24 February 1964
Supreme Court


Case number: Appeal (civil) 549 of 1962






DATE OF JUDGMENT: 24/02/1964


CITATION:  1964 AIR 1511            1964 SCR  (6) 876  CITATOR INFO :  RF         1966 SC1908  (3)  F          1985 SC 111  (8)  RF         1991 SC1654  (39)

ACT: Retroactivity-Enactment of the Act pending appeal-Appeal  if governed  by  the  Act-Assam  Non-Agricultural  Urban  Areas Tenancy Act. 1955 (Assam Act No. 12 of 1955), s. 5.                             877

HEADNOTE: The  appellant  sued  the lessee,  the  predecessor  of  the respondents,  for  ejectment  on  the  latter’s  failure  to deliver possession of a leased land at the expiration of the stipulated  period.   Under  the  covenant  the  lessee  was entitled  to  build a house for residential  purposes.   The trial  Court  decreed the appellant’s  claim  whereupon  the lessee  filed an appeal.  While the appeal was  pending  the Assam  Non-Agricultural Urban Areas Tenancy Act was  passed, and  thereafter the lessee prayed for permission to take  an additional ground under s. 5 of the Act.  Before that  date, the High Court had taken the view that this provision of the Act  was  applicable  to  pending  proceedings.   The  lower appellate  court  allowed the lessee’s plea  and  ultimately allowed  the appeal and set aside -,he decree passed by  the trial Judge in favour of the appellant, concluding that  the two  houses had been constructed by the lessee  within  five years  after the taking of the lease and that  entitled  the lessee  to claim the benefit of s. 5 of the Act.   The  High Court  on appeal, following its earlier decision  about  the applicability   of  the  provisions  of  s.  5  to   pending proceedings,  summarily dismissed the appeal, but granted  a certificate for leave to appeal to this Court Held:     (i)  A statutory provision is  retroactive  either when it is so declared by express terms. or the intention to make it retroactive clearly follows from the relevant  words and the context in which they occur Re.   Athlumney  Ex  parte  Wilson,  (1898)  2  Q.B.D.  547, referred to.



(ii) The  provisions  of the Act clearly indicate  that  the legislature wanted the beneficient provisions enacted by  it to  take  within their protection not only  leases  executed after  the  Act came into force, but  also  leases  executed prior to the operation of the Act. The  plain object of s.5 is to protect the tenants who  have built  a  permanent  structure either for  business  or  for residence, provided it has been built within 5 yearsfrom the date of contract of tenancy, even though those constructions had been made before the date of the Act. (iii)     A  suit which was pending when the Act  came  into force would be governed by s. 5(1) (a) and an appeal arising from a suit which had been decided before the Act came  into force,  would likewise be governed by s. 5(1) (a),  provided it is pending after the date when the  Act  came  into  force. for  an  appeal  pending  in  a continuation of the suit.

JUDGMENT: CIVIL APPELLATE JURISDICTION: CIVIL Appeal No. 549 of 1962. Appeals  from the judgment and orders dated August  1,  1958 and  March  13, 1959 of the Assam High Court A. Nos.  86  of 1958 and 14 of 1959 respectively. N.   C.  Chatterjee, K. P. Sen and P. K. Chatterjee, for the appellant (in C.A. No. 549 of 1962). 878 B.   P.  Maheshwari, for respondents Nos. 1(a) to  1(e)  (in C.A. No. 549 of 1962). Behrul  Islam and R. Gopalakrishnan, for the  appellant  (in C.A. No. 569 of 1963). D.   N. Mukherjee, for the respondent (in C.A. No. 569/ 63). February 24, 1964.  The Judgment of the Court was  delivered by GAJENDRAGADKAR  C.J.-These  two  appeals  which  have   been brought to this Court with a certificate issued by the Assam High  Court, raise a short question about  the  construction and  effect of section 5 of the Assam NonAgricultural  Urban Area Tenancy Act, 1955 (No. 12 of 1955) (hereinafter  called ’the Act’).  The relevant and material facts which have  led to  the  suits  from which these  two  appeals  respectively arise,  are  similar, and so, it would not be  necessary  to state  them  in detail in regard to both  the  matters.   We would,  therefore,  mention the facts broadly  in  C.A.  No. 549/1962,  in dealing with the common point raised  for  our decision.  The appellant in this case is Mst.  Rafiquennessa who  sued the predecessor of the respondents for  ejectment. It appears that Lal Bahadur Chetri has executed a registered lease-deed in favour of the appellant on the 14th  February, 1946.  The lease covered an open plot of land and under  the covenant  the  leasee  was entitled to  build  a  house  for residential purposes.  In the ordinary course, the lease was due to expire on the 12th February, 1952, and the lessee had agreed  to  deliver  vacant possession of the  land  at  the expiration of the stipulated period.  Accordingly, a  notice to  quit was served on him to vacate on the  12th  February, 1952.  He, however, did not comply with the notice and  that led  to the present suit by the appellant for eviction  (No. 149  of  1952).   In support of  her  claim,  the  appellant alleged  that  the lessee had contravened the terms  of  the lease  inasmuch as he had sublet the premises built by  him, and  so,  that  was an additional ground  for  evicting  the



lessee.    The  sub-lessees  were  accordingly   joined   as defendants to the suit. The lessee Chetri alone resisted the suit.  The  sub-tenants let  into  possession  by him did not join  issue  with  the appel-  879 lant.  The trial Judge decreed the appellant’s claim  where- upon  the lessee Chetri filed an appeal in the Court of  the Sub-Judge,  Lower Assam District, Gauhati,  challenging  the validity  and the correctness of the decree  passed  against him (Civil Appeal No. 24/1953). While  the  appeal was pending, the Act was passed  and  was published  in  the  Assam Gazette on  the  6th  July,  1955. Thereafter,  when the appeal came on for hearing before  the lower  appellate  Court,  the tenant  filed  an  application praying  that he should be permitted to take  an  additional ground  under s. 5 of the Act.  Before that date, the  Assam High Court had taken the view that the said provision of the Act was applicable to the pending proceedings between  land- lords  and  tenants for eviction and that was the  basis  on which  the tenant Chetri wanted to support his appeal.   The lower  appellate Court allowed the tenant’s plea, framed  an additional issue in pursuance of it and sent the matter back to the trial Court for a finding. On  remand,  the trial Court took evidence and  after  local inspection,  made  a finding that the two houses  proved  to have been built by the tenant must be regarded as  permanent in relation to the locality of the plot.  He, however, found that there was no evidence to show when the said houses were constructed.   Part  of the finding was  challenged  by  the tenant  before the lower appellate Court.  The lower  appel- late  Court ultimately allowed the appeal and set aside  the decree passed by the trial Judge in favour of the appellant. The conclusion of the lower appellate Court was that the two houses had been constructed by the tenant within five  years after  the taking of the lease and that entitled the  lessee to claim the benefit of s. 5 of the Act. The  appellant  then preferred a second appeal in  the  High Court  of  Assam  (No.  86/1958).   Following  its   earlier decision  about the applicability of the provisions of s.  5 to  pending proceedings, the High Court summarily  dismissed the said appeal.  Thereafter, the appellant applied for  and obtained a certificate from the High Court and with the said certificate  the present appeal has been brought before  us. Pending  these proceedings, the tenant Chetri died  and  his heirs and legal representatives Mst.  Tulsa Devi and others. 880 have  been  brought on the record and will be  described  as respondents  hereafter.  Thus, the only point  which  arises for  our decision is whether the Assam High Court was  right in  taking the view that the provisions of s. 5  applied  to the  proceedings between the parties which were  pending  at the relevant time before the lower appellate Court. Appeal  No.  569  of 1963 arises from a suit  filed  by  the appellant Wahedulla against his tenant, the respondent Abdul Hamid.  The relevant facts are similar to those in C.A.  No. 549/1962.  In this case also, the Act came into force  while the appeal was pending before the lower appellate Court  and by the application of s. 5 respondent’s claim to continue in possession  has  been upheld and the appellant’s  claim  for ejecting  the respondent has been rejected.  The High  Court granted  certificate to the appellant when it was told  that the  appellant proposed to challenge the correctness of  its earlier decision holding that s. 5 of the Act applied to the pending proceedings.



The  Act  was passed by the Assam Legislature  in  order  to regulate in certain respects the relationship between  land- lord and tenant in respect of non-agricultural lands in  the urban  areas  of the State of Assam.  It  contains  fourteen sections  and the scheme which is evident in  the  operative provisions of the Act is to afford protection to the tenants by  regulating in certain respects the relationship  between them and their landlords in respect of the lands covered  by the  Act.   Section 3(c) defines a ’landlord’ as  meaning  a person  immediately under whom a tenant holds but  does  not include the Government.  While s. 3(d) defines a  ’Permanent structure’  in  relation  to  any  locality  as  meaning   a structure  which is regarded as permanent in that  locality, the ’tenant and ’urban area’ are defined by clauses (g)  and (b)  respectively.  Section 4 imposes an obligation  on  the tenant  to  pay rent for his holding at fair  and  equitable rates,  and  the  proviso prescribes that  in  case  of  any dispute as to fair rent ,between the parties, the rent which was paid by the tenant immediately before the dispute  shall be deemed to be fair and equitable unless a competent  court decides   to  the  -,contrary.   Section  6   provides   for compensation for improvements; s. 7 provides for enhancement of rent by contract,. s.   8 deals with enhancement of rent without contract; s. 9                             881 authorises  the Court to make an order as to enhancement  of rent:  s.  10  prohibits  illegal  realisation  beyond   the prescribed amount; s. 11 provides for notice for  ejectment; s. 12 prescribes the procedure in which the notice has to be served;  and  s. 13 confers rule-making power on  the  State Government.  Section 14 repeals the earlier Tenancy Act. Having thus broadly considered the scheme of the Act, it  is necessary  to  read s. 5, the effect of which  is  the  main point of controversy between the parties before us.  Section 5(i) reads thus:- Notwithstanding  anything in any contract or in any law  for the  time  being  in force-(a) where under the  terms  of  a contract  entered  into between a landlord  and  his  tenant whether  before  or after the commencement of  this  Act,  a tenant  is entitled to build, and has in pursuance  of  such terms  actually built within the period of five  years  from -the  date  of such contract, a permanent structure  on  the land of the tenancy for residential or business purposes, or where a tenant not being so entitled to build, has  actually built any such structure on the land of the tenancy for  any of   the   purposes  aforesaid  with   the   knowledge   and acquiescence  of  the  landlord, the  tenant  shall  not  be ejected  by  the  landlord from the tenancy  except  on  the ground  of  non-payment  of rent; (b)  where  a  tenant  has effected  improvements on the land of the tenancy under  the terms   whereof   he  is  not  entitled   to   effect   such improvements,  the  tenant  shall not  be,  ejected  by  the landlord  from the, land of the tenancy unless  compensation for reasonable improvements has been paid to the tenant". Sub-section  (2) prohibits the ejectment of any tenant  from the land of the tenancy except in execution of a decree  for ejectment passed by a competent civil Court; and sub-section (3) prohibits the execution of a decree for ejectment on the ground  of  non-payment of rent within a period of  30  days from  the date of the decree, and allows the tenant  to  pay into  the  executing Court the entire amount  due  from  him under 134-159 S.C.-56 882 the decree within the said period, Whereupon the decree  has



to be entered as satisfied. Mr.  Chatterjee  contends that the Assam High Court  was  in error in coming to the conclusion that the proceedings which were  pending between the parties at the appellate stage  on 6th  July,  1955 when the Act came into force,  fell  to  be governed  by the provisions of s. 5. He argues that  at  the relevant  date when the suit was filed by the appellant,  he had acquired a right to eject the tenant under the terms  of the  tenancy, and he contends that where vested  rights  are affected  by  any statutory provision,  the  said  provision should normally be construed to be prospective in  operation and  not  retrospective, unless the  provision  in  question relates  merely to a procedural matter.  It is not  disputed by him that the legislature is competent to take away vested rights  by means of retrospective  legislation.   Similarly, the legislature is undoubtedly competent to make laws  which over-ride  and  materially  affect the  terms  of  contracts between the parties; but the argument is that unless a clear and unambiguous intention is indicated by the legislature by adopting suitable express words in that behalf, no provision of  a  statute should be given retroactive operation  if  by such  operation  vested rights are likely  to  be  affected. These  principles  are ’unexceptionable and as a  matter  of law, no objection can be taken to them.  Mr. Chatterjee  has relied upon the well known observations made by Wright J. in in  re Athlumney Ex parte Wilson(1), when the learned  Judge said  that  it is a general rule that when  the  Legislature alters  the rights of parties by taking away  or  conferring any right of action, its enactments, unless in express terms they apply to pending actions, do not affect them.  He added that  there  was one exception to that rule,  namely,  that, where  enactments merely affect procedure and do not  extend to  rights  of  action,  they have been  held  to  apply  to existing rights.  In order to make the statement of the  law relating  to the relevant rule of construction which has  to be   adopted  in  dealing  with  the  effect  of   statutory provisions  in  this  connection,  we  ought  to  add   that retroactive  operation  of  a  statutory  provision  can  be inferred  even  in cases where  such  retroactive  operation appears to be clearly implicit in the (1)  [1898] 2 Q. B. D. 547.  883 provision  construed  in the context where  it  occurs.   In other words, a statutory provision is held to be retroactive either  when  it  is so declared by express  terms,  or  the intention  to make it retroactive clearly follows  from  the relevant words and the context in which they occur. Bearing  in  mind  these principles, let us look  at  s.  S. Before doing so, it is necessary to consider s. 2 which pro- vides  that notwithstanding anything contained in  any  con- tract  or  in  any  law for the time  being  in  force,  the provisions  of this Act shall apply to all  non-agricultural tenancies whether created before or after the date on  which this Act comes into force.  This provision clearly indicates that  the  legislature  wanted  the  beneficent   provisions enacted  by  it  to take within their  protection  not  only leases  executed  after the Act came into  force,  but  also leases executed prior to the operation of the Act.  In other words, leases which bad been created before the Act  applied are intended to receive the benefit of the provisions of the Act,  and  in  that sense, the Act  clearly  affects  vested rights  of  the  landlords  who  had  let  out  their  urban properties  to  the tenants prior to the date  of  the  Act. That is one important fact which is material in  determining the scope and effect of s. 5.



Now,  s.  5 itself gives an unmistakable indication  of  the legislative intention to make its provisions  retrospective. What  does  s.  5 provide?  It provides  protection  to  the tenants  who have actually built within five years from  the date   of  leases  executed  in  their   favour,   permanent structures  on the land let out to them for  residential  or business  purposes, and this protection is available  either when  the construction of the permanent structure  has  been made  by the tenant in pursuance of the terms of the  lease, or  even without any term of that kind and the landlord  had knowledge  of it and had acquiesced in it.  Thus, the  plain object  of s. 5 is to protect the tenants who have  built  a permanent  structure either for business or  for  residence, provided  it has been built within 5 years from the date  of contract  of  tenancy.   Therefore,  cases  where  permanent structures  had  been built within 5 years of the  terms  of contract,  would  fall within s. 5 ( 1 )  (a),  even  though those  constructions  had been made before the date  of  the Act.  Thus, the very scheme of 5 (1) (a) clearly  postulates the extension of its protection to 884 constructions already made.  That is another point which  is significant  in  dealing with the  controversy  between  the parties before us.      There  is yet another point which is relevant  in  this connection.   S. 5(1)(a) provides that the tenant shall  not be  evicted by the landlord from the tenancy except  on  the ground of non-payment of rent, provided, of course, the con- ditions prescribed by it are satisfied.  If the  legislature had   intended   that   this   protection   should   operate prospectively.  it  would  have been easy to  say  that  the tenant  shall not be sued in ejectment; such  an  expression would have indicated that the protection is afforded to  the suits brought after the Act came into force, and that  might have  introduced  the  element  of  prospective   operation; instead,  what is prohibited by s. 5 (1)(a) is the  eviction of  the  tenant, and so, inevitably, the section  must  come into  play  for  the protection of the tenant  even  at  the appellate  stage  when it is clear that by  the  proceedings pending before the appellate court, the landlord is  seeking to  evict the tenant, and that obviously indicates that  the pending proceedings are governed by s. 5(1)(a), though  they may have been initially instituted before the Act came  into force. Incidentally,  an appeal pending before the lower  appellate court  is  a continuation of the suit, and so, there  is  no difficulty in holding that a suit which was pending when the Act  came into force would be governed by s. 5(1)(a) and  an appeal arising from a suit which had been decided before the Act  came  into  force, would likewise  be  governed  by  s. 5(1)(a), provided it is pending after the date when the  Act came into force.  Therefore, we are satisfied that the Assam High  Court was right in coming to the conclusion  that  the dispute  between  the parties in the present  case  must  be governed  by  the provisions of s. 5(1)(a).   It  is  common ground  that  if s. 5(1)(a) is held to  apply,  the  decrees passed against the appellants in both the appeals cannot  be successfully challenged. The  result  is,  the appeals fail and  are  dismissed  with costs.  One set of hearing foes. Appeals dismissed.  885