S.C.R. Dr. K. A. DHAIRYAWAN AND OTHERS v. J. R. THAKUR AND OTHERS (B. P. SINHA, JAFER IMAM and ,:i:. L. KAPUR JJ.) Rent Control-Lease of land for fixed period-Lessee construct- ing building on land-Covenant for delivery of possession of building to lessor on expiry of term of lease-Statute protecting lessee from eviction-If applies to covenant-Whether statute extends period of lease-Bombay Rents, Hotel and Lodging House Control Act; I947·
The lessors granted a lease of a parcel of land to the lessees for 21 years at a rent of Rs. 50 per month. Under the terms of the lease the lessees were to construct a double storeyed building on the land at a cost of not less than Rs. 10,000. The construc- tion had to be to the satisfaction of the lessors' engineers, and the buflding had to be insured for at least Rs. r2,ooo in the joint names of the lessors and the lessees with an insurance firm approved by the lessors. In case of damage or destruction the building was to be repaired out of the money received from the insurance company. On the termination of the lease either at the end of 21 years or earlier, the lessees were to surrender and yield up the demised premises including the building with its fixtures and appurtenances to the lessors without any compensa- tion for the same. After the expiry of the 21 years the lessors filed a suit for a declaration that they were entitled to the build- ing, and were entitled to claim possession of the same and to recover the rents and profits thereof.
The lessees pleaded that they were also lessees of the building and were protected from eviction therefrom by the provisions of the Bombay Rents, Hotel and Lodging House Control Act, 1947 and that the covenant
for delivery of possession of the building could not be enforced as the lease in respect of the land could not be terminated on account of the protection given by the Act. Held, that upon a proper construction of the lease there was a demise only of tlie land and not of the building and conse- quently the provisions of the Act did not apply to the contract for delivery of possession of the building. The ownership in. the building was with the lessees and in which the• lessors had no right while the lease subsisted. There was no absolute rule of law in India that whatever was affixed or built on the soil became pa:rt of it, and was subject to the same rights of pro- perty as the soil itself.
Nar~an Das Khettry v. Jatindra Nath Roy Chowdhury, (1926) 54 I.A. 218 and Vallabhdas N arranji v. Development Officer,. Bandra (!928) 56 I.A. ~59 followed. April z8. Dr. K. A. Dhairyawan
and others v. ]. R. Thakur and othtrs Imam]. [1959] Held, further, that the provisions of the Act did not provide for a continuation of the lease beyond the specified period stated therein. The Act merely gave to the lessee who continued in possession even after the expiry of the period of the lease the status of a statutory tenant and protected him from eviction. CIVIL APPELLATE JURISDICTION: Civil Appeal No.
192 of 1954. Appeal from the judgment and decree dated August 29, 1952, of the Bombay High Court in Appeal No. 79 of 1952, arising out of the judgment and decree dated June 27, 1952, of the said High Court exercising its
1' Ordinary Original Civil Jurisdiction in Suit No. 2325 of 1948. A. V. Viswanatha Sastri and Naunit Lal, for the appellants. L. K. Jha, Rameshwar Nath, S. N. Andley and P. L. Vohra, for the respondents.
1958. April 28. The Judgment of the Court was delivered by IMAM J.-The appellants, as trustees, of the Man- keshwar Temple Trust had filed suit No. 2325 of 1948 in the High Court of Bombay in its Ordinary Original
Civil Jurisdiction, for a declaration that they were entitled to the building in suit and were entitled to claim possession of the same and to recover the rents and profits thereof. The appellants further prayed
that the defendants may be ordered and decreed to obtain a letter of attornment from the tenants of the said property attorning to the appellants, that the first defendant may be ordered to render accounts of
the rents received by him from the tenants of the said property from May 23, 1948, and that pending the hearing of rtle suit a Receiver may be appointed of the property in suit. The appellants had obtained
leave of the High Court under 0. II, r. 2 of the Civil Procedure Code reserving to them liberty to file a separate suit with respect to the land on wl}ich the . building, was situated. The learned Judge who heard
the suit decreed it in part in favour of the appellants. He also p~ssed·an order of injunction restraining the . ' S.O.R. defendants 1, 2 and 5, their agents and servants, from interfering with the exercise of the right of the appel-
lants in obtaining possession of the building or other- n~:i,:a·w~~ wise effectuating their possession consistently with the and others provisions of law. He further directed the first
v. defendant to account for the rents recovered by him J. R. Thakur from and after May 23, 1948, till the date of the decree. and others He refused to grant the prayer that the defendants be
directed to obtain letters of attornment from the tenants of the building in favour of the appellants. Against this decision the defendants appealed and a Division Bench of the High Court allowed the appeal,
reversed the decision of the trial Judge and dismissed the suit with costs. On May 23, 1927, Krishnarao Ganpatrao and Sham- rao Ganpatrao, as trustees ofthe lVIankeshwar Temple, executed a registered lease, Exbt. A, in favour of
Moreshwar Kasinath and Radhabai, wife of Ram- krishna Bhai Thakore, whereby they demised a parcel of land specified in the Schedule to the document. The lease was for twenty-one years. The area of land
was about 213·66 square yards and the rent reserved was Rs. 50 per month. Under the terms of the lease the lessee had to construct within six months from the date of the lease a double storeyed building consisting
of shops on the ground floor and residential rooms on the upper floor. The cost of construction was to be not less than Rs. 10,000. The construction had to be to the satisfaction of the lessors' engineers. There
were certain restrictive covenants in the lease. The building had to be insured for at least Rs. 12,000 in the joint names of the lessors and the lessees with an in- surance firm approved by the lessors. If the building
was· damaged or destroyed it had to be repaired or restored by the use of the insurance money received from the insurance company. On the termination of the lease either at the end of twenty~one years or ear-
lier, the lessees were to surrender and yield up the demiseq premises including the building with its fixtures and appurtenances to the lessors without any compensation for the same. On May 14, 1948', shortly· •
before the lease was to expire; the appellant~ who 'vere Imam ]. [1959] then the trustees of the temple gave notice to the respondents to deliver possession of the demised pre- ~:·;,~~w~~
mises and the building on the expiry of the lease, that and others is to say, on May 22, 1948. On May 19, 1948, the v respondents replied that they were entitled to the J. R. Thakur
benefits of the provisions of the Bombay Rents, Hotel and othm and Lodging House Rates Control Act, 1947, herein- Imam ]. after referred to as the Act, and that the appellants were not to interfere with their possession.
All that they could get was the rent under the lease from the respondents. On July 23, 1948, the appellants gave the respondents notice to quit the building only as in their opinion the Act did not apply to it. On July 27,
1948, the respondents, replied asserting that the Act did apply to it. The appellants; accordingly, filed the present suit in the High Court on September 1, J.948. The period of the lease under Exbt. A having expired
and the respondents having been given notice to quit, they were bound to vacate the demised premises unless they were protected by . the provisions of the .Act_ Land used for non-agricultural purposes is "premises"
under the Act. Although the period of the lease had expired the respondents continued to remain in pos- session without the. assent of the lessors. Under the Act they would, therefore, be tenants of the land with-
in the meaning of that expression as defined in the Act. There can be no question that so far as the land demised by the lease is concerned the respondents could not be evicted so long as they complied with the
provisions of the Act and the lessors, as landlords, were unable to resort to any of the provisions of s. 13 of the Act. to evict the respondents from the land. Indeed, the appellants did not claim in the plaint that
they were entitled to evict the respondents from the demised land. The plaint, as drafted, confined the reliefs claimed by the appellants only to the building constructed on the land.
The substantial question in issue in this appeal is whether on a proper construction of the lease, ~xbt. A, it can bEl held that not only the land but also the • ·building to be constructed on it had been demised
under it. .Othor questions had also been raised in the . ' S.C.R. course of arguments. It was argued on behalf of the respondents that the appellants could not get posses- sion of the building until the lease had been determined.
Dr. K. A. Dhairyawan The lease could not be determined as under the law and others they could not be compelled to give up possession of v. the land demised under the lease as they were tenants
J. R. Thakur of the land within the meaning of the Act. A further and others submission maqe was that even if the lease did not purport to demise the building which was to be con-
structed on the land demised under that document, the appellants were not entitled to get a declaration to the effect that they were entitled to the rents and profits from the building which had been let out to several
persons by the respondents and the respondents could not be restrained from interfering with the collection of the rents and profits from the building by the a p- pellants so long as the respondents were in possession
of the land demised. It was also urged that the suit must at any rate fail on the ground that defendant No. 4 having died before the institution of the suit and her name being struck off from the category of defend-
ants and her legal heirs and representatives not having been brought on to the record the suit was bad on account of non-joinder of necessary parties. A perusal of the Schedule to the lease shows that
what was demised thereunder was a parcel of land of an area of about 213 square yards with New Survey No. 1/2600 cadestral survey No. 96. The Schedule leaves no room for doubt as to what was demised.
Under the terms of the lease the rent payable for this land was Rs. 50 per month. The terms of the lease show that the land was demised for the purpose of constructing a building thereon by the lessees. Clause
I of the lease may be quoted as the respondents have strongly relied upon this clause in suppott of their con- tention that what was demised under the lease was not only the land but also the building to be erected
thereon. This clause runs as follows: " Jn consid~ration of the Expenses to be incurred by the Lessees in and about the erection anq comple- tion of the building hereinafter mentioned and the •
rents hereinafter reserved and the Loosee'~ covenants Imam ]. [1959) hereinafter contained the Lessors do hereby demise UNTO the Lessees ALL that piece or parcel of land J;;~fr~aw~~
situated at Supari Baug I-toad, more particularly and othm described in the Schedule hereto and delineated in the v. plan thereof hereto annexed and marked "A" and J. R. Thak•" therein bounded by a red line TO HOLD the premises
and others unto the LESSEES for the term of 21 (twenty.one) Imam J. years to be computed from the date of these presents yielding and paying therefor on the 10th day of each and every Calendar month the first of such payments
to be made on 10th of June next, upon the terms and subject to the covenants and conditions hereafter con- tained:-" Another clause upon which reliance had been placed was cl. 6 which provides for the building to be erected
to be insured in the joint names of the. lessors• and the lessees with an insurance company approved by the lessors. It was pointed out that the building was to be handed over to the lessors at the end of the lease
without compensation to the lessees. We have examined the various clauses of the lease and find that in none of them has it been positively stated that the building to be erected on the demised
land would be in the ownership of the lessors and that the building would be deemed to have been leased to the lessees along with the demised land. Under the law there was no impediment in the way of the parties
to have had a clause, in a positive form, to that effect. In the absence of such a clause the various clauses of the lease, as they exist, will have to be construed in order to ascertain whether on a proper construction
thereof it can be said that there had also been a demise of the building. The Schedule to the lease, as already stated, specifically mentions that the land had been demised and 'there is no mention therein that the
building when constructed thereon would also form part of the demised property. In 1927 when the lease was executed the Act was not in existence and it may reasonably be said that none of the parties had ever in
Qontemplation that the Act or anything akin thereto • would become law in the future affecting the rights of the parties vnder the lease. The various clauses of the S.C.R. lease a:re consistent with the ownership in the building
being with the lessees in which the lessors had no right while<the lease subsisted. In the case of Narayan Das Khettry v. Jatindra Nath Roy Ohowdhury(1) the Privy Council approved the observations of Sir Barnes
Peacock in the case of Thakoor Ohunder Poramanick v, Ramdhone Bhuttacha1jee (2) to the following effect: "We have not been able to find in the laws or customs of this country any trac~s• of the existence of an
absolute rule oflaw that whatever is affixed or built on the soil becomes a part of it, and is subjected to the same rights of property as the soil itself." In the case of Vallabhdas Naranji v. Development Officer, Bandra( 3)
the Privy Council once again referred to Sir Barnes Peacock's observation as stated above. The Privy Coun'1il also quoted the following observation of Couch, 0. J., in the case of Narayan v. Bholagir (4):
" ……… We cannot, however, apply to cases arising in India the doctrine of the English law as to buildings, viz., that they should belong to the owner of the land. The only doctrine which we can apply is the doctrine
established in India that the party so building on another's land should be allowed to remove the materials." Normally, under s. 108 of the Transfer of Property Act, before the expiry of the lease, a lessee can remove
all structures and buildings erected by him on the demised land. All that was necessary for him to do was to give back the .land to the lessor, on the termina- tion of the lease, in the same condition as he found it.
The ownership, therefore, of the building in this case was not with the lessors but was with the lessees. Under s. 108 of the Transfer of Property Act there was nothing to prevent the lessees contracting to hand over
any building or structure erected on the iand by them to the lessors without receiving any compensation. In other words, although under s. 108 the lessees had the right to remove the building, by the contract t,hey
had ag.rned to hand over the same to the lessors with- out the right to receive compensation at the end of (I) (1926) 54 I. A. 218. (3) (1928) 56 I.A. 259: (2) 6 Suth. W. R. 228. (4)'6 Born. H.'C. (A .• C. J.) So.
Dr. 'J(. A. Dhairyawan ani others v. ]. R. Thakur and others Imam j, [1959] the lease, the matter being entirely one of contract between the parties. Such a contract, however, did
g;~ir~~:.~ not transfer the ownership in the building to the and others lessors while the lease subsisted. The various clauses of the lease in the present case J. R. Thakur make a clear distinction between the demised premises
and others and tl,e building by using the words " demised pre- v. mises inclnding the building to be erected thereon ''. It was, however, urged on behalf of the respondents that cl. 1 of the lease indicated that what was demised
by the lease was not only the land but also the build- ing to be constructed thereon, because the opening words of cl. 1 make it clear that in consideration of the expenses to be incurred by the lessees in erection
and completion of the building and the rent reserved the lessors demised to the lessees the land mentioned in the Schedule. The important words in this clause were " to hold the premises" and not to hold t.he
demised premises. The word " premises" covered both the land and the building to be erected thereon. The intention of the parties was that the premises would be held at a moderate rent of Rs. 50 per month as the
lessees were going to incur the expenses of erecting the building, maintaining it in proper repair and paying all taxes in connection therewith. In the course of 21 years the lessees would have not only received back
the money invested by them in the erection of the building but would have also enjoyed a large margin of profit. Under cl. 5, at ·the end of the lease, the premises held by the lessees, would be handed over to
the lessors that is to say, the land and the building erected on it without the lessors paying any compensa- tion for the building. Under cl. 6 the building was to be insured in the joint names of the lessors and the
lessees. In c:r. 9 of the lease the expression "the said demised premises" appears and this clause guaranteed to the lessees enjoyment of peaceful possession of the premises. This clause came after all the clauses referr-
ing to the building to be erected on the land. Jf els. l, 5, 6 and 9 were read together and properly constru- • ed, it would appear that the intention of the parties was that npt only the land demised but also the
' ' … S.C.R. building which was to be constructed on it was the subject of the lease, as that was th~ only purpose for which the land was given on lease. The~e clauses do not necessarily lead to the conclusion snggested. If
the ownership in the building was intended to· be with the lessors, there was no occasion for providing that the lessees would get no compensatfon when the build- ing was handed over. This provision rather suggests
that the ownership in the building was with the lessees. Oil behalf of the respondents. much reliance was placed on the decision of this Court in the case of Bhatia Co- operative Housing Society Ltd. v. D. 0. Patel (1). Many
of the terms of the lease in the case. cited were similar to the terms to be found in the lease in the present case. There was, however, cl. 18 of the lease in the case referred to, which expressly stated that immedia-
tely after the completion of the building within the time specified in cl. 7, the lessors of the land would grant to the lessees' a lease of the land with the building thereon for a term of 999 years from the date of the
·auction at a yearly rent calculated in ·accordance with the accepted bid. for the plot. There could be no question, a.s a matter of interpretation, in the case cited, that a lease would be granted not only of the
land but also of the building on it for a term of 999 years ·from the date of the auction. ' There is no such clause in the lease in the present case. The decision upon which reliance had been placed does not support
the case. of the respondents, because in the present . case none of the cla~ses of the . lease even ·remotely suggest that. on the completion· of the building on the land 'demised the lease in fa VOlll' of the lessees would
be both of the land and the building erected thereon. · On beh~lf of the appellants, on the other hand·; it was submitted that what· was demised was ~ctually ·the land and the expression " to hold the premiSes " in cl. l
meant nothing more than to .hold the demised pre- mises. The ownership in the building to be construct- ed · did hot pass on to the lessors under the lease. During the subsistence of the lease the ownership of .
(I) [.r953] S,C.R 1 85. Dr. K. A. Dhairyawan and· others v. ]. R. 1 hakur and others Imam]. Dr. K. A. Dhairyawan and others v. J·. R. 1 hal<ur and others Iniam .f. [1959] the building remained 'vith the lessees. The lessees con-
tracted to hand over the building without compensation at the end of the lease and in consideration for this the lessees were being demised the land at a small rental of Rs. 50 per month.
We have examined the various clauses of the lease and arc satisfied that not one of them, if properly construed, indicates that there was any contract between the parties to the effect that the
building to be erected on the land would be in the ownership of the lessors and that the same would be deemed to have been demised to the lessees along with the land. It was next urged that even if there had been no
demise of the building to be erected on the land posses- sion of it could not be given to the appellants until the lease had been determined, which in law, could not be determined so long as the respondents could not be
evicted from the demised land of which they were tenants within the meaning of the Act. This con- tention is without force as the provisions of the Act do not provide for the continuation of a lease beyond the
specified period stated therein. All that the Act does is to give to the person who continues to remain in possession of the land, although the period of the lease had come to an end, the status of a statutory tenant.
That is to say, although the lease had come to an end but the lessee continued to remain in possession with- out the consent of the lessor, he would none the less be a tenant-of the land and could not be evicted save as
provided by the Act. It was then submitted that the appellants could not get the declara;tion to the effect that they were entitled to the rents a,nd profits from the -building which had
been let out to seyeral persons by the respondents because th;y could not realise the same without enter- ing upon the land on which the building had been con- structed. The appellants could not enter upon the
land for the purpose of collecting the rents without the consent of the respondents as the latter \Vere the tenants of the land. They could only enter upon the land as provided for by the Act. The declaration
which the; ap]1ellants seek, however, does not ask for a 1 … s:c.R. SUPRE~iE COURT REPORTS declaration that they \!>re entitled to enter upon the land. All that it seeks is that they are entitled to the
rents andl profits of the building which had been let out to several persons by the respondents. The appel- lants merely seek a declaration of their right to collect the rent.s and profits from the building. As to how
they collect the same was their concern; There seems, therefore, to be no valid objection in law to granting the relief sought by the appellants: The original lessees were Moreshwar Kashinath and
Radhabai, wife of Ramakrishna Bhai Thakore. Appa- rently, these persons were dead andthe suit was filed against defendants I to 3 as heirs and legal representa- tives of Radhabai and defendants 4 and 5 as heirs
and legal representatives of Moreshwar Kashinath Thakortl. After th,e suit was filed it was discovered that defendant No. 4 could not be served with a copy of the plaint as she had died before the institution of
the suit. Her name was accordingly _struck off as a defendant in the suit. It was conceded on behalf of the·defendants at the trial that the suit filed against the defendants on a cause of action could not be dis-
missed merely because of the non-joinder of the legal representatives of defendant No, .4 who was already dead at the institution of the suit. In appeal, the learned Judges wer~ of the opinion that it was not
necessary to decide this question because, in their opinion, the suit was bound to fail on other grounds. Whatever other consequences may arise on account of the failu~e of the: appellants to implead the heirs and
legal representatives of defendant No. 4, it was con- ceded on behalf of the respondents at the trial that the suit could not be dismissed merely because of this. It would have been better if the heirs and legal repre-
sentatives of defendant No. 4 had been ,brQUght on to the record asdefendants: It_ seems to us,, however, that_ the suit cannot be dismissed merely on this ground because the nature of the declaration :which
the appellants sought could be granted everi iri the absence cif the heirs and representatives of defendant No. 4 being ()n ~he record. Though the pl11intiffs impleaded 5 persons a&_defeqP,ants in .. the suit, the
plaintiffs claimed a decree against the first defendant Dr.–K. A; Dhairyawan – and others v.- J. R. Tha!cur and others Imam ]. Dr. K. A. Dhairyawan · and others v. ]. R. Thakur and others
Imam ]. [1959] only in respect of the rents received by him from the tenants in the building in question. There is no claim against the other defendants for accounts in respect of the usufruct of the property. The correspondence
disclosed in the suit, which passed between the plain- tiffs and the first defendant, showed that it was only he who was in effective control of the building. The suit was contested only by the first three defendants
who appear to be brothers and who claim to have continued in possession of the building after the crucial date, i.e., May 22, 1948. It is they who claimed pro- tection under the Act. Defendants 4 and 5, who
were purported to be sued as representatives of one of the joint lessees, do not appear to have taken any interest in the building. After the suit, defendant No. 5 has remained ex parte throughout .. After the
decree of the trial court, it is only the first three defen- dants who preferred an appeal to the High Court. From all these considerations, it appears that the 4th defenda-nt or her heirs or legal representatives were
not necessary parties to the suit. The Court could, therefore, proceed with the suit in their absence. Tlie appeal, accordingly, is allowed with costs throughout and the decision of the High Court in
appeal is set aside. The appellants are entitled to a declaration that the building constructed on the land demised under the lease, Ext. A, belongs to the Man- kesh war Temple Trust and the said trust is entitled to
recover all the rents and profits from the same and the respondents have no right, title and interest there- in since the expiration of the said lease. The first respondent is directed to render an account of the
rents received by him from the tenants of the building from 23-5-48 and to pay to the appellants the amount found due, after accounting, with interest at 6% per annum from 23-5-48 until payment. There will be an
order of injunction restraining the respondents, their agents and servants from interfering with the collec- tion of rents and profits by the appellants from the tenants of the aforesaid building.
Appeal allowed .