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PETITIONER: R.   VENKATASWAMI NAIDU AND ANOTHER

       Vs.

RESPONDENT: NARASRAM NARAINDAS

DATE OF JUDGMENT: 27/04/1965

BENCH: SARKAR, A.K. BENCH: SARKAR, A.K. SUBBARAO, K. HIDAYATULLAH, M. MUDHOLKAR, J.R.

CITATION:  1966 AIR  361            1966 SCR  (1) 110  CITATOR INFO :  RF         1969 SC 435  (5)  E          1970 SC1683  (27,29)

ACT: Madras City Tenants Protection Act, 1922, ss. 2(4), 3, 9 and 12 - Tenants building on land in breach of covenant  whether entitled to benetits under ss. 3 and 9.

HEADNOTE: The  appellants were tenants who held over after the  expiry of their lease and built structures on the land in breach of a covenant not to build.  In a suit for their ejectment they asked  the Court to direct the landlord to sell the land  to them  under s. 9 of the Madras City Tenants Protection  Act, 1922  which  had, pending the, suit, been  extended  to  the area.   The benefit under s. 9 was available to tenants  who were   entitled  under  s.  3  to  compensation  for   their structures.   According  to  s.  3  every  tenant  would  on ejectment  be entitled to be paid as compensation the  value of  any  building which may have been erected by  him.   The appellants  claim to the benefit under s. 9 was accepted  by the  trial  Court, the First appellate Court  and  a  single Judge  of the High Court.  But in the Letters Patent  Appeal the  Division Bench took the view that since a covenant  not to  build  is  enforceable in law and  a  superstructure  in contravention  of it is liable to be demolished it would  be anomalous to   compensate  the tenant under s. 3 for such  a structure, and therefore s.   3  could not be applicable  to tenants  who built structures in breach of  their  covenant. It also took note of the words in the preamble that the  Act was   intended  to  protect  tenants  who  had   constructed buildings  on others lands "in the hope that they would  not be evicted.," HELD  : (i) The covenant entered into by the  tenants  could not be taken into account for the purpose of construing  the scope of s. 3. The High Court had fallen into this error. [1 15F] (ii)The  word ’tenant" in s. 3 must be understood  only  in the sense that the word is defined in the Act.  There is  no reason  for saying that the word ’tenant’ in s.  3  excludes

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tenants  who put up structures on the land in breach  of  a. covenant not to build. [114 C-D] (iii)A  covenant  not to buid, if it could  affect  the right of the tenant to claim compensation under s. 3,  would be  of  no effect for under s. 12 nothing  in  any  contract shall take away a tenant’s rights under the Act. Thereforein spite  of  the covenant the tenants were entitled  to  their rights under s.3 and s. 9. [114 F-G] (iv) Since the language of s. 2(4) and ss. 3 and 9 was clear and unambiguous there was no need to resort to the  preamble for interpreting these sections.  A preamble cannot  operate to annul a section. [115 C-D] N.   Vajrapani Naidu v. New Theatre Carnatic  Talkies  Ltd., A.I.R. (1964) S.C. 1440, referred to. Per Hidayatullah, J. (i) Section 3 is general and applies to every  tenant  and would include all and sundry  tenants  as also tenants holding,met. [117D] 111 (ii)The kind of building hinted at in the preamble  namely, one  constructed  "in the hope" of the  continuance  of  the tenancy does not find any mention in the operative part of the Act or in  the definition  of building.  It is therefore difficult to  read this  limitation  (as was contended) in ss. 3  and  9  where ’building’  is  used without any qualification  and  implies only a constructions [118 F-G] Deo v., Brandling, (1828) 7 B & C, 643, referred to. (iii)Sections  3  and  9 are imperative  and  s.  9  is expressly made applicable to pending suits in ejectment such as the present one.  Appellants made application under s.  9 within the time limited therefor.  The result must obviously follow  unless  the  latter part of s.  12  could  save  the respondent.   That could only be if the stipulations by  the tenant  not to build had been ’in writing  registered’,  but the  lease-deed  in  question, though  in  writing,  is  not registered. [119 B-C]

JUDGMENT: CIVIL APPELLATE JURISDICTION : Civil Appeal No. 146 of 1965. Appeal from the judgment and order dated September 21,  1962 of the Madras High Court in L.P.A. No. 29 of 1961. P.   Ram Reddy and R. Ganapathy Iyer, for the appellants. C.   B. Agarwala and R. Gopalakrishnan, for the respondents. The  Judgment  of Sarkar, Subba Rao and Mudholkar,  JJ.  was delivered by Sarkar J. Hidayatullah J. delivered a  separate Opinion. Sarkar  J.  By  an unregistered instrument  of  lease  dated February  3, 1953, the respondent let out a piece of  vacant land  in  the town of Coimbatore to the appellants  for  the term  of  one  year at a rent of Rs. 30/-  per  month.   The tenants held over after the expiry of the term reserved  and the  tenancy  was continued.  The lease  provided  that  the tenants  "shall  not raise any building  whatsoever  in  the vacant site" but they committed a branch of the covenant  by putting up a building on the land. On  December 4, 1956, the lessor filed a suit for  ejectment of the tenants and their sub-tenants.  Pending the suit, the Madras  City Tenants’ Protection Act, 1921, was on  February 19,  1958  made  applicable to the town  of  Coimbatore  and thereupon the tenants made an application in the suit  under S.  9 of the Act for an order directing the lessor  to  sell the  land to them.  The trial Court, a learned Sub-Judge  in first appeal and Anantanarayanan J. in second appeal to  the

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High Court of Madras held that the tenants were entitled  to the  order.   A  Division Bench of the  High  Court  took  a contrary  view in a Letters Patent Appeal preferred  by  the lessor.  The tenants have appealed to this Court against the judgment of the Division Bench. 112 The question naturally turns upon the provisions of the  Act the  relevant parts of which we will, therefore, set out  at once.               S.2  (4).   "Tenant means tenant  of  land               liable to pay rent on it.........."               S.3.  "Every tenant shall on ejectment  be               entitled to be paid as compensation the  value               of any building which may have been erected by               him."               S.9.  "Any  tenant  who  is  entitled   to               compensation under section 3 and against  whom               a  suit in ejectment has been instituted  ....               may...... apply to the court for an order that               the  landlord shall be directed to  sell  ....               the  extent  of land to be  specified  in  the               application."               S.12.  "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  builddings erected after the date  of  the               contract." It will be noticed that a tenant entitled to purchase  under S.  9 must be a tenant entitled to compensation under s.  3. The real question, therefore, is whether the tenants in  the present  case were entitled to compensation under s.  3.  We may  observe  that  we  shall not in  the  present  case  be concerned with the proviso to s. 12 as the lease was not  by a registered document and hence references in this  judgment to that section will be to that section without the proviso. We  should  also  state that by virtue of s.  10,  s.  9  is applicable  to suits pending in Coimbatore courts  when  the Act was applied to that city. It  was not disputed in this Court that if the covenant  was left out of consideration, the tenants would be entitled  to the benefit of ss. 3 and 9. They would be tenants within the definition  of that word in the Act and the  ingredients  of the  other  two  sections would  be  fully  satisfied.   The learned  Judges  of the Division Bench  also  accepted  this position. The question then is, Does the covenant make any  difference ?  The learned Judges thought, in our opinion wrongly,  that it did.  They put the matter in this way : A covenant not to build is valid.  If it is valid, it must be enforceable  all along  and,  therefore, also after the  termination  of  the lease by an order for demolition.  If it can be so enforced, S. 3 which gives the tenant a right to compensation for  the building cannot be applicable to a case where                             113 there was such a covenant for the Act could not at the  same time have countenanced a compulsory demolition of a building at  the instance of the lessor and a right in the tenant  to compensation  for that building.  The enforceability of  the covenant, therefore, indicated the scope of s. 3 in spite of its  wide terms and the equally wide definition of the  word "tenant" in the Act.  That scope was that the section had no application here there was such a covenant.  Learned counsel

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for  the lessor advanced the same reasoning summarising  the position  by the observation that the erection  contemplated by s. 3 was a lawful erection, that is, not in breach of any covenant not to build. It  seems to us that this reasoning is  clearly  fallacious. The  learned Judges held that the covenant not to build  was valid.   They,  therefore, must have held that  it  did  not affect  a right under s. 3 for if it did, it must have  been ineffective  under s. 12.  Now when the learned Judges  held that the covenant did not affect the right under s. 3,  they must  have  decided  what that right was and  who  were  the tenants  entitled  to it.  In deciding the validity  of  the covenant  they  must,  therefore  have  fully  and   finally interpreted  the section and decided its scope  and  effect. After  that  they could not again proceed to  ascertain  the scope of the section.  But this is what they did and this is where  their principal error lay.  Basing themselves on  one interpretation  of the section they held the covenant to  be valid and basing themselves on the validity of the  covenant so  found,  they gave the section a second and  a  different interpretation.   In deciding the validity of  the  covenant they  had  not said that s. 3 had no application  where  the covenant existed.  If they had, they would have decided what they  called the scope of the section without any  aid  from the covenant and there would have been no need for  deciding the scope of the section again on the basis of the  validity of  the  covenant.  Therefore, on the second  occasion  they found the scope to be different from what they had found  it to be on the first occasion.  But, of course, a section  has only  one interpretation and one scope; a process  resulting in  more  than  one  interpretation  and  scope  is  clearly erroneous. Now when deciding that the covenant did not affect the right of tenants under s. 3 and was, therefore, valid, the learned Judges  did not say that a tenant who built in breach of  it was  not  a  tenant  as contemplated by s.  3  and  was  not entitled  to  its benefits; in fact they  expressly  took  a contrary  view.  They said, and in our view rightly,  "there is  no express provision in the Act, limiting the  operation of section 3...... to the tenants who were authorised by the terms of the lease to put up a building.  Prima facie, 114 therefore, the term ’tenant’ might not exclude one who  puts up a superstructure on the land in breach of a covenant  not to build." They stated that this was the view to be gathered from  a consideration of the entire Act.  But clearly  there was  nothing  else  they  could  legitimately  consider  for interpreting  s.  3. It would, therefore,  appear  that  the words   "prima  facie"  with  which  they  qualified   their observation  were inapposite.  In effect. then  the  learned Judges  said  this : The contract was valid as  it  did  not affect the right under s. 3 of any tenant as defined in  the Act and since the contract was valid, a tenant who had built in  breach of it was not entitled to any right under  s.  3. This is a wholly untenable proposition. We  think that the word "tenant" in s. 3 must be  understood only  in  the  sense that word is defined in  the  Act.   We repeat  that  there is no reason for saying  that  the  word "tenant" in s. 3 does not include all tenants as defined  in the  Act.  None has been shown apart from that given by  the learned  Judges which we think is ill found   Therefore  the appellants  are  tenants as contemplated by s.  3.  Now  the covenant says that the tenants shall not build.  Either that affects  the right of the tenants to claim compensation  for the buildings constructed in breach of it at the termination

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of  the  lease  or it does not.  If it  does  not,  then  no further   question  arises  there  will  then   be   nothing purporting  to disentitle the tenants of their rights  under s.  3  and the case will be the same as where  there  is  no covenant at all.  If such is the case then, as we have  said earlier,  there is no dispute that the tenants are  entitled to their rights under ss. 3 and 9. If however, the  covenant not  to build affects the right to claim compensation  under s. 3, such a covenant would be of no effect, for under s. 12 nothing  in any contract shall take away a  tenant’s  rights under  the Act.  The case will then also be the same  as  if there was no covenant at all.  That is why we think that the covenant not to build does not affect the question in  hand. The tenants must be held entitled to their rights under  ss. 3  and 9 in spite of the covenant not to build and a  breach of it by them. Before  Anantanarayanan J. the argument for the  lessor  was somewhat different.  It was said that s. 3 had to be read in harmony  with  the general law, that is, s.  108(h)  of  the Transfer  of Property Act, which gave the tenant a right  to build  when  the  lease  did  not  prohibit  building  ’and, therefore, the erection under s. 3 must be one permitted  by law.   The learned Judge rejected this, contention,  in  our opinion rightly, on the ground that s. 3 and 115 s.9  contained no words justifying it and under s. 12  no contract  could  be  made  affecting  the  sections  earlier mentioned.   He  also  pointed out that s.  13  of  the  Act specifically provided that the Transfer of Property Act must be  deemed to have been repealed to the extent necessary  to give  effect  to  the Act so that there  was  no  scope  for harmonising  the Act with the Transfer of Property Act.   We entirely agree with the learned Judge’s views.  We must how- ever  observe  that this argument was not advanced  in  this Court. Before  leaving this matter a reference to the  preamble  of the Act is necessary.  It states that the Act was passed "to give  protection  to  tenants  who......  have   constructed buildings  on others’ lands in the hope that they would  not be evicted." The learned Judges of the Division Bench  found it  to  be  too vague to be taken  as  defining  a  definite ascertained class of tenants.  In any case, no resort to the preamble  would, we think, be justified in interpreting  the definition of tenant in s. 2(4) as the words used in it  are clear and unambiguous.  We observe that the language used in ss.  3  and  9 also admits of no doubt  as  to  the  meaning intended.   A preamble cannot of course operate to  annul  a section.  We must here also say that learned counsel for the lessor  did  not  rely  on  the  preamble  to  support   his contention. We  think it right to point out before we conclude  that  N. Vairapani  Naidu  v. Naw Theatre Carnatic  Talkies  Ltd.  to which our attention was drawn, does not touch the point with which  we are concerned, for it turned on the proviso to  s. 12 and that proviso has no application to the present case. For  these reasons we think that the judgment  under  appeal was  erroneous  and  must  be  set  aside.   We  agree  with Anantanarayanan  J. that the appellant tenants had  a  right under  s. 9 of the Act to purchase the land leased in  spite of  the covenant not to build and the breach of it by  them. The covenant cannot be used for interpreting s. 3 or s. 9. The  appeal is allowed.  The judgment of the Division  Bench is  set  aside and that of Anantanarayanan J.  is  restored. The  appellants will get the costs in this Court and in  the Division Court.

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Hidayatullah, J. I agree that this appeal must succeeded but I  would  like to state the  reasons  somewhat  differently. Appellants  1  and  2, who were tenants  of  the  respondent landlord,  seek the enforcement of s. 9 of the  Madras  City Tenants’  Protection  Act,  1921,  which  was  extended   to Coimbatore on February 19, 1958.  By a 116 written (but not registered) lease-deed the appellants I and 2 took on lease for a year from February 10, 1953, a  vacant site  on  a  rent  of Rs.  35  per  month.   The  lease-deed contained  a  term that no building should be built  on  the land.  Without the knowledge and consent of the landlord the appellants  I and 2 built structures on the vacant site  and continued  to hold over even after the expiry of  the  year. They inducted sub-tenants.  The respondent-landlord sued  in ejectment in 1956 and the suit stood closed for arguments on February 25, 1958.  On that date appellants I and 2  applied under  S. 9 of the above Act claiming the right to  purchase the land.  The case was reopened and some more evidence  was received.   The District Munsif, Coimbatore by his  judgment dated April 8, 1958 accepted the claim of appellants 1 and 2 and  took  action  to determine the price for  the  land  as required  by the Act.  An appeal by the  respondent-landlord before the Subordinate Judge, Coimbatore and a second appeal in  the High Court failed.  ’Me present appeal is  from  the judgment  dated September 21, 1962 of the Division Bench  in an  appeal filed under cl. 15 of the Letters Patent  and  by certificate  from the Division Bench.  By that judgment  the decision   of  the  Single  Judge  was  reversed   and   the application  under  s.  9  of the  Act  was  ordered  to  be dismissed.   There  was, however, a remit  for  disposal  on other points. The  Act  which is relied upon by the appellants is  an  Act which  was  intended to apply in the first instance  to  the Madras  City  but  could  be extended  to  other  towns  and villages.   It  was, as the long title shows,  intended  "to give  protection to certain classes of tenants in  Municipal towns and adjoining areas in the State of Madras".  The last eleven words were substituted for the words "in the City  of Madras" by an amending Act of 1955.  The preamble of the Act reads               "Whereas it is necessary to give protection to               tenants  who in municipal towns and  adjoining               areas in the State of Madras 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 words underlined were substituted for the words "in many parts of the city of Madras" by the same amending Act. The  Act defines the word "building" so as to include  every structure,  permanent  or temporary and  ’land’  to  exclude "buildings"  and "tenants" as "tenant of land liable to  pay rent  on  it,  every person deriving title  from  him",  and including "persons who con- 117 tinue  in possession after the termination of the  tenancy". The  appellants I and 2 were thus tenants of land  excluding the  buildings.   The Act then give new  rights  of  various sorts  to  tenants,, and some of the sections  are  set  out below :               "3. Payment of compensation on ejectment.               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-ininterest, or  by

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             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) - " The section is general and applies to every tenant and would include all and sundry tenants as also tenants holding over. In other words, the appellants would be included.   Sections 4  and  5  lay  down  the  procedure  for  determination  of compensation.  Section 6 provides for determination of rent. They are not relevant here and we are not concerned with ss. 7, 7A and 8. Section 9 (omitting portions not relevant here) then states :               "9.  Application  to court for  directing  the               landlord to sell land.               (1)Any   tenant   who   is   entitled    to               compensation under section 3 and against  whom               a  suit  in ejectment has been  instituted  or               proceeding under section 41 of the  Presidency               Small  Cause  Courts Act, 1882, taken  by  the               landlord, may, within one month of the date of               Madras  City Tenants’  Protection  (Amendment)               Act,  1955, coming into force or of  the  date               with effect from which this Act is extended to               the  municipal  town or village in  which  the               land is situate or within one month after  the               service on him of summons, apply to the  court               for  an  order  that  the  landlord  shall  be               directed  to sell the land for a price  to  be               fixed  by the court.  The court shall fix  the               price  according  to the lowest  market  value               prevalent  within  seven years  preceding  the               date of the order and shall order that, within               a  period to be determined by the  court,  not               being less than three months and not more than               three  years from the date of the  order,  the               tenant               118               shall pay into court or otherwise as  directed               the price so fixed in one or more installments               with or without interest.               (2)               (3)On payment of the, price the court shall               pass a final order directing the conveyance of               the  land by the landlord to the  tenant.   On               such  order being made the suit or  proceeding               shall stand dismissed, and any decree or order               in ejectment that may have been passed therein               but  which  has  not been  executed  shall  be               vacated.               Section  10 expressly applies ss. 4, 5,  6,  8               and  9  to pending suit in  ejectment  and  to               decrees  passed  in  such suits  but  not  yet               executed.Section 12 provides as follows               "12.  Effect of contracts made by tenants.               Nothing in any contract made by a tenant shall               take away or limit his rights tinder 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

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             buildings  erected  after  the  date  of   the               contract." Section  13 provides that the provisions of the Transfer  of Property  Act in its application to the area where  the  Act was  in force, to .,’.he extent necessary to give effect  to the  provisions  of the Act, shall be deemed  to  have  been repealed  or modified.  The Act is ’thus self-contained  and the ordinary law of transfer of property has no application. The  first  point  to notice is that the  kind  of  building hinted  at in the preamble, namely, one constructed "in  the hope"  of the continuance of the tenancy does not  find  any mention  in  the  operative  part  of  the  Act  or  in  the definition of building.  It is, therefore, difficult to read this  limitation  (as was contended) in ss. 3  and  9  where "building"  is  used without any qualification  and  implies only a construction.  A preamble is a key to the interpreta- tion  of  a  Statute but is not  ordinarily  an  independent enactment  conferring rights or taking them away and  cannot restrict  or  widen  the enacting part which  is  clear  and unambiguous.  The motive for legislation is often recited in the  preamble but the remedy may extend beyond the  cure  of the   evil   intended  to  be  removed.   See   Maxwell   on Interpretation  of  Statutes,  11th  Edn.  p.  45.   If  the enacting   portion   takes   in   all   buildings    without qualification, it is 119 not  possible  to  give the less  extensive  import  of  the preamble a greater value against the enacted provision.  See Deo  v.  Brandling  -(1828)  7  B &  C  643,  660  per  Lord Tenterden. What then is the position ? Sections 3 and 9 are  imperative and  s. 9 is expressly made applicable to pending  suits  in ejectment  such  as this was.  Appellants 1 and 2  made  the applications  within a week of the extension of the  Act  to Coimbatore  and  were  within the  time  limited  for  their action.  The result must obviously follow unless the  latter part of s. 12 can save the respondent.  That can only be  if the  stipulations  by the tenant as to the erection  of  the building  in  so far as they related  to  buildings  erected after  the  date  of the lease-deed  had  been  "in  writing registered’.   The  leaseded  is  in  writing  but  is   not registered.   By  the  first part of s. 12:  the  tenant  is protected  against  his  own  contract.   The  landlord   is protected  by the second part, but the landlord here  cannot seek  the protection of the second part because  the  lease- deed is not registered. The appellants also claimed that the words "stipulations  as to the erection of buildings" cannot take in a covenant  not to construct at all, as laid down in N. Vajrapani Naidu  and Another v. New Theatres Carnatic Talkies Ltd.(1. The  ruling certainly  is  in  the  appellants’ favour  but  it  is  not necessary  to rely on it for the disposal of this case.   As at present advised, I would not like to rest my judgment  on that point of view. I  agree with the order proposed but for the  reasons  given here. Appeal allowed, (1) A.I.R 964 S.C. 1440. 120