1. Lease of open site for building construction — Ejectment action — Application by tenant to purchase land under Section 9, Madras City Tenants Protection Act, 1922. (Para 1 , 3 , 4 , 5 )
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1964 Supreme(SC) 61
SUPREME COURT OF INDIA
4th March, 1964.
P.B. GAJENDRAGADKAR, C.J.I., K.N. WANCHOO, J.C. SHAH, N. RAJAGOPALA AYYANGAR AND S.M. SIKRI, JJ.
N. Vajrapani Naidu and another, Appellants
Versus
New Theatres Carnatic Talkies Ltd., Respondent.
Civil Appeal No. 264 of 1962.
Advocates Appeared
Mr. A. V. Viswanatha Sastri, Senior Advocate, (Mr. R. Ganapathy Iyer, Advocate, with him), for Appellants; Mr. M. C. Setalvad, Senior Advocate, (M/s. M. A. Sattar Sayeed and R. Thiagarajan, Advocates, with him), for Respondent.
Advocates:
A.V.VISHWANATHA SASTRI, M.A.SATTAR SAYID, M.C.SETALVAD, R.Ganapathy Iyer, R.THIAGARAJAN
A.V.VISHWANATHA SASTRI, M.A.SATTAR SAYID, M.C.SETALVAD, R.Ganapathy Iyer, R.THIAGARAJAN
A registered stipulation to remove buildings and deliver vacant possession upon lease expiry is not a stipulation "as to the erection of buildings" under the Tenants Protection Act and does not preclude a tenant's statutory right to purchase the land.
Headnote:(A) Madras City Tenants Protection Act, 1922 - Sections 9 and 12 - Interpretation of "stipulations as to the erection of buildings" - A covenant in a registered lease that the tenant shall remove the building and deliver vacant possession on expiry of the lease is a stipulation relating to the building, but not a stipulation "as to the erection of building" - Such a clause does not deprive the tenant of the statutory right to purchase the land under Section 9. (Paras 6, 7)
(B) Constitution of India - Articles 19(1)(f) and 31(1) - Validity of Section 9 of the Tenants Protection Act - Provision allowing tenant to purchase land is a reasonable restriction in the interest of the general public to protect tenants and conserve building materials - Not an unreasonable restriction on the right to hold and dispose of property. (Para 8)
Facts of the case:
A lease of an open site was granted for a fixed term for the construction of a theater. The registered deed stipulated that upon termination, the lessee must dismantle the constructions and deliver vacant possession. Following the expiry of the lease and the initiation of ejectment proceedings, a tenants' protection act was extended to the municipal town. The lessee applied for an order directing the lessors to sell the site at a price fixed by the court.
Findings of Court:
The court held that the stipulation to remove buildings does not fall within the exception of "stipulations as to the erection of buildings" under Section 12 of the Act. Therefore, the tenant is entitled to the benefit of Section 9. The provision of the Act is constitutionally valid as it serves a public purpose. A dissenting view was held that a stipulation to demolish and deliver vacant possession is indeed a stipulation "as to the erection of buildings" and should preclude the tenant from statutory protection.
Issues: (1) Whether a registered stipulation to dismantle buildings and deliver vacant possession excludes a tenant from the right to purchase land under Section 9 of the Act; (2) Whether Section 9 of the Act infringes the fundamental rights under Articles 19(1)(f) and 31(1) of the Constitution.
Ratio Decidendi: The exception in Section 12 regarding "stipulations as to the erection of buildings" must be strictly construed. It encompasses restrictions on the size, nature, materials, or purpose of the building, but not the obligation to vacate and remove the structure upon the determination of the lease. Such a removal clause does not override the statutory right to purchase the land.
Result: Appeal dismissed.
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Table of Contents
2. Whether a registered stipulation to remove buildings and deliver vacant possession constitutes a stipulation as to the erection of buildings under Section 12, Madras City Tenants Protection Act, 1922. (Para 6 , 15 , 18 )
3. Analysis of Section 12 — Distinction between stipulations regarding the process of erection and stipulations regarding the removal of buildings upon termination of lease. (Para 7 , 16 , 19 , 20 , 21 , 22 , 23 , 24 )
4. A registered covenant to remove buildings and deliver vacant possession on lease expiry is not a stipulation as to the erection of buildings under Section 12. (Para 7 )
5. Appeal dismissed; tenant's right to purchase land under Section 9 upheld. (Para 10 , 25 , 26 )
6. Does a registered stipulation requiring a tenant to remove buildings and deliver vacant possession upon lease expiry constitute a stipulation as to the erection of buildings?
No. Such a covenant is a stipulation relating to the building but not one as to the erection of the building. It does not encompass the obligation to vacate and deliver possession without claiming statutory rights under the Act. (Para 7 )
7. Does Section 9 of the Madras City Tenants Protection Act, 1922, infringe upon the fundamental right to hold and dispose of property?
No. It does not impose an unreasonable restriction on the right to property as it protects tenants who constructed buildings in good faith and serves the general public interest by conserving building materials. (Para 8 )
8. Can a contract between a landlord and tenant limit the rights conferred by the Madras City Tenants Protection Act, 1922?
Generally, no. Section 12 provides that no contract shall take away or limit tenant rights, except for registered stipulations specifically relating to the erection of buildings constructed after the contract date. (Para 4 , 5 , 7 )
Judgment
SHAH, J. (for himself, Gajendragadkar C.J.I. and Sikri J.) :The appellant Vajrapani Naidu and his mother Bangarammal-hereinafter collectively called the lessors - granted a lease of an open site in the town of Coimbatore to Abirama Chettiar under a registered deed dated September 19, 1934, for 20 years at an annual rental of Rs. 1,080/- for putting up a building suitable for use as a theater. Abirama Chettiar constructed a theater on the site, and assigned his rights to the New Theater Carnatic Talkies Ltd., Coimbatore-hereinafter called the Company . The Company attorned to the lessors and was recognised as tenant under the lease dated September 19, 1934. On March 9, 1954 the lessors served a notice calling upon the Company to vacate and surrender vacant possession of the site, and the company having failed to comply with the requisition, the lessors commenced an action against the Company for a decree in ejectment and for mesne profits at the rate of Rs. 1,000/- per mensem from September 19, 1954. The Subordinate Judge at Coimbatore awarded to the lessors a decree for possession and mesne profits at the rate of Rs. 350/- per mensem and costs of the suit. Against the decree the Company preferred an appeal to the District Court at Coimbatore which was transferred for trial to the High Court at Madras. During the pendency of this appeal by G. O. No. 608 dated February 10, 1958, the State of Madras extended the MADRAS CITY TENANTS PROTECTION ACT 3 of 1922, as amended by Madras Act 19 of 1955, to the Municipal Town of Coimbatore. The Company then applied under S. 9 of the Act for an order directing the lessors to convey the site demised to the Company for a price to be fixed by the Court. Panchapakesa Iyer, J., directed that the lessors do sell to the Company the site in dispute under S. 9 of the MADRAS CITY TENANTS PROTECTION ACT , 1922, against payment of the full market value of the land on the date of the order, and further directed that the trial Court to appoint a Commissioner to fix the value of the site based on the market value prevalent on July 28, 1958. An appeal under Cl. 15 of the Letters Patent of the High Court against the order of Panchapakesa Iyer J., was dismissed. With certificate granted by the High Court of Madras, this appeal is preferred by the lessors.
2. Two questions fall to be determined in this appeal:
1. Whether the Company is entitled under S. 9 of the MADRAS CITY TENANTS PROTECTION ACT , 1922, notwithstanding the terms of the lease, to an order calling upon the lessors to sell the land demised under the deed dated September 19, 1934; and
2. Whether the terms of S. 9 of the Act infringe the fundamental right under Arts. 19 (1) (f) and 31 (1) of the Constitution, of the lessors, and S. 9 is on that account invalid.
3. It is necessary in the first instance to notice the material terms of the lease. The land demised under the lease was a vacant site situate in the municipal town of Coimbatore. The annual rent stipulated was Rs. 1,080/- and the period of the lease was 20 years from the date of delivery of possession of the site. The land was to be utilised for constructing buildings thereon for "purposes of Cinema, Drama, etc.". After the expiry of the term of 20 years stipulated under the deed the lessee had an option of renewal for another period of 20 years on fresh terms and conditions. The deed provided that "If after the termination of the stipulated period" x x x the lessees "fail to pay the arrears of rent that will fall due till that date and hand over possession of the site" to the lessors "after making it clear by dismantling the constructions therein and by demolishing the walls etc." the lessors "shall, besides realizing the arrears of rent due to them according to law, have the right to take possession through Court of the site in which the aforesaid buildings are put up after dismantling the constructions and demolishing the buildings therein". The other covenants of the lease are
