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PETITIONER: SHIBSANKAR NANDY

       Vs.

RESPONDENT: PRABARTAK SANGHA AND ORS.

DATE OF JUDGMENT: 01/02/1967

BENCH: SIKRI, S.M. BENCH: SIKRI, S.M. HIDAYATULLAH, M. VAIDYIALINGAM, C.A.

CITATION:  1967 AIR 1040            1967 SCR  (2) 528

ACT: West Bengal Non-Agricultural Tenancy Act (20 of 1949) s. 24- Conditions for applicability of section-Validity of  section with reference to Constitution of India, Art. 19(1)(f). West Bengal Estates Acquisition Act (1 of 1954), s. 2(1)(i)- Non-Agricultural  tenanr receiving rent  from  under-tenant- Whether "intermediary."

HEADNOTE: Respondent  No. 1, a Society registered under the  Societies Registration  Act, 1860, took to lease a piece of land  part of  which was already leased to Respondents 2 and  3.  Under the lease Respondent No.1 was entitled to receive rent  from Respondents 2 and 3. The latter transferred the land held by them  to the appellant.  Respondent No.1 thereupon filed  an application  claiming the right of transfer under s.  24  of the  West  Bengal Non-Agricultural Tenancy Act,  1949.   The trial   Court   and  the  appellate  court   dismissed   the application but the High Court, in revision, allowed it.  By special  leave,  the appellant came to this Court.   It  was urged on behalf of the appellant : (i) that the terms of  s. 24  of the aforesaid Tenancy Act were not satisfied  in  the case,  (ii)  that  s. 24 was ultra vires  as  the  right  of transfer therein was based solely on the ground of  vicinage and  created an unreasonable restriction on  the  guaranteed right of the appellant and respondents Nos. 2 and 3 under s. 19(1) (f) of the Constitution and (iii) that Respondent  No. 1 being only entitled to receive rent from respondents 2 and 3  was  an  "intermediary" within the meaning  of  the  West Bengal Estates Acquisition Act and therefore all its  rights vested under the Act in the State of West Bengal. HELD:     (i) The Society was the immediate landlord of  the land in dispute.  The said land was contiguous to the  other land in its actual possession, and was bona fide required by it  for the expansion of its educational  institution.   The purpose  for which it was required was covered by  cls.  (b) and  (c) of s. 4 of the Tenancy Act.  The terms of s. 24  of the Act were therefore fully satisfied in the case. [562  B- E] (ii) The.  object of s. 24 is to have an adjustment  of  the rights  of landlords and tenants.  The consideration of  the

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land  being contiguous is not the sole  consideration.   The principle  of  Bhau Ram v. B. Raijnath Singh’s ease  is  not therefore  attracted.   The restriction contained in  s.  24 cannot   by  any  means  be  treated  as   an   unreasonable restriction,, [565 D] Bhau  Ram  v.  Baijnath Singh, [1962] Supp.  3  S.C.R.  724, distinguished. Ram Sarup v. Munshi, [1963] a S.C.R. 858, relied on. (iii)     Being  itself  a non-agricultural tenant  the  1st respondent    was   excluded   from   the   definition    of "intermediary"  by  the terms of S. 2(1)(i) of  the  Estates Acquisition Act. [563 D-E]

JUDGMENT: CIVIL  APPELLATE  JURISDICTION : Civil Appeal  No.  1004  of 1965.                             559 Appeal  by special leave from the judgment and  order  dated February  27, 1963 of the Calcutta High Court in Civil  Rule No. 3723 of 1962. D.   N. Mukherjee and Dhurba Kumar Mukherjee, for the appel- lant. Sukumar.  Ghose, for respondent No. 1. The Judgment of the Court was delivered by Shelat, J. This appeal by special leave relates to a plot of land  admeasuring  about - 41 decimals  situate  within  the municipal’ limits of Chandernagore.  Respondent No.1 is a society registered under the Societies Registration  Act, XXXI of 1860.  Its objects as set out  in clause 3(s) of its Memorandum of Association inter alia  are "to  work, manage; develop, improve and  utilise  properties and  business for the promotion of education, art,  science, religion and charity or other useful objects." On March  23, 1941 one Kashinath Seal, the owner of a large plot of  land, granted a permanent lease of the land in dispute out of  the said plot in favour of respondents 2 and 3. By a  registered deed  of lease dated September 29, 1944 he granted lease  of the entire plot of land including the land in dispute to one Motilal Roy for 99 years.  So far as the land in dispute  is concerned, which as aforesaid was leased out to  respondents 2 and 3, the said Motilal Roy acquired under this lease only the  right of realising the rent.  The said Motilal Roy  was the founder of the 1st respondent Association and was a mere benamidar  thereof By a deed of relinquishment  dated  March 14,  1953 he relinquished all his interest in the said  plot in   favour  of  the  1st  respondent  Association.   By   a registered  deed of sale with a condition  for  reconveyance dated  November 3, 1960 respondents 2 and 3 transferred  the land  in  dispute  to  the appellant  and  handed  over  its possession  to him.  On coming to know of this sale the  1st respondent Association made an application claiming a  right of  transfer  under  section  24 of  the  West  Bengal  Non- Agricultural Tenancy Act, XX of 1949 on the ground, that  it was  the immediate landlord in relation to that  land,  that the  land in question was contiguous to its other lands  and that  it  required it for the purpose of  extension  of  the school conducted by it. The  Trial Court dismissed the application holding that  the land in dispute was not contiguous to the land in possession of the 1st respondent Association.  It however held that  it was  satisfied that the 1st respondent Association  required the  said  land bona fide for the purpose of  expanding  its school.   In  an  appeal  against  this  order  by  the  1st

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respondent  Association  the Additional District  Judge  set aside the finding of the Trial Court holding that the land 560 in  dispute was adjacent to the other land in possession  of the  1st respondent Association.  But he held that  the  1st respondent  Association  was an  "intermediary"  within  the meaning   of  section  2(a)  of  the  West  Bengal   Estates Acquisition  Act,  1 of 1954; that therefore  its  interests vested  in the State of West Bengal on the extension of  the Act  to Chandernagore after its merger in the State of  West Bengal  and  consequently respondent No.1 had  no  right  to claim transfer and dismissed the appeal.  The 1st respondent Association  thereupon filed a revision application  in  the High Court under section 116 of the Code of Civil  Procedure and Art. 227 of the Constitution. Three  contentions  were  raised before the  High  Court  on behalf  of  the  present  appellant:  (1)  that  the   first respondent  Association  was. an "intermediary"  within  the meaning of S. 2(1)(i) of the West Bengal Estates Acquisition Act  and therefore all its right’s vested under that Act  in the  State of West Bengal; (2) that section 24 of  the  Non- Agricultural  Tenancy Act did not apply as (a) the  land  in dispute  was not contiguous, (b) that under proviso  (b)  to that  section it must be established to the satisfaction  of the  Court  that  such  land was required  for  any  of  the purposes  specified in section 4 and that the  courts  below had  not given any finding as to their satisfaction and  (3) that  section  24 did not apply to a case  where  an  under- tenant  transferred  his  rights to a  third  party  as  the section  applied only to a transfer by a tenant.   The  High Court  repelled  all the three contentions and  allowed  the revision setting aside the order of dismissal passed by  the Trial Court and confirmed by the Additional District Judge. Before  us, Mr. Mukherjee besides reagitating the  aforesaid three  contentions also raised a constitutional point as  to the  invalidity  of  section  24  on  the  ground  that   it constituted an unreasonable restriction on the right of  the appellant and respondents 2 and 3 to hold property. Section  2(3) of the, West Bengal  Non-Agricultural  Tenancy Act, defines a "landlord" to mean a person immediately under whom  a non-agricultural tenant holds. subsection 5 of  that section defines a "non-agricultural tenant-" as a person who holds non-agricultural land under another person and is,  or but  for a special contract would be, liable to pay rent  to such person for that land.  Section 3 provides that for  the purposes  of  this Act there would be two  classes  of  non- agricultural  tenants,  namely, (a) tenants and  (b)  under- tenants.   Sub-section 2 of section 3 defines a "tenant"  as meaning  a  person who has acquired from a proprietor  or  a tenure-holder a right to hold non-agricultural land for  any of  the purposes provided in the Act and includes  also  the successors-in-interest  of persons who have acquired such  a right.  Sub-section 3 defines an "under-tenant" as meaning a person who has acquired a right to hold non-agri-                             561 cultural  land  either immediately or  immediately  under  a tenant  and  includes  also  the  successors-in-interest  of persons who have acquired such a right.  Section 4  provides that  a  non-agricultural tenant may  hold  non-agricultural land  for  (a)  homestead  or  residential  purposes,,   (b) manufacturing  or business purposes or (c)  other  purposes, Section  7 deals with incidents of non-agricultural  tenancy and provides that if any non-agricultural land has been held with  or without any lease having been entered into  by  the landlord and the tenant from before the commencement of  the

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Transfer  of Property Act or if such land comprised in’  any tenancy created after the commencement of that Act has  been held  for  a term of not less than twelve. years  without  a lease in writing or if such land has been held for not  less than twelve years under a lease in writing but no period  is specified  therein  or if such land held under  a  lease  in writing for a specified period continues to be held with the express or implied consent of the landlord after the  expiry of  such period and the total period for which such land  is so held is not less than twelve years or if the landlord has allowed   pucca  structures  to  be  erected  on  any   non- agricultural  land  held  under a lease  in  writing  for  a specified  period whether such structures have been  erected before  the  expiry of the said period or  where  such  land continues to be held with the express or implied consent  of the  landlord  after  the expiration of  the.  said  period, during  the period such land so continues to be  held,  then the  tenant  holding such land shall not be evicted  by  his landlord except on the ground that he has used such land  in a  manner which renders it unfit for use for the purpose  of the  tenancy.   The.  section  further  provides  that   the interests  of  such a tenant in the land comprised  in  such tenancy are both heritable and capable of being  transferred and  bequeathed  in the same manner as the  other  immovable property  of  such  tenant.   Section  23  provides  that  a transfer  of non-agricultural tenancy or of any  portion  or share  thereof shall be made by a registered instrument  but the  Registering Officer is not to accept  for  registration any such instrument unless the sale price, or where there is no  sale price its value is stated therein and unless it  is accompanied by a notice of such transfer on the landlord who is  not  a  party  to the  transfer.   Section  24  runs  as follows:-               "If the entire non-agricultural land in a non-               agricultural   tenancy  is  transferred,   the               immediate landlord may, within four months  of               the service of notice issued under section 23,               apply  to the court for such land ....  to  be               transferred to himself               Provided that-               (a)               (b)   the  immediate  landlord  of  the   non-               agricultural  tenant shall not have any  right               to purchase               562                 unless the,  non-agricultural  land...... so               transferred  is contiguous to any land in  the               actual  possession  of the  landlord  and  the               court  is  satisfied that such  land  ....  is               required  for use by such landlord for any  of               the purposes specified in section 4. In  view  of the clear finding by  the  Additional  District Judge it can no longer be disputed that the land in question is  contiguous to the land in actual possession of  the  1st respondent  Association.  ’There is also no reason  why  the finding  of  the  High  Court that the  land  is  bona  fide required by the 1st respondent Association for expansion  of its educational institution should be disturbed.  The ’Trial Court  held  that  it  was bona fide  required  by  the  1st -respondent and though the Additional District Judge did not expressly give any finding it appears as the High ,Court has stated  that   fact  was not challenged  before  him.   ’The proviso to section 24 however requires that though such land may be needed bona fide the use for which it is needed  must be  for any of the purposes set out in section 4. Since  the

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land is not required for a hostel or residential purpose  of the  1st respondent -or its employees it cannot  fall  under clause (a) but the case would -seem to fall under clause (b) and  in  any  event under clause  (c).   As  aforesaid,  the objects  of  the 1st respondent are inter  alia  to  promote education, arts etc., by utilising, improving and developing properties  and  business.   Since  the  case  of  the   1st respondent  is  that it requires the land  in  question  for expansion  of  its  educational  -activities,  the  land  in dispute  is  required for its business purposes,  -viz.,  to develop,  improve  its properties or in any  event  for  the "other purposes," viz., to carry out its educational objects for  which  the  land  in its  actual  possession  is  being utilised.  There is therefore no ,difficulty in holding that clause (b) of the proviso is satisfied. The  next question is whether section 24 of the Act  applies to  ’the case of a transfer to a third party by  the  under- tenant.  Section 24 lays down that if non-agricultural  land in  a non-agricultural tenancy is transferred the  immediate landlord  may  within the prescribed period apply  for  such land to be transferred to him, ,Counsel argued that  section 24  would apply only to a case of transfer .by a tenant  and therefore  respondents  2 and 3 being  the  under-tenants  a transfer by them in favour of the appellant did not  attract ’its  provisions.  The contention is erroneous, for it  does not  take  into  account the special definition  of  a  non- agricultural tenant in section 3. That section is  contained in  Chapter 11 which is headed "Classes of  Non-Agricultural Tenants."  The section clearly provides that there  are  two classes  of  non-agricultural tenants, (a) tenants  and  (b) under-tenants  and  though  sub-sections 2 and  3  define  a tenant  and an under-tenant both the categories are  tenants ’for the purposes of the Act.  Therefore respondents 2 and 3 though  ,under-tenants must be regarded tenants of  the  1st respondent                             563 Association for the purposes of the Act.  Consequently, when respondents 2 and 3 effected transfer of their rights in the land  in dispute in favour of the appellant they were  bound to  give  notice thereof to the 1st respondent and  on  such transfer being made the 1st respondent was entitled to apply for  the land to be transferred to it.  It is true  that  by reason of the perpetual lease in favour of respondents 2 and 3  in  respect of the land in dispute the  first  respondent Association  had only the right of receiving rent from  them but that makes no difference to the position that the  first respondent’  war,, the immediate landlord of  respondents  2 and  3 in regard to the land in question.   Therefore  there can  be  no doubt that both section 23 and section  24  were attracted  to the transfer made by respondents 2 and  3  and under  section  24 the first respondent as  their  immediate landlord became entitled to apply for transfer. Counsel  however contended that the first respondent  having merely  the right to receive rent, it was an  "intermediary" within the meaning of Act 1 of 1954, that under that Act the interests of such an intermediary vested in the State on the extension  of  that Act to Chandernagore and  therefore  the Association had no locusstandi to apply for transfer.   This contention  also cannot be accepted, for, an  "intermediary" as  defined in s. 2(1)(i) of that Act means  "a  proprietor, tenure-holder,    under-tenure   holder,   or   any    other intermediary above a raiyit or a non-agricultural tenant and in  relation  to  mines and minerals, a  lessee  or  a  sub- lessee........  It is thus obvious that the  1st  respondent being  itself  a non-agricultural tenant in respect  of  the

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entire  land including the land in dispute it does not  fall within  this definition.  Not being thus an intermediary  it is  impossible  to  say that its interests in  the  land  in dispute  vested  in the State or that therefore it  was  not entitled to apply under section 24. Mr. Mukherjee then raised a further contention which  though not  argued in the High Court we allowed him to urge, as  it was. purely a question as to the constitutional validity  of section  24.  The contention was that the right of  transfer enacted   in  that  section  was  founded  solely   on   the consideration  of  vicinage  and  therefore  constituted  an unreasonable   restriction  on  the  guaranteed   right   of respondents 2 and 3 and the appellant under Art. 19(1)(f) of the  Constitution.  In this connection he relied  upon  Bhau Ram  v. Baijnath Singh(1) where by a majority judgment  this Court  struck down section 10 of the Rewa State  Pre-emption Act,  1946.   That section provided for pre-emption  on  the ground  of vicinage and it was held that such a  restriction on  the  right  of the vendor to sell  ’his  property  to  a purchaser of his choice at a price settled between them  was unreasonable.   It was observed that besides there being  no advantage  to the general public from such a law,  the  real reason (1) [1962] Supp. 3 S. C. R. 724. 2Sup.  Cl/67-7 564 behind a law of pre-emption on the basis of vicinage was  to prevent  strangers,  i.e.,  people  belonging  to  different religion, race or caste, from acquiring property in any area populated  by  a particular fraternity or class  of  people. Such a proviso could not be considered reasonable in view of the  prohibition  under  Art.  15  of  the  Constitution  of discrimination only on the ground of religion, race,  caste, etc.   It  may however be observed that the  Court  in  that decision   considered  certain  provisions  of  the   Punjab -Pre-emption  Act,  1913 and Berar Land Revenue  Code,  1928 also and refused to strike down certain provisions of  those Acts where apart from vicinage there - were other factors on the  consideration  of which the right  of  pre-emption  was enacted.   The decision therefore is an authority  only  for the  proposition that where such a restriction is laid  down exclusively on the ground of vicinage it might be liable  to be  struck  down as an unreasonable  restriction.   This  is illustrated by Ram Sarup v. Munshi(1) where section 15(a) of the  Punjab Pre-emption Act, 1913 , as amended by Act 10  of 1960  was held valid on the ground that the  restriction  on the right of free allienation imposed by that provision  was intended  to preserve the integrity of the village  and  the village  community  and  to implement the  agnatic  rule  of succession  and  that  both  of  them  were  reasonable  and calculated to further the interests of the general public. An  examination of the different provisions of the  Act  and its   scheme   shows  that  contiguity  is  not   the   sole consideration for which section 24 was enacted.  Chapter III of  the Act deals with tenants and confers on  them  diverse rights.  Section 6 permits a tenant holding non-agricultural land  to erect pucca structures, to dig a tank and to  fell, utilise or dispose of the timber of any tree planted by such a tenant.  Under section 7 if the tenancy was created before the  commencement  of the Transfer of Property  Act  or  its origin  is unknown or if created after the  commencement  of that Act but the land is held thereunder for a period of  12 years or more or where the tenancy is for a shorter term but the  tenant has continued to hold the land with the  express or  implied  consent of the landlord and the period  in  the

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aggregate is not less than twelve years such a tenant cannot be  ejected except only on the solitary ground that  he  has used  such land in a manner which renders it unfit  for  use for  the  purposes of the tenancy.  Under that  section  the interests  Of  such  a tenant are  made  heritable  and  are capable  of  being  transfeffed or bequeathed  in  the  same manner and to the extent as the other immovable property  of the tenant.  Where any no agricultural land is held under  a lease  in  writing for a period of not less than  12  years, section 8 confers on the tenant on the expiry of such period the option of successive renewals of such lease on fair  and reasonable  conditions  as  to rent as may  be  agreed  upon between  the parties or decided by the court in the  absence of such agreement. (1)  [1963] 3 S. C. R. 858.                             565 It  further  provides that such a tenant cannot  be  ejected either  during the term provided by the lease or during  its renewal except on the solitary ground that he has used  such land  in  a manner which renders it unfit for  use  for  the purposes  of  such tenancy.  Chapter IV of the Act  in  like manner  confers substantial rights on under-tenants.  it  is only when a non-agricultural tenant transfers his rights  in the  leased  land to a third party that  the  provisions  of sections 23 and 24 are attracted and in such an  eventuality the immediate landlord who has interest in such land and has contiguous land in his actual possession is given the  right to  apply  for  the  transfer of such  land  in  his  favour provided the court is satisfied that such land  is  required for any of the purposes set out in section 4. The scheme  of the  Act clearly is to afford security of tenure to  tenants and under tenants even to the extent of making their  rights transferable  and heritable.  It is only when such  land  is sought  to  be transferred that the  immediate  landlord  is given the right to have it transferred to himself instead of to a third party.  These provisions clearly reflect the true object  of  the legislature in enacting  section  24.   That object  is to have an adjustment of rights of landlords  and tenants.  The consideration of the land being contiguous  is therefore not the sole consideration as in the case of  Bhau Ram  v. B. Baijnath Singh.(1) The restriction  contained  in section 24 cannot by any means be treated as an unreasonable restriction.    Consequently  the  contention  as   to   the constitutional invalidity of section 24 cannot be Accepted The appeal is dismissed with costs. G.C.                          Appeal dismissed. (1) [1962] Supp. 3 S.C.R. 724. 566