Full Judgment Text
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 8
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
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 8
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
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 8
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
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 8
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
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 8
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.
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 6 of 8
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
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 7 of 8
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
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 8 of 8
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