REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 3206 OF 2006

DEVAKI ANTHARJANAM ……. Appellant

Versus

SREEDHARAN NAMBOODIRI & ANR. .... Respondents

JUDGMENT

Dr. Mukundakam Sharma, J.

1. This  appeal  is  directed  against  the  judgment  and  order  dated  

25.5.2005 passed by the High Court of Kerala whereby the High Court while  

allowing the Civil Revision filed by the respondent herein and setting aside  

the order passed by the Execution Court directed that the Execution Court  

should proceed to fix the value of improvements due to the respondent in  

accordance  Section  5(3)  of  the  Kerala  Compensation  for  Tenants  

Improvements Act, 1959 (for short “the Act”).

2. The appellant herein filed a suit seeking for a decree for recovery of  

possession of immovable property including the building on the strength of a  

title with a further prayer for grant of a decree for mesne profit.   The suit  

was instituted by the appellant in her capacity as the landlady of the said  

property in the year 1987.   The respondents/judgment debtors contested the  

said suit by filing a written statement.  In the written statement filed by the  

respondents, they claimed value of improvements made by them which they  

themselves assessed at Rs. 7 lakhs and for recovery of the same.  

3. By judgment and decree passed on 31.5.1991, the suit  filed by the  

appellant was decreed granting a decree for recovery of possession of the  

plaint schedule property from the respondents and also decreeing the suit for  

recovery of mesne profit at the rate of Rs. 1000 per year from the defendant  

No.1 /respondent No. 1 from the date of institution of the suit till delivery of  

possession.   It was also directed in the said suit that respondent No. 1 would  

be  entitled  to  get  value  of  improvements  of  Rs.  1,35,000/-  from  the  

plaintiff/appellant herein and that the amount would be first charged on the  

plaint schedule property and that the defendant No. 1 would also pay the  

cost of the suit to the plaintiff/appellant.   

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4. The aforesaid decree was challenged by the respondents herein before  

the first appellate court which dismissed the said appeal.  

5. Feeling  aggrieved,  the  respondent filed  an  appeal  before  the  High  

Court wherein also the value of improvements as fixed by the trial court and  

upheld by the first appellate court was challenged.

6. The  High  Court,  however,  dismissed  the  said  appeal  and  thereby  

upheld and confirmed the decree passed by the trial court as also confirmed  

by the  first  appellate  court.    Consequent  result  is  that  the  claim of  the  

independent title and also the claim of title by way of adverse possession set  

up by the respondents  were rejected whereas all  the courts  including the  

High Court confirmed only to the extent that the respondents were entitled to  

value of improvements being Rs. 1,30,000/- for the building and Rs. 5,500/-  

for  the  motor  pump  set  and  pump  house,  aggregating  to  a  total  of  Rs.  

1,35,500/- only.

7. The aforesaid valuation was made by the trial court by its judgment  

and decree dated 31.5.1991 on the basis of Exts. C2 and C3, Final Report  

and Valuation Statement of August and September, 1990 submitted by the  

Commissioner appointed by the Court aided by an expert.   The said amount  

also came to be paid by the appellants herein.

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8. After the decree was granted by the trial court under judgment and  

order dated 31.5.1991 and since despite the decree and also payment of the  

compensation as determined and assessed by the courts including the High  

Court, the respondents did not vacate the suit premises, the appellants were  

compelled to file an execution case bearing Execution Petition No. 331 of  

1999 seeking for eviction of the respondents from the suit premises.   In the  

said execution petition, the respondents took up a plea that in terms of the  

provisions  of  Section  5(3)  of  the  Act,  the  execution  court  is  required  to  

conduct a supplementary enquiry to determine (i) additional compensation  

for improvement made to the building after the date of the decree on the  

ground  that  the  Act  permits  to  include  amount  of  compensation  for  the  

improvements made even subsequent to the passing of the decree and (ii) on  

revaluation  of  this  building  for  which  compensation  had  already  been  

adjusted in the decree, the value of the said building with reference to its  

conditions.

9. The  Executing  Court  took  up  the  aforesaid  plea  raised  by  the  

respondents and after consideration of the same and after hearing the counsel  

appearing for the parties held that the judgment debtors/ respondents could  

not be said to be persons in bonafide occupation of the premises so as to  

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come within the ambit of “tenant” under Section 2(d) of the Act from the  

date of the decree and therefore they would not be entitled to the value of  

improvements  put  up subsequent  to  the  date  of  decree.    The Executing  

Court also found as a matter of fact that as on the date of the decree, the  

building in the property did not have any first floor and that the first floor  

had  come into  existence  after  passing  of  the  decree.   Consequent  to  the  

recording  of  the  aforesaid  finding,  the  Executing  Court  held  that  the  

respondents/judgment debtors were not entitled to additional compensation  

for the improvements effected after the date of the decree.   However, the  

Executing Court took into account the condition of the entire ground floor of  

the building on the basis of the Commissioner’s Report filed in execution  

proceedings and its own finding that the entire portion of the ground floor  

had been completed before the date of the decree in the suit a factor which  

had escaped the notice of the earlier Commissioner and Expert appointed by  

the Court for that purpose at the trial stage.

10. The  Executing  Court  thereafter  made  a  revaluation  of  the  entire  

ground  floor  portion  of  the  building  and  directed  that  an  amount  of  

Rs. 3,12,000/- was to be deposited by the appellants-decree holder over and  

above  the  amount  of  Rs.  1,35,500/-  adjudged  in  the  decree  which  was  

already deposited by the appellant.

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11. Needless to point out that the aforesaid assessment of Rs. 3,12,000/-  

was made without giving any depreciation of the building.  Be that as it may,  

it transpires from the records that the appellants paid the said amount also in  

terms of the order passed by the Executing Court that is to say the appellants  

deposited  the  amount  of  Rs.  3,12,000/-  over  and  above  the  amount  of  

Rs. 1,35,500/-.

12. The respondent still not being satisfied, filed a revision petition before  

the High Court of Kerala.   In the final order passed in the revision petition,  

the High Court held that unless the appellants could establish that there was  

an order passed by the High Court restraining the respondent from claiming  

further value of improvements, the respondent would be entitled to get such  

improvements also and that the same could not be denied.   Having held thus  

in paragraph 14, the High Court observed as follows:-

“14. It is also the settled position of law that section 5(3) of  the  Compensation  for  Tenants  Imrovements  Act  only  empowers  the  executing  court  to  assess  the  amount  of  compensation  for  improvements  made  subsequent  to  the  date up to which compensation for improvements had been  adjudged in the decree and section 5(3) does not enable the  executing court to re-open the adjudication made by the trial  court  as  held  in  Kamalamma  vs  Madhavan  pillai  (1959  K.L.T. 578).   In this case there are no materials available on  record to find whether there was a final order of injunction  prohibiting  the  petitioner  from  claiming  further  value  of  improvements.    The  executing  court  proceeded  on  the  

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wrong assumption that since the trial court passed the decree  for recovery of the suit property, the petitioner is not entitled  to claim any value of improvements effected after the said  date.    That  finding  is  illegal.    So  the  matter  requires  reconsideration.   I have no other option but to set aside the  impugned order and remand the case back to the executing  court to fix the value of improvements due to the petitioner  in accordance with the provisions contained in section 5(3)  of the Compensation for Tenants Improvements Act.”

13. In  terms  of  the  aforesaid  findings,  the  civil  revision  filed  by  the  

respondent  was  allowed  by  the  High  Court.    The  order  passed  by  the  

Executing  Court  was  set  aside  and  matter  was  remanded  back  to  the  

Executing Court to fix the value of improvements in accordance with the  

provisions of Section 5(3) of the Act.

14. The  appellant  being  aggrieved  by  the  aforesaid  order  of  remand  

passed by the High Court, has filed this appeal in which notice was issued  

by this Court and after notice was served this Court granted the leave.   The  

original  records  of  the  case  have  been received.    On the  prayer  of  the  

parties,  there was  a direction by this  Court  that  this  appeal  be listed for  

hearing during summer vacation and consequently it was placed before us  

for final  hearing during the summer vacation when we heard the learned  

counsel appearing for the parties.

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15. Before we proceed to discuss the rival contentions raised on behalf of  

the respective parties,  we would like to make a reference to the relevant  

provision of the aforesaid Kerala Compensation for Tenants Improvements  

Act, 1959.   Section 2(b) of the Act reads as follows: -

“2(b) “improvement”  means  any  work  or  product  of  a  work which adds to the value of the holding, is suitable to  it and consistent with the purpose for which the holding is  let,  mortgaged  or  occupied,  but  does  not  include  such  clearances,  embankments,  levellings,  enclosures,  temporary wells  and water-channels  as  are  made  by the  tenant in the ordinary course of cultivation and without any  special expenditure or any other benefit accruing to land  from the ordinary operations of husbandry;”

16. The expression “tenant” is also defined under Section 2(d) of the Act  

as follows :  

“2. (d) ‘Tenant’.—‘tenant’ with its grammatical variations  and cognate expressions includes— (i) a person who, as lessee, sub-lessee, mortgagee or sub- mortgagee or in good faith believing himself to be lessee,  sub-lessee,  mortgagee,  or  sub-mortgagee  of  land,  is  in  possession thereof; (ii) a person who with the bona fide intention of attorning  and  paying  a  reasonable  rent  to  the  person  entitled  to  cultivate  or  let  wasteland,  but  without  the permission of  such person, brings such land, under cultivation and is in  occupation thereof as cultivator; and (iii) a person who comes into possession of land belonging  to another person and makes improvements thereon in the  bona  fide  belief  that  he  is  entitled  to  make  such  improvements.”

17. Further,  Section 4 of the Act lays down that every tenant shall  on  

eviction be entitled  to compensation for improvements  which were  

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made by him or his predecessor-in-interest or by any person not in  

occupation at the time of the eviction who derived title from either of  

them and for  which  compensation  had not  already  been paid;  and  

every tenant to whom compensation is so due shall, notwithstanding  

the  determination  of  the  tenancy  or  the  payment  or  tender  of  the  

mortgage  money  or  premium  ,  if  any,  be  entitled  to  remain  in  

possession until eviction in execution of a decree or order of court.    

18. Section  5  thereof  provides  that  the  decree  passed  in  eviction  suit  

would be conditional on payment of compensation.  Sub-Section (3)  

of Section 5 thereof which is relevant for our purpose is also extracted  

below:-

“5(3)  The  amount  of  compensation  for  improvements  made subsequent to the date up to which compensation for  improvements has been adjudged in the decree and the re- valuation of an improvement, for which compensation has  been so adjudged, when and in so far as such re-valuation  may be necessary with reference to the condition of such  improvement at the time of eviction as well as any sum of  money accruing due to the plaintiff subsequent to the said  date for rent, or otherwise in respect of the tenancy, shall  be determined by order of the court executing the decree  and  the  decree  shall  be  varied  in  accordance  with  such  order.”

19. The aforesaid provisions particularly Section 2(d) and Section 5 came  

to be considered by this Court in the case of Kunjan Nair Sivaraman Nair  

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Vs. Narayanan Nair and Others [(2004) 3 SCC 277].   We have carefully  

considered the said decision.   In paragraph 23 of the aforesaid judgment this  

Court has considered the definition of Section 2(d) and analysed the said  

definition of tenant by stating thus:-

“23. It is to be noted that the three clauses of Section 2(d) use  different expressions to meet different situations and class of  persons. While clause (i) refers to a person who is a lessee or  sub-lessee, or mortgagee or sub-mortgagee or in “good faith”  believing himself to be any one of the above such persons,  clause (ii) deals with a person with “bona fide intention” by  doing any one of the things enumerated is in occupation as  cultivator, and clause (iii) deals with a person who comes into  possession  of  land  belonging  to  another  and  makes  improvement  thereon  in  the  “bona  fide  belief”  that  he  is  entitled  to  make  such  improvements.  According  to  the  appellant,  both  clauses  (i)  and  (iii)  are  applicable  to  him.  Clause  (i)  deals  with  the  person  who  bona  fide  believes  himself to be a lessee in respect of the land in question. The  fact that he asserted a claim for purchase of  jenmam rights,  irrespective of the rejection of the claim would go to show  that at any rate he was believing in good faith to be one such  person  viz.  lessee.  Clause  (iii)  encompasses  a  person  who  comes  into  possession of  land belonging  to  another  person  and makes  improvements  thereon with  the bona fide belief  that he is entitled to make such improvements. The appellant  was claiming himself to have been put in possession as the  nephew  of  late  Narayanan  Nair,  and  as  a  person  in  such  possession  —  claims  to  have  made  certain  improvements.  Indisputably  he  was  in  possession.  Though,  in  view of  the  judgments of the courts below his claim to assert a title in him  has  been  rejected  and  his  possession  cannot  be  a  lawful  possession  to  deny  the  right  of  the  real  owner  to  recover  possession  or  assert  any  adverse  claim  against  the  lawful  owner  to  any  longer  squat  on  the  property  —  his  initial  induction or entering into possession cannot be said to be by  way of encroachment. Whether such a person could not claim  to have entertained a bona fide belief  that  he is  entitled to  make such improvements has to be factually determined with  reference to the point of time as to when he really made such  improvements. If the alleged improvements are found to have  been made after the disputes between parties commenced then  

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only it may not be in bona fide belief. Improvements made, if  any, even thereafter  only cannot fall  under clause (iii).  The  court dealing with the matter is required to examine the claim  and find out whether the prescriptions in the different clauses  individually or cumulatively have any application to the claim  of the appellant for improvements alleged to have been made,  if  so  really  made.  The  courts  below  have  noted  that  the  appellant  made a claim that  he was a  lessee and thereafter  made the improvements. The courts below do not appear to  have considered the issues arising at any rate in respect of the  claim for the alleged improvements said to have been made,  from the aforesaid angle. As factual adjudication is necessary  as to whether the appellant acted in good faith or with bona  fide belief  as  envisaged;  this  has to  be decided taking into  consideration  the  materials  placed  before  the  court  in  that  regard. It is, therefore, appropriate that the trial court should  consider this aspect afresh uninfluenced by any observation  made by it earlier or by the appellate courts. We also do not  express  any  conclusive  opinion  on  the  merit  of  the  claim  except  indicating  the  parameters  relevant  for  such  consideration. For that limited purpose, the matter is remitted  to the trial court which shall make an endeavour to adjudicate  the matter within six months from the date of judgment, after  allowing  the  parties  to  place  material  in  support  of  their  respective stands.”

20. In  view of  the  aforesaid  settled  legal  position,  we  are  required  to  

consider  whether  the  respondent  could  make  a  claim  for  enhanced  

compensation for improvements allegedly made by him.  

21. Initially, when the suit was filed, even at that stage the relief sought  

for in the suit was for a decree of recovery of possession as also for payment  

of mesne profit.   In the said suit itself, the respondent pleaded in the written  

statement that he has made improvements in the suit premises and therefore,  

he  is  entitled  to  claim value  of  improvements  made  by  him which  they  

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themselves assessed and determined at Rs. 7 lakhs and prayed for recovery  

of the same.   The suit was decreed both for decree of recovery of possession  

and  also  for  payment  of  mesne  profit.   The  trial  court  held  that  the  

respondent  would  be  entitled  to  Rs.  1,35,500  as  value  of  improvements  

which  was  based  on  the  report  of  the  Court  Commissioner  aided  by  an  

expert.   All the aforesaid findings recorded by the trial court were under  

challenge both before the first appellate court as also before the High Court.  

Both the courts not only upheld and confirmed the decree but also held that  

the appellants are entitled to a decree of eviction whereas the respondents  

would be entitled to compensation for improvements made at Rs. 1,35,500/-.

22. We are also conscious of the fact that an affidavit was filed by the  

respondents herein before the Kerala High Court on 12th July, 1999 wherein  

they had given an outline of the eviction proceedings initiated against them  

by the appellant herein.   They had stated that the second appeal arises from  

a decree and judgment in OS No. 294 of 1987 of the Sub Court, Irinjalakuda.  

It  was  also  mentioned  therein  that  the  suit  was  for  declaration,  title  and  

recovery of possession.    In the Second Appeal the appellant filed CMP  

1133 of 1999 seeking order of injunction to restrain the respondents herein  

from undertaking any construction activity in the plaint schedule property  

and committing any waste therein and that the said CMP was filed on the  

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allegation that the respondents herein were attempting to construct a first  

floor  to  the  existing  residential  building  situate  in  the  plaint  schedule  

property.   In  the  said  application,  it  was  also  alleged  that  the  said  

construction work was done in order to delay the benefit of decree that might  

be  passed  in  the  appeal  and  that  the  existing  residential  building  was  

constructed by the ancestors of the appellant (respondents herein).   It was  

stated that the said allegations are incorrect.   Despite the said statement, the  

High Court passed an interim order of injunction restraining the respondents  

particularly respondent No. 1 from making any further construction in the  

property.   After stating thus, the respondents through respondent No. 1 gave  

an undertaking in the said affidavit particularly in paragraph Nos. 3 and 4 in  

the following manner:-

“3. We  are  not  constructing  first  floor  to  the  existing  residential  building.   A small  room with an attached toilet  was constructed more than two to three weeks prior  to the  date of passing of the order of injunction.   As regards the said  room, the flooring painting and plastering of the ceiling is yet  to be completed.   Once we are informed of the passing of the  order  of  the  injunction  we  had  stopped  further  works  including the one stated above.   I think it proper to seek the  permission of this Hon’ble Court to complete the said work.  Accordingly,  the  accompanying  CMP  is  filed  seeking  permission to complete the flooring, painting and plastering  works of the said small room and toilet already constructed on  the first floor of the existing residential building.

4. We undertake that we will not claim the value of the  said  room  and  toilet  constructed  on  the  first  floor  of  the  

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building   Neither  we  will  claim  any  special  equities  on  account of the construction of the said room and toilet.   We  may be permitted to complete the said works at our risk and  costs.”  

23. It is also pointed out that now the respondents are seeking for payment  

of  compensation  for  the  aforesaid  improvements  also  made  despite  an  

undertaking given by them before the High Court that they would not claim  

any value of the said room and the improvements made in the first floor of  

the building.    Since the aforesaid undertaking was placed on record by the  

respondents, any constructions made after the aforesaid undertaking given  

by the respondents cannot be said to be improvements made in the bonafide  

belief that they are entitled to make some improvements.

24. Even assuming for the purpose of argument that the respondents could  

make some improvements even after passing of the decree by the trial court,  

but they could not have made any improvement in the suit property by way  

of constructing the first  floor and also claimed compensation for it  when  

they  had  given  a  clear  undertaking  that  they  would  not  claim  any  

compensation towards value of the said constructions made on the first floor  

of the building.   They also undertook that they would not claim anything on  

account of the construction of the room and the toilet in the first floor.  They  

are bound by the aforesaid undertaking given to this Court and they are not  

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entitled to resile from the same subsequently and claim any compensation.  

When they filed an undertaking they definitely had the knowledge that they  

are not entitled to make any improvement thereon in view of the currency of  

the  order  of  injunction  and  therefore  they  proceeded  to  give  such  an  

undertaking which disentitles them to claim any compensation towards any  

such improvement made.

25. The trial court or the executing court took notice of the said fact and  

therefore had assessed compensation with regard to improvements made in  

respect of the ground floor only after proper assessment thereof with the aid  

and assistance of  the Court  Commissioner  aided by  an  expert   at   Rs.  

3,12,000/- over and above Rs. 1,35,500/-.

26. The said  findings and conclusions  arrived at  by  the  trial  court  are  

found to be valid and justified.   The High Court acted without jurisdiction  

in  interfering  with  the  aforesaid  order  in  the  exercise  of  the  jurisdiction  

under Section 115 of the Code of Civil Procedure.

27. We do not  find any reason to  linger  on the  matter  any further  by  

remanding the matter back to the High Court as we find that the findings  

recorded by the  executing court  are  legal  and valid.    In  our  considered  

opinion, the said findings do not call for any interference and the High Court  

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committed  a  manifest  error  of  law and  also  exceeded  its  jurisdiction  by  

interfering with the said findings.   We, therefore, allow this appeal and set  

aside the order passed by the High Court and restore the order of the trial  

court.   The trial court would now take steps for execution of the decree in  

accordance with law.

28. The appeal is allowed with costs.

       .....………………………J.      [Dr. Mukundakam Sharma]

…...........………………..J.          [Dr. B.S. Chauhan]

New Delhi, July 7, 2009

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