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Report No. 70

46.11. Compensation-whose option.-

Although the language of section 51 might suggest that the choice of mode of compensation is of the person evicted, that is not the intention.1 The choice is of the person evicting2-3-4. This seems to be a point requiring clarification by express amendment in the section.

1. Famaiya v. Narayanaswamy, 51 MLJ 313.

2. Narayan v. Ganesh, AIR 1926 Born 599 (600).

3. See decree in AIR 1956 SC 727 (729), Narayan Rao Basavaraynppa.

4. Nagaratnamma v. Ramayya, AIR 1963 AP 177 (184), para. 18.

46.12. Amount.-

As to the amount of compensation, it has been decided by the Privy Council1 that the amount of expenditure has occasionally very little to do with the real issue, and that the real issue is to what extent enhancement of the subject-matter has been brought about. In other words, the real question is: Has the property as a marketable subject enhanced in value or not? In that case a temple built on the land did not enhance its marketable value and was not regarded as falling within section 51.

1. Kedar Nath v. Muthumal, ILR 48 Cal 555 (PC).

46.12A. Removal.-

This brings us to a connected question, namely, is the evicted person entitled to remove the materials which constitute the improvements? The answer could appear to be in the affirmative1-2 provided the land is not injured.

1. Hans Raj v. Somi, ILR 44 All 655.

2. Krishna Prasad v. Adyanath Ghatak, AIR 1944 Pat 77.

46.13. Estoppel.-

We must make a distinction between those improvements which involve an equitable estoppel and those which do not. Equitable estoppel goes far beyond the rule in section 51, because while section 51 merely puts the party on terms to pay compensation, estoppel may compel him to make good his representation. In the well-known case of Forbes v. Ralli Brothers, AIR 1925 PC 146, the defendant lessee raised a pucca building on a leasehold.

He purported to do so on the strength of the permission of the landlord, given by a letter which stated that the lease was a permanent one and gave to the lessee the right to erect buildings.

It was held that though the lessee was not entitled to hold the land at a fixed rate of rent and that the rent was liable to be enhanced after proper legal notice, yet a suit by the landlord for ejectment on the ground of construction of the pucca building was not maintainable by reason of estoppel arising on the letter written by the landlord.

46.14. Meaning of transferee.-

How does section 51 apply to a transferee from a transferee? A decision of a single judge of the Calcutta High Court1 is to the effect that a claim for improvements under section 51 can be made only by the first transferee, and not by his representative in interest. In the Calcutta case, these observations were made with regard to the argument relating to section 51:

"I had best state my construction of that section at once. If it was intended to provide for rights higher and wider than those that I shall now state, in my view, the section should be re-drafted. I will paraphrase it as follows: X has a right to compensation provided that he is (1) a transferee, (2) he has made such improvement, (3) he has made such improvement believing in good faith that he was absolutely entitled, and (4) he was evicted. In my view, the section does not provide for these various capacities or qualifications being filled or fulfilled, by different persons. It appears to me that it was intended to provide for a right to compensation to an individual who fulfils all the conditions laid down."

It is held in the Calcutta decision that such a right is neither heritable nor transferable and apart from section 51, there are no equitable principles under which the evictee can claim compensation. The actual decision in that can be supported on the ground that the defendant who claimed compensation was the purchaser of the property at a court sale so that he cannot claim to be a transferee within meaning of section 51 of the Transfer of Property Act.

But the reasoning goes beyond that, and would deny the benefit of section 51 to any transferee. The judgment gives a very mild hint of a need for reform of the law.

A different view was expressed in a Madras case,2 holding that section 51 applies to the subsequent transferee also. The Madras case dissents from the Calcutta case.

There are at least two Privy Council decisions3-4 in which compensation seems to have been awarded to the transferee's representative in interest. The first case was one in which a transferee from a Hindu widow without legal necessity effected permanent improvements. His successor-in-interest was allowed to claim compensation for the improvements made by his predecessor.

In the second case, the transferee who had effected improvements in good faith was succeeded by his heir and it was the heir who was awarded compensation for the improvements effected by his predecessor. Having regard to this position, it is desirable to take the opportunity of making it clear that the expression "transferee" in this section includes his successors in interests.

1. Nagendrabala v. Panchanan, AIR 1934 Cal 290,

2. Md. Basiruddin v. Govindroy, AIR 1971 Mad 44.

3. Bhagzvat Dayal v. Ram Ratan, AIR 1922 PC 91 (93).

4. Narayanan v. Rama Iyer, AIR 1930 PC 297 (300).

46.15. Recommendation-Amendments summed up.-

As a result of the above discussion, we recommend that the following propositions1 should be inserted in section 51:-

(a) "Good faith" in the section requires only honesty of purpose, and not proof of absence of negligence.2

(b) Invalid transfers, including invalid transfers by qualified owners, are covered.3

(c) The choice between the two modes of compensation is of the person evicting,4 and not of the person evicted.

(d) The expression 'transferee' includes successors in interest.5

1. For draft amendment, see para. 46,16, infra.

2. Para. 46.8, supra.

3. Paras. 46.9 and 46.10, supra.

4. Para. 46.11, supra.

5. Para. 46.14, supra.

46.16. Recommendation.-

In the light of the above discussion, we recommend the addition of the following Explanations to section 51:-

"Explanation 1.-In this section, "transferee" includes a person claiming under or through a transferee.

"Explanation 2.-In this section, the expression 'good faith' has the same meaning as in section 50.

Explanation 3.-A person who purports to derive title under a transfer which is not valid in law is a transferee within the meaning of this section.1

Explanation 4.-A person causing the eviction has the option of deciding whether the transferee should be entitled to have the value of the improvements estimated and paid for, or whether the transferee shall be entitled to require that person to sell his interest in the property to the transferee, as provided in this section."

1. Of course the other conditions of the section, including belief in good faith, must be satisfied.

The Transfer of Property Act, 1882 Back

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