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PETITIONER: BASANT LAL (DEAD) BY LRS. & ANR.

       Vs.

RESPONDENT: THE STATE OF U.P. AND ANR.

DATE OF JUDGMENT25/09/1980

BENCH: FAZALALI, SYED MURTAZA BENCH: FAZALALI, SYED MURTAZA KOSHAL, A.D.

CITATION:  1981 AIR  170            1981 SCR  (1) 815  1980 SCC  (4) 430

ACT:      Transfer of  Property Act,  sections 108(h)  and  114A, scope and applicability of.

HEADNOTE:      The appellants  terminated the  lease of the suit lands by a notice dated 26th February, 1944 and allowed the lessee company "Narain  Das Lachman  Das Oil  Mill" time  till 30th June, 1944  for the  removal of machinery, stores, buildings and other constructions in terms of clause (6) of the lease- deed dated  2nd June,  1941. The company not only secured an order from  a Civil  Court forbidding  the  appellants  from ejecting  it,  but  applied  to  the  State  Government  for compulsory  acquisition  of  the  suit  land.  In  the  land acquisition proceedings,  the claim  of the  appellants "for the machinery,  stores, buildings  and  other  constructions made by  the lessee"  by virtue  of automatic vesting in the appellants in  terms of  clause (6)  of the lease-deed dated 2nd June,  1941 and also, pursuant to notice of termination, was negatived.  Having failed  before the District Court and the High Court to obtain the relief, the appellants obtained special leave of the Supreme Court.      Allowing the appeal, the Court ^      HELD: (1)  Although the  lessee continued  to remain in the premises  after the expiry of the notice terminating the lease, yet by force of the express recitals in clause (6) of the lease-deed  dated 2nd  June, 1941,  the buildings, etc., became the  property of  the lessors.  Therefore, after  the Government  acquired  the  property  it  was  bound  to  pay compensation to  the appellants  not only  for the  land but also for the buildings and structures thereon. [821H; 822A]      (2)  There   was  no   waiver  of  the  notice  by  the appellants. There  is no  reliable evidence  at all  in  the instant case  to show  the exact  date  when  the  rent  was accepted or,  at any  rate,  the  fact  that  the  rent  was accepted between  the 26th  February, 1944,  when the notice was sent,  and the  30th June,  1944, when  the Company  was asked to  vacate the premises. Besides there is a finding of fact that the Company was treated as a trespasser ever since 26th February,  1944, namely,  the date  when the notice was given and  that any  rent which  the appellants accepted was

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really not  rent but  mere compensation for wrongful use and occupation of the land. [819C-E]      (3) It is no doubt true that s. 114A of the Transfer of Property Act  requires two conditions to be fulfilled before a suit  for ejectment  could lie-(i) that a notice should be given  to   the  lessee  specifying  the  particular  breach complained of,  and (ii)  that the  lessee should  be called upon to remedy the 816 breach. If  these conditions  are fulfilled,  then alone the lessor would  be entitled  to bring  a suit for ejectment of the lessee. Section 114A merely bars a suit for ejectment of the lessee in the instant case as the land had been acquired for the  purpose of  the lessee,  namely, the  Company,  the question of  filing a  suit for  ejectment did  not arise at all. In  fact, the  lessees  themselves  filed  a  suit  and obtained injunction restraining the appellants from ejecting them before  the land  acquisition proceedings were taken in respect of  the land in dispute. Thus, the non-compliance of sub-s. (b)  of s.  114A is  of no consequence so far as this particular case  is concerned.  In the lease dated 2nd June, 1941, clause  (6) clearly  lays down that within four months after the expiry of the period of the lease the lessee would be entitled  to remove  the stocks  and machinery.  The last part of  that clause  also empowers  the lessor  to re-enter possession and acquire title to the buildings etc., that may be constructed by the lessee. [819H; 820B-D]      (4) A  construction of  clause (h)  of s.  108  of  the Transfer of Property Act clearly reveals that where there is a contract  contrary to the provisions of that section would not apply.  In the  lease dated  June 2,  1941, there is not only an  express clause  under which the lessee was entitled to remove  the stocks and materials within four months after the termination  of  the  lease  but  thereafter  there  was another stipulation that in case the lessee failed to do so, all the  buildings etc.  would become  the property  of  the lessor. [821A-B]

JUDGMENT:      CIVIL APPELLATE  JURISDICTION: Civil Appeal No. 1145 of 1970.      From the  Judgment and  Order  dated  8-4-1969  of  the Allahabad High Court in First Appeal No. 45/55.      Mrs. Rani Chhabra for the Appellant.      B. N.  Dikshit, O.  P. Rana and Mrs. Shobha Dikshit for the Respondent.      The Judgment of the Court was delivered by      FAZAL ALI,  J.-This appeal  by certificate  is directed against a  judgment dated  January 6,  1969 of the Allahabad High Court and arises in the following circumstances.      The land in dispute originally belonged to Smt. Jawahar Devi who  had inherited the same from her father Shankar Das who died  sometime in  or before the year 1905. Jawahar Devi had a  daughter Putli  Bibi  who  had  three  sons,  namely, Basantlal, Shankarlal  and Girdharilal. Jawahar Devi died in the year 1934.      On the  25th February  1905, Jawahar  Devi let  out the land to  the late Lala Lachman Das for the construction of a mill which  was known  as ’Narain Das Lachman Das Oil Mill’. The lease  was to  continue for  50 years  and  contained  a clause for  renewal. In the year 1936-37, the lessee Lachman Das transferred his rights in the 817

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lease to  Northern India Oil Industries Limited (hereinafter referred to as the ’Company’). Thereafter, the three sons of Putli Bibi  sent a  notice on  the 15th  of December 1937 to M/s. Narain  Dass Lachman  Dass claiming  damages.  At  that stage Girdharilal sold his rights in the land to his brother Basant Lal.  In the year 1938, a suit was filed by Basantlal and Shankarlal against M/s. Narain Dass Lachman Dass as well as the  Company. This  suit was, however, compromised on the 2nd of  June 1941  and on  the same  date a  fresh lease was executed by  the two  plaintiffs therein  in favour  of  the company. The  terms of  the lease  were incorporated  in the compromise  (Exhibit   31)  but   both  the  lease  and  the compromise were contained in unregistered documents.      Disputes again arose between the parties and led to the institution of  a suit  by the company against Basantlal and Shankarlal for  specific performance of the compromise above mentioned (Exhibit  31). This suit also ended on the 26th of May 1943  in a  compromise according  to which a fresh lease embodying the terms of the lease dated the 2nd June 1941 was to be  executed by Basantlal and Shankarlal in favour of the Company and  at its  cost within a week provided the company complied with  the covenants  contained in that lease to the satisfaction of  Rai Bahadur  Lala  Ram  Narain,  Treasurer, Imperial  Bank   of  India,   Kanpur.  Despite   the  second compromise disputes again cropped up between the parties and ultimately Basantlal  and Shankarlal, who are the appellants before us,  sent to  the company  a  notice  dated  26th  of February 1944 (Exhibit 36-A) terminating the lease dated the 2nd June  1941 on  the ground  of breach  by the  company of covenants 2,  4 and 5 contained therein. Time was allowed to the company  till the  30th June  1944 for  the  removal  of machinery, stores,  buildings and  other constructions.  The Company, however,  secured  an  order  from  a  civil  court forbidding the appellants from ejecting it.      On the  7th June 1946, the Company applied to the State Government for  compulsory  acquisition  of  the  land.  Its request was  accepted and  the land covered by the lease was acquired by  the Government  for the purpose of the company. In proceedings  before the  Collector the appellants claimed compensation  not  only  for  the  land  but  also  for  the buildings   and    other   structures    standing   thereon. Compensation for  the land  was awarded to them but the rest of their  claim was  turned down. The matter was re-agitated before the  District Judge  to whom it was referred and then in appeal  before the High Court. The District Judge and the High Court  raised the  quantum of compensation for the land but rejected the claim of the appellants for compensation in respect of buildings and structures. 818      In the  appeal before  us no dispute subsists about the compensation for  the land and the controversy is limited to the  compensation   for  the  buildings,  etc.,  which  were constructed on  the premises  by the lessee and to which the appellants claim  title on  the ground  that the company did not remove  the same  despite a period of more than 4 months granted to  it for  the purpose in the notice dated the 26th of February 1944 and that the title thereto had consequently vested in the appellants with effect from 1st July 1944.      Before  proceeding  further  we  may  recapitulate  the manner in  which the  present dispute  was dealt with by the two Courts below. It was argued before the District Judge on behalf of  the State  that the lease dated the 2nd June 1941 being unregistered  it was inadmissible in evidence and that the  Company,   therefore,  was  not  bound  to  vacate  the premises. The  District Judge overruled the argument (and in

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our opinion  rightly) on  the ground  that the  terms of the lease formed  part of the decree based on compromise Exhibit 31, that  the compromise  related to  the property which was the subject-matter  of the  suit and  that,  therefore,  the compromise did  not require  registration. The  argument was repeated before the High Court and was rejected for the same reason for which it was repelled by the District Judge.      Another point  taken before the District Judge was that as the  appellants had  accepted the rent after having given the notice  dated February  26, 1944, their conduct in doing so amounted to waiver of the notice as a result of which the tenancy continued  to subsist.  The District  Judge accepted this point  and non-suited  the appellants  mainly  on  this ground. The  High Court,  however, did  not agree  with  the conclusion of the District Judge and held that, in the first place, there  was no  evidence to  show that  the  rent  was accepted at  any time  after the  notice was  given  to  the company, and,  secondly, as  the rent  was accepted  by  the appellants under  protest, it  could not  amount  to  waiver because there  was no intention on the part of the lessor to treat the  lease as subsisting. In this connection, the High Court observed as follows:-           "We have  been taken  through  the  deposition  of      Basant Lal, but we have failed to find anything in that      statement which may go to show that rent for the period      beginning  after  the  termination  of  the  lease  was      accepted by him. All that he said was as follows:-           "Rent was  sent to  me and  I accepted  some  rent      under protest." 819           "From that  statement, it  cannot be said that the      rent so  accepted was  for the period after termination      of  the   lease.  There  is  another  sentence  in  the      statement of Basant Lal, which reads as follows:-                "’I treated  the defendant as trespasser from           26th February  1944 and  accepted payment  for use           and occupation of the land.’"           "The learned  District Judge,  therefore, was  not      right in taking the view that the notice was waived."      We find  ourselves in  complete agreement with the view taken by  the High  Court. There  is no reliable evidence at all to show the exact date when the rent was accepted or, at any rate,  the fact  that the  rent was accepted between the 26th February  1944, when  the notice was sent, and the 30th June  1944,  when  the  Company  was  asked  to  vacate  the premises. Furthermore,  the High  Court has pointed out from the evidence  of the appellants that the Company was treated as a  trespasser ever  since 26th February 1944, namely, the date when  the notice  was given  and has held that any rent which the  appellants accepted  was really not rent but mere compensation for wrongful use and occupation of the land. In these circumstances,  we fully  endorse the  finding of  the High Court  that there  was no  waiver of the notice such as was spelt  by the  District Judge.  The High Court, however, upheld the  order of  the District  Judge  for  a  different reason which  was that  there could not be any forfeiture of the tenancy  under s. 111(g) of the Transfer of Property Act unless a  notice was  given to  the  lessee  by  the  lessor expressing his  intention to  terminate  the  lease  and  in addition a  notice under  s.114-A of that Act also affording an opportunity  to the  lessee to comply with the terms, the non-compliance  of   which  would   result  in   forfeiture. According to the High Court, as the second condition was not complied with,  there was  no forfeiture and hence the title to the structures, etc., continued to vest in the lessee and

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therefore after  the Government  acquired the land under the Land Acquisition  Act, the  appellants were  not entitled to any compensation  for the  structures and  the materials  as claimed by  them. We  are, however, unable to agree with the view taken  by the  High Court for the reasons that we shall give hereafter.      It is  no doubt  true that  s. 114-A of the Transfer of Property Act  requires two conditions to be fulfilled before a suit  for ejectment  could lie-(1) that a notice should be given  to   the  lessee  specifying  the  particular  breach complained of, and (2) that the lessee should be called upon to remedy  the breach.  If these  conditions are  fulfilled, then alone  the lessor would be entitled to bring a suit for ejectment 820 of the  lessee. In  the instant  case, it is no doubt common ground that  in the  notice  dated  February  26,  1944  the appellants did  not at  all mention  that the  lessee should remedy the  breach within a reasonable period to be fixed by the lessor, but that does not advance the case of the lessee because s.114-A  merely bars  a suit  for ejectment  of  the lessee. In  the instant  case, as the land had been acquired for the  purpose of  the  lessee,  viz.,  the  Company,  the question of  filing a  suit for  ejectment did  not arise at all. In  fact, the  lessees  themselves  filed  a  suit  and obtained  an  injunction  restraining  the  appellants  from ejecting them  before the  land acquisition proceedings were taken in  respect of  the land  in dispute.  Thus, the  non- compliance  of   sub-section  (b)   of  s.114-A   is  of  no consequence so far as this particular case is concerned.      In the  lease dated  2nd June, 1941, clause (6) clearly lays down  that within  four months  after the expiry of the period of  the lease  the lessee would be entitled to remove the stocks  and machinery. The last part of that clause also empowers the lessor to re-enter possession and acquire title to the  buildings, etc.,  that may  be  constructed  by  the lessee.      Mr. Dixit,  appearing for  the State of U.P., relied on s.108(h) of the Transfer of Property Act which runs thus:           "108(h).   The   lessee   may   even   after   the      determination of  the lease  remove, at any time whilst      he is  in possession  of the  property leased,  but not      afterwards, all  things which  he has  attached to  the      earth, provided  he leaves the property in the State in      which he received it."      He contended that even if the lease was determined, the title to  the construction,  etc., would  vest in the lessor only if the lessee does not remove the materials at any time whilst he  is in  possession of  the property leased. It was argued that  in the  instant case,  as the  leased land  was acquired by  the Government  while the  lessee was  still in possession and  continued to  be in possession, by virtue of the land  having been  acquired, the  lessor could not claim any title to the constructions or the materials. There could be no doubt that this is the real effect of clause (h) of s. 108 but  s. 108  opens with  a sort of a non-obstante clause which is as follows:           "In the  absence of  a contract  or local usage to      the contrary,  the lessor  and the  lessee of immovable      property, as against one another, respectively, possess      the rights and are subject to the liabilities mentioned      in the  rules next  following, or  such of  them as are      applicable to the property leased." 821      A construction  of this  clause  clearly  reveals  that

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where there  is a contract to the contrary the provisions of s.108(h) would  not apply.  In the lease dated June 2, 1941, there is  not only  an express clause under which the lessee was entitled  to remove the stocks and materials within four months after  the termination  of the  lease but  thereafter there was another stipulation that in case the lessee failed to do so, all the buildings, etc., would become the property of the  lessor. In this connection, the relevant part of the lease may be extracted thus:-           "6. That  within four  months after  the expiry of      the period  of lease,  the lessees, their successors or      assigns will  be entitled  to remove  their stocks  and      machinery  etc.   pipelines,   electric   installation,      fixtures, fittings,  including stocks  and materials of      their constructions  and fittings  which stand  on  the      plot of  land shown  by the  letters A  F H  G  in  the      accompanying map  and will, on the expiry at the period      of lease have over to the lessors the said plot of land      (shown by letters A F H G in the accompanying map) duly      levelled but  the lessees  would  not  be  entitled  to      remove the  boundary  walls  or  any  constructions  or      buildings which  at present  are created,  which may be      created during  the period of lease on the plot of land      shown by  letters A  B E  F in the accompanying map and      which is  outside the compound of the lessees Oil Mills      on the  eastern side  and on  which  at  present  stand      twenty three  quarters facing  Hamirpur Road,  as their      quarters or  any other buildings that may be created in      their place  or on their site as well as boundary walls      would become  the property of the lessors on the expiry      of the  period of lease, without any compensation being      paid for the same by the lessors to the lessees."                                              (Emphasis ours)      Thus, although  the lessee  continued to  remain in the premises after  the expiry  of the  notice  terminating  the lease, yet  by force  of the  express recitals  in clause(6) extracted above, the buildings, etc., became the property of the lessors.  Unfortunately, this  aspect of the matter does not appear  to have  been considered  by the  High Court. In these   circumstances,    therefore,   the   conclusion   is inescapable that 822 after the  Government acquired  the property it was bound to pay compensation to the appellants not only for the land but also for the buildings and structures thereon.      As, however,  neither of the Courts below have assessed the compensation  for the  buildings, etc., as they stood in the year  1946 when  the land  was acquired, the matter will have to be determined by the District Judge afresh in so far as such  compensation is  concerned.  We  would,  therefore, allow this appeal with costs, set aside the Judgments of the High  Court   and  the  District  Judge  in  so  far  as  no compensation has  been awarded  in respect of the buildings, structures, etc.,  and remand the case to the District Judge for determining  such compensation  according to  the  rates prevailing in  1946 and  also to  determine the interest and solatium to  be paid on such compensation from 1946 upto the date of payment. S.R.                                         Appeal allowed. 823