1951 Supreme(SC) 61

SUPREME COURT OF INDIA
 5th October 1951
H.J. KANIA C.J.I., PATANJALI SASTRI, S.R. DAS, CHANDRASEKHARA AIYAR AND BOSE JJ.
Collector of Bombay - Appellant
Versus
Municipal Corporation of the city of Bombay and others - Respondents.
Civil Appeal No. 44 of 1950
Advocates appeared
Shri C. K. Daphtary, Solicitor-General (Shri S. B. Jathar, Advocate, with him), instructed by Shri P. A. Mehta, Agent - for Appellant ; Shri N. C. Chatterjee, Senior Advocate (Shri N. K, Gamndia, Advocate, with him), instructed by Shri Ratnaparkhi Anant Govind, Agent-for Respondent.

Headnote:Article 144-Bombay City Land Revenue Act (1876), S. 8-Government by Resolution granting land to Corporation free of rent-statutory formalities not complied with-Corporation holding land for over 70 years free from rent.

       Bombay City Land Revenue Act (II of 1876), S. 8 Government by Resolution granting land to Corporation free of rent- Statutory formalities not complied with - Corporation holding land for over 70 years free from rent Assesment to land revenue-Legality-Estoppel by representation-Limitation Act, Art. 144-Evidence Act, S. 115- Transfer of Property Act, S. 53-A-Acquisition of right to exemption from assessment-Prerogative of

       CrOWD.. In 1865, the Government of Bombay, called upon the predecessor in title of the Municipal Corporation of the City of Bombay to remove its then existing fish and vegetable markets from the site required for the construction of a Boulevard. On the application of the then Municipal Commitsioner, Government granted the present site of the Crawford market. It was proposed that the site be "rented to the Municipal Commissioner" and it was suggested that "the annual charge of one pice per square yard be levied in consideration of the expense of filling in the ground." Qn December 19, 1865, the Government passed the following resolution :-

       "(I) Government approve of the site and authorise its grant.

       (2) The plans should be submitted for approval; but Government do not consider any rent should be charged to the Municipality as the markets will be like other public buildings, for the benefit of the whole community."

       Pursuant to the above Resolution, possession of the site was made over to the then Municipal Commissioner, but no formal grant was executed as required by Statutes 22 and 23 Vie. C. 41. The Corporation spent over rupees 17 lakhs in erecting and maintaining markets on this site. In 1940 the C()llector of Bombay, overruling the objection of the Corporation, assessed this site under S. 8 af the Bombay City Land Revenue Act, 1876, to land revenue rising from Rs. 7,500 to Rs. 30,000 per annum in 50 years. The Corporation thereupon sued for a declaration that the order of assessment was ultra vires and that it was entitled to hold the land for ever without payment of any assessment. Applying the principal of Ramsden v. Dyson1 the Bombay High Court held that the Government had lost its right to assess the land in question by reason of the equity arising on the fact of the case in favour of the Corporation and there was thus a limitation on the right of the Government to assess under S. 8 of the said Act. Government appealed to the Supreme Court against that decision.

       Held: (dimissing the appeal) (per Kania C.]., Das and Bose ]].) : By reason of the non-compliance with the statutory formalities the Govenment Resolution of 1865 is not an effeCtual grant of passing title in the land to the Corporation and is not also an enforceable contract. On the other hand, there is no doubt as to the existence of an intention on the part of the Government to make and on the part of the Corporation to take a grant of the land in terms of the Resolution of 1865 including an undertaking by the Government not to charge any rent. Both parties acted on the basis of that Resolution and the predecessor in title of the Corporation went into possession of this land pursuant to the Government Resolution of 1865 and, acting upon the said Resolution and the terms contained therein, the Corporation and its predecessor in title spent considerable sums of money in levelling the site and erecting and maintaining the market buildings and have been in possession of the land for over 70 years. The position of the Corporation and its predecessor in title was thus that of a person having no legal title but nevertheless holding possession of the land under colour of an invalid grant of the land in perpetuity and free from rent for the purpose of a market. Such possession not being referable to any legal title it was prima facie adverse

       1. (1886) L.R. I H.L. 129.

       to the legal title of the Government as owner of the land from the very moment the predecessor in title of the; Corporation took possession of the land under the invalid grant. This possession has. continued openly, as of right and unintcrru ptedly for over 70 ycars and the Corporation has acquired the limited title it and its predecessor in title had been prescribing for during all this period, that is to say, the right to hold the land in perpetuity free from rent but only for the purposes of a market in terms of the Government Resolution of 1865. There is no question of requisitioJl by adverse possession of the Governments prerogative right to levy assessment. What the Corporation has acquired is the legal right to hold the land in perpetuity free of rent for the specific purpose of erecting and maintaining a market upon the terms of the Government Resolution as if a legal grant had been made to it. The right thus acquired includes, as part of it, an immunity from payment of rent which must necessarily constitute a right in limitation of the Governments right to assess in excess of the specific limit established and preserved by the Government Resolution within the meaning of S. 8 of the Bombay Act II of 1876, there being for the purposes of this case no distinction between rent and revenue.

       Per Chandrasekhara A~ar J.-Right to levy assessment is a prerogative right of the Government and it is hard to conceive of a case where it could be said to be lost by adverse possession. In any case, the denial of the Government right to levy assessment in this case was only after March, 1938, and is therefore not for over a period of 60 years. On grounds of equity, however, the case of the Corporation must be held up. The accident that the grant was invalid does not wipe out of the existence of the representation of the fact that it was acted upon by Corporation. The requisition of title here is as a result of the law of limitation. It has nothing to do with any conduct on the part of the Corporation which can be said to have rendered the representation about non-liability to assessment of no legal effect or consequence. The invalidity of the grant does not lead to the obliteration of the representation. If the resolution can be read as meaning that the gran( was a rent-free land, the case would come strictly within the doctrine of estoppel enumerated in section 115 of the Evidence Act. Even otherwisc, if there was merely the holding out ofa promise that no rent will be charged in the future the Government must be deemed to have bound themselves to fulfil it.

       Per Patanjali Sastri J. (contra).-The principle of Ramsden v. Dyson1 cannot prevail against statutory requirements regarding disposition of property or making of contracts by Government. No question of estoppel by representation arises, as the Government made no representation of fact which it now seeks to deny. Nor can any case of estoppel by acquiescence by founded on the facts of the case as there was no lying by and letting another run into a trap. No right of exemption has been established either on the basis of equitable principles of part-performance or e&toppel by acquiescence. The right to levy land revenue is no part of the Governments right to property but a prerogative of the Crown and adverse possession of the land could not destroy the Crowns prerogative to impose assessment on the land. 1. (1886) L.R.I H.L. 129.Section 115-Estoppel by representation-Bombay City Land Revenue Act (1876), section 8-Government by Resolution granting land to land to Corporation free of rent-Statutory formalities not complied with-Corporation holding land for over 70 years free from rent-Assessment of land of revenue -Legality.

       Transfer of Property Act, S. 53 A-Part-performance.