Haridas Girdhardas & Ors Vs.
Varadaraja Pillai & ANR  INSC 207 (18 August 1971)
SIKRI, S.M. (CJ) SIKRI, S.M. (CJ) RAY, A.N.
CITATION: 1971 AIR 2366 1972 SCR (1) 291
Madras City Tenants Protection Act, 1921 (as
amended in 1955)--Applicability of s. 12 proviso.
The plaintiffs who were landlords leased to
defendant No. a plot of land in Madras under a duty registered lease deed dated
November 17, 1938 for a period of 15 years 3 months from March 1, 1939 at a
rent of Rs. 560 per month on the terms and conditions set out therein with an
option for renewal in favour of defendant No. 1 for a period of 10 years from
March 1, 1954 but at an enhanced rent of Rs. 630 per month, and subject to the
other stipulations except the clause for renewal. Under cl. 2 of the deed
defendant No. I was entitled to raise a cinema building and other structures at
a cost of not less than Rs. 50,000. Clause 4(d) provided that at the expiration
or sooner determination of the tenancy the lessors had the option of buying the
buildings in question for a slim of Rs. 50,000, less depreciation.
This option was to be exercised within one
week of the termination of the tenancy. Defendant No. 1 in accordance with the
stipulations in the lease deed constructed, a theatre oil the said plot and
exercised his option to renew the lease for a further period of 10 years from
March 10, 1954. Shortly before the expiry of The period of lease on March 1,
1964 the plaintiffs exercised the option of buying the buildings erected on the
demised land and sent by cheque to defendant No. I the amount of, Rs. 50,000
mentioned in cl. 4(d) of the deed, waiving their claim to deduction of
depreciation. Defendant No. I however refused to -accept the preferred sum. In
the consequent suit the question for determination was whether cl. 4(d) of the
deed could be enforced by the plaintiffs in view of the Madras City Tenants'
,Protection Act, 1921 as amended by the Amending Act of 1955.
HELD: The Madras City Tenants' Protection
Act, 1921 was passed in 1922 to give protection to certain classes of tenants
who had constructed buildings on others' land in the hope that they would not
be evicted as long as they paid fair rent for the rent. It was not the object
of the Act to cover a hope if the 'hope' was entertained contrary to express
stipulations as to erection of building.
Accordingly proviso to s. 12 exempted any
stipulations made by the tenant in writing registered as to the erection of
buildings in so far as they related to buildings erected after the date of the
contracts [296F-G] Clauses 2 and 4 of the lease deed amounted to a stipulation
as to the erection of buildings and consequently the proviso to s. 12 was
applicable to the case. Accordingly the plaintiffs were entitled to enforce cl.
4 (d) of the deed against defendant No. 1. [296A-B] Mylapore Hindu Permanent
Fund Ltd. v.K. S. Subraniania Iyer, A.I.R. 19 70 S.C. 1683 at 1691-92, applied.
292 N. Vajranani Naidu V. New Theatre
Carnatic Talkies,  6 S.C.R. 1015, referred to.
CIVIL APPELLATE JURISDICTION : Civil Appeal
No. 74 of 197 1.
Appeal from the judgment and order dated June
17, 1970 of the Madras High Court in O. S. Appeal No. 35 of 1967.
M. C. Chagla, R. V. Pillai and P. Kesava
Pillai, for the appellants.
K. Parasaran, K. Rajendra Chawdhary and Hari
Singh for respondent No. 1.
A. V. Rangam, for respondent No. 2.
The Judgment of the Court was delivered by
Sikri, C.J. This appeal is directed against the judgment of the Madras High
Court (Veeraswami, C.J., and Gokulakrishnan, J.) dismissing the appeal filed by
the plaintiffsappellants against the judgment and decree of Kunhamed Kutti, J.,
dated February 20, 1967, made in the exercise of the ordinary original civil
jurisdiction of the Madras High Court.
The plaintiffs had filed a suit on the
following allegations. The plaintiffs who were landlords leased to defendant
No. the plot of land on Mount Road, Madras, under a duty registered lease deed
dated November 17, 1938, for a period of 15 years 3 months from March 1, 1939
at a rent of Rs. 560/per month on the terms and conditions set out therein with
an option for renewal in favour of defendant No. 1 for a further period of 10
years from March 1, 1954 but at an enhanced rent of Rs. 630/per month, and
subject to the other stipulations except the clause for renewal.
For our purpose the -following clauses are
"2. The Leasee covenants with the
Lessors as follows (c) Within a reasonable period from the date hereof, at his
own cost and charges, under the supervision of the Lessors and in accordance
with plans, elevations,/ sections and specifications to be first approved by
the Lessors erect, cover in and complete in a substantial and workmen like
manner on the demised plot of land, a theatre with all proper 2 9 3 officers and
out buildings such as bazars, restaurants,, motor and dunamo sheds etc., and
fences, drains, sewers to be used for production and exhibition of films and
for staging Drama therein and to, expend in building such theatre a sum of not
less than Rs. 50,0001-. The Lessee shall be at liberty to put up other
buildings in addition to. the above.
(d) Not to have an entrance for the theatre
going public from the General Peters Road, so long as the Police authorities do
not permit such access from the said road.
(f) In the erection and completion of such
buildings to do all acts and things required by and perform the works
conformably in all respects with the provisions of the statutes applicable
thereto and with the by laws and regulations of the Corporation of Madras to
pay and keep the Lessors indemnified against all claims for the fees,, charges,
fines, penalties and other payments whatsoever which during the progress of the
works may become payable or be demanded by the said authoritarian in respect of
the said works or of anything done under the authority herein contained and
from time to time discharge and pay all claims, assessments, out goings now or
at any time hereafter chargeable against an owner by Statute or otherwise in
regard to the said plot of land or any buildings thereof, save and except the
property tax and quit rent levied on the demised plot of land which alone shall
be one by the Lessors..
(g) Not at any time to cause or permit any
public or private nuisance in or upon the demised plot of -land or anything
which shall cause unnecessary annoyance inconvenience or disturbance to the
Lessors' or to the occupiers of any adjoining or neighbouring premises or which
shall lead to interference by the Police or Local authorities and at all times
to comply with all Municipal and Police requirements.
(n) Not to install or cause to be installed
on the dimised land or any part thereof any petrol pump, without getting the
Lessor's previous permission in 294 writing and without providing sufficient
safeguards to the Lessors' neighbouring owners and their other tenants.
(o) Not to put up a compound wall on the
southern side of the demised plot but to put up only iron railings or bars with
a low wall' if necessary, not exceeding three feet in height." It was
further agreed between the lessor and lessee:
". (d) At the expiration or sooner
determination of the tenancy, the Lessors shall have the ,option of buying the
buildings to be erected on the demised land the basis of valuation being as
follows The buildings shall be valued at Rs. 50,0001irrespective of the actual
cost of construction and the Lessee shall allow a depreciation of 3 per cent
per annum, the period being calculated for the purpose of this valuation from
1st March, 1939. If within a week from such termination of tenancy the Lessors
do not signify their willingness to purchase the building or erections at the
aforesaid valuation from the Lessee, the Lesee shall within three months
thereafter remove and carry away any buildings or erections on the demised plot
of land and shall cause to be restored to its original or natural level state
and condition the demised plot of land." Defendant No. 1 in accordance
with the stipulations -in the lease deed, constructed a theatre on the said
plot ;and the same has been used for exhibition of cinema films by him.
Defendant No. I exercised the option of
renewal ,,of lease for the further period of 10 years from March 1, 1954 and
has been continuing in possession for a full further term of 10 years from
March 1, 1954 expiring with ,the month of February, 1.964.
In accordance with the terms of clause 4 (d)
of the lease deed, the plaintiffs exercised the option of buying the buildings
erected on the demised land by letter dated February 27, 1964 and sent along with
the full amount of Rs. 50,000/by cheque in payment for all the superstructures
without deducting any amount for depreciation, as provided in the said clause
of the lease deed, stating that 29 5 they had decided not to stand on their
strict legal rights to deduct depreciation but to pay the full price of Rs.
50,000/as the buildings had been maintained
and kept in good repair. Defendant No. I however, refused the sum of Rs.
50,0001and contended that the plaintiffs were
not entitled to claim any rights on the footing of clause 4 (d) of the lease
deed or to offer the sum of Rs. 50,0001as the price for purchasing the
superstructure put up by him on the land leased to him.
The question that arises before us is whether
the plaintiffs were entitled to enforce clause 4 (d) of the lease deed in view
of the Madras City Tenants' Protection Act, 1921, as amended by the Amending
Act of 1955.
This Court construed the said Act and its
various provisions in N. Vajranani Naidu v. New Theatre Carnatic Talkies(1) and
in The Mylapore Hindu Permanent Fund Ltd. v. K. S. Subramania Iyer(2). The
second decision was not before the High Court when the Letters Patent Bench
rendered its judgment. It seems to us that the case is covered by the judgment
in the Mylapore Hindu Permanent Fund case(2). In that case Vaidialingam, J.,
speaking for the Court, observed :
"Therefore, in our opinion, the decision
in Vajranani's case (supra) has been misunderstood. by the learned Judges of
the Letters Patent Bench and the said decision is no authority for the
proposition that the stipulation contained in the lease deed before us cannot
come within the proviso to section
12. The case before us is not one under which
the tenant has in any manner contracted himself out of the rights conferred on
him by the statute. On the other hand, by allowing the building to stand on the
property and agreeing to receive the amount of compensation provided for in the
lease deed, the object of the legislation is fully satisfied. It must also be
emphasized that the first part of Section 12 protects a tenant against the
deprivation or limitation of his rights under the Act and the rights conferred
by the Act do not directly relate to covenants relating to erection of
buildings." (1) 6 S.C.R. 1015. (2) A. 1. R. 1970 S. C. 1683 at
296 Considering the facts of that case this
Court held that clause 2, in the deed, read with clause 4, amounted to stipulations
as to the erection of buildings and, in this view the proviso to S. 12 applied.
We have set out the relevant clauses of the
lease deed in this case and it seems to us that these clauses amount to a
stipulation as to the erection of buildings and consequently the proviso to S.
Mylapore Hindu Permanent Fund case(1) was
sought to be distinguished by the learned counsel for the respondent on the
ground that in the present case the defendant was entitled to put up the
building beyond the value of Rs. 50,0001-. But clause 2 (c) of the lease deed,
set out above, clearly shows that the plaintiffs required "a theatre with
all proper offices and out buildings such as bazars, restaurants, motor and
dunamo sheds etc., and fences, drains, sewers to be used for production and
exhibition of films and for staging drama therein" to be erected. The
plaintiffs wanted to ensure that the cost of the building would not be less
than Rs. 50,0001in order that the building would be of a proper quality of
There is no evidence as to what other
buildings the defendant had put up. On these facts we cannot say that these
were not stipulations as to the erection of buildings within the meaning of the
proviso to S. 12.
It must be remembered that the Madras City
Tenants' Protection Act, 1921, was passed in 1922 to give protection to certain
classes of tenants who had constructed buildings on others' lands in the hope
that they would not be evicted so long as they paid a fair rent for the land.
It was not the object of the Act to cover a hope if the 'hope' was entertained
contrary to express stipulations as to erection of buildings. Accordingly
proviso to S. 12 exempted any stipulations made by the tenant in writing
registered as to the erection of buildings, in so far' as they related to
buildings erected after the date of the contract.
The plaintiffs-appellants applied for
amendment of their plaint dated April 15, 1964, by adding the following words
in the Prayer Clauses "(a) after the words : as from 1-3-1964 (1) A.I.R.
1970 S.C. 1683.
29 7 and direct the defendant No. 1 to
deliver possession to the plaintiffs of the sites leased out to the defendant
No. 1 under the aforesaid lease deeds and the buildings and superstructures
built thereupon in good and satisfactory condition." (b) Delete Prayer,
(b) and in its place substitute the following :
"That the defendants do pay the
plaintiffs the sum of Rs. 12,000 (twelve thousand) per month as mesne profits
for use and occupation of the buildings and superstructures built upon the
demised premises from 4-8-1968 " till possession is handed over to the
plaintiffs." We allowed the amendment to be made. The learned counsel for
the defendant objected to the prayer regarding mesne profits but as the
plaintiffs are limiting the mesne profits for use and occupation from August 4,
1968, i.e. three years before the date of the application for amending the
plaint, the defendant can have no just cause to complain.
In the result the appeal is allowed, the
judgments of the Single Judge and the Division Bench set aside and the suit
decreed in terms of prayers (a) and (b) as amended. The case will now go back
to the Trial Judge to determine the mesne profits for use and occupation from
August 4, 1968 till the possession is handed over to the plaintiffs in
accordance with law. The parties will bear their own costs throughout.
Possession will be handed over within six months from today. In the meantime
respondent No. 1 will not induct any tenant or other person or otherwise'
create any interest' in the property.
G.C. Appeal allowed.