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PETITIONER: N.   VAJRAPANI NAIDU AND ANOTHER

       Vs.

RESPONDENT: THE NEW THEATRE CARNATIC TALKIES LTD.,COIMBATORE

DATE OF JUDGMENT: 04/03/1964

BENCH: SHAH, J.C. BENCH: SHAH, J.C. GAJENDRAGADKAR, P.B. (CJ) WANCHOO, K.N. AYYANGAR, N. RAJAGOPALA SIKRI, S.M.

CITATION:  1964 AIR 1440            1964 SCR  (6)1015  CITATOR INFO :  RF         1966 SC 361  (11,19)  R          1969 SC 435  (6)  E          1970 SC1683  (9,11,12,19,20,25)  RF         1971 SC2366  (7)  RF         1984 SC   1  (2)

ACT: Madras  City Tenants’ Protection Act, 1922 (Act 3 of  1922), ss. 9, 12-Lease of land for purpose of enacting buildings-lf lease  not  renewed after twenty years  lessor  entitled  to vacant  possession  of land after  demolishing  building-Act permitting tenant to either get 1016 compensation for building or purchase land at price fixed by court-Provision  whether  violates  landlord’s   fundamental rights--Constitution of India, Arts. 19(1)(f), 31.

HEADNOTE: The appellant and his mother (the lessors), granted a  lease of  an  open  site  in the town  of  coimbatore  to  Abirama Chettiar  under a registered ’deed dated September  19,1934. The annual rent stipulated under the lease was Rs. 10,80 and the  period of the lease was 20 years.  The term  under  the lease was that the land was to be utilised for  constructing buildings  thereon for "purposes of cinema. drama  etc."  It was  further agreed between the parties that at the  end  of the  term the lessee would demolish the buildings  which  he had.  constructed and deliver vacant possession of the  site Lo the lessor. Abirama  Chettiar  constructed a theatre on  the  site,  and assigned his rights to the respondent-company.  In an action against the company for a decree in ejectment and for  mesne profits, the Trial Court awarded to the lessors a decree for possession  and  mesne  profits.   Against  the  decree  the company-respondent preferred an appeal to the District Court which  was transferred for trial to the High Court.   During the  pendency of this appeal, the State of  Madras  extended the  Madras  City  Tenants’ Protection Act, 3  of  1922,  as amended  by Madras Act 19 of 1955 to the Municipal  Town  of

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Coimbatore.  The company then applied under a. 9 of the  Act and  on  this application the High Court directed  that  the lessors do sell to the company the site in dispute under  s. 9  of the Madras City Tenants Protection Act, 1922.  against payment of the full market value of the land on the date  of the  order.  The order was confirmed in an appeal under  the Letters Patent Held:     Per  Gajendragadkar,  C.J., Shah  and  Sikri,  JJ. section  12 has been enacted to protect the tenants  against any  contractual  engagements  which  may  have  been   made expressly or by implication to deprive themselves wholly  or partially of the protection intended to be conferred by  the Statute.   And  the  only  class  of  cases  in  which   the protection becomes ineffective is where the tenant has  made a  stipulation in writing registered as to the  erection  of buildings, erected after the date of the contract of  lease. The  stipulations not protected in s. 12 are only  those  in writing registered and relate to erection of buildings. such as  restrictions about the size and nature of  the  building constructed,  the building materials to be used therein  and the purpose for which the building is to be utilised. (ii)Section  9(1) of the Act was manifestly in the  interest of the general public to effectuate the mutual understanding between the, landlords and the tenants as to the duration of the  tenancies,  and  to  conserve  building  materials   by maintaining  existing buildings for purposes for  which  the leases were granted.  Restriction imposed upon the right  of the  landlord to obtain possession of the  premises  demised according to the terms of the lease would, therefore not  be regarded  as  imposing an unreasonable  restriction  in  the exercise of the right conferred upon  1017 the landlord by Art. 19(1) of the Constitution, because  the restriction would be regarded as one in the interests of the general  public.  What s. 9 does is not so much  to  deprive the landlord of his property or to acquire his rights to  it as to give effect to the real agreement between him and  his tenant  which induced the tenants to construct his  building on  the plot let out to him.  If the law is not  invalid  as offending Art. 19(1)(f) of the Constitution, no  independent infringement  of Art. 31(1) of the Constitution may  be  set up. Per  Wanchoo and Ayyangar, JJ (dissenting) (1) The  preamble of  the Act would indicate that the Act would not  apply  to afford  protection in a case where by an express term  in  a registered lease deed a tenant agreed to surrender the  site on  which he had erected a building, where  he  specifically contracted  that he would demolish the building and  deliver vacant  possession  of the site on the  termination  of  his tenancy.   If  the scope of the proviso to s. 12 had  to  be construed  in the light of the preamble, it is obvious  that the   tenant  who  had  entered  into  a  contract  with   a stipulation of the sort as stated above could not be said to have  constructed  the buildings on another’s land  "in  the hope  that he would not be evicted so long as he  pays  rent for  the land".  The High Court erred in  interpretting  the proviso to s. 12 of the Act. (ii) These  words "as to the erection of buildings"  mean  a stipulation which bears on or is in relation to the erection of  buildings.   Such  a construction  would  reconcile  the proviso  with the preamble which sets out the object  sought to  be achieved by the Act.  If the lease deed  contains  no stipulation   whatsoever  in  regard  to  the  erection   of buildings,  as was the case with the large number of  leases in  the city of Madras which were entered into prior to  the

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enactment  of  the Act in 1922, the tenant who  erected  the building exconcessis without contravening any undertaking on his part, obtains protection under the Act.  The test  would therefore be "did the parties advert to and have in mind the Lontingency  of the tenant erecting buildings on the  leased land"?  If they had and had included in a solemn  registered instrument  a provision which would bear upon  the  relative rights  of  the  parties in the event  of  the  erection  of buildings  on  the site, the stipulation would  have  effect notwithstanding  the  Act; for in such an event  the  tenant would not have constructed buildings on the land in the hope that he would not be disturbed from possession so long as he paid the rent agreed upon.

JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeal No. 264 of 1962. Appeal  from the judgment and order dated April 24, 1959  of the Madras High Court in L.P.A. No. 75 of 1958. A.   V.  Viswanatha  Sastri and R. Ganapathy Iyer,  for  the appellants. M.   C.  Setalvad, M. A. Sattar Sayeed and  R.  Thiagarajan, for the respondent. 1018 March  4, 1964.  The Judgment of GAJENDRAGADKAR  C.J.,  SHAH and  SIKRI  JJ.  was delivered by  Shah  J.  The  dissenting opinion  of  WANCHOO  and  AYYANGAR  JJ.  was  delivered  by AYYANGAR J. SHAH  J.-The  appellant  Vajrapani  Naidu  and  his   mother Bangarammal-hereinafter  collectively called  ’the  lessors- granted a lease of an open site in the town of Coimbatore to Abirama Chettiar under a registered deed dated September 19, 1934,  for 20 years at an annual rental of Rs.  1,080/-  for putting  up  a  building  suitable for  use  as  a  theatre. Abirama  Chettiar  constructed a theatre on  the  site,  and assigned  his  rights to the New  Theatre  Carnatic  Talkies Ltd., Coimbatore-hereinafter called ’the Company’.  The Com- pany  attorned to the lessors and was recognised  as  tenant under the lease dated September 19, 1934.  On March 9,  1954 the  lessors  served a notice calling upon  the  Company  to vacate and surrender vacant possession of the site, and  the Company  having failed to comply with the  requisition,  the lessors commenced an action against the Company for a decree in  ejectment  and  for mesne profits at  the  rate  of  Rs. 1,000/- per mensem from September 19, 1954.  The Subordinate Judge  at  Coimbatore awarded to the lessors  a  decree  for possession  and mesne profits at the rate of Rs.  350/-  per mensem  and  costs  of the suit.   Against  the  decree  the Company  preferred  an  appeal  to  the  District  Court  at Coimbatore which was transferred for trial to the High Court at  Madras.  During the pendency of this appeal by G.O.  No. 608  dated February 10, 1958, the State of  Madras  extended the  Madras  City  Tenants’ Protection Act  3  of  1922,  as amended  by Madras Act 19 of 1955, to the Municipal town  of Coimbatore.  The Company then applied under s. 9 of the  Act for  an  order  directing the lessors  to  convey  the  site demised to the Company for a price to be fixed by the Court. Panchapakesa lyer, J., directed that the lessors do sell  to the  Company  the site in dispute under s. 9 of  the  Madras City  Tenants’ Protection Act, 1922. against payment of  the full market value of the land on the date of the order,  and further   directed  that  the  trial  Court  do  appoint   a Commissioner  to  fix  the value of the site  based  on  the market value prevalent on July 28, 1958.

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1019 An  appeal  under cl. 15 of the Letters Patent of  the  High Court  against the order of Panchapakesa lyer, J., was  dis- missed.   With  certificate  granted by the  High  Court  of Madras, this appeal is preferred by the lessors.               Two  questions fall to be determined  in  this               appeal :               (1)   Whether the Company is entitled under s.               9 of the Madras City Tenants’ Protection  Act,               1922, notwithstanding the terms of the  lease,               to  an order calling upon the lessors to  sell               the   land  demised  under  the   deed   dated               September 19, 1934; and               (2)   Whether  the  terms of s. 9 of  the  Act               infringe the fundamental right under Arts.  19               (1  ) (f ) and 31(1) of the  Constitution,  of               the  lessors,  and  s. 9 is  on  that  account               invalid. It is necessary in the first instance to notice the material terms of the lease.  The land demised under the lease was  a vacant  site  situate in the municipal town  of  Coimbatore. The  annual rent stipulated was Rs. 1,080/-- and the  period of  the  lease  was 20 years from the date  of  delivery  of possession  of  the site.  The land was to be  utilised  for constructing  buildings  thereon for  "purposes  of  Cinema, drama,  etc.".  After  the expiry of the term  of  20  years stipulated  under  the  deed the lessee  had  an  option  of renewal  for another period of 20 years on fresh  terms  and conditions.    The   deed  provided  that  "if   after   the termination of the stipulated period" * * the lessees  "fail to pay the arrears of rent that will fall due till that date and hand over possession of the site" to the lessors  "after making it clear by dismantling the constructions therein and by  demolishing the walls etc." the lessors "shall,  besides realizing the arrears of rent due to them according to  law, have the right to take possession through Court of the  site in   which  the  aforesaid  buildings  are  put   up   after dismantling the constructions and demolishing the  buildings therein".   The  other  covenants  of  the  lease  are   not material. It  appears that before 1922, in many cases on lands in  the town of Madras belonging to others constructions had 1020 been  put up by tenants obtained under periodic  leases  "in the hope that they would not be evicted so long as they paid fair rent".  But on account of the inflationary pressure  in the  wake of the First World War, there was a steep rise  in land values and rents, and many tenants who had  constructed buildings  on  lands obtained on leases were  sought  to  be evicted  by the landlords.  To prevent loss to  the  tenants consequent upon the enforcement of the strict provisions  of the  Transfer of Property Act, the Legislature  enacted  the Madras  City Tenants’ Protection Act 3 of 1922.   Under  the Act  every  tenant is on ejectment entitled to  be  paid  as compensation  the value of any building which may have  been erected  by him or by his predecessors-in-interest  and  for which  compensation has not already been paid to him.  ln  a suit  for ejectment against a tenant in which  the  landlord succeeds,   the  Court  has  to  ascertain  the  amount   of compensation which is to be the value as on the date of  the order of the buildings constructed, trees planted and  other improvements  made by the tenant and the decree in the  suit must  declare  the  amount so found  due  and  direct  that, on_payment  by the landlord into Court, within three  months from the date of the decree, of the amount so found due, the

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tenant  has to put the landlord into possession of the  land and  the building.  By s. 9 it is provided that  any  tenant entitled  to  compensation  and  against  whom  a  suit   in ejectment has been instituted may within the time prescribed apply to the Court for an order that the landlord shall sell the  whole or part of the land for a price to be  fixed  by, the  Court.  The price under the Act as  originally  enacted was  to be the market value of the land on the date  of  the order,  but  by an amendment made in 1926 it has to  be  the lowest  market value prevalent within seven years  preceding the date of the order.  On the price being fixed, the tenant has  the  option within a period not being less  than  three months  and not more than three years from the date  of  the order  to pay into Court or otherwise the price  either  the whole  or  in  instalments  with  or  without  interest   as directed, and when the payment is made the Court has to pass the  final  order directing conveyance of the  land  by  the landlord to the tenant, and thereupon the suit or proceeding is to stand dismissed, and any decree or order in  1021 ejectment  that may have been passed therein but  which  has not  been  executed  is to stand vacated.  By s.  12  it  is provided :               "Nothing  in  any contract made  by  a  tenant               shall take away or limit his rights under this               Act,  provided that nothing  herein  contained               shall  affect  any stipulations  made  by  the               tenant   in  writing  registered  as  to   the               erection  of  buildings,  in so  far  as  they               relate to buildings erected after the date  of               the contract." The Act as originally enacted extended only to lands in  the City  of Madras, let out before the commencement of the  Act for construction of buildings for non-residential as well as residential  use.   By  Madras  Act 19  of  1955  power  was conferred upon the State Government to extend Act 3 of  1922 by notification to tenancies of land created before the date on which the Act was extended, to any other municipal  towns and  any specified village within five miles of the City  of Madras or such municipal town with effect from such date  as may  be  specified  in the  notification.   Exercising  this power,  the  Government of Madras issued a  notification  on ’February  10, 1958, extending the provisions of the Act  to the municipal town of Coimbatore. The  scheme  of the Act as extended by  notification  issued under  Act 19 of 1955 is that when under a tenancy  of  open land within    the  municipal town created before  the  date with effect from    which  the Act is extended,  a  building has been constructed     by  the tenant, and he is  sued  in ejectment by the landlord,    he has the right on  ejectment to  be paid as compensation the value as at the date of  the order  of ejectment, of the building constructed  and  trees planted  by him, and he has in the alternative the right  to claim an order from the Court that the land belonging to the lessor shall be sold to him at the price fixed by the  Court according  to  the  terms of the statute.  By s.  12  it  is provided  that the rights conferred by the Act shall not  be taken  away or restricted by any contract made  between  the landlord and the tenant provided, however, the  stipulations made by the tenant in writing registered as to the  erection of buildings, 1022 in so far as they relate to buildings erected after the date of the contract of lease, are exempt from this restriction. The lease granted by the lessors in this case was before the

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date  on  which  the  Act was  extended  to  the  Coimbatore municipal  town and it is common ground that  the  buildings were constructed after the date of the contract of lease. Ex facie,  the  Company  as  lessee  had,  when  an  order  for ejectment  was made, an option to receive  compensation  for the  value  of the structure, or to claim that  the  lessors shall sell to it the land demised.  But the lessors  contend that because of the stipulations in the deed of lease (which is  registered  under the law in force for  registration  of assurances) relating to the obligation of the tenant on  the expiry of the lease to deliver vacant possession of the land after dismantling the constructions therein, the Company has by the terms   of  s. 12 disentitled itself to ’the  benefit of s. 9 of the Act.      It    is   submitted    that    the stipulation relating to delivery   of  vacant possession  of the  site  on the expiry of the period of  the  lease  after removing the buildings is a stipulation "as to the  erection of buildings" within the meaning of s. 12, and therefore the restriction on the liberty of contract between landlord  and tenant  imposed by the opening clause of s. 12  is  removed, and  the Company is bound by the terms of the lease  and  is not  entitled to claim the benefit of s. 9 of the  Act.   We are,  for reasons presently to be set out, unable to  uphold that contention. Section  12 of the Act consists of two parts : by the  first part  it  enacts that the rights conferred upon  the  tenant under  the  Act  may not be taken away  or  limited  by  any contract  made  by  a tenant.  Such  rights  would,  amongst others, include the right to claim compensation under ss.  3 and 4 and the right to purchase the land from the lessor  by order of the Court under s. 9. By the second part of s.  12, the protection granted by the first part does not avail  the tenant in certain conditions.  If there be a stipulation "as to the erection of buildings" made by the tenant in  writing registered,  in  so far as it relates to  buildings  erected after the date of the contract, the protection conferred  by the  first part of s. 12 shall not apply.  A covenant  in  a lease  which  is duly registered that the  tenant  shall  on expiry of  1023 the lease remove the building constructed by him and deliver vacant possession, is undoubtedly a stipulation relating  to the  building,  but  it  is not a  stipulation  as  to  "the erection  of  building".   Section 12  has  manifestly  been enacted to effectuate the object of the Act which is set out in  the  preamble-viz.   "to  give  protection  to   tenants who  . . . . have constructed buildings on others’ lands  in the hope that they would not be evicted so long as they  pay a  fair  rent  for the land".  The  Legislature  has  sought thereby  to  protect  the tenants  against  any  contractual engagements  which  may  have  been  made  expressly  or  by implication to deprive themselves wholly or partially of the protection intended to be conferred by the statute.  And the only  class  of  cases  in  which  the  protection   becomes ineffective  is where the tenant has made a  stipulation  in writing registered as to the erection of buildings,  erected after the date of the contract of lease.  The restriction is therefore  made only in respect of a limited class of  cases which expressly attract the description of the  stipulations as  to  the  erection of buildings.  Having  regard  to  the object of the Act, and the language used by the Legislature, the exception must be strictly construed, and a  stipulation as to the erection of buildings would not, according to  the ordinary meaning of the words used, encompass a  stipulation to  vacate and deliver possession of the land on the  expiry

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of  the  lease  without claiming to  enforce  the  statutory rights  conferred upon the tenant by s. 9. The  stipulations not protected in s. 12 are only those in writing  registered and  relate  to erection of buildings such  as  restrictions about  the size and nature of the building constructed,  the building  materials to be used therein and the  purpose  for which  the building is to be utilized.  It is true that  the operative  part  of s. 12 protects the  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.  But  on  that account  it is not possible to give a wider meaning  to  the expression  "as  to  the’ erection of  buildings"  that  the stipulation  as:to the erection of buildings  would  include stipulations to remove buildings on the determination of the lease.   It cannot be said that the literal meaning  of  the expression  is likely to render the exception  ineffective,, for stipulations 1024 concerning  erection of buildings in registered  leases,  or contracts subsequent to the leases, providing for forfeiture on failure to comply with the terms of the lease relating to the  erection of buildings may undoubtedly  involve  limita- tions  or deprivation of the rights of the tenant under  the Act and to that extent the protection conferred by s. 12  in favour  of the landlord may be lost.  The  construction  for which the appellant contends assigns no meaning to the words "as   to   the  erection  of  buildings"  and   makes   them superfluous, besides it materially affects the scope of  the relief  which  the  Act obviously  extends  to  the  tenants falling under its provisions. Section   9(1)  which  enables  a  tenant  to  purchase   on determination  of  the lease the land of  -the  landlord  is somewhat unusual.  But it cannot be said that it imposes  an unreasonable  restriction upon the right of the landlord  to hold  and  dispose of property within the  meaning  of  Art. 19(1)(f)  of  the Constitution.  The Act applies to  only  a limited  class  of lands : it applied to  lands  granted  in lease  for  construction of buildings before the  date  with effect  from  which  the  Act is extended  to  the  town  or village.   It was enacted with a view to give protection  to the  tenants  who had, notwithstanding the  usual  covenants relating  to determination of tenancies, obtained lands  -on lease in the hope that so long as they paid and continued to pay  fair  rent, they would not be evicted, but  because  of changed  conditions as a result of the War, appreciation  in land  values and consequent increase in the level of  rents. were  faced with actions in ejectment involving  dismantling of  properties  constructed  by  them,  and  eviction.   The protection becomes effective only when the landlord seeks to obtain,  in breach of the mutual understanding,  benefit  of the unearned increment in the land values, by instituting  a suit in ejectment.  It was manifestly in the interest of the general  public  to  effectuate  the  mutual   understanding between the landlords and the tenants as to the duration  of the  tenancies,  and  to  conserve  building  materials   by maintaining  existing buildings for purposes for  which  the leases were granted.  Restriction imposed upon the right  of the  landlord to obtain possession of the  premises  demised according to the terms  1025 of  the lease would, therefore, not be regarded as  imposing an  unreasonable  restriction in the exercise of  the  right conferred  upon  the  landlord  by  Art.  19(1)(f)  of   the Constitution,  because the restriction would be regarded  as

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in the interests of the general public.  We ought to  empha- sise  that  what  s. 9 does is not so much  to  deprive  the landlord  of his property or to acquire his rights to it  as to  give  effect to the real agreement between him  and  his tenant which induced the tenant to construct his building on the  plot  let  out to him.  If the law is  not  invalid  as offending Art. 19(1)(f) of the Constitution, no  independent infringement  of Art. 31(1 ) of the Constitution may be  set up. It was urged, however, that by the statute as amended by the Madras  City Tenants’ Protection (Amendment) Act VI of  1926 (before  it was amended by Act 13 of 1960), the price  which the  Court  may fix and at which the tenant is  entitled  to purchase the land is to be the lowest market value prevalent within  seven years preceding the date of the order.   This, it was submitted was unreasonable.  But it is not  necessary for  the purpose of this case to decide that  question,  for the Company has offered to pay the market value of the  land as at the date on which the order was passed by Panchapakesa lyer,  J. That absolves us from the necessity to  adjudicate upon  the  reasonableness  of  the  provisions  relating  to payment of compensation at the rate prescribed by the Act as amended  by  Act  VI of 1926.  We may observe  that  by  the Amending  Act 13 of 1960 several alterations have been  made as regards the extent of the right of the tenants to require the landlords to sell the land and the price which has to be paid by the tenants for purchasing the land.  For  instance, under  the Amending Act the Court -nay direct sale  only  of the minimum area of land necessary for convenient  enjoyment by the tenant of the house built by him and the price is  to be  the average marked value in the three years  immediately preceding the date of the order.  In view of this amendment, and  having  regard to the special circumstances,  viz.  the offer made by the Company, notwithstanding the provisions of the Act, to pay the market value of the land -it the date of the   order,   we  decline  to  enter   upon   an   academic consideration as to the validity of the 134-159 S.C.-65 1026 provision  fixing  compensation at the lowest  market  value prevalent  within  seven  years preceding the  date  of  the order.   Assuming that a provision fixing such  compensation is  Unreasonable and therefore invalid, it would be  clearly severable from the rest of the statute and would not  affect the validity of the provision relating to acquisition by the tenant  of the land demised by purchasing it from the  land- lord.   At  best, the landlord would be entitled  to  obtain compensation  which is equivalent to the market  value,  and that  the  Company has agreed to pay.  That, however,  is  a matter on which we express no opinion. The appeal therefore fails and is dismissed.  There will  be no order as to costs. AYYANGAR, J.-We regret our inability to agree with the order that the appeal should be dismissed.  The facts of the  case have  been set out in the Judgment of our brother  Shah,  J. and do not, therefore, require to be repeated. The  two principal points arising for consideration  and  on which the decision of the appeal would turn are, first,  the interpretation   of  s.  12  of  the  Madras  City   Tenants Protection  Act  (Madras Act III of 1922) and,  second,  the constitutional validity of s. 9 of that enactment.   Section 12 enacts :               "Nothing  in  any contract made  by  a  tenant               shall take away or limit his rights under this               Act,  provided that nothing  herein  contained

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             shall  affect  any  stpulations  made  by  the               tenant   in  writing  registered  as  to   the               erection  of  buildings,  in so  far  as  they               relate to buildings erected after the date  of               the contract." The question that first calls for examination is the  proper construction  of  s. 12 and in particular  the  meaning  and effect  of  the proviso contained in it.   Before,  however, taking  up the words of the section, it would be  useful  to read the preamble and certain of the other provisions of the Act  because it is in the light of the guidance afforded  by them  that  the  content of the proviso to s.  12  could  be determined, The preamble recites that the Act had been  1027 enacted  as  it was "found necessary to give  protection  to tenants  who in municipal towns and adjoining areas  in  the State  of Madras have constructed buildings on others’  land in  the hope that they would not be evicted so long as  they pay  a  fair rent for the land".  Section 1 (3) of  the  Act which  defines the tenancies within the local area to  which the  Act  extends enacts (to read the provision  as  it  now stands) that the Act shall apply only "to tenancies of  land created  before the commencement of the Madras City  Tenants Protection  (Amendment) Act, 1955 and in any municipal  town or  village  to which this Act is extended  by  notification under  sub-s. (2) only to tenancies created before the  date with effect from which this Act is extended to such town  or village."  From these provisions two matters are clear:  (1) that  the Act was enacted in order to ensure that  the  hope entertained  by  tenants who had  constructed  buildings  on others’ lands that they would not be evicted so long as they paid fair rent was not frustrated, and (2) that the Act  has application only to tenancies which having commenced earlier were subsisting on the date on which the Act came into force in the particular area. With these preliminary observations we shall proceed to deal with the, construction of s. 12 of the Act. The tenancy under which the respondent was inducted into the land  on which he has constructed buildings was of  1934,  a date  long  anterior to 1958 when by a  notification  issued under s. 1(2) of the Act its provisions were extended to the municipal town of Coimbatore where the land involved in  the present proceedings is situated.  It was therefore a tenancy governed  by  the provisions of the Act.   Next,  the  lease under  which  the respondent held the land  was  in  writing registered, and therefore the only question to be considered is whether the stipulations it contains are comprehended  by the proviso. Section 12, it would be seen, is made up of two limbsfirst a general provision saving to tenants comprehended by the Act, the rights conferred by its operative terms, notwithstanding any contract, and next a proviso which makes an inroad  into the generality of the saving, by saving con- 1028 tractual  stipulations from the operation of  the  statutory rights  created  by  the Act.  The entirety  of  the  debate before us is as to the nature, scope and width of the saving effected  by the proviso.  It does not need any argument  to establish    that if s. 12 had stopped with its first  limb, the  respondent  would be entitled to the benefit  of  every right conferred upon tenants by the Act, but the proviso  it is  conceded  is  intended to cut down  the  scope  of  that saving.   Expressed  in other terms,  from  the  prohibition against  the  operation  of any stipluation  in  a  contract limiting  the  rights  conferred on tenants by  the  Act  an

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exception  is carved out.  So much is common ground but  the controversy  is  as  regards the scope and  limits  of  that exception.   As  regards  the  exception  contained  in  the proviso  four  matters are clear: (1) The  stipulation  must find  a place in a contract in writing which is  registered, (2) the stipulation which is within the proviso and to  that extent detracting from the non-obstante provision  contained in  the  opening  words  must be one  in  relation  to  "the erection  of  buildings", (3) it must  relate  to  buildings erected after the date of the contract, and (4) if there  is a   stipulation  satisfying  these  three  conditions   such stipulation  would have effect notwithstanding  anything  in the  previous part of s. 12 which would be the  same  things saying  that the rights of the tenant under the Act  may  be taken  away or limited by such a stipulation.  It is  common ground  and beyond controversy that conditions 1 &  3  above are  satisfied and the only point in dispute is whether  the 2nd condition is satisfied so as to attract the operation of condition 4. The  learned  Judges of the High Court have  understood  the words  "as  to the erection of buildings" occurring  in  the proviso as equivalent to a stipulation regarding the  manner in  which the building may be erected, the materials  to  be used,  the area the building should cover and other  details in  relation to the construction of the building and as  not apt  to cover the case of a stipulation whereby  the  tenant undertakes to remove the buildings constructed by him on the termination of the tenancy; and that was also the submission made  to  us by Mr. Setalvad on behalf  of  the  respondent. With the greatest respect to the learned Judges  1029 of the High Court we are unable to agree with this construc- tion of the proviso. Before  examining  this  we think  it  convenient  and  even necessary  to  refer to the terms of the  lease  deed  under which  the  appellant  became a  tenant  before  considering whether  it  is a stipulation which would  fall  within  the words  "stipulations as to the erection of buildings".   The lease deed which has been marked as Ex.  B-1 in the case  is a registered instrument dated September 19, 1934.  The  term of  the  demise was a period of 20 years from  the  date  of delivery  of  possession  and the rent  stipulated  was  Rs. 1,080/- per year.  The purpose for which the site was leased is  stated  in the document to be  "to  construct  buildings thereon  as he (the lessee) requires on the  aforesaid  site for the purpose of cinema, drama etc. at his own expense and also further constructions necessary for the same".  This is followed   by  two  clauses  which  have   some   relevance. Notwithstanding  that  the lease was for  a  fixed  definite period  of 20 years, the lessee was permitted  to  surrender the  lease if he found that the business venture  for  which the  lease was taken was not profitable.  In that event  the lessee  was entitled to surrender the lease, and put an  end to  the  tenancy,  when he had to  dismantle  the  buildings constructed by him at his own expense and pay to the lessors one  year’s  rent for loss by the latter  sustained  by  the premature  termination of the lease,.  If this condition  as to  the  removal  of buildings were  not  fulfilled  by  the lessee,  the lessors were authorised to take  possession  of the   vacant   site  dismantling   the   constructions   and demolishing the walls.  On the termination of the stipulated period  of 20 years the lessees stipulated that  they  would dismantle  the constructions by demolishing the  walls  etc. and deliver possession of the vacant site to the lessors. The   question  now  for  consideration  is   whether   this

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stipulation  contained in the registered lease deed that  at the end of the term the lessee would demolish the  buildings which  he had erected and deliver vacant possession  of  the site  is a stipulation which is saved by the proviso  to  s. 12.  If the scope of the proviso had to be construed in  the light of the preamble, it is obvious that the tenant who had entered  into a contract with a stipulation of the  sort  we have  extracted, could not be said to have  constructed  the buildings on 1030 another’s land "in the hope that he would not be evicted  so long  as  he pays rent for the land".  The  preamble  would, therefore,  indicate that the Act would not apply to  afford protection  in  a  case  where  by  an  express  term  in  a registered lease deed a tenant agreed to surrender the  site on  which  he had erected a building where  he  specifically contracted  that he would demolish the building and  deliver vacant  possession  of the site on the  termination  of  his tenancy. The  next matter to be noticed is that the  tenancies  dealt with  by  the Act are tenancies which  came  into  existence prior  to the enactment or prior to the date the Act  became operative in the local area and therefore one cannot  expect stipulations worded in exactly the same terms as in the Act, because  exconcessis the Act and its provisions were not  in the contemplation of the parties when they entered into  the contract.   The mere fact, therefore, that a stipulation  as regards  the erection of the buildings is not worded in  the same  manner as under the provisions of the Act or in  terms of the Act is no ground for refusing effect to it.   Lastly, since what is saved by the proviso from the operation of the Act are the rights which are created in favour of tenants by the Act, we are led to an inquiry as to the rights which are conferred  by  the Act, for the saving must  obviously  have reference to and be determined by these rights. Broadly speaking two kinds of rights have been conferred  on lessees under tenancies failing within the scope of the Act- first  a right to the payment of compensation for  buildings erected  by  them on leased land before  they  are  evicted, (under  s. 3 of the Act) and secondly (this of course  could be only in the alternative) a right or option to require the landlord to sell them the land under lease for a price to be computed  in  accordance with s. 9. It is obvious  from  the very  nature  of things having regard to the time  when  the lease was entered into that there would not and could not in terms be a stipulation in a deed against the option accorded to  a tenant to purchase the leased land, and the matter  is so self evident as not to need any argument in support.   We therefore   reach   the  position   that   the   stipulation contemplated  by the proviso to s. 12 could only be  one  in relation  to the right of the tenant to  claim  compensation for the buildings erected by him after the  1031 commencement of the tenancy.  Expressed differently,  though the   proviso  is  worded  as  to  permit  the   saving   of stipulations  contained  in  registered  deeds  whether  the stipulations relate to the right to the compensation receiv- able  by tenants under s. 3, or their right to  require  the sale  of  the  leased land to them under s. 9  when  on  the termination  of the tenancy they are sought to  be  evicted, the  latter right is not one which could be affected  by  an express stipulation in that regard, but its non-availability to  the tenant could be brought about only by a  stipulation bearing on the right of the tenant to compensation under  s. 3 for buildings erected by him during his tenancy.

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We  shall  now proceed to ascertain  the  stipulation  which would affect the right to compensation in respect of  build- ings  erected conferred on tenants by s. 3.  That  provision reads :               "Every  tenant shall on ejectment be  entitled               to  be paid as compensation the value  of  any               building, which may have been erected by  him,               by any of his predecessors in interest, or  by               any  person not in occupation at the  time  of               the ejectment who derived title from either of               them,  and  for  which  compensation  has  not               already -been paid.  A tenant who is  entitled               to compensation for the value of any  building               shall  also be paid the value of  trees  which               may  have been planted by him on the land  and               of  any improvements which may have been  made               by him." A stipulation which if effective would limit the quantum  of compensation payable in respect of buildings constructed  by a tenant provided for by s. 3, it is conceded, is within the proviso to s. 12 as being one with respect to the  "erection of buildings".  The effect of this concession on the meaning of  the proviso, we shall consider later.  But the  question is whether these words can on any resonable construction  be limited  or confined to such a contingency.  Let. us take  a case  where  in a lease like the one before us for  a  fixed term say of 20 years there is a stipulation that the  tenant shall not build on the land and that if lie erected 1032 buildings he shall remove the structures, and deliver vacant possession  at  the end of the tenancy.   Obviously  such  a stipulation  would  imply that he shall not claim  any  com- pensation,  for the structures which contrary to his  under- taking  he  erects.  We did not understand Mr.  Setalvad  to whom  this  was  put during arguments to  contend  that  the tenant,  who  constructed  buildings under a  lease  with  a stipulation  such as this would be able to obtain  compensa- tion  under s. 3, with the attendant rights conferred by  s. 9.  This  can  only  be on  the  basis  that  a  stipulation forbidding  the  erection of buildings by the  lessee  is  a stipulation    as   regards   "erection    of    buildings"- notwithstanding   that  it  is  part  and  parcel  of   this stipulation  that the tenant shall demolish buildings  which he  constructed.   If a stipulation forbidding  erection  of buildings  and requiring their removal  before  surrendering possession of the site is conceded to be one ’in respect  of erection  of  buildings’-as has to be conceded,  it  is  not possible  to accept the construction that a stipulation  for the  removal of buildings which the lessee is  permitted  to erect  and  keep in the site only for the  duration  of  the tenancy  is  any  the less one "in respect  of  erection  of buildings".  We understand these words to mean a stipulation which  bears  on  or  is in  relation  to  the  erection  of buildings.  Such a construction would reconcile the  proviso with  the  preamble which sets out the object sought  to  be achieved  by,  the  Act.   If the  lease  deed  contains  no stipulation  whatsoever  in  regard  to  the  erection   of. buildings,  as was the case with the large number of  leases in  the city of Madras which were entered into prior to  the enactment  of  the  Act in 1922. the tenant  who  erected  a building exconcessis without contravening any undertaking on his  part., obtains protection under the Act.  Again if  the lease   though  it  contains  such  a  stipulation   against construction  of  buildings on the leased land is not  by  a registered  instrument-as were again several leases  in  the

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city-the statutory rights to compensation and purchase  were protected.  If however the parties had recourse to a  formal registered  instrument for putting through  the  transaction and such a deed contained a stipulation against erection  of buildings,  or against the continuance of the  buildings  on the land at the termination of the tenancy, or what comes to the  same  thing  against  the  tenant  being  entitled   to compensation for the buildings  1033 erected  by  him  during  the currency  of  the  lease,  the stipulation  would govern the rights of the tenant  and  not the statute.  This in oar opinion is the proper construction of  the proviso to s. 12.  The test would  therefore  be"did the  parties advert to and have in mind the  contingency  of the tenant erecting buildings on the leased land"?  If  they had and had included in a solemn registered deed a provision which would bear upon the relative rights of the parties  in the  event  of the erection of buildings on  the  site,  the stipulation  would have effect notwithstanding the Act;  for in  such  an  event the tenant would  not  have  constructed buildings  on  the  land in the hope that he  would  not  be disturbed from possession so long as he paid the rent agreed upon. Before  concluding  we  shall examine how  far  the  limited meaning  attributed  to the phrase "as to  the  erection  of buildings" can be sustained.  First let us take a case where there is a stipulation in a registered deed under which  the lessee  in consideration of a favourable rent undertakes  to construct  buildings  of  a  particular  type  and   deliver possession  of the site as well as the building  constructed at  the end of the term without any claim  to  compensation. On the construction put forward by the respondent this would be  a stipulation which would be saved by the proviso  since it refers to the construction of buildings and not  removal, though  it negatives all right to compensation to  which  he would be entitled under s. 3. Such a stipulation being valid and  enforceable, on a suit for ejectment being  filed,  the tenant  would  not  be entitled to  compensation  and  would therefore be outside s. 9 because s. 9 applies only to cases where the tenant is entitled to compensation.  Now, does  it make  any  difference  if  the  deed  stipulated  that   the buildings  erected by the tenant should be removed,  without any  claim to compensation in the event of non-removal.   We can  see no sensible distinction between the two cases,  and if  the  one  is a stipulation in respect  of  "erection  of buildings", the other is equally so. Next we shall take the case which the respondent asserts  is precisely the one intended to be covered by the proviso viz: a stipulation that the lessee shall not construct a building in  excess of a particular plinth area, or beyond a  ground- floor, or in excess of a specified number of rooms. 134-159 S.C.-66. 1034 Obviously  the  question  about  the  applicability  of  the proviso would come in only if the tenant broke the  covenant and  we  shall  therefore  assume  that  in  breach  of  the stipulation,  the  tenant erects buildings contrary  to  his undertaking.   In  such an event it is said  that  when  the compensation  to which the tenant is entitled under s. 3  is computed, the amount would be confined to what he would have got,  if  he  had abided by the contract.  But  this  is  to ignore the basic feature of the Act, under which the  tenant who  is entitled to compensation under s. 3,  and  certainly the  limited compensation that the tenant obtains even  when he breaks a covenant would still be compensation under  that

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section, is entitled to purchase the lease land under s.  9. The  construction  suggested therefore comes  to  this  that though   under  the  proviso  to  s.  12  there   might   be stipulations which might reduce the quantum of  compensation to which a tenent would be entitled under s. 3, there cannot be a stipulation apart possibly from a covenant against  any erection  of  buildings which we have  already  dealt  with, which -would preclude a tenant from his right under s. 9. If as  must  be  conceded the first limb of  s.  12,  save  the statutory  rights of tenants both under ss. 3 & 9  from  the operation  of  any contract, it appears to us  to  stand  to reason  that the proviso which saves rights under  contracts from the rights conferred by the Act should be construed  to be  co-extensive with and operate on the same field  as  the opening portion of s. 12. We  are, therefore, clearly of the opinion that the  learned Judges of the High Court were in error in their construction of  the  proviso  to s. 12.  In this view  the  question  as regards the constitutional validity of s. 9 would not really arise  for consideration, and we express no opinion  on  it. We  would accordingly allow the appeal and decree  the  suit for ejectment filed by the appellant-                            ORDER In  accordance  with  the majority opinion,  the  appeal  is dismissed.  No order as to costs. Appeal dismissed. GMGIPND-L-134-59 S. C. of India (6021-46)-18-10-65-2,500.          1