Full Judgment Text
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PETITIONER:
LARSEN & TOUBRO LTD. CLUB HOUSE ROAD, MADRAS
Vs.
RESPONDENT:
TRUSTEES OF DHARMAMURTHY, RAO BAHADURCALAVALA CUNNAN, CHETTY
DATE OF JUDGMENT31/08/1988
BENCH:
RANGNATHAN, S.
BENCH:
RANGNATHAN, S.
MUKHARJI, SABYASACHI (J)
CITATION:
1988 SCR Supl. (2) 755 1988 SCC (4) 260
JT 1988 (3) 684 1988 SCALE (2)605
ACT:
Tamil Nadu City Tenant’s Protection Act (No. 111 of
1922)-Whether the lessee-Company was entitled to protection
under section 9-Of-In eviction proceedings-Construction of
the lease deed.
HEADNOTE:
In this appeal by special leave, the dispute arose out
of a lease by a charitable trust in favour of a company. The
respondent-Trust Bled a for possession of a property taken
on lease from it by the appellant-company. The appellant
responded by filing an application claiming protection under
section 9 of the Tamil Nadu City Tenant’s Protection Act
(the ‘Act’). The application was accepted by the trial court
which held that the company was entitled to the benefit of
the Act and appointed a Commissioner to inspect the property
and fix the minimum extent of the property required by the
defendant for convenient enjoyment of the super-structure
which it would be entitled to purchase in terms of section
9.
The trustees filed an appeal, contending that the company
was not entitled to the protection of section 9. The appeal
was allowed. The company preferred a revision petition
before the High Court, which dismissed it, holding that the
application of the company under section 9 was not
maintainable. The company appealed to this Court,
Dismissing the appeal, the Court,
HELD: The short question to be decided was whether the
company was entitled to the protection under section 9 of
the Act. This piece of legislation was enacted primarily for
the protection of small tenants, who in certain municipal
towns and adjoining areas had constructed buildings on
others’ lands, by ensuring that they were not evicted so
long as they paid a fair rent for the lease. The Act also
contained a provision whereunder a tenant could put up a
claim to purchase the land in question from the owner.
[758C]
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The Act applies only to tenants in respect of land
situated in certain areas where the tenancy has been created
before a prescribed date. The only controversy here was
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whether the lease in question could be said to be a lease of
‘land’. Before a right of purchase can be exercised under
section 9, the tenant must be a tenant of land, not
comprising buildings or lands appurtenant thereto. The High
Court had held that there had been a lease not of the vacant
land but of a building with the land appurtenant thereto and
the provisions of the Act would not apply. [764E, F-G; 765F-
G]
The case involved construction of the lease deed. The
language employed in the lease-deed only showed that both
land and building were leased. Whether the land was to he
treated as an appurtenant or not would depend upon the
extent and nature of the land and its situation vis-a-vis
the building thereon and not on whether the lease deed
described the subject-matter as ‘call that land and
building" or Vice Versa. If the deed had described the
demised premises as ‘building and appurtenant land’. that
would have helped in ascertaining the intention of the
parties but even that would not have been conclusive. [766E-
G]
The question whether a certain land is appurtenant or
not is one of fact. There was no reason to disturb the
finding of the first appellate Court and the High Court that
the land was appurtenant to the building. The use of the
land, in the circumstances of the case, was incidental to
the enjoyment and beneficial use of the building. [768B-d]
The clauses of the lease deed could not be construed as
consisting of two separate leases, one, of the building and
the other, of the land, as suggested by the lessees. There
were clear indications in the lease deed that it was a
single, indivisible lease of both the building and the
vacant land. It was impossible to consider the document as
comprising two leases. It was a composite lease of a
building with appurtenant land, sad having regard to the
definitions contained in the Act, the Lessee was not
entitled to the rights conferred by section 3 or section 9
of the Act. [769D; 770F]
Whether the Act applied to the lease or not was
something which had to be considered on the terms of the
lease deed, having regard to the nature of the property. The
clause regarding removal of the structures is the normal
clause that occurs in the leases under the Transfer of
Property Act. The clause in this case made no mention of
compensation and only talked of the lessees’ right to
remove structures. Even if no such clause had been inserted,
that would have been the position in law. It was not
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possible to infer from such a natural clause that it had
been put in with a view to denying compensation to the
lessee and getting over the hurdle of the lessee putting in
a claim for acquiring the property by purchase. The lease
deed was a simple lease deed containing the usual clauses
and covenants expected in it and nothing more. If the
parties had been conscious of the possibility of the lessee
claiming any rights under the Act, the lessors would have
tried to safeguard themselves by making clear that what was
let out was only a building and the appurtenant land. [771C-
F]
The appeal was dismissed.
Maharaja Singh v. State of U. P., [1977] 7 S.C.C. l55r
referred to.
JUDGMENT:
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CIVIL APPELLATE JURISDICTION: Civil Appeal No. 3095 of
1988.
From the Judgment and Order dated 1.4.87 of the Madras
High Court in C. R.P. No. 370/87.
T.S. Krishnamurthy Iyer, V. Krishnamurthy, V.
Balachandran and V. Ramamoorthy for the Appellant.
Shanti Bhushan, S. Rangarajan, and Sanjay Prakash for
the Respondent.
The Judgment of the Court was delivered by
RANGANATHAN, J. 1. After having heard learned counsel on
both sides, we grant special leave and proceed to dispose of
the appeal itself by this order, the point involved being a
very short one.
2. Real estate prices all over the country, and
particularly in important capital cities, have spiralled up
in the last few decades to such heights that disputes over
land, which at one time could have been resolved by a little
give and take between the parties have now assumed a
magnitude which makes any type of reconciliation
impossible.. In this case, where that dispute arises out of
a lease by a prominent charitable trust in Madras in favour
of a well-established engineering company of all-India
stature, we were somewhat hopeful that the parties would
agree not to waste further time and energy in litigation but
would come to some reasonable compromise. We tried our best
by adjourning the case several times and encouraging the
parties to come up with various proposals for compromise.
PG NO 758
Ultimately, however, we found that it was not possible to
bring the parties together. We, there-fore, proceed to
dispose of the issues raised in the appeal.
On. 13.8. 1951, M/s. Larsen & Toubro. the appellant
company, took on lease from the respondent trustees a
property situated in a busy central locality of the city of
Madras. In 1975, the trustees filed a suit for possession.
The appellant company respondent by claiming protection
under Section 9 of the Tamil Nadu City Tenants’ Protection
Act (No. 111 of 1922) (hereinafter referred to as the
‘Act’). The short question that arises in the appeal is
whether the company is entitled to this protection. The
above piece of legislation was enacted primarily for the
protection of small tenants, who in certain municipal towns
and adjoining areas had constructed buildings on others’
lands, by ensuring that they are not evicted so long as they
pay a fair rent for the land. The Act also contained a
provision under which the tenant could put forward a claim
to purchase the land in question from the owner at its
average market value of the three immediately preceding
years. It is highly doubtful whether the Act was intended to
enable affluent persons or prosperous companies, like the
present appellant, to take advantage of its provisions to
compel a lessor to Sell to them property of which they have
obtained initial possession as lessees. However, the
question has to be decided not on such general
considerations but on the language of the statute itself and
so we proceed to discuss the issue involved.
It is first necessary to advert to the terms of the
lease deed.
By the lease deed dated 13.8. 1951, the lessors
(trustees) purported to demise to the lessee (company) "all
that plot of vacant land and the buildings erected thereon
and more particularly described in the schedule hereto and
delineated in the plan hereto annexed and measuring 17
grounds and 321 sq. ft. or thereabouts". The term of the
lease was 21 years from the date of the lease. The
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consideration was "a monthly rent of Rs.900 for the
aforesaid land and a monthly rent of Rs.350 for the
aforesaid buildings aggregating in all to Rs.1,250 per
month" and the other conditions and covenants set out in the
deed. Paras I or II of the lease deed set out the following,
among other,Covenants between the parties:
(a) The lessee was to pay, and had paid, an advance of
Rs.15,000 to the lessor refundable without interest on the
termination of the lease ;
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(b) the lessee was to pay the rent reserved regularly
whether or not any buildings were erected by the lessees on
the demised land and irrespective of whether the land or
the buildings were of use to them for the purposes for which
they were taken on lease ;
xxx xxx xxx
(e) the lessee was to comply with all municipal and
local regulations "in the erection and completion of any
buildings on the demised plot."
(f) the lessors were to pay the property tax for the
existing demised building but the lessees were to pay all
taxes, rates etc. chargeable in respect of any buildings to
be erected by the lessees on the demised plot ;
xxx xxx xxx
(h) if and when the lessees sublet the demised land or
any part thereof or the demised buildings or any portion or
portions thereof at any higher rental and the Corporation
authorities levy a property tax on the demised land or
buildings higher than that based on a monthly rent of Rs.950
and Rs.300 respectively, the lessees shall pay such excess
tax, if any, to the lessors.
xxx xxx xxx
(j) the lessees were to enjoy the demised land during
the term of the lease but surrender "the demised land and
the buildings" to the lessors at the termination of the lease
xxx xxx xxx
(m) the lessees during the subsistence of the lease,
were to renovate, at their own cost, the demised buildings
or any portion or portions thereof and carry out and effect
all repairs considered necessary for their use and
habitation.
Under Para III of the lease deed, it was agreed between
the parties, inter alia:
(a) that in case of any default in the payment of rent
or any breach of the covenant between the parties, the
lessor could "re-enter upon the demised plot and buildings
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or upon any part thereof in the name of the whole" and
determine the lease ;
(b) that, in case the lessee fulfilled his obligations
under the lease and gave six months’ prior notice of his
desire to obtain a renewal of the lease, the lessors shall
grant a renewal lease of the demised plot and building for a
further period of 21 years ;
(c) if during the subsistence of this lease, the lessors
get an offer (for) the purchase of the demised plot of land
or the buildings or both from third parties at a valuation
acceptable to the lessors they shall intimate such offers to
the lessees and give them the option of buying the demised
plot and buildings at such valuation and if within two weeks
of receipts of such intimation to the lessees they do not
send a reply to the lessors expressing their consent to buy
at such valuation and do not further pay to the lessors a
deposit or earnest money towards the intended purchase, the
lessors shall be entitled to sell the demised plot of land
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or buildings to such third parties for the price for which
it was offered to the said lessees and any such sale to
third parties shall be only subject to this lease. The
lessees shall (be) in the event of their purchase of the
demised plot and buildings themselves pay and bear the
stamp, registration and all other charges incidental to the
deed of conveyance.
The schedule to the lease deed described the demised
property as "all that piece or parcel of land marked ’J’
washed in yellow colour in the plan hereto stitched and
measuring 17 grounds 32 I sq. ft. or there-abouts and
forming part of the entire piece or parcel of land with
bungalow known as ‘Club Chambers’ and bearing No. 1,
Patullo’s Road and No. 5, Club House Road . . . . ."
To turn now to the statute, the relevant provisions are
not many and may next be set out. The Act came into force
in 1922.S.1 applies the Act only to "tenancies of land" in
certain towns and their adjoining areas in Tamil Nadu
created before a particular date but there is no dispute
that it does apply. within the city of Madras and that the
lease deed in the instant case is prior to the specified
date. S. 2 contains the definitions of which we are
concerned only with the following.
(1) " ‘Building’ means any building, hut or other
structure whether of masonry, bricks. wood, mud or metal or
any other material whatsoever used-
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(i) for residential or non-residential purposes in the
City of Madras . . . . . . .
(ii) for residential purposes only, in any other area;
and includes the appurtenance thereto."
(2) "Land" does not include buildings.
(4) ’Tenant’ in relation to any-
(i) means a person liable to pay rent in respect of such
land, under a tenancy agreement express or implied, and
(ii) includes-
(a) any such person as is referred to in sub-clause (i)
who continues in possession of the land after the
determination of the tenancy agreement,
(b) any person who was a tenant in respect of such land
under a tenancy agreement to which this Act is applicable
under sub-section (3) of section 1 and who or any of his
predecessors in interest had erected any building on such
land and who continues in actual physical possession of such
land and building, notwithstanding that-
(1) such person was not entitled to the rights under
this Act by reason of the proviso to section 13 of this Act
as it stood before the date of the publication of the Madras
City Tenants’ Protection (Amendment) Act, 1972 (Tamil Nadu
Act 4 of 1972), or
(2) a decree for declaration or a decree or an order for
possession or for similar relief has been passed against
such person on the ground that the proviso to section
12 of this Act as it stood before the date of the
publication of the Madras City Tenants’ Protection
(Amendment), Act [Tamil Nadu Act 4 of 1972) disentitled such
person from claiming the rights under this Act. and
(c) the heirs of any such person as is referred to in
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sub-clause (i) or sub-clause (ii)(a) or (ii)(b); but does
not include a sub-tenant or his heirs.
Section 3 entitles every tenant "’on ejectment" to be
paid compensation for 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
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ejectment who derived title from either of them. Section 4
requires the Court in a suit for ejectment against a tenant
in which the landlord succeeds to determine the amount of
compensation payable under Section 3 and direct the landlord
to pay the same within a time to be specified, in default of
which the suit will stand dismissed and landlord debarred
from instituting a fresh suit for ejectment or presenting a
fresh suit for recovery of possession for a period of five
years. Sections 7 and 7-A enable the landlord and tenant
respectively to apply to the court to fix a reasonable rent
for the occupation of the land and section 8 provides that
the tenant shall not be liable to eviction for a period of
five years from the date of fixation of fair rent. Section 9
confers a valuable right on the tenant. It reads, in so far
as it is relevant for our purpose, as follows:
"9 [1] [a] [i] : Any tenant who is entitled to
compensation under section 3 and against whom a suit in
ejectment has been instituted ..... may 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 for a
price to be fixed by the court, the whole or part of the
extent of land specified in the application.
XXX XXX XXX
(b) On such application, the court shall first decided
the minimum extent of the land which may be necessary for
the convenient enjoyment by the tenant. The Court shall then
fix the price of the minimum extent of the land decided as
aforesaid or of the extent of the land specified in the
application under cause (a), whichever is less. The price
aforesaid shall be the average market value of the three
years immediately preceding the date of the order. The court
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 shall pay
into court or otherwise as directed the price so fixed in
one or more instalments with or without interest.
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(2) In default of payment by the tenant of any one
instalment, the application under clause (a) of sub-section
(1) shall stand dismissed, provided that on sufficient cause
being shown, the court may excuse the delay and pass such
orders as it may think fit, but not so as to extend the time
for payment beyond the three years above mentioned. On the
application being dismissed, the court shall order the
amount of the instalment or instalments, if any, paid by the
tenant to be repaid to him without any interest.
(3)(a) On payment of the price fixed under clause (b) of
sub-section (1), the court shall pass an order directing the
conveyance by the landlord to the tenant of the extent of
land for which the said price was fixed. The court shall by
the same order direct the tenant to put the landlord into
possession of the remaining extent of the land, if any. The
stamp duty and registration fee in respect of such
conveyance shall be borne by the tenant.
[b] On the order referred to in clause (a) being made,
the suit . . . . . 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.
XXX XXX XXX
Section 11 provides for a notice offering compensation in
terms of the Act before any suit for ejectment could be
filed against a tenant. Section 12 is of some relevance and
needs to be set out:
"Nothing in any contract made by a tenant shall take
away or limits his rights under this Act.
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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 proviso, however, was deleted with complete
retrospective effect by an Amendment Act of 1972.
When the trustees filed the suit for ejectment, the
company, as already stated, filed Application No. 1541 of
1976 under Section 9 of the Act. This application was
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accepted by the trial court. The court negatived the
company’s contention that it had exercised its option for
the renewal of the lease for the period beyond the initial
period of 21 years. However, it was of the opinion that the
company was entitled to the benefit of the Act and appointed
a commissioner to inspect the property, find out the market
value of the property and fix the minimum extent of the
property required by the defendant for convenient enjoyment
of the super-structure which it would be entitled to
purchase in terms of Section 9.
The trustees filed an appeal. They contended that the
lease in favour of the company was that of a building with
appurtenant land and that, therefore, the respondent was not
entitled to the protection of section 9 of the Act and that,
therefore, the application filed by the company should have
been dismissed. The appeal was allowed. The company,
thereupon, preferred a revision petition before the High
Court. The Iearned Judge examined closely the terms of the
lease deed between the parties, discussed certain earlier
decision of the Court and concluded that the first appellate
court was right in holding that the lease was of a building
and not of land and that, therefore, the application of the
company under Section 9 was not maintainable. He, therefore,
dismissed the revision petition. Hence the present appeal.
From the statutory provisions set cut above, it will be
seen that the Act applies only to tenants in respect of land
situated in certain areas where the tenancy has been created
before a prescribed date. The only controversy here is
whether the lease in question can be said to be a lease of
‘land’. S. 2(2) which purports in define ’land’ only
clarifies that ’land’ does not include ’building’. ’This
takes us therefore to the definition of ’building’ in s.
2(1) which expression means any structure whatever put up on
land ’and includes the appurtenance thereto’. From these
definitions It will be clear that, before a right of
purchase can be exercised under Section 9$, the tenant must
be a tenant of land, not comprising of buildings or lands
appurtenant thereto. In the present case, the High Court has
observed as follows:
"If a land with a building is leased out, then T..N. Act
III of 1972 would have no applicability to such a property.
(That) there was a palatial building over the property could
not be disputed because the property originally belonged to
a notable dignitary in yester years, who lived in that
building with a spacious compound all round the property
(and) which was enjoyed as an appurtenant area to the
building PWl had stated that the plinth area of the building
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XXX XXX XXX
was about 5,285 sq. feet. In para 7 of the written
statement, defendants stated that the vacant site covered by
the lease deed was about 35,830 which is equal to 14 grounds
and 323 sq. feet. Under the lease deed, the total area
leased out was 17 grounds and 321 sq. feet. Hence the
building had occupied an area of nearly two grounds, which
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would be roughly about one eighth of the total area. Hence
it was not a tiny insignificant structure, but a substantial
building which was used as a residential building by a very
affluent person, and which had been later on given to the
charity, on a will executed by him. Under the Act, if there
is a structure built with mud or any other material of even
a tiny dimension, it would be a building for the purpose of
the Act as defined in section 2(1); and section 3(2) being
explicit that land does not include building, the provisions
of the Act could be availed of by the tenant only if he had
taken vacant land on lease.
XXX XXX XXX
In the instant case a substantial building which had
occupied one eighth of the area leased out cannot be
overlooked particularly when the area was enjoyed us an
appurtenant area for that building. Once a superstructure of
such dimension had existed, it will be impossible to apply
the provisions of Act III of 1922 and hold that only the
land had been taken on lease by defendant.
(underlining ours)
In other words, the High Court came to the conclusion that,
in the present case, there had been a lease, not of vacant
land but of a building with the land appertunant thereto and
that, therefore, the provisions of the Act would not apply.
Learned counsel for the appellant attacks the above
finding on two grounds. ln the first place, he points out
that under the terms of the lease deed what was leased out
was" . . . . . plot of vacant land and building erected
thereon". This is the description given of the subject
matter of the lease both in the preamble as well as in the
Schedule. He, therefore, submits that the subject matter of
the lease was a piece of vacant land on some portion of
PG NO 766
which there were buildings and not of a building with
appurtenant land. The second submission is that when the
definition of ’building’ talks to appurtenant land, what it
refers to is only such an extent of land as is absolutely
necessary for the necessary and convenient enjoyment of the
building in question. Pointing out that the building in the
present case occupied barely an eighth of the area of the
entire plot of land which was the subject matter of the
lease, he contends that the land covered by the lease cannot
be said to be appurtenant land. In this context, learned
counsel relies on the definition of ‘appurtenant’ in Black’s
Law Dictionary (Special Deluxe, Fifth Edition) page 94
which, in so far as is relevant, reads as follows:
"Appurtenant: belonging to; accessory or incident to;
adjunct, appeanded, or annexed to; answering to accessorium
in civil law. Employed in leases for the purpose of
including any easments or servitudes used or enjoyed with
the demised premises. A thing is ’appurtenant’ to something
else when it stands in relation of an incident to a
principal and is necessarily connected with the use and
enjoyment of the latter. A thing is deemed to be incidental
or appurtenant to land when it is by right used with the
land for its benefit, as in the case of a way, or water-
course, or of a passage for light, air or heat from or
across the land of another."
In our opinion, the contentions of the learned counsel
cannot be accepted. So far as the first contention is
concerned, we do not think that the language employed is
conclusive on the issue. It only shows that both land and
building were leased. Whether the land is to be treated as
an appurtenant or not would depend upon the extent and
nature of the land and its situation vis-a-vis the building
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thereon and not on whether the lease deed describes the
subject matter as "all that land and building" or vice
versa. Perhaps, if the deed had described the demised
premises as ’building and appurtenant land’ that would have
helped in ascertaining the intention of the parties but even
that would not have been conclusive.
On the second question, we may point out that this Court
had occasion to consider at length the meaning of the
expression ’appurtenant to building’ in Maharaja Singh v.
State of U.P., [1977] 7 SCC 155. There the question was
whether the land on which a cattle fair was being held could
be said to be appurtenant to the building situated on the
land. This Court observed :
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"The heated debate at the bar on this and allied aspects
need not detain us further also because of our concurrence
with the second contention of the Solicitor General that the
large open space cannot be regarded as appurtenant to the
terraces, stands and structures. What is integral is not
necessarily appurtenant. A position of subordination,
something incidental or ancillary or dependant is implied in
appurtenance. Can we say that the Iarge spaces are
subsidiary or ancillary to or inevitably implies in the
enjoyment of the buildings qua buildings? That much of space
required for the use of the structures as such has been
excluded by the High Court itself. Beyond that may or may
not be necessary for the hat or mela but not for the
enjoyment of the chabutras as such. A hundred acres may
spread out in front of a clubhouse for various games like
golf. But all these abundant acres are unnecessary for not
incidental to the enjoyment of the house in any reasonable
manner. lt is confusion to miss the distinction, fine but
real.
"Appurtenant", in relation to a dwelling, or to a
school, college includes all land occupied therewith and
used for the purposes thereof [Words and Phrases Legally
Defined-Butterworths, 2nd EDM.
The word ’appurtenances’ has a distinct and definite
meaning . . . . . Prima facie it imports nothing more than
what is strictly appertaining to the subject matter of the
devise or grant, and which would, in truth, pass without
being specially mentioned. Ordinarily, what is necessarily
for the enjoyment and has been used for the purpose of the
building, such as easements, alone will be appurtenant.
Therefore, what is necessary for the enjoyment of the
building is alone covered by the expression ’appurtenance’.
If some other purpose was being fulfilled by the building
and the Iands, it is not possible to contend that these
lands are covered by the expression "appurtenances". Indeed
it is settled by the earliest authority, repeated without
contradiction to the latest, that land cannot be appurtenant
to land. The word ’appurtenances’ includes all the
incorporal hereditaments attached to the land granted of
demised, such as rights of way, of common ... but it does
not include lands in addition to that granted’ (Words and
Phrases, supra].
PG NO 768
In short, the touchstone of ‘appurtenance’ is dependence
of the building on what appertains to it for its use as a
building. The law thus leads to the clear conclusion that
even if the buildings were used and enjoyed in the past with
the whole stretch of vacant space for a hat or mela, the
land is not-appurtenant to the principal subject granted by
Section 9, viz., buildings".
The question, therefore, whether certain land is
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appurtenant or not is one of fact. The High Court has
applied its mind to the nature of the building as well as to
the terms of the lease deed. It has kept in mind that the
lease relates to a period about 35 years ago, a time when
residential houses occupied large extents of land. There
used to be a building in the middle surrounded by a vast
area covered by garden, arbor, trees and the like. The lease
also describes the building as "Club Chambers" with a
municipal door number. The building is itself a substantial
one occupying as many as two grounds. Having regard to the
position pertaining at the time when the lease was executed,
the first appellate court and High Court came to the
conclusion that the land in this case was appurtenant to the
building. We see no reason to disturb this finding. On the
other hand, we agree that the use of the land, in the
circumstances of this case, was incidental to the enjoyment
and beneficial use of the building and, therefore, squarely
fell within the definition which has been discussed above.
It was then contended for the appellant, in the
alternative, that the lease deed in the present case should
be treated as creating two separate leases, one of the
building and the other of the land and that, viewed in this
light, the appellant would be entitled to exercise rights
under the Act atleast in respect of the portion of the
demised premises which comprised of vacant land. To
substantiate this contention, Iearned counsel for the
appellant relied upon the following clauses in the lease
deed:
1. The divisibility of the clauses in para I of the
lease deed into two sets: clauses (b), (d), (e) and (g) as
pertaining to the land and clauses (f), (m), (n). (o) and
(p) as pertaining, to the building;
2. The stipulation of separate rents for the land and
the building,
3. The presence of clauses clearly envisaging and
implying that the lessee could put up buildings on the
vacant portions of the land and even providing that the
lessee would be liable to pay taxes etc. in respect of the
buildings to be so erected ;
4. The provision that the lessee that the sublet the
demised land or building or any part or portion thereof
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subject only to its being liable for any extra burden of
municipal tax that may fall on the landlord as a
consequence;
5. The covenant that, if during the subsistence of the
lease, the lessors got an offer for the purchase of the
demised plot of land or the buildings or both from third
parties the lessee should be given a first option to
purchase at the price offered. Relying upon the above
features, it was contended that the lease deed does deal
with the land and building separately. Separate rents were
provided for; the lessees were given right to put up
structures and, if necessary, even let them out; the sale or
disposal of various parts of the land or the building
separately was envisaged. It was, therefore, vehemently
contended that the lease deed should be construed as
consisting of two leases, one in respect of the vacant land
and one in respect of the building rolled into one.
We are unable to accept this contention. We agree with
the conclusion of the High Court that these clauses of the
lease deed cannot to be construed in the manner suggested by
the lessees. There are clear indications in the lease deed
that it is a single lease of both the building and the
vacant land. They are jointly referred to in the lease deed.
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There are various passages in the lease deed where it is
referred to as "the lease" i.e. a single indivisible lease.
The rent payable is specified as an aggregate of Rs. 1,250
per month and a consolidated advance of one year rent is
payable under the lease deed. The lease is for a period of
21 years with an option to the lessee to renew it for the
same period. The lease deed does not envisage the
termination or renewal of the lease in respect of a part of
the leased premises. The lease of the building alone cannot
be renewed without a renewal of lease in respect of the land
or vice versa. The deed contemplates the termination of
lease at one point of time whereat the lessee has to
surrender the possession with liberty to remove any super
structures it might have put up there. The re-entry clause
also provides a right to re-entry in respect of the demised
premises as such in the event of any non payment of rent or
breach of the stipulations. Also. physically, it is
impossible to consider the document as comprising of two
leases because the extent of land which has to go with the
building as appurtenance-for some part of the land atleast
is clearly and necessarily appurtenant-and the extent of
land which can be treated as separately demised cannot be
defined. No seperate lease of land can be read into the
document without a proper specification and delineation of
the extent of land that is to be comprised in such a
separate lease.
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The clauses on which reliance has been placed on behalf
of the appellant, in our opinion, do not lead to the
inference suggested by the appellant. The High Court has
pointed out that the rent for the property was Rs. 1,250 and
that the bifurcation thereof into Rs.900 and Rs.350 had been
introduced only with a limited purpose in view. The landlord
wanted to, protect himself against the possibility of
demands of high municipaL takes being made against him as a
result of the Iessees putting up structures on the land or
letting out parts of the property at high rent$. So far as
the other clauses are concerned, as rightly pointed out by
the learned counsel for the respondents they are just the
usual clauses which find a place in a lease of immovable
property. They are merely permissive in nature and enable
the Iessee to deal with the land, during the period of
demise, to the best advantage without affecting the lessor’s
interests. There was a substantial building existing on the
land. There is no material to indicate that this was not
sufficient for the purposes for which the building was taken
on lease by the appellant. However, in case it was
considered necessary to put up further structures, the lease
deed permits the lessee to do so subject to safeguards
against higher tax and compensation and with a stipulation
that this should be removed at the time of termination of
the lease. So far as the clause pertaining to sale is
concerned, again, it merely provides for a possible
eventuality. The execution of a lease deed does not prevent
the lessor from disposing of the property, in whole or in
part, subject to the lessees’ leasehold rights therein. The
clause only provides that, in case the landlord decided to
exercise this right, he should give a right of pre-emption
to the lessee. Thus all these are merely clauses which
provide against the various contingencies that may occur
during the period of the lease which may go up to 42 years.
It is not possible to infer from these clauses that the
parties had entered into two separate transactions of lease,
though incorporated in a single document. In our opinion,
this was a composite lease, as we have already said, of a
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building with appurtenant land and having regard to the
definitions contained in the Act, the lessee is not entitled
to the rights conferred by section 3 or section 9 of the
Act.
Before we conclude, we might refer to one more argument
addressed on behalf of the appellant. Counsel submitted that
the lease deed itself contains a clear indication that the
parties were fully conscious that the transaction was liable
to be hit by the provisions of the Act. He pointed out that,
when the lease deed was executed in 1951, section 12 of the
Act contained a proviso (which has been extracted by us
earlier). That proviso saved any stipulations between the
parties regarding buildings erected after the date of the
contract. Learned counsel for the appellant urged that the
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clause I (j) in the lease deed which, by implication,
disentitles the lessee to payment of any compensation in
respect of structures at the time of termination of the
lease was specifically put in to exclude the applicability
of the Act. For, both parties were conscious that the Act
would be applicable to the transaction and realised that, if
such a clause were not specifically put in, the lessee would
be entitled to such compensation and hence to the protection
of the Act. Unfortunately, learned counsel urged, the
proviso was dropped with retrospective effect. The result
was that, despite the above clause in the lease deed, the
lessor has become liable to pay the lessee compensation
under section 3 thus conferring on the latter the
correlative right of exercising an option to purchase the
property under section 9. In our opinion, this argument is
far-fetched. Whether the Act applies to the lease in
question or not is something which has to be considered on
the terms of the lease deed, having regard to the nature of
the property. On this we have already expressed our
conclusion. The clause regarding removal of structures is
the normal clause that occurs in leases under the Transfer
of Property Act. There may have been some force in the
argument at least if there had been a clause specifically
stating that the lessee will not be entitled to compensation
for his structures. The clause here makes no mention of
compensation and only talks of the lessees’ right to remove
structures. Even if no such clauses had been inserted, that
would have been the position in law. it is not possible to
infer from such a neutral clause that it was put in with a
view to deny compensation to the lessee and thus get over
the hurdle of the assessee putting in a claim for acquiring
the property by purchase. lt is clear that the lease deed
between the parties is a simple lease deed containing the
usual clauses and covenants that one expects in it and
nothig more. lf, indeed, the parties had been conscious of
the possibility of the lessee claiming any rights under the
Act, the lessors would have tried to safeguard themselves by
making it clear that what was being let out was only a
building and appurtenant land. We, therefore, do not think
that there is much force in this submission of the learned
counsel for the appellant.
As the view we have taken is entirely based on a
construction of the lease deed before us, we do not consider
it necessary to refer to the various decisions discussed by
the High Court in its judgment.
In the result, this appeal fails and is dismissed. The
respondents will be entitled to their costs.
S.L. Appeal dismissed.
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