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PETITIONER: HARIDAS GIRDHARDAS & ORS.

       Vs.

RESPONDENT: VARADARAJA PILLAI & ANR.

DATE OF JUDGMENT18/08/1971

BENCH: SIKRI, S.M. (CJ) BENCH: SIKRI, S.M. (CJ) RAY, A.N. PALEKAR, D.G.

CITATION:  1971 AIR 2366            1972 SCR  (1) 291

ACT: Madras  City  Tenants Protection Act, 1921  (as  amended  in 1955)--Applicability of s. 12 proviso.

HEADNOTE: The plaintiffs who were landlords leased to defendant No.  a plot  of land in Madras under a duty registered  lease  deed dated  November 17, 1938 for a period of 15 years  3  months from  March  1, 1939 at a rent of Rs. 560 per month  on  the terms  and  conditions set out therein with  an  option  for renewal  in  favour of defendant No. 1 for a  period  of  10 years from March 1, 1954 but at an enhanced rent of Rs.  630 per month, and subject to the other stipulations except  the clause for renewal.  Under cl. 2 of the deed defendant No. I was entitled to raise a cinema building and other structures at a cost of not less than Rs. 50,000.  Clause 4(d) provided that  at  the  expiration or  sooner  determination  of  the tenancy  the lessors had the option of buying the  buildings in  question  for a slim of Rs. 50,000,  less  depreciation. This  option  was  to be exercised within one  week  of  the termination  of the tenancy.  Defendant No. 1 in  accordance with  the  stipulations  in the lease  deed  constructed,  a theatre oil the said plot and exercised his option to  renew the  lease for a further period of 10 years from  March  10, 1954.   Shortly before the expiry of The period of lease  on March 1, 1964 the plaintiffs exercised the option of  buying the buildings erected on the demised land and sent by cheque to  defendant No. I the amount of, Rs. 50,000  mentioned  in cl.  4(d) of the deed, waiving their claim to  deduction  of depreciation.   Defendant No. I however refused  to  -accept the preferred sum.  In the consequent suit the question  for determination  was  whether cl. 4(d) of the  deed  could  be enforced  by  the  plaintiffs in view  of  the  Madras  City Tenants’  ,Protection Act, 1921 as amended by  the  Amending Act of 1955. HELD:     The Madras City Tenants’ Protection Act, 1921  was passed  in  1922 to give protection to  certain  classes  of tenants who had constructed buildings on others’ land in the hope  that  they would not be evicted as long as  they  paid fair rent for the rent.  It was not the object of the Act to cover  a  hope  if the ’hope’ was  entertained  contrary  to express   stipulations   as   to   erection   of   building.

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Accordingly proviso to s. 12 exempted any stipulations  made by  the tenant in writing registered as to the  erection  of buildings  in  so far as they related to  buildings  erected after the date of the contracts [296F-G] Clauses 2 and 4 of the lease deed amounted to a  stipulation as to the erection of buildings and consequently the proviso to  s.  12  was applicable to  the  case.   Accordingly  the plaintiffs  were entitled to enforce cl. 4 (d) of  the  deed against defendant No. 1. [296A-B] Mylapore Hindu Permanent Fund Ltd. v.K. S. Subraniania Iyer, A.I.R. 19 70 S.C. 1683 at 1691-92, applied. 292 N.   Vajranani Naidu V. New Theatre Carnatic Talkies, [1964] 6 S.C.R. 1015, referred to.

JUDGMENT: CIVIL APPELLATE JURISDICTION : Civil Appeal No. 74 of 197 1. Appeal  from the judgment and order dated June 17,  1970  of the Madras High Court in O. S. Appeal No. 35 of 1967. M.   C.  Chagla, R. V. Pillai and P. Kesava Pillai, for  the appellants. K.   Parasaran,  K.  Rajendra Chawdhary and Hari  Singh  for respondent No. 1. A. V. Rangam, for respondent No. 2. The Judgment of the Court was delivered by Sikri, C.J. This appeal is directed against the judgment  of the  Madras  High  Court  (Veeraswami,  C.J.,  and   Gokula- krishnan, J.) dismissing the appeal filed by the plaintiffs- appellants  against  the  judgment and  decree  of  Kunhamed Kutti, J., dated February 20, 1967, made in the exercise  of the ordinary original civil jurisdiction of the Madras  High Court. The   plaintiffs   had  filed  a  suit  on   the   following allegations.   The plaintiffs who were landlords  leased  to defendant No.  the plot of land on Mount Road, Madras, under a duty registered lease deed dated November 17, 1938, for  a period of 15 years 3 months from March 1, 1939 at a rent  of Rs.  560/-  per month on the terms and  conditions  set  out therein  with an option for renewal in favour  of  defendant No.  1 for a further period of 10 years from March  1,  1954 but at an enhanced rent of Rs. 630/- per month, and  subject to  the  other stipulations except the clause  for  renewal. For our purpose the -following clauses are important. "2. The Leasee covenants with the Lessors as follows               (c)   Within a reasonable period from the date               hereof, at his own cost and charges, under the               supervision  of the Lessors and in  accordance               with   plans,   elevations,/   sections    and               specifications  to  be first approved  by  the               Lessors  erect,  cover in and  complete  in  a               substantial  and  workmen like manner  on  the               demised  plot  of  land, a  theatre  with  all               proper               2 9 3               officers  and  out buildings such  as  bazars,               restaurants,, motor and dunamo sheds etc., and               fences,   drains,  sewers  to  be   used   for               production  and  exhibition of films  and  for               staging  Drama  therein  and  to,  expend   in               building  such theatre a sum of not less  than               Rs. 50,0001-.  The Lessee shall be at  liberty               to put up other buildings in addition to.  the               above.

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             (d)   Not to have an entrance for the  theatre               going public from the General Peters Road,  so               long  as the Police authorities do not  permit               such access from the said road.               (f)   In  the erection and completion of  such               buildings  to do all acts and things  required               by  and perform the works conformably  in  all               respects  with the provisions of the  statutes               applicable  thereto and with the by  laws  and               regulations  of the Corporation of  Madras  to               pay  and keep the Lessors indemnified  against               all  claims  for the  fees,,  charges,  fines,               penalties and other payments whatsoever  which               during  the progress of the works  may  become               payable   or   be   demanded   by   the   said               authoritarian in respect of the said works  or               of  anything done under the  authority  herein               contained and from time to time discharge  and               pay all claims, assessments, out goings now or               at  any time hereafter chargeable  against  an               owner by Statute or otherwise in regard to the               said  plot of land or any  buildings  thereof,               save and except the property tax and quit rent               levied on the demised plot of land which alone               shall be one by the Lessors..               (g)   Not  at any time to cause or permit  any               public  or  private nuisance in  or  upon  the               demised plot of -land or anything which  shall               cause  unnecessary annoyance inconvenience  or               disturbance   to  the  Lessors’  or   to   the               occupiers  of  any adjoining  or  neighbouring               premises  or which shall lead to  interference               by the Police or Local authorities and at  all               times to comply with all Municipal and  Police               requirements.               (n)   Not to install or cause to be  installed               on the dimised  land  or any part thereof  any               petrol pump, without getting   the    Lessor’s               previous permission in               294               writing   and  without  providing   sufficient               safeguards to the Lessors’ neighbouring owners               and their other tenants.               (o)   Not  to  put up a compound wall  on  the               southern  side of the demised plot but to  put               up only iron railings or bars with a low wall’               if  necessary,  not exceeding  three  feet  in               height."               It  was further agreed between the lessor  and               lessee:               ". (d) At the expiration or sooner  determina-               tion  of the tenancy, the Lessors  shall  have               the  ,option  of buying the  buildings  to  be                             erected  on  the  demised  land  the basis  of               valuation being as follows               The buildings shall be valued at Rs.  50,0001-               irrespective    of   the   actual   cost    of               construction  and  the Lessee  shall  allow  a               depreciation  of  3 per cent  per  annum,  the               period  being  calculated for the  purpose  of               this  valuation  from 1st  March,  1939.   If               within a week from such termination of tenancy               the  Lessors do not signify their  willingness               to  purchase the building or erections at  the

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             aforesaid valuation from the Lessee, the Lesee               shall  within three months  thereafter  remove               and  carry away any buildings or erections  on               the demised plot of land and shall cause to be               restored  to  its original or   natural  level               state and condition the demised plot of land." Defendant No. 1 in accordance with the stipulations -in  the lease deed, constructed a theatre on the said plot ;and  the same  has been used for exhibition of cinema films  by  him. Defendant  No. I exercised the option of renewal ,,of  lease for  the further period of 10 years from March 1,  1954  and has  been continuing in possession for- a full further  term of  10 years from March 1, 1954 expiring with ,the month  of February, 1.964. In  accordance with the terms of clause 4 (d) of  the  lease deed,  the  plaintiffs exercised the option  of  buying  the buildings  erected on the demised land by letter dated  Feb- ruary  27,  1964 and sent alongwith the full amount  of  Rs. 50,000/-  by cheque in payment for all  the  superstructures without  deducting any amount for depreciation, as  provided in the said clause of the lease deed, stating that 29 5 they  had decided not to stand on their strict legal  rights to  deduct  depreciation but to pay the full  price  of  Rs. 50,000/as the buildings had been maintained and kept in good repair.   Defendant  No. I however, refused the sum  of  Rs. 50,0001- and contended that the plaintiffs were not entitled to  claim any rights on the footing of clause 4 (d)  of  the lease deed or to offer the sum of Rs. 50,0001- as the  price for purchasing the superstructure put up by him on the  land leased to him. The question that arises before us is whether the plaintiffs were  entitled to enforce clause 4 (d) of the lease deed  in view  of the Madras City Tenants’ Protection Act,  1921,  as amended by the Amending Act of 1955. This Court construed the said Act and its various provisions in N. Vajranani Naidu v. New Theatre Carnatic Talkies(1) and in  The  Mylapore  Hindu  Permanent  Fund  Ltd.  v.  K.   S. Subramania Iyer(2).  The second decision was not before  the High  Court  when  the Letters  Patent  Bench  rendered  its judgment.   It seems to us that the case is covered  by  the judgment  in the Mylapore Hindu Permanent Fund case(2).   In that case Vaidialingam, J., speaking for the Court, observed :               "Therefore,  in our opinion, the  decision  in               Vajranani’s    case    (supra)    has     been               misunderstood.  by the learned Judges  of  the               Letters Patent Bench and the said decision  is               no  authority  for the  proposition  that  the               stipulation contained in the lease deed before               us  cannot come within the proviso to  section               12.  The case before us is not one under which               the  tenant  has  in  any  manner   contracted               himself out of the rights conferred on him  by               the  statute.  On the other hand, by  allowing               the  building  to stand on  the  property  and               agreeing to receive the amount of compensation               provided for in the lease deed, the object  of               the  legislation is fully satisfied.  It  must               also  be  emphasized that the  first  part  of               Section  12  protects  a  tenant  against  the               deprivation or limitation of his rights  under               the Act and the rights conferred by the Act do               not  directly relate to covenants relating  to               erection of buildings."

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             (1) [1964]6 S.C.R. 1015.         (2) A. 1.  R.               1970 S. C. 1683 at 1691-92.               296 Considering  the  facts of that case this  Court  held  that clause 2, in the deed, read with clause 4, amounted to  sti- pulations as to the erection of buildings and, in this  view the proviso to S. 12 applied. We  have set out the relevant clauses of the lease  deed  in this case and it seems to us that these clauses amount to  a stipulation as to the erection of buildings and consequently the proviso to S. 12 applies. Mylapore  Hindu  Permanent  Fund case(1) was  sought  to  be distinguished  by the learned counsel for the respondent  on the  ground  that  in the present  case  the  defendant  was entitled  to  put up the building beyond the  value  of  Rs. 50,0001-.   But  clause  2 (c) of the lease  deed,  set  out above, clearly shows that the plaintiffs required "a theatre with  all proper offices and out buildings such  as  bazars, restaurants,  motor  and  dunamo  sheds  etc.,  and  fences, drains,  sewers to be used for production and exhibition  of films  and  for staging drama therein" to be  erected.   The plaintiffs  wanted to ensure that the cost of  the  building would  not  be  less than Rs. 50,0001-  in  order  that  the building  would  be  of a proper  quality  of  construction. There  is  no  evidence  as  to  what  other  buildings  the defendant  had  put up.  On these facts we cannot  say  that these were not stipulations as to the erection of  buildings within the meaning of the proviso to S. 12. It  must  be  remembered  that  the  Madras  City   Tenants’ Protection Act, 1921, was passed in 1922 to give  protection to certain classes of tenants who had constructed  buildings on others’ lands in the hope that they would not be  evicted so  long as they paid a fair rent for the land.  It was  not the  object  of the Act to cover a hope if  the  ’hope’  was entertained contrary to express stipulations as to  erection of  buildings.   Accordingly proviso to S. 12  exempted  any stipulations made by the tenant in writing registered as  to the  erection  of buildings, in so far’ as they  related  to buildings erected after the date of the contract. The  plaintiffs-appellants  applied for amendment  of  their plaint  dated April 15, 1964, by adding the following  words in the Prayer Clauses               "(a) after the words : as from 1-3-1964               (1)   A.I.R. 1970 S.C. 1683.               29 7               and  direct  the defendant No.  1  to  deliver               possession  to  the plaintiffs  of  the  sites               leased  out to the defendant No. 1  under  the               aforesaid  lease deeds and the  buildings  and               superstructures  built thereupon in  good  and               satisfactory condition."               (b)   Delete  Prayer,  (b) and  in  its  place               substitute the following :               "That the defendants do pay the plaintiffs the               sum of Rs. 12,000 (twelve thousand) per  month               as mesne profits for use and occupation of the               buildings  and superstructures built upon  the               demised   premises   from  4-8-1968   "   till               possession is handed over to the plaintiffs." We  allowed the amendment to be made.  The  learned  counsel for  the  defendant objected to the prayer  regarding  mesne profits but as the plaintiffs are limiting the mesne profits for use and occupation from August 4, 1968, i.e. three years before the date of the application for amending the  plaint, the defendant can have no just cause to complain.

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In  the result the appeal is allowed, the judgments  of  the Single  Judge and the Division Bench set aside and the  suit decreed  in  terms of prayers (a) and (b) as  amended.   The case  will now go back to the Trial Judge to  determine  the mesne  profits  for use and occupation from August  4,  1968 till  the  possession is handed over to  the  plaintiffs  in accordance with law.  The parties will bear their own  costs throughout.   Possession  will  be handed  over  within  six months  from today.  In the meantime respondent No.  1  will not  induct any tenant or other person or otherwise’  create any interest’ in the property. G.C.                                       Appeal allowed. 298