Shibsankar Nandy Vs. Prabartak Sangha
& Ors [1967] INSC 24 (1 February 1967)
01/02/1967 SIKRI, S.M.
SIKRI, S.M.
HIDAYATULLAH, M.
VAIDYIALINGAM, C.A.
CITATION: 1967 AIR 1040 1967 SCR (2) 528
ACT:
West Bengal Non-Agricultural Tenancy Act (20
of 1949) s. 24- Conditions for applicability of section-Validity of section
with reference to Constitution of India, Art. 19(1)(f).
West Bengal Estates Acquisition Act (1 of
1954), s. 2(1)(i)- Non-Agricultural tenanr receiving rent from under-tenant-
Whether "intermediary."
HEADNOTE:
Respondent No. 1, a Society registered under
the Societies Registration Act, 1860, took to lease a piece of land part of
which was already leased to Respondents 2 and 3. Under the lease Respondent
No.1 was entitled to receive rent from Respondents 2 and 3. The latter
transferred the land held by them to the appellant. Respondent No.1 thereupon
filed an application claiming the right of transfer under s. 24 of the West
Bengal Non-Agricultural Tenancy Act, 1949. The trial Court and the appellate
court dismissed the application but the High Court, in revision, allowed it. By
special leave, the appellant came to this Court. It was urged on behalf of the
appellant : (i) that the terms of s.
24 of the aforesaid Tenancy Act were not
satisfied in the case, (ii) that s. 24 was ultra vires as the right of transfer
therein was based solely on the ground of vicinage and created an unreasonable
restriction on the guaranteed right of the appellant and respondents Nos. 2 and
3 under s.
19(1) (f) of the Constitution and (iii) that
Respondent No.
1 being only entitled to receive rent from
respondents 2 and 3 was an "intermediary" within the meaning of the
West Bengal Estates Acquisition Act and therefore all its rights vested under
the Act in the State of West Bengal.
HELD: (i) The Society was the immediate
landlord of the land in dispute. The said land was contiguous to the other land
in its actual possession, and was bona fide required by it for the expansion of
its educational institution. The purpose for which it was required was covered
by cls. (b) and (c) of s. 4 of the Tenancy Act. The terms of s. 24 of the Act
were therefore fully satisfied in the case. [562 B- E] (ii) The. object of s.
24 is to have an adjustment of the rights of landlords and tenants. The
consideration of the land being contiguous is not the sole consideration. The
principle of Bhau Ram v. B. Raijnath Singh's ease is not therefore attracted.
The restriction contained in s. 24 cannot by any means be treated as an
unreasonable restriction,, [565 D] Bhau Ram v. Baijnath Singh, [1962] Supp. 3
S.C.R. 724, distinguished.
Ram Sarup v. Munshi, [1963] a S.C.R. 858,
relied on.
(iii) Being itself a non-agricultural tenant
the 1st respondent was excluded from the definition of "intermediary"
by the terms of S. 2(1)(i) of the Estates Acquisition Act. [563 D-E]
CIVIL APPELLATE JURISDICTION : Civil Appeal
No. 1004 of 1965.
559 Appeal by special leave from the judgment
and order dated February 27, 1963 of the Calcutta High Court in Civil Rule No.
3723 of 1962.
D. N. Mukherjee and Dhurba Kumar Mukherjee,
for the appel- lant.
Sukumar. Ghose, for respondent No. 1.
The Judgment of the Court was delivered by
Shelat, J. This appeal by special leave relates to a plot of land admeasuring
about - 41 decimals situate within the municipal' limits of Chandernagore.
Respondent No.1 is a society registered under
the Societies Registration
Act, XXXI of 1860. Its objects as set out in clause 3(s) of its Memorandum
of Association inter alia are "to work, manage; develop, improve and
utilise properties and business for the promotion of education, art, science,
religion and charity or other useful objects." On March 23, 1941 one
Kashinath Seal, the owner of a large plot of land, granted a permanent lease of
the land in dispute out of the said plot in favour of respondents 2 and 3. By a
registered deed of lease dated September 29, 1944 he granted lease of the
entire plot of land including the land in dispute to one Motilal Roy for 99 years.
So far as the land in dispute is concerned, which as aforesaid was leased out
to respondents 2 and 3, the said Motilal Roy acquired under this lease only the
right of realising the rent. The said Motilal Roy was the founder of the 1st
respondent Association and was a mere benamidar thereof By a deed of
relinquishment dated March 14, 1953 he relinquished all his interest in the
said plot in favour of the 1st respondent Association. By a registered deed of
sale with a condition for reconveyance dated November 3, 1960 respondents 2 and
3 transferred the land in dispute to the appellant and handed over its
possession to him. On coming to know of this sale the 1st respondent
Association made an application claiming a right of transfer under section 24
of the West Bengal Non- Agricultural Tenancy Act, XX of 1949 on the ground,
that it was the immediate landlord in relation to that land, that the land in
question was contiguous to its other lands and that it required it for the
purpose of extension of the school conducted by it.
The Trial Court dismissed the application
holding that the land in dispute was not contiguous to the land in possession
of the 1st respondent Association. It however held that it was satisfied that
the 1st respondent Association required the said land bona fide for the purpose
of expanding its school. In an appeal against this order by the 1st respondent
Association the Additional District Judge set aside the finding of the Trial
Court holding that the land 560 in dispute was adjacent to the other land in
possession of the 1st respondent Association. But he held that the 1st
respondent Association was an "intermediary" within the meaning of
section 2(a) of the West Bengal Estates Acquisition Act, 1 of 1954; that
therefore its interests vested in the State of West Bengal on the extension of
the Act to Chandernagore after its merger in the State of West Bengal and
consequently respondent No.1 had no right to claim transfer and dismissed the
appeal. The 1st respondent Association thereupon filed a revision application
in the High Court under section 116 of the Code of Civil Procedure and Art. 227
of the Constitution.
Three contentions were raised before the High
Court on behalf of the present appellant: (1) that the first respondent
Association was. an "intermediary" within the meaning of S. 2(1)(i)
of the West Bengal Estates Acquisition Act and therefore all its right's vested
under that Act in the State of West Bengal; (2) that section 24 of the Non-
Agricultural Tenancy Act did not apply as (a) the land in dispute was not
contiguous, (b) that under proviso (b) to that section it must be established
to the satisfaction of the Court that such land was required for any of the
purposes specified in section 4 and that the courts below had not given any
finding as to their satisfaction and (3) that section 24 did not apply to a
case where an under- tenant transferred his rights to a third party as the
section applied only to a transfer by a tenant. The High Court repelled all the
three contentions and allowed the revision setting aside the order of dismissal
passed by the Trial Court and confirmed by the Additional District Judge.
Before us, Mr. Mukherjee besides reagitating
the aforesaid three contentions also raised a constitutional point as to the
invalidity of section 24 on the ground that it constituted an unreasonable
restriction on the right of the appellant and respondents 2 and 3 to hold
property.
Section 2(3) of the, West Bengal
Non-Agricultural Tenancy Act, defines a "landlord" to mean a person
immediately under whom a non-agricultural tenant holds. subsection 5 of that
section defines a "non-agricultural tenant-" as a person who holds
non-agricultural land under another person and is, or but for a special
contract would be, liable to pay rent to such person for that land. Section 3
provides that for the purposes of this Act there would be two classes of non-
agricultural tenants, namely, (a) tenants and (b) under- tenants. Sub-section 2
of section 3 defines a "tenant" as meaning a person who has acquired
from a proprietor or a tenure-holder a right to hold non-agricultural land for
any of the purposes provided in the Act and includes also the
successors-in-interest of persons who have acquired such a right. Sub-section 3
defines an "under-tenant" as meaning a person who has acquired a
right to hold non-agricultural land either immediately or immediately under a
tenant and includes also the successors-in-interest of persons who have
acquired such a right. Section 4 provides that a non-agricultural tenant may
hold non-agricultural land for (a) homestead or residential purposes,, (b)
manufacturing or business purposes or (c) other purposes, Section 7 deals with
incidents of non-agricultural tenancy and provides that if any non-agricultural
land has been held with or without any lease having been entered into by the
landlord and the tenant from before the commencement of the Transfer of
Property Act or if such land comprised in' any tenancy created after the
commencement of that Act has been held for a term of not less than twelve.
years without a lease in writing or if such land has been held for not less
than twelve years under a lease in writing but no period is specified therein
or if such land held under a lease in writing for a specified period continues
to be held with the express or implied consent of the landlord after the expiry
of such period and the total period for which such land is so held is not less
than twelve years or if the landlord has allowed pucca structures to be erected
on any non- agricultural land held under a lease in writing for a specified
period whether such structures have been erected before the expiry of the said
period or where such land continues to be held with the express or implied
consent of the landlord after the expiration of the. said period, during the
period such land so continues to be held, then the tenant holding such land
shall not be evicted by his landlord except on the ground that he has used such
land in a manner which renders it unfit for use for the purpose of the tenancy.
The. section further provides that the interests of such a tenant in the land
comprised in such tenancy are both heritable and capable of being transferred
and bequeathed in the same manner as the other immovable property of such
tenant. Section 23 provides that a transfer of non-agricultural tenancy or of
any portion or share thereof shall be made by a registered instrument but the
Registering Officer is not to accept for registration any such instrument
unless the sale price, or where there is no sale price its value is stated
therein and unless it is accompanied by a notice of such transfer on the
landlord who is not a party to the transfer. Section 24 runs as follows:-
"If the entire non-agricultural land in a non- agricultural tenancy is
transferred, the immediate landlord may, within four months of the service of
notice issued under section 23, apply to the court for such land .... to be
transferred to himself Provided that- (a) (b) the immediate landlord of the
non- agricultural tenant shall not have any right to purchase 562 unless the,
non-agricultural land...... so transferred is contiguous to any land in the
actual possession of the landlord and the court is satisfied that such land
.... is required for use by such landlord for any of the purposes specified in
section 4.
In view of the clear finding by the
Additional District Judge it can no longer be disputed that the land in
question is contiguous to the land in actual possession of the 1st respondent
Association. 'There is also no reason why the finding of the High Court that
the land is bona fide required by the 1st respondent Association for expansion
of its educational institution should be disturbed. The 'Trial Court held that
it was bona fide required by the 1st -respondent and though the Additional
District Judge did not expressly give any finding it appears as the High ,Court
has stated that fact was not challenged before him. 'The proviso to section 24
however requires that though such land may be needed bona fide the use for
which it is needed must be for any of the purposes set out in section 4. Since
the land is not required for a hostel or residential purpose of the 1st
respondent -or its employees it cannot fall under clause (a) but the case would
-seem to fall under clause (b) and in any event under clause (c). As aforesaid,
the objects of the 1st respondent are inter alia to promote education, arts
etc., by utilising, improving and developing properties and business. Since the
case of the 1st respondent is that it requires the land in question for
expansion of its educational -activities, the land in dispute is required for
its business purposes, -viz., to develop, improve its properties or in any
event for the "other purposes," viz., to carry out its educational
objects for which the land in its actual possession is being utilised. There is
therefore no ,difficulty in holding that clause (b) of the proviso is
satisfied.
The next question is whether section 24 of
the Act applies to 'the case of a transfer to a third party by the under-
tenant. Section 24 lays down that if non-agricultural land in a
non-agricultural tenancy is transferred the immediate landlord may within the
prescribed period apply for such land to be transferred to him, ,Counsel argued
that section 24 would apply only to a case of transfer .by a tenant and
therefore respondents 2 and 3 being the under-tenants a transfer by them in
favour of the appellant did not attract 'its provisions. The contention is
erroneous, for it does not take into account the special definition of a non-
agricultural tenant in section 3. That section is contained in Chapter 11 which
is headed "Classes of Non-Agricultural Tenants." The section clearly
provides that there are two classes of non-agricultural tenants, (a) tenants
and (b) under-tenants and though sub-sections 2 and 3 define a tenant and an
under-tenant both the categories are tenants 'for the purposes of the Act.
Therefore respondents 2 and 3 though ,under-tenants must be regarded tenants of
the 1st respondent 563 Association for the purposes of the Act. Consequently,
when respondents 2 and 3 effected transfer of their rights in the land in
dispute in favour of the appellant they were bound to give notice thereof to
the 1st respondent and on such transfer being made the 1st respondent was
entitled to apply for the land to be transferred to it. It is true that by
reason of the perpetual lease in favour of respondents 2 and 3 in respect of
the land in dispute the first respondent Association had only the right of
receiving rent from them but that makes no difference to the position that the
first respondent' war,, the immediate landlord of respondents 2 and 3 in regard
to the land in question. Therefore there can be no doubt that both section 23
and section 24 were attracted to the transfer made by respondents 2 and 3 and
under section 24 the first respondent as their immediate landlord became
entitled to apply for transfer.
Counsel however contended that the first
respondent having merely the right to receive rent, it was an
"intermediary" within the meaning of Act 1 of 1954, that under that
Act the interests of such an intermediary vested in the State on the extension
of that Act to Chandernagore and therefore the Association had no locusstandi
to apply for transfer. This contention also cannot be accepted, for, an
"intermediary" as defined in s. 2(1)(i) of that Act means "a
proprietor, tenure-holder, under-tenure holder, or any other intermediary above
a raiyit or a non-agricultural tenant and in relation to mines and minerals, a
lessee or a sub- lessee........ It is thus obvious that the 1st respondent
being itself a non-agricultural tenant in respect of the entire land including
the land in dispute it does not fall within this definition. Not being thus an
intermediary it is impossible to say that its interests in the land in dispute
vested in the State or that therefore it was not entitled to apply under
section 24.
Mr. Mukherjee then raised a further
contention which though not argued in the High Court we allowed him to urge, as
it was. purely a question as to the constitutional validity of section 24. The
contention was that the right of transfer enacted in that section was founded
solely on the consideration of vicinage and therefore constituted an unreasonable
restriction on the guaranteed right of respondents 2 and 3 and the appellant
under Art. 19(1)(f) of the Constitution. In this connection he relied upon Bhau
Ram v. Baijnath Singh(1) where by a majority judgment this Court struck down
section 10 of the Rewa State Pre-emption Act, 1946. That section provided for
pre-emption on the ground of vicinage and it was held that such a restriction
on the right of the vendor to sell 'his property to a purchaser of his choice
at a price settled between them was unreasonable. It was observed that besides
there being no advantage to the general public from such a law, the real reason
(1) [1962] Supp. 3 S. C. R. 724.
2Sup. Cl/67-7 564 behind a law of pre-emption
on the basis of vicinage was to prevent strangers, i.e., people belonging to
different religion, race or caste, from acquiring property in any area
populated by a particular fraternity or class of people.
Such a proviso could not be considered
reasonable in view of the prohibition under Art. 15 of the Constitution of
discrimination only on the ground of religion, race, caste, etc. It may however
be observed that the Court in that decision considered certain provisions of
the Punjab -Pre-emption Act, 1913 and Berar Land Revenue Code, 1928 also and
refused to strike down certain provisions of those Acts where apart from
vicinage there - were other factors on the consideration of which the right of
pre-emption was enacted. The decision therefore is an authority only for the
proposition that where such a restriction is laid down exclusively on the
ground of vicinage it might be liable to be struck down as an unreasonable
restriction. This is illustrated by Ram Sarup v. Munshi(1) where section 15(a)
of the Punjab Pre-emption Act, 1913 , as amended by Act 10 of 1960 was held
valid on the ground that the restriction on the right of free allienation
imposed by that provision was intended to preserve the integrity of the village
and the village community and to implement the agnatic rule of succession and
that both of them were reasonable and calculated to further the interests of
the general public.
An examination of the different provisions of
the Act and its scheme shows that contiguity is not the sole consideration for
which section 24 was enacted. Chapter III of the Act deals with tenants and
confers on them diverse rights. Section 6 permits a tenant holding
non-agricultural land to erect pucca structures, to dig a tank and to fell,
utilise or dispose of the timber of any tree planted by such a tenant. Under
section 7 if the tenancy was created before the commencement of the Transfer of
Property Act or its origin is unknown or if created after the commencement of
that Act but the land is held thereunder for a period of 12 years or more or
where the tenancy is for a shorter term but the tenant has continued to hold
the land with the express or implied consent of the landlord and the period in
the aggregate is not less than twelve years such a tenant cannot be ejected
except only on the solitary ground that he has used such land in a manner which
renders it unfit for use for the purposes of the tenancy. Under that section
the interests Of such a tenant are made heritable and are capable of being
transfeffed or bequeathed in the same manner and to the extent as the other
immovable property of the tenant. Where any no agricultural land is held under
a lease in writing for a period of not less than 12 years, section 8 confers on
the tenant on the expiry of such period the option of successive renewals of
such lease on fair and reasonable conditions as to rent as may be agreed upon
between the parties or decided by the court in the absence of such agreement.
(1) [1963] 3 S. C. R. 858.
565 It further provides that such a tenant
cannot be ejected either during the term provided by the lease or during its
renewal except on the solitary ground that he has used such land in a manner
which renders it unfit for use for the purposes of such tenancy. Chapter IV of
the Act in like manner confers substantial rights on under-tenants. it is only
when a non-agricultural tenant transfers his rights in the leased land to a
third party that the provisions of sections 23 and 24 are attracted and in such
an eventuality the immediate landlord who has interest in such land and has
contiguous land in his actual possession is given the right to apply for the
transfer of such land in his favour provided the court is satisfied that such
land is required for any of the purposes set out in section 4. The scheme of
the Act clearly is to afford security of tenure to tenants and under tenants
even to the extent of making their rights transferable and heritable. It is
only when such land is sought to be transferred that the immediate landlord is
given the right to have it transferred to himself instead of to a third party.
These provisions clearly reflect the true object of the legislature in enacting
section 24. That object is to have an adjustment of rights of landlords and
tenants. The consideration of the land being contiguous is therefore not the
sole consideration as in the case of Bhau Ram v. B. Baijnath Singh.(1) The
restriction contained in section 24 cannot by any means be treated as an
unreasonable restriction. Consequently the contention as to the constitutional
invalidity of section 24 cannot be Accepted The appeal is dismissed with costs.
G.C. Appeal dismissed.
(1) [1962] Supp. 3 S.C.R. 724.
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