Hitkarini Sabha, Jabalpur Vs. The
Corporation of The City of Jabalpur & Ors  INSC 140 (3 May 1972)
CITATION: 1972 AIR 2017 1973 SCR (1) 495 1972
SCC (3) 325
CITATOR INFO :
D 1991 SC 14 (7)
Land Acquisition Act 1894--Apportionment of
compensation--Unauthorised lease by Municipal corporation to local
College-lease deed Containing renewal clause-Since lease is ineffective renewal
clause cannot be taken into consideration for purpose of apportionment-Quantum of
compensation-This Court will not interfere when lower courts have taken all
factors into consideration.
The Municipal Corporation of Jabalpur
purporated to grant a leave of certain land to the appellant Sabha. According
to the document the period of lease was 30 years. The appellant was entitled on
the expiry of the lease to, have the same renewed on such terms and conditions
as might be agreed between the parties, The appellant made a college hostel on
the aforesaid land and had also used the attached ground as playground for
students. A portion of the said land was sought to be acquired by the State
Government under the Land Acquisition Act, 1894 for constructing the Home
Science College. The Collector of Jabbulpur by his award dated July 18, 1955
dealt with the claims filed by the appellant and the Municipal Corporation and
assessed the compensation at As. /8/- per sq. ft. Apportionment was made
between the appellant and the Corporation on the footing that the appellant was
not merely a tenant at will as contended by the Corporation but was a lessee
for the terms mentioned in lease. The appellant and the Corporation made
applications for reference under s. 18(1) of the Act.
The Additional District Judge held that the
price should be As. /10/- per. sq ft. and that the appellant and' the Municipal
Corporation were entitled to equal compensation.
The Corporation and the appellant filed
appeals to the High Court. The decision of the Addl. District Judge fixing the
price of the land As. /10/- per sq. ft. was affirmed. As regards the dispute
regarding apportionment the High Court held that the lease deed having been
exempted by the Administrator during the time when the Corporation stood
superseded was ineffective to convey the leasehold interest to the appellant.
However, the appellant was paying the rent which had been accepted for a long
time by the Corporation. there was thus a tenancy by necessary implication. The
High Court further held that the lease was to continue for the period of 30
years mentioned in the deed but there was no valid contract for renewal of
least-- because the clause relating to that was vague and uncertain.
The apportionment was made on acturial basis
between the appellant and the Corporation in the ratio of 1038 : 962.In appeal
before the Court the quest-ions relating to quantum of compensation and the
apportionment between the appellant and the Corporationfell for consideration.
HELD : (1) No lease could be spelt out of the
deed dated August 31, 1940 for a period of 30 years containing the renewal
clause. If th officer who executed the lease deed had no power to lease out the
property in question the grant of the lease was wholly null and void. It is
true that by the acceptance of rent from the appellant the relationship of landlord
and tennant came into xistence. But that did not show that a lease deed for a
period of 30 years with a renewal clause had come into existence. [497E] Since
the lease deed was ineffective the lease could be under the provisions of
section 106- of the 'transfer of 'Property Act, only from. mouth 494 to month
because the immovable property had not been leased out for agricultural or
manufacturing purpose in which case it would have been from year 'Lo year.
Therefore the :contention that the renewal clause was effective and should have
been taken into consideration while making the apportionment between the
appellant and the Corporation could not be accepted. (The question whether the
High Court was right in holding that the period of lease was 30 years was not
gone into because the Corporation had filed no appeal against that portion of
the decision. [497H] Dagdulal v. Municipal Committee, Burhar, (19'60) M.P.L.J.
627 and H. V. Ranan v. G. N. Gopat & Ors.
A. I. R. 1961 Mys. 29, referred to.
(2) The value which was fixed by the Addl.
District Judge and the High Court was fixed by reference to sales of plots of
comparable nature. There was no doubt that the High Court had taken all the
factors into consideration while as essing the value and there was no reason to
interfere in this regard. [499A-C] Raja Vyigheria Narayana Gajapatiraju v.. The
Revenue Divisional Officer Vizagapatam, 66 I.A. 104, referred to.
CIVIL APPELLATE JURISDICTION: Civil Appeals
Nos. 702 and 703 of 1967.
Appeals from the judgment and order dated
September 28, 1960 of the Madhya Pradesh High Court in Misc. First Appeals Nos.
12 and 16 of 1958.
M. C. Chagla, Rameshwar Nath and Swaranjit
Ahuja, for the appellant (in both the appeals).
S. T. Desai and D. N. Mukherjee, for
respondent No. 1 (in both the appeals).
I. N. Shroff, for respondents Nos. 2 and 3
(in C.A. No.
703 of 1967) and respondent No. 2 (in C.A.
No. 702 of 1967).
The Judgment of the Court was delivered by
Grover, J. These appeals which have been brought by cer- tificates from a
common judgment of the Madhya Pradesh High Court arise out of certain
The facts may be stated. Plots Nos. 670, 671
and 735 situate in Madan Mahal Extension area, Jabalpur were acquired by the
State Government under the Land Acquisition Act 1894, hereinafter called the
'Act', for constructing the Home Science College. In the present appeals we are
concerned mainly with Plot No. 670. On August 31, 1940, a deed of lease had
been executed on behalf of the Municipal Corporation granting a lease free of
premium to the Hitkarini Sabha, Jabalpur, which is the appellant before us.
The laese was in respect of 10 Acres of land
comprising Plot No. 670 and another strip of land measuring 0.621 Acres as
described in the deed and delineated in the plan annexed thereto. The period of
the lease was 30 years and the purpose for which the land was to be used was
for locating and running the Hitkarini City College. Amongst other terms and
conditions the, appellant was to pay a yearly rent of Rs. .5 / , for 1 0 acres
and Re. 1 / for the other strip of land besides, paying, and discharging all
rates and taxes-etc. The appellant, on the expiry of the lease, was entitled
495 to have the same renewed on-, such terms and conditions as might be agreed
between the parties. The appellant had built a, college hostel on the aforesaid
land and had also used the attached ground as playground for students.
The Collector of Jabalpur, by his award dated
July 18, 1955 dealt with the claims filed by the appellant and the Municipal
Corporation and after disposing of certain preliminary objections he assessed
the compensation for the lands in all the three plots at As.0/8/-per sq. ft.
According to the Collector the appellant was
not merely a lessee or tenant-at-will as contended by the Corporation but was a
lessee for the term mentioned in the lease-deed dated August 31, 1940, the
lease having been made for a specific purpose, i.e. for locating and running a
City College. As regards Plot No. 670 the apportionment was made between the
appellant The appellant and the Corporation were dissatisfied with the award of
the Collector. Applications for reference were made under s. 18 (1) of the Act.
The Additional District Judge held that the price should be 10 As. per sq. ft.
and that the appellant and the Municipal Corporation were entitled to equal
compensation for plot No. 670. The Corporation and the appellant filed appeals
to the High Court. The decision of the Additional District Judge, fixing the
price of the land at As. 0/8/- per sq. ft. was affirmed. As regards the dispute
regarding apportionment the High Court held, following a decision of a Division
Bench of the same court in Dagdulal v. Municipal Committee, Burhar(1), that the
lease deed having been executed by the Administrator during the time when the
Corporation stood superseded was ineffective to convey the lease hold interest
to the appellant. However, the appellant had been paving refit at the
stipulated rate which had been accepted for a long time by the Corporation. It
amounted, therefore, to the creation of a tenancy by necessary implication and
the relationship of landlord and tenant came into existence. On the character
of tenancy, whether it should be deemed to be from year to year or whether it
should be on terms contained in the lease deed, the High Court held that the
tenancy continued on the terms contained in the lease deed. The High Court then
proceeded to say :- "The lease deed in this case was executed on 31- 8
1940 and was for a period of thirty years. It was, therefore to remain in force
for 15 years more after the date of acquisition. There is a renewal clause
which has been already quoted above. The lessee is entitled for renewal
"on such terms and conditions as, may be agreed to between the
parties". It appears to. us that the clause (1) 1960 M. P. L. J. 627 496
is uncertain and vague and does not form a valid contract for renewal of the
lease. Normally in a covenant for renewal there is an express agreement that
the lease would be continued on the same terms and conditions subject to a
reservation that the rent way be enhanced under certain circumstances. In the
instant, case, ill the terms and conditions have been left to the agreement of
patties which may not take place at all. Although a renewal is contemplated no
terms on which it can be granted have been fixed between the parties. Under
section 29 of the Indian Contract Act such a contract cannot be enforced., It
has been held in Ramaswami v. Rjajagopala (I.L.R. I I Mad. 260) that a lease
whereby a tenant agreed to pay whatever rent the Landlord might fix was void
The apportionment was made on acturial basis
between the appellant and the Corporation in the ratio of 1038 : 962.
Before us two matters have been sought to be
raised. One relates to the quantum of compensation awarded by the learned
Additional District Judge and the other to the apportionment between the
appellant and the Corporation. We shall first deal with apportionment. It has
been argued that since the High Court had held that the tenancy continued on
the terms contained in the lease deed benefit should have been given of the
renewal clause also. The High Court had taken the view that that clause was
uncertain and vague and did not form a valid contract for the renewal of the
lease. Our attention has been invited to a judgment of the Mysore High Court in
H. V. Rajan v. C. N.Gopal & Others.(1) There the relevant portion of the
renewal clause was "lessee shall have the option of five years but subject
only to such terms and conditions as may be mutually agreed upon". It was
observed that ordinarily the renewal clause in a lease deed was an important
term of the agreement and the courts would be reluctant to ignore that clause
on the ground that it was vague unless on a reasonable construction no meaning
could be attached to it. An agreement to renew the lease, without more, must be
deemed to be an agreement to renew as per the original terms. Even if the
renewal provided was dependent on the agreement between the parties the clause
merely provided for an agreement on reasonable terms. If the parties could not
agree as to those terms the courts could step in.
In our judgment it is altogether unnecessary
to decide the true scope and effect of the renewal clause contained in the deed
executed on August 31, 1940. At the time the lease was executed (1) A.I.R. 1961
497 there used to be a Municipal Committee in
Jabalpur Apparently it became a Corporation later. The Committee was superseded
in-Charge of the Committee Jabalpur as also Secretary of the Municipal
Committee had signed the lease on behalf of that Committee. In the decision of
the Madhya Pradesh High Court in Dagdulal's(1) case the view had been expressed
that so long as Municipal Committee was not reconstituted the ownership of the
property stood transferred by operation of law to the State Government and
therefore the Administrator had no power whatsoever to sell the property which
had vested in the Government. The Additional District Judge had observed that
the lease deed had been executed in pursuance of a resolution which had already
been passed by the Municipal Committee. The High Court, however, found on the
evidence produced before the Additional District Judge that the final
resolution passed by the Municipal Committee was only for the grunt of a
license and not a lease to the appellant. The deed of lease, therefore, was,
held to be ineffective for conveying any lease-hold interest to it.
But still the High Court held that the
tenancy was to last for a period of thirty years.
We are wholly unable to comprehend how any
lease could be spelt out of the deed dated August 31, 1940 for a period of 30
years containing the renewal clause which has already been mentioned. If the
officer who executed the lease deed had no power to lease out the property in
question the grant of the lease was wholly null and void. It is true that by
acceptance of the rent from the appellant the relationship of landlord and
tenant came into existence between the parties but Mr. Chagla for the appellant
has not been able to show how a lease for a period of 30 years together with a
renewal clause could be held to have been created or to have come into
existence. It may be mentioned that we are not concerned with the period of 30
years which has already been taken into consideration by the High Court because
no appeal has beep filed on that point by the Corporation. The only matter
which requires determination is whether the High Court, while deciding the
question of apportionment, should have given due affect to the renewal clause.
In our opinion the High Court could riot have done so. If the so called deed of
lease dated August 31, 1940 was wholly ineffective and void for the purpose of
demising the land for a period of 30 years one could only look at the
provisions of the Transfer of Property Act for determining the term for which
the tenancy came into existence. Under s. 106 of that Act the ,tenancy, in the
present case, could be only from month to month because the immovable property
had not been leased out (1) (1960) M..P.L.J. 627.
498 for agricultural or manufacturing purpose
in which case the lease would have been from year to year. We are therefore
unable to accede to the contention that the renewal clause in the lease deed
dated August 31, 1940 was effective and should have been taken into
consideration while making the apportionment between the appellant and the
The next question relating to quantum can be
disposed of shortly. The sole criticism of Mr. Chagla is that the potential value
of the plot in question was not taken into consideration. It is true, as
pointed out in Raja Vyrigherla Marayana Gajapatiraju v. The Revenue Divisional
Officer Vizagapatam(1) that where the land to be valued possesses some unusual
or unique features as regards its position or its potentialities the court
determining the market value will have to ascertain as best as it can from the
materials before it what a willing vendor might reasonably expect to obtain
from a willing purchaser for the land in that particular position and with
those particular potentialities. It has been urged that Plot No. 670 had a
special situation or position in view of its size, locality, nearness to
business centre and the Madan Mahal Station.
But the value which was fixed by the
Additional District Judge and the High Court was fixed by reference to sales of
plots of comparable nature. The following portion of the judgment of the High
Court shows how the matter was dealt with "We may observe that the two
witnesses relied upon by the appellants purchased small plots at the rate of
Re. 1/- per sq. ft. As the map of the Wright Town Madan Mahal Extension area
produced by the Corporation before us shows, these plots are in a fully
developed lay out having roads and drains round about. We had asked the
Corporation to calculate how much area out of the acquired sites would be
required to be left open for roads and drains and they have calculated that
about 70,000 sq.
ft. would have to be left open for this pur-
pose. Obviously, therefore, it is only the remaining plot which would have
value as building sites. Besides leaving so much area open, costs will have to
be incurred in developing the roads, and drains for which the Corporation has
estimated the cost to be Rs.
8,500/-. Considering all these factors and
also calculating the built up area in the lay outs surroundings the acquired
land, we find that it is only eighty per cent of the land which can be sold as
On these calculations if the average price of
the plots sold in the locality is taken to be /12/- per sq. ft. the (1)66 I.A.
499 overall price of the acquired land
without roads and drains would work out to a little less than / 9/ per sq. ft.
To put the matter, in a different way, the value of / 10/ per sq. ft. found by
the Additional Judge would work out to a little over /12/- per sq. ft., if only
the area which could be built upon is considered saleable as building site.
We,therefore, find that the price at-/10/per
sq. ft. allowed by the Additional District judge, is not unreasonable; if
anything it errs on the generous side".
We have no manner of doubt that the High
Court had taken all the factors into consideration while assessing the value.
In the result the appeals fail and are
dismissed. There will be no order as to costs.