had been demised and there is no mention therein that the
building when constructed thereon would also form part of the demised property.
In 1927 when the lease was executed the Act was not in existence and it may
reasonably be said that none of the parties had ever in contemplation that the
Act or anything akin thereto would become law in the future affecting the rights
of the parties under the lease. The various clauses of the 805 lease are
consistent with the ownership in the building being with the lessees in which
the lessors had no right while the lease subsisted. In the case of Narayan Das
Khettry v. Jatindra Nath Boy Chowdhury(1) the Privy Council approved the
observations of Sir Barnes Peacock in the case of Thakoor Chunder Poramanick v.
Ramdhone Bhuttacharjee (2)to the following effect:
We have not been able to find in the laws or
customs of this country any traces of the existence of all absolute rule of law
that whatever is affixed or built on the soil becomes a part of it, and is
subjected to the same rights of property as the soil itself." In the case
of Vallabhdas Naranji v.
Development Office,),, Bandra (3) the Privy
Council once again referred to Sir Barnes Peacock's observation as stated
above. The Privy Council also quoted the following observation of Couch, C. J.,
in the case of Narayan v.
Bholagir (4):........... We cannot, however,
apply to cases arising in India the doctrine of the English law as to
buildings, viz., that they should belong to the owner of the land. The only
doctrine which we can apply is the doctrine established in India that the party
so building on another's land should be allowed to remove the materials."
Normally, under s. 108 of the Transfer of Property Act, before the expiry of
the lease, a lessee can remove all structures and buildings erected by him on
the demised land.
All that was necessary for him to do was to
give back the land to the lessor, on the termination of the lease, in the same
condition as he found it. The ownership, therefore, of the building in this
case was not with the lessors but was with the lessees. Under s. 108 of the
Transfer of Property Act there was nothing to prevent the lessees contracting
to hand over any building or structure erected on the land by them to the
lessors without receiving any compensation. In other words, although under s.
108 the lessees had the right to remove the building, by the contract they had
agreed to hand over the same to the lessors without the right to receive
compensation at the end of (1) (1926) 54 I. A. 218.
(3) (1928) 56 I.A. 259.
(2) 6 Suth. W. R. 228.
(4) 6 Bom. H. C. (A. C. J.) 8o.
806 the lease, the matter being entirely one
of contract between the parties. Such a contract, however, did not transfer the
ownership in the building to the lessors while the lease subsisted.
The various clauses of the lease in the
present case make a clear distinction between the demised premises and the
building, by using the words " demised premises including the building to
be erected thereon It was, however, urged on behalf of the respondents that cl.
I of the lease indicated that what was demised by the lease was not only the
land but also the building to be constructed thereon, because the opening words
of el. I make it clear that in consideration of the expenses to be incurred by
the lessees in erection and completion of the building and the rent reserved
the lessors demised to the lessees the land mentioned in the Schedule. The
important words in this clause were " to hold the premises" and not
to hold the demised premises. The word " premises " covered both the
land and the building to be erected thereon. The intention of the parties was
that the premises would be held at a moderate rent of Rs. 50 per month as the
lessees were going to incur the expenses of erecting the building, maintaining
it in proper repair and paying all taxes in connection therewith. In the course
of 21 years the lessees would have not only received back the money invested by
them in the erection of the building but would have also enjoyed a large margin
of profit. Under el.
5, at the end of the lease, the premises held
by the lessees, would be handed over to the lessors that is to say, the land
and the building erected on it without the lessors paying any compensation for
the building. Under cl.the building was to be insured in the joint names of the
lessors and the lessees. In cl. 9 of the lease the expression "the said
demised premises " appears and this clause guaranteed to the lessees
enjoyment of peaceful possession of the premises. This clause came after all
the clauses referring to the building to be erected on the land. If cls. 1, 5,
6 and 9 were read together and properly construed, it would appear that the
intention of the parties was that not only the land demised but also the 807
building which was to be constructed on it was the subject of the lease, as
that was the only purpose for which the land was given on lease. These clauses
do not necessarily lead to the conclusion suggested. If the ownership in the
building was intended to be with the lessors, there was no occasion for
providing that the lessees would get no compensation when the building was
handed over. This provision rather suggests that the ownership in the building
was with the lessees. Oil behalf of the respondents much reliance was placed on
the decision of this Court in the case of Bhatia Cooperative Housing Society
Ltd. v. D. C.
Patel (1). Many of the terms of the lease in
the case cited were similar to the terms to be found in the lease in the
present case. There was, however, el. 18 of the lease in the case referred to,
which expressly stated that immedia- tely after the completion of the building
within the time specified in el. 7, the lessors of the land would grant to the
lessees a lease of the land with the building thereon for a term of 999 years
from the date of the auction at a yearly rent calculated in accordance with the
accepted bid for the plot. There could be no question, as a matter of
interpretation, in the case cited, that a lease would be granted not only of
the land but also of the building on it for a term of 999 years from the date
of the auction. There is no such clause in the lease in the present case. The
decision upon which reliance had been placed does not support the case of the
respondents, because in the present case none of the clauses of the lease even
remotely suggest that on the completion of the building on the land demised the
lease in favour of the lessees would be both of the land and the building
On behalf of the appellants, on the other
hand, it was submitted that what was demised was actually the land and the
expression " to hold the premises " in cl. I meant nothing more than
to hold the demised premises. The ownership in the building to be constructed
did not pass on to the lessors under the lease. During the subsistence of the
lease the ownership of (1)  S.C.R. 185.
103 808 the building remained with the
lessees. The lessees con- tracted to hand over the building without
compensation at the end of the lease and in consideration for this the lessees
were being demised the land at a small rental of Rs. 50 per month. We have
examined the various clauses of the lease and are satisfied that not one of
them, if properly construed, indicates that there was any contract between the
parties to the effect that the building to be erected on the land would be in
the ownership of the lessors and that the same would be deemed to have been
demised to the lessees along with the land.
It was next urged that even if there had been
no deinise of the building to be erected on the land possession of it could not
be given to the appellants until the lease had been determined, which in law,
could not be determined so long as the respondents could not be evicted from
the demised land of which they were tenants within the meaning of the Act. This
contention is without force as the provisions of the Act do not provide for the
continuation of a lease beyond the specified period stated therein. All that
the Act does is to give to the person who continues to remain in possession of
the land, although the period of the lease had come to an end, the status of a
That is to say, although the lease had come
to an end but the lessee continued to remain in possession without the consent
of the lessor, he would none the less be a tenant of the land and could not be
evicted save as provided by the Act.
It was then submitted that the appellants
could not get the declaration to the effect that they were entitled to the
rents and profits from the building which had been let out to several persons
by the respondents because they could not realise the same without entering
upon the land on which the building had been constructed. The appellants could
not enter upon the land for the purpose of collecting the rents without the
consent of the respondents as the latter were the tenants of the land. They
could only enter upon the land as provided for by the Act. The declaration
which the appellants see]<:, however, does not ask for a 809 declaration
that they are entitled to enter upon the land.
All that it seeks is that they are entitled
to the rents and profits of the building which had been let out to several
persons by the respondents. The appellants merely seek a declaration of their
right to collect the rents and profits from the building. As to how they
collect the same was their concern. There seems, therefore, to be no valid
objection in law to granting the relief sought by the appellants.
The original lessees were Moreshwar Kashinath
and Radhabai, wife of Ramakrishna Bhai Thakore. Apparently, these persons were
dead and the suit was filed against defendants I to 3 as heirs and legal
representatives of Radhabai and defendants 4 and 5 as heirs and legal
representatives of Moreshwar Kashinath Thakore. After the suit was filed it was
discovered that defendant No. 4 could not be served with a copy of the plaint
as she had died before the institution of the suit. Her name was accordingly
struck off as a defendant in the suit. It was conceded on behalf of the
defendants at the trial that the suit filed against the defendants on a cause
of action could not be dismissed merely because of the non-joinder of the legal
representatives of defendant No. 4 who was already dead at the institution of
the suit. In appeal, the learned Judges were of the opinion that it was not
necessary to decide this question because, in their opinion, the suit was bound
to fail on other grounds. Whatever other consequences may arise on account of
the failure of the appellants to implead the heirs and legal representatives of
defendant No. 4, it was conceded on behalf of the respondents at the trial that
the suit could not be dismissed merely because of this. It would have been
better if the heirs and legal repre- sentatives of defendant No. 4 had been
brought on to the record as defendants. It seems to us, however, that the suit
cannot be dismissed merely on this ground because the nature of the declaration
which the appellants sought could be granted even in the absence of the heirs
and representatives of defendant No. 4 being on the record.
Though the plaintiffs impleaded 5 persons as
defendants in the suit, the plaintiffs claimed a decree against the first
defendant 810 only in respect of the rents received by him from the tenants in
the building in question. There is no claim against the other defendants for
accounts in respect of the usufruct of the property. The correspondence
disclosed in the suit, which passed between the plaintiffs and the first
defendant, showed that it was only he who was in effective control of the
building. The suit was contested only by the first three defendants who appear
to be brothers and who claim to have continued in possession of the building
after the crucial date,] i. e., May 22, 1948. It is they who claimed protection
under the Act. Defendants 4 and 5, who were purported to be sued as representatives
of one of the joint lessees, do not appear to have taken any interest in the
building. After the suit, defendant No. 5 has remained ex parte throughout.
After the decree of the trial court, it is only the first three defendants who
preferred an appeal to the High Court. From all these considerations, it
appears that the 4th defendant or her heirs or legal representatives were not
necessary parties to the suit. The Court could, therefore, proceed with the
suit in their absence.
The appeal, accordingly, is allowed with
costs throughout and the decision of the High Court in appeal is set aside.
The appellants are entitled to a declaration
that the building constructed on the land demised under the lease, Ext. A,
belongs to the Mankeshwar Temple Trust and the -aid trust is entitled to
recover all the rents and profits from the, same and the respondents have no
right, title and interest therein since the expiration of the said lease.
The first respondent is directed to render an
account of the rents received by him from the tenants of the building from 23-5-48 and to pay to the appellants the amount found due, after accounting, with interest
at 6% per annum from 23-5-48 until payment. There will be an order of
injunction restraining the respondents, their agents and servants from
interfering with the collection of rents and profits by the appellants from the
tenants of the aforesaid building.