Jafferjee, A.A. V. Cyril De Zoysa

1953 Present: Gratiaen J. and H. A. de Silva J.

A. A. JAFFERJEE et al., Appellants, and CYRIL DE ZOYSA,
Respondent

S. C. 238-D. C. Colombo, 5430/L
 

Lessor and lessee-Improvements effected by lessee-Compensation.

(i) Under the general law, and subject to any agreement to the contrary, a lessee who has erected buildings with the lessor's consent or acquiescence has, upon the expiration of the lease, the option either of removing the materials affixed to the soil or of permitting ownership in them to pass to the owner of the land ; in the latter event, he must be compensated for the loss of his materials.

(ii) Under the terms of a contract of lease the lessee was entitled at his discretion to erect buildings on the leased property, and he agreed in that event " to yield up and surrender " such buildings to the lessor at the determination of the lease. The contract did not stipulate for the payment by the lessor of compensation for the buildings.

Held, that, at the determination of the lease, the lessor was entitled to take possession of the property, including the buildings, without payment of compensation. The lessee had in effect renounced his option (under the general law) either of removing the materials or of claiming compensation for them.

APPEAL from a judgment of the District Court, Colombo.

S. J. V. Chelvanayakam, Q. C., with N. Samarakoon, I. Perera and G. Candappa, for the plaintiffs appellants.

H. V. Perera, Q. C., with H. W. Jayewardene and D. R. P. Goonetilleke, for the 2nd defendant respondent.

Cur. adv. vult.

October 29, 1953. GRATIAEN J.-

The appellants are the executors and trustees of the late Abdulhussein Jafferjee who died on 1st September, 1946. By an indenture of lease PI dated 13th November, 1937, Jafferjee had leased an allotment of bare land situated in Galle Road, Colombo, to the Shell Company of Ceylon, Ltd., for a period often years commencing on 1st November, 1937. It is quite evident from the terms of the lease that the erection of substantial buildings on the land at the lessee's expense (but entirely at his discretion) was within the contemplation of both parties. In that connection, the lessee undertook inter alia :

"3. To pay the cost and charges for gas incandescent and/or for other illuminant used or consumed in the buildings that may be erected on the demised premises and to pay the water rate levied in respect of the said buildings.

" 4. Not to sell or dispose of any earth cabook clay gravel or sand from the said demised premises nor to excavate the same except so far as may be necessary for the erection of the said buildings.

" 5. From time to time well and substantially to repair and clean all new buildings" structures and erections which may at any time during the said term be erected on the said demised premises.

"7. At all times to observe fulfil and comply with the laws bye-laws rules and regulations of the Municipal Council of Colombo in respect of the sanitation of the City of Colombo and all the other requirements in regard to the occupation and use of the demised premises and the said buildings to be erected thereon and to keep the Lessor at all times indemnified against all prosecutions and fines for the breach of or non-compliance with any of the laws bye-laws or regulations of the said Municipal Council.

"9. At the determination of the tenancy to yield up and surrender to the said Lessor the demised premises with all the buildings that may be erected on the said demised premises and all the permanent fixtures that may be affixed thereon during the said term in good and tenantable repair and condition in accordance with the covenants hereinbefore contained. "

By a contemporaneous indenture of lease P2 (attested by the same notary) the lessee, with the lessor's consent, sublet the land to the respondent for the full term of the lease. P2 conferred and imposed on the respondent in

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