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Report No. 108

2.3. Ahmed Yar Khan v. Secretary of State.-

The facts in this case1 are: The appellant's predecessor was a lessee from the Government of certain revenue yielding lands. He constructed a canal which passed through Government lands spending more than Rs. 8 lakhs. Government permitted the construction, because, considerable area of land would be rendered fit for cultivation and there would be an increase in Government revenue. The canal also passed through the lands of private parties who also agreed to the construction on certain terms as to compensation.

After the period of the current settlement had expired the Government gave by way of Inam, a large tract of land to the appellant's predecessor in recognition of his loyalty and good service. One of the terms of the grant was that the Government could take over the management of the canal for better administration. Government, however, passed orders taking over permanently the canal lands, and denied any proprietary right in the appellant to the canal lands. The Privy Council held:2

"Taking all the circumstances into consideration, having regard to the permanent character of the proposed work, the indefinite amount of the probable expense of construction and the fact that the Government encouraged the undertakers to acquire the necessary land where the line of the canal passed through property in private ownership, and also bearing in mind the view of the Government at the time, as appears from Government records, that the work might be constructed and maintained more economically by the Khans than by Government, and that it would be better to leave the settlement of the country in the hands of native Chiefs, it seems to be pretty clear that the Government must have intended the Khans to understand, and in fact must have led them to expect, that all the Government land required for the canal would be made over to them in proprietary right.

If the Government had intended that at the termination of the period of the then current settlement the Government land required and used for the canal should revert to the Government, it is difficult to suppose that the Government would have omitted to say so... or to make a provision for securing the transfer to them of the land acquired by the undertakers from private owners."

For arriving at this conclusion the Privy Council, relied on the following rule laid down in Ramsden v. Dyson, 1866 LR 1 HL 129 (170).

"If a man, under a verbal agreement with a landlord for a certain interest in land, or, what amounts to the same thing under an expectation, created or encouraged by the landlord that he shall have a certain interest, takes possession of such land, with the consent of the landlord, and upon the faith of such promise or expectation, with the knowledge of the landlord and without objection by him, lays out; money upon the land, a court of equity will compel the landlord to give effect to such promise or expectation."

The Privy Council also held3 that, upon the expiration of the period of the settlement for which the lease of the bar-barini lands had been granted, Government made a grant to the appellant's predecessor at a moderate assessment of a tract of land in full proprietary right and in the deed of settlement, Government stipulated that they had the right when necessary in the management of the canal. This however did not give the Government a right to seize and confiscate the canal.

On the facts of the case, the appellant, under the Transfer of Property Act, 1882, would be entitled to a perpetual lease of the canal lands from the Government. But, perhaps, because the Act was not in force at the time of the transaction, Lord McNaghten applied the Ramsden rule to give relief to the appellant. But the rule is the rule of Proprietary Estoppel and not of Promissory Estoppel. And Proprietary Estoppel had always a special status in the English Law.

1. (1901) 28 IA 211.

2. Ibid, p. 218.

3. (1901) 28 IA 211 (219, 220).

2.4. In this case,1 the appellant surrendered its own lands in favour of the Government in consideration of a lease of government lands in favour of the appellant on a nominal rent. After taking possession, the appellant spent enormous sums in making constructions. Twenty-seven years later, the respondent filed a suit claiming a large amount as arrears of rent and for a declaration that the lease, if any, was determined. The High Court modified the decree of the trial court in favour of the respondent. The High Court allowed the parties to redefine their rights, namely, the appellant's right to a leasehold and the respondent's right to a reasonable rent. In the course of the judgment, Sir Lawrence Jenkins, C.J., referred to the Ramsdek, rule and observed that the 'Crown comes within the range of this equity'. A perusal of the judgment, however, shows that the learned Chief Justice did not give any relief to the appellant by, applying the rule.

The learned Chief Justice noted that the parties were the Municipality and the Government, both interested in public welfare, and that the controversy between them should not be allowed to become 'acute', and that the suit was really not for eviction of the appellant but was only for rent and for ascertaining the right of the parties. In fact, the decree of the High Court was that the Municipality should hold the land on an agreed rent and that if the Municipality did not cooperate, there would be as decree for eviction in favour of the respondent. This judgment can, by no stretch of imagination, be understood as applying even the rule of proprietary estoppel let alone the doctrine of promissory estoppel.

1. 1905 ILR 29 Bom 580.

2.5. The facts which gave rise to this case,1 were that in 1865 the Government of Bombay called upon the predecessor in title of the Municipal Corporation of Bombay to remove old markets from a certain site and vacate it and on the application of the Municipal Commissioner the Government passed a resolution approving and authorising the grant of another site to the Municipality. The Municipal Corporation gave up the site on which the old markets were situated and spent a sum of Rs. 17 lakhs in erecting and maintaining markets on the new site. In 1940, the Collector of Bombay assessed the new site to land revenue and the Municipal Corporation thereupon filed a suit for a declaration that it was entitled to hold the land for ever without payment of any assessment.

The majority of the Judges of the Supreme Court held that the Government was not, under the circumstances of the case, entitled to assess land revenue because the Municipal Corporation had taken possession of the land in terms of the Government resolution and has continued in such possession openly, uninterruptedly, and of right for over seventy years and thereby acquired the limited title it had been prescribing for during the period, that is to say, the right to hold the land in perpetuity free of rent. Only Chandrasekhara Iyer, J. while concurring with the majority, rested his decision, on promissory estoppel that the Government could not be allowed to go back on its representation. He seems to have misunderstood the reference to the Ramsden rule in the earlier case. He evidently thought that if in the earlier case, the Ramsden rule was applied it could be applied with greater force in the latter case. In doing so, he mistakenly called it 'promissory estoppel.'

1. AIR 1951 SC 469.

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