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PETITIONER: HITKARINI SABHA,  JABALPUR

       Vs.

RESPONDENT: THE CORPORATION OF THE CITY OF JABALPUR & OTHERS

DATE OF JUDGMENT03/05/1972

BENCH: GROVER, A.N. BENCH: GROVER, A.N. HEGDE, K.S.

CITATION:  1972 AIR 2017            1973 SCR  (1) 495  1972 SCC  (3) 325  CITATOR INFO :  D          1991 SC  14  (7)

ACT: Land     Acquisition     Act     1894--Apportionment      of compensation--Unauthorised lease by Municipal corporation to local  College-lease  deed Containing  renewal  clause-Since lease  is  ineffective renewal clause cannot be  taken  into consideration   for  purpose  of  apportionment-Quantum   of compensation-This Court will not interfere when lower courts have taken all factors into consideration.

HEADNOTE: The Municipal Corporation of Jabalpur purporated to grant  a leave of certain land to the appellant Sabha.  According  to the  document  the  period  of  lease  was  30  years.   The appellant  was entitled on the expiry of the lease to,  have the  same renewed on such terms and conditions as  might  be agreed  between  the parties, The appellant made  a  college hostel on the aforesaid land and had also used the  attached ground  as playground for students.  A portion of  the  said land was sought to be acquired by the State Government under the  Land  Acquisition Act, 1894 for constructing  the  Home Science  College.  The Collector of Jabbulpur by  his  award dated  July  18,  1955 dealt with the claims  filed  by  the appellant  and  the Municipal Corporation and  assessed  the compensation  at  As. /8/- per sq. ft.   Apportionment  was made  between  the  appellant and  the  Corporation  on  the footing  that the appellant was not merely a tenant at  will as  contended  by the Corporation but was a lessee  for  the terms mentioned in lease.  The appellant and the Corporation made  applications for reference under s. 18(1) of the  Act. The Additional District Judge held that the price should  be As. /10/-  per.  sq ft. and that the  appellant  and’  the Municipal  Corporation were entitled to equal  compensation. The Corporation and the appellant filed appeals to the  High Court.  The decision of the Addl.  District Judge fixing the price  of the land As. /10/- per sq. ft. was affirmed.   As regards  the dispute regarding apportionment the High  Court held  that  the  lease  deed having  been  exempted  by  the Administrator  during  the time when the  Corporation  stood superseded was ineffective to convey the leasehold  interest to  the  appellant.  However, the appellant was  paying  the

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rent  which  had  been  accepted for  a  long  time  by  the Corporation.   there  was  thus a  tenancy  by   necessary implication.  The High Court further held that the lease was to continue for the period of 30 years mentioned in the deed but  there  was  no valid contract for  renewal  of  least-- because the clause relating to that was vague and uncertain. The  apportionment  was made on acturial basis  between  the appellant and the Corporation in the ratio of 1038 : 962.In appeal before the Court the   quest-ions relating to quantum of compensation and the   apportionment between          the appellant and the Corporationfell for consideration. HELD  : (1) No lease could  be  spelt out of the deed  dated August  31,   1940 for a         period of     30      years containing       the     renewal clause.  If th officer  who executed  the  lease  deed had no power  to  lease  out  the property in question the grant of the lease was wholly  null and void.  It is true that by the acceptance of rent from the appellant the relationship of landlord and tennant  came into xistence. But that did not show that a lease deed for a period  of  30  years with a renewal clause  had  come  into existence. [497E] Since  the  lease deed was ineffective the  lease  could  be under  the  provisions of section 106- of the  ’transfer  of ’Pro@y Act, only from. mouth 494 to month because the immovable property had  not been leased out for agricultural or manufacturing purpose in which  case it  would  have  been from year  ’Lo  year.   Therefore  the :contention that the renewal clause was effective and should have   been  taken  into  consideration  while  making   the apportionment  between  the appellant  and  the  Corporation could not be accepted. (The question whether the High  Court was  right in holding that the period of lease was 30  years was  not  gone  into because the Corporation  had  filed  no appeal against that portion of the decision. [497H] Dagdulal  v. Municipal Committee, Burhar,  (19’60)  M.P.L.J. 627 and H.     V. Ranan v. G. N. Gopat & Ors.  A. I. R. 1961 Mys. 29, referred to. (2)  The value which was fixed by the Addl.  District  Judge and the High Court was fixed by reference to sales of  plots of  comparable  nature.  There was no doubt  that  the  High Court had taken all the factors into consideration while  as essing  the  value and there was no reason to  interfere  in this regard. [499A-C] Raja   Vyigheria  Narayana  Gajapatiraju  v..  The   Revenue Divisional Officer Vizagapatam, 66 I.A. 104, referred to.

JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeals Nos. 702 and 703 of 1967. Appeals from the judgment and order dated September 28, 1960 of  the  Madhya Pradesh High Court in Misc.   First  Appeals Nos. 12 and 16 of 1958. M.   C. Chagla, Rameshwar Nath and Swaranjit Ahuja, for  the appellant (in both the appeals). S.   T. Desai and D. N. Mukherjee, for respondent No. 1  (in both the appeals). I.   N.  Shroff, for respondents Nos. 2 and 3 (in  C.A.  No. 703 of 1967) and respondent No. 2 (in C.A. No. 702 of 1967). The Judgment of the Court was delivered by Grover,  J.  These appeals which have been brought  by  cer- tificates from a common judgment of the Madhya Pradesh  High Court arise out of certain acquisition proceedings.

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The  facts  may  be stated.  Plots Nos.  670,  671  and  735 situate  in  Madan  Mahal  Extension  area,  Jabalpur   were acquired by the State Government under the Land  Acquisition Act 1894, hereinafter called the ’Act’, for constructing the Home  Science  College.   In  the  present  appeals  we  are concerned  mainly with Plot No. 670.  On August 31, 1940,  a deed  of lease had been executed on behalf of the  Municipal Corporation  granting  a  lease  free  of  premium  to   the Hitkarini Sabha, Jabalpur, which is the appellant before us. The  laese was in respect of 10 Acres of  land  comprising Plot No. 670 and another strip of land measuring 0.621 Acres as described in the deed and delineated in the plan  annexed thereto.   The  period  of the lease was 30  years  and  the purpose  for which the land was to be used was for  locating and running the Hitkarini City College.  Amongst other terms and  conditions the, appellant was to pay a yearly  rent  of Rs. .5 / , for 1 0 acres and Re. 1 /  for the other  strip of  land  besides,  paying, and discharging  all  rates  and taxes-etc.   The appellant, on the expiry of the lease,  was entitled                             495 to  have the same renewed on-, such terms and conditions  as might  be  agreed between the parties.   The  appellant  had built  a, college hostel on the aforesaid land and had  also used the attached ground as playground for students. The Collector of Jabalpur, by his award dated July 18,  1955 dealt  with  the  claims  filed by  the  appellant  and  the Municipal   Corporation  and  after  disposing  of   certain preliminary objections he assessed the compensation for  the lands  in  all  the  three  plots  at  As.0/8/-per  sq.  ft. According  to the Collector the appellant was not  merely  a lessee or tenant-at-will as contended by the Corporation but was a lessee for the term mentioned in the lease-deed  dated August  31, 1940, the lease having been made for a  specific purpose,  i.e. for locating and running a City College.   As regards Plot No. 670 the apportionment was made between  the appellant The appellant and the Corporation were dissatisfied with the award  of  the Collector.  Applications for  reference  were made  under s. 18 (1) of the Act.  The  Additional  District Judge  held that the price should be 10 As. per sq. ft.  and that  the  appellant  and  the  Municipal  Corporation  were entitled  to  equal  compensation for  plot  No.  670.   The Corporation  and  the appellant filed appeals  to  the  High Court.   The  decision  of the  Additional  District  Judge, fixing  the price of the land at As. 0/8/- per sq.  ft.  was affirmed.   As regards the dispute  regarding  apportionment the  High  Court held, following a decision  of  a  Division Bench of the same court in Dagdulal v. Municipal  Committee, Burhar(1),  that the lease deed having been executed by  the Administrator  during  the time when the  Corporation  stood superseded was ineffective to convey the lease hold interest to  the appellant.  However, the appellant had  been  paving refit  at the stipulated rate which had been accepted for  a long  time by the Corporation.  It amounted,  therefore,  to the  creation of a tenancy by necessary implication and  the relationship of landlord and tenant came into existence.  On the character of tenancy, whether it should be deemed to  be from year to year or whether it should be on terms contained in  the  lease deed, the High Court held  that  the  tenancy continued  on  the terms contained in the lease  deed.   The High Court then proceeded to say :- "The lease deed in this case was executed on 31- 8 1940 and was  for  a period of thirty years.  It  was,  therefore  to remain  in  force  for  15 years  more  after  the  date  of

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acquisition.   There  is  a renewal clause  which  has  been already  quoted above.  The lessee is entitled  for  renewal "on  such terms and conditions as, may be agreed to  between the parties".  It appears to. us that the clause (1)  1960 M. P. L. J. 627 496 is  uncertain and  vague and does not form a valid  contract for  renewal  of  the lease.  Normally  in  a  covenant  for renewal there is  an express agreement that the lease  would               be continued on the same terms and  conditions               subject to a reservation that the rent way  be               enhanced under certain circumstances.  In  the               instant,  case, ill the terms  and  conditions               have  been  left to the agreement  of  patties               which  may not take place at all.  Although  a               renewal  is contemplated no terms on which  it               can  be  granted have been fixed  between  the               parties.   Under  section  29  of  the  Indian               Contract   Act  such  a  contract  cannot   be               enforced.,  It has been held in  Ramaswami  v.               Rjajagopala (I.L.R. I I Mad. 260) that a lease               whereby  a tenant agreed to pay whatever  rent               the   Landlord   might  fix   was   void   for               uncertainty". The  apportionment  was made on acturial basis  between  the appellant and the Corporation in the ratio of 1038 : 962. Before  us two matters have been sought to be  raised.   One one  relates to the quantum of compensation awarded  by  the learned  Additional  District  Judge and the  other  to  the apportionment between the appellant and the Corporation.  We shall  first  deal with apportionment.  It has  been  argued that  since  the  High  Court  had  held  that  the  tenancy continued  on the terms contained in the lease deed  benefit should have been given of the renewal clause also.  The High Court had taken the view that that clause was uncertain  and vague  and did not form a valid contract for the renewal  of the lease.  Our attention has been invited to a judgment  of the  Mysore  High  Court  in H. V. Rajan  v.  C.  N.Gopal  & Others.(1) There the relevant portion of the renewal  clause was "lessee shall have the option of five years but  subject only to such terms and conditions as may be mutually  agreed upon".   It was observed that ordinarily the renewal  clause in  a lease deed was an important term of the agreement  and the  courts would be reluctant to ignore that clause on  the ground that it was vague unless on a reasonable construction no  meaning could be attached to it.  An agreement to  renew the  lease, without more, must be deemed to be an  agreement to  renew  as per the original terms.  Even if  the  renewal provided was dependent on the agreement between the  parties the  clause merely provided for an agreement  on  reasonable terms.  If the parties could not agree as to those terms the courts could step in. In  our judgment it is altogether unnecessary to decide  the true scope and effect of the renewal clause contained in the deed executed on August 31, 1940.  At the time the lease was executed (1) A.I.R. 1961 Mys. 29. 497 there used to be a Municipal Committee in Jabalpur Aparently it became a Corporation later.  The Committee was superseded in-Charge of the Committee Jabalpur as also Secretary of the Municipal  Committee had signed the lease on behalf of  that Committee.  In the decision of the Madhya      Pradesh  High Court in Dagdulal’s(1) case the view had been expressed that so  long  as Municipal Committee was not  reconstituted  the

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ownership of the property stood transferred by operation  of law to the State Government and therefore the  Administrator had  no  power  whatsoever to sell the  property  which  had vested in the Government.  The Additional District Judge had observed that the lease deed had been executed in  pursuance of  a  resolution  which  had already  been  passed  by  the Municipal Committee.  The High Court, however, found on  the evidence produced before the Additional District Judge  that the  final resolution passed by the Municipal Committee  was only  for  the  grunt of a license and not a  lease  to  the appellant.   The deed of lease, therefore, was, held  to  be ineffective  for  conveying any lease-hold interest  to  it. But  still the High Court held that the tenancy was to  last for a period of thirty years. We  are wholly unable to comprehend how any lease  could  be spelt out of the deed dated August 31, 1940 for a period  of 30  years  containing the renewal clause which  has  already been mentioned.  If the officer who executed the lease  deed had no power to lease out the property in question the grant of  the lease was wholly null and void.  It is true that  by acceptance  of the rent from the appellant the  relationship of  landlord  and  tenant came into  existence  between  the parties  but Mr. Chagla for the appellant has not been  able to show how a lease for a period of 30 years together with a renewal clause could be held to have been created or to have come  into existence.  It may be mentioned that we  are  not concerned with the period of 30 years which has already been taken into consideration by the High Court because no appeal has  beep filed on that point by the Corporation.  The  only matter  which  requires determination is  whether  the  High Court, while deciding the question of apportionment,  should have given due affect to the renewal clause.  In our opinion the  High Court could riot have done so.  If the  so  called deed  of lease dated August 31, 1940 was wholly  ineffective and  void for the purpose of demising the land for a  period of  30  years one could only look at the provisions  of  the Transfer of Property Act for determining the term for  which the  tenancy came into existence.  Under s. 106 of that  Act the ,tenancy, in the present case, could be only from  month to month because the immovable property had not been  leased out (1)   (1960) M..P.L.J. 627. 498 for agricultural or manufacturing purpose in which case  the lease  would have been from year to year.  We are  therefore unable  to accede to the contention that the renewal  clause in  the lease deed dated August 31, 1940 was  effective  and should  have been taken into consideration while making  the apportionment between the appellant and the Corporation. The  next  question relating to quantum can be  disposed  of shortly.   The  sole  criticism of Mr. Chagla  is  that  the potential  value of the plot in question was not taken  into consideration.    It  is  true,  as  pointed  out  in   Raja Vyrigherla  Marayana Gajapatiraju v. The Revenue  Divisional Officer  Vizagapatam(1)  that where the land  to  be  valued possesses  some  unusual or unique features as  regards  its position  or  its potentialities the court  determining  the market  value will have to ascertain as best as it can  from the  materials  before  it  what  a  willing  vendor   might reasonably expect to obtain from a willing purchaser for the land  in that particular position and with those  particular potentialities.   It has been urged that Plot No. 670 had  a special situation or position in view of its size, locality, nearness  to  business centre and the Madan  Mahal  Station. But  the  value which was fixed by the  Additional  District

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Judge and the High Court was fixed by reference to sales  of plots  of comparable nature.  The following portion  of  the judgment  of the High Court shows how the matter  was  dealt with "We  may observe  that the two witnesses relied upon by  the               appellants  purchased small plots at the  rate               of  Re.  1/- per sq. ft.  As the  map  of  the               Wright   Town  Madan  Mahal   Extension   area               produced  by the Corporation before us  shows,               these  plots are in a fully developed lay  out               having  roads and drains round about.  We  had               asked  the Corporation to calculate  how  much               area  out  of  the  acquired  sites  would  be               required to be left open for roads and  drains               and they have calculated that about 70,000 sq.               ft.  would have to be left open for this  pur-               pose.   Obviously, therefore, it is  only  the               remaining  plot  which  would  have  value  as               building sites.  Besides leaving so much  area               open,  costs  will  have  to  be  incurred  in               developing the roads, and drains for which the               Corporation  has estimated the cost to be  Rs.               8,500/-.   Considering all these  factors  and               also calculating the built up area in the  lay               outs  surroundings the acquired land, we  find               that  it is only eighty per cent of  the  land               which can be sold as building site. On these calculations if the average price of the plots sold in the locality is taken to be /12/- per sq. ft. the (1)66 I.A. 104. 499 overall price of the acquired land without roads and  drains would work out to a little less than / 9/  per sq. ft.  To put the matter, in a different way, the value of / 10/  per sq.  ft. found by the Additional Judge would work out  to  a little over /12/- per sq. ft., if only the area which could be  built  upon  is considered saleable  as  building  site. We,therefore, find that the price at-/10/per sq. ft. allowed by  the Additional District judge, is not  unreasonable;  if anything it errs on the generous side". We have no manner of doubt that the High Court had taken all the factors into consideration while assessing the value. In  the  result the appeals fail and are  dismissed.   There will be no order as to costs. Appeals dismissed. G.C. 500