vil Appeal Nos
2044 45 of 1990
From the Judgment and Order dated 1881989 of the Madras High Court in CRP Nos
4797 and 4798 of 1984
CS Vaidyanathan KV Vishwanathan KV Mohan SR Bhat and SR Setia for the Appellant
785 K Parsaran and V Balachandran for the Respondents
The Judgment of the Court was delivered by RANGANATHAN J
Special leave to appeal is granted and the appeals are disposed of by a common order
On 961936 Ramaswamy Gounder the predecessor in interest of the respondents executed a lease deed in favour of Gopal Sait the predecessor in interest of the appellant
Certain passages from an English translation of the lease deed which was in vernacular are relevant for the purposes of the present case and they read thus Whereas the property viz vacant land well and Kaichalai etc
belongs to the party of the First part as his ancestral property Whereas the said property was leased out to party of the Second Part on a monthly rental of Rs12 8 0 for 15 years and taken possession by the party of the second part from party of the First part on 3121935   and the party of the Second part for his convenience and at his own ex penses and costs was permitted to construct in the said vacant land and install petrol selling business  
After the expiry of lease period of 15 years ie on 122 1950 the lessee shall at his own expense remove the struc ture put up by him and deliver possession of the vacant land together with well and kaichalai in the present state  SCHEDULE  vacant land situated in this bounded on the North by vacant land leased out for Burmah Oil Co by the said Ramas wamy Gounder Gopalji Ratnaswami   all these vacant lands together with in the fourth plot measuring East to west 84 and North to South 16 together with half share in well therein together with tiled Kaichalai  together with door doorways etc
There is no number for Kaichalai
It is common ground that the total vacant area covered by the 786 lease was 3600 sq
and that the kaichalai referred to therein was thirty seven and a half by sixteen and a half feet ie of the extent of about 600 sq
It also appears that even though there was initially no door number for the Kaichalai it was eventually given door No 82 and the suit premises we are concerned with bear door Nos 80 81 and 82
The lease was extended for a period of two years from 1151 by a fresh deed dated 15151 at an enhanced rent
This lease deed recited On the expiry of two years ie on 311252 the lessor has no objection for the removal of the structure put up by Burmah Shell petrol pump etc except the extent of structure of thirty seven and a half feet by sixteen and a half feet put up by the lessor   There was a fresh lease deed again executed on 2153 for a further period of three years at a higher rent
This deed also required the lessee when delivering possession back to the lessor on the expiry of the lease to remove the struc tures put up by him or the Burmah Shell Co Ltd except the structure measuring thirty seven and a half ft by sixteen and a half ft
The lessee appears to have continued to occupy the property even beyond 311255 at a further enhanced rent
In 1962 we are told the lessor flied a petition to evict the lessee under section 103ai and 141b of the Madras Buildings Lease and Rent Control Act 1960 alleging that he required the premises for personal occupation and for bona fide immediate demolition
The lessee defended the petition saying that the premises do not require any immedi ate demolition that the premises are used for non residen tial purposes and kept in good condition and that the peti tioner s requirement for personal occupation is not bona fide The petition was dismissed by the Rent Controller observing that the premises did not need demolition and further that as the premises had been leased out for non residential purposes and the landlord could not seek its conversion into residential use without the controller s application the petitioner s allegation that he required it for personal use was neither tenable nor bona fide
Ramaswamy Gounder filed a petition again in 1979 for the eviction of the respondent but he died in February 1979 and the petition filed by him was dismissed for default
There after his legal representatives the present respondents instituted a petition for eviction 787 RCOP 1979 out of which the present proceedings have arisen of the respondents on the grounds of demolition and re construction and of wilful denial of title within the meaning of Ss 141b and 102vii of the Tamil Nadu Buildings Lease and Rent Control Act
In the meantime the provisions of the Madras City Tenants  Protection Act 1922 Later renamed the Tamil Nadu City Tenants  Protection Act were extended to the municipal limits of Udumalpettai within which the premises in question were located
Taking advantage of this the respondent filed OP 179 in the same court of District Munsif cum Rent Controller claiming the benefit of compulsory purchase conferred on tenants of land under the said Act
The Dis trict Munsif cum Rent Controller allowed the lessor s peti tion for eviction and dismissed the lessee s petition
The sub judge on appeal dismissed the appeals with a slight modification
He was of the view that except for the kai chalai the other buildings had been put up by the respond ents with the permission of the lessor and that hence he was entitled to obtain compensation therefore by institution of separate appropriate proceedings
The respondent filed two revision petitions before the High Court which declined to interfere
The learned Judge held I do not see any reason to interfere with the orders of the courts below negativing the claim of the revision petition er
In as much as admittedly the property situated in door No 82 belonged to the landlord this is a case to which section 141b of the Tamil Nadu Buildings Lease and Rent Control Act 1960 will apply
However the property bearing door Nos 80 and 81 belonged to the petitioner is the find ing
On that all that the tenant could ask for will be for removal of the superstructure
Beyond that his claim for compensation also could not be ordered since there was no prayer for the same
The decision in Ms Larsen  Toubro Ltd vs The Trustees of Dharmamoorthy Rao Bahadur Calvala Cunnan Chetty s Charities by its Trustees 1988 2 LW 380 is distinguishable because this is a case of only one and a half grounds wherein there is a kaichalai of 600 sq
The removal shall take place within a period of three months from today
The Civil revision petitions are dismissed
 Hence these two appeals
788 Though there have been claims made under the Rent Con trol Act by the lessor and under the City Tenants  Protec tion Act by the lessee the claim under the latter has not been pressed before us by the learned counsel for the appel lant who has confined his arguments before us to the only question whether the demised premises constitute a build ing within the meaning of section 22 of the Rent Control Act
Sri CS Vaidyanathan learned counsel for the appel lants submitted that the first appellate court has found modifying the trial court s findings in this regard that the original lease comprised only of the vacant site well and kaichalai and that all the other superstructures found in the demised premises had been put up by the appellant
He contended that the kaichalai  was merely in the nature of a shed put up for the tethering of cattle and that it was not a building  within the meaning of the Rent Control Act
Alternatively he contended even if the Kaichalai could be considered to be a building this was not a case of the lease of a building or hut with its appurtenant land it was really a case of the lease of a vacant site to the petition er on which was situated a small hut in one corner
The lease deed itself recites that the appellant had taken the premises for putting up a petrol pump
In fact he did put in an underground storage tank a petrol pump and other struc tures and carried on a petrol and kerosene business thereon
Though the small Kaichalai was situate in a corner of the site the lease intended by the parties was only that of the site
The Kaichalai was no doubt not demolished and per haps the appellant also made use of it for the purposes of his business but says Sri Vaidyanathan this made no dif ference to the obvious and clear and dominant intention of both parties that it was the site that was leased out for a petrol pump business
Sri Vaidyanathan contended that the issue is directly governed by the decision in the Larsen  Toubro case   to which one of us was a party
He submitted that where a lease is a composite one of land and buildings the court has to address itself to the primary or dominant intention of the parties
If this is to lease a building the lease of land being adjunct or incidental as in the Larsen  Toubro case supra the Rent Control Act would apply
On the other hand if the dominant intention is to lease a site the presence of a building thereon not being considered material by either party the lease would not be one of a building  covered by the Rent Control Act whether or not it can be considered as a lease only of a vacant site governed by the City Tenant s Protection Act
Counsel contended that it is possible that there may be a grey area of leases which might fall under neither Act and proceedings in respect of which 789 may continue to be governed by the Transfer of Property Act unaffected by these special laws
The Rent Control Act contains a definition of the ex pression building  which reads as follows 22 building  means any building or hut or part of a building or a hut let or to be let separately for residen tial or non residential purposes and includes a the gardens grounds and out houses if any appurtenant to such building hut or part of such building or hut and let or to be let along with such building or hut b any furniture supplied by the landlord for use in such building or hut or part of a building or hut but does not include a room in a hotel or boarding house
 We have not been able to get at the exact meaning of the Tamil word kaichalai 
It however seems to denote a structure or a roof put up by hand
Whatever may be the precise meaning of the term we think that the definition in section 22 clearly includes the kaichalai in the present case
Since the Act applies to residential and non residential buildings alike the expression hut  cannot be restricted only to huts or cottages intended to be lived in
It will also take in any shed hut or other crude or third class construction consisting of an enclosure made of mud or by poles supporting a tin or asbestos roof that can be put to use for any purpose residential or non residential in the same manner as any other first class construction
The kaichalat is a structure which falls within the purview of the definition
Counsel for the appellant is perhaps under stating its utility by describing it as a mere cattle shed
The area of the shed is quite substantial and as will be explained later the parties also appear to have attached some importance to its existence on the site
It is very difficult to hold in view of the above definition that the kaichalai is not a building  within the meaning of section 22
On behalf of the respondents it is contended that in a composite lease the existence of a building or hut on the land however small insignificant or useless it may be is sufficient per se to bring the lease within the scope of the Rent Control Act
It is suggested for the respondent that it would be inarguable once it is admitted or held 790 that the Kaichalai is a building and that the same has been let out that still there is no letting out of a building within the meaning of the Act
In support of his contention Sri Parasaran for the respondent placed considerable reliance on Irani vs Chidarnbaram Chettiar AIR 1953 Mad 650
He pointed out that in that case there was a vast vacant land with only some stalls in one corner and a com pound wall but it was nevertheless held to be a case of lease of a building
According to him this case was not disapproved but indeed indirectly approved by this Court in Salay Md Sait vs
JMS Charity 1969 1 MLJ SC 16 though certain other cases where leases of vacant sites with only the lessees  buildings thereon were held to be leases of buildings were overruled in that decision
This case according to him decides that once there is a build ing on the land however insignificant and it is let out the case will be governed by the Rent Control Act
We do not think this case is an authority for such an extreme posi tion
It rather seems that the case was one decided on its own special facts
At the time of the original lease by the landlord there was only a vacant site and a few small stalls
But by the time the relevant lease deed which came up for consideration was executed it had become the site of a theatre
No doubt the theatre did not belong to the lessor nevertheless for several years the leased property had been sued as a theatre and the purpose of the parties was clearly that the leased premises should continue be used as a cinema theatre
It was in this special situation that the Court came to the conclusion that it was plausible to hold the lease to be one of a building though if the struc tures not belonging to the landlord were left out of ac count there was only a vacant site and a few stalls
We think it would not be correct to draw support from this decision for the extreme proposition contended for on behalf of the respondent
In our opinion we have to travel beyond this solitary fact go further to look at the terms of the lease and the surrounding circumstances to find out what it is that the parties really intended
There is no difficulty in determining the scope of the lease where a building and a piece of land are separately let out
But in the case of composite lease of land and building a question may well arise whether the lease is one of land although there is a small building or hut on it which does not really figure in the transaction or one of a lease of the building in which the lease of land is incidental or a lease of both regardless of their respec tive dimensions
In determining whether a particular lease is of the one kind of another difficulties are always bound to arise and it will be necessary to examine whether the parties intended to let out the building along with the lands or vice 791 versa
The decisions in Sivarajan vs Official Receiver AIR 1953 Trav
Co 105 Nagamony vs Tiruchittambalam AIR 1953 Trav
Co 369 Official Trustee vs United Commercial Syndi cate and Raj Narain vs Shiv Raj Saran AIR  relied upon by Sri Vaidyanathan were in stances where what the parties had in mind was only the lease of land although there were certain petty structures thereon which were not demolished or kept out of the lease but were also let out
They were clearly cases in which we think the applicability of the Rent Act was rightly ruled out
On the other hand Larsen  Toubro  is a case where there was the lease of a building although a vast extent of land was also included in the lease
That was not a case which arose under the Rent Control Act but it illustrates the converse situation
Sri Vaidyanathan wants to derive from the case referred to above and certain cases which deal with other aspects which become relevant while considering a composite letting a proposition that the dominant purpose of the letting should govern
For instance there are cases where factories mills or cinema theatres are leased out and cases have held that the dominant object is to lease a factory mill or theatre and that even though in all these cases the letting out of a building would be involved the provisions of the Rent Control Act would not apply vide Venkayya vs Subba Rao AIR 1957 AP 619 Uttam Chand vs Lalwani
AIR 1965 SC 716 and Dwarka Prasad vs Dwarkadas  But we think that this approach also seeks to over simplify the problem
When we come down to consider the terms of a particular lease and the inten tion of the parties there are bound to be a large variety of cases
If the transaction clearly brings out a dominant intention and purpose as in the cases cited above there may be on difficulty in drawing a conclusion one way or the other
But it is not always necessary that there should be a dominant intention swaying the parties
There may be cases where all that is intended is a joint lease of both the land and the building without there being any considerations suf ficient to justify spelling out an intention to give primacy to the land or the building
For instance where a person owns a building surrounded by a vast extent of vacant lands which may not all be capable of being described appurtenant thereto in the sense of being necessary for its use and enjoyment and a party comes to him and desires to take a lease thereof he may do so because he is interested either in the building or the land as the case may be
But the owner may very well say I am not interested in your need or purpose
You may do what you like with the land or building
1 have got a compact property consisting of both and I want to let it out as such
You may take it or leave it
 The fact in such cases is that the owner has a building and land and he lets them 792 out together
He is not bothered about the purpose for which the lease is being taken by the other party
In such cases it is very difficult to say that there is no lease of build ing at all unless there is some contra indication in the terms of the lease such as for example that the lessee could demolish the structure
The test of dominant intention or purpose may not be very helpful in such cases in the context of this legislation
Sri Vaidyanathan sought to contend that the words of section 22 any building   and gardens grounds   let or to be let along with it import the concept that the dominant purpose should be a letting of the building
We do not think that this is necessarily so
The decision of this Court in Sultan Bros P Ltd vs CIT   is of some relevance in this context
There the Supreme Court was concerned with the interpretation of section 124 of the Indian Income tax Act 1922 which read 4 Where an assessee lets on hire machinery plant or furniture belonging to him and also buildings and the letting of the buildings inseparable from the letting of the said machinery plant or furniture he shall be entitled to allowances in accordance with the provisions of the clauses iv v and vii of sub section 2 of section 10 in respect of such buildings
 The High Court took the view that the plant and machinery and buildings should not only be inseparably let out but also that the primary letting must be of the machinery plant or furniture and that together with such letting or along with such letting there should be letting of build ings 1n that case the High Court held the primary let ting was of the building and so section 124 would not apply
The Supreme Court did not approve of this reasoning
It said Now the difficulty that we feel in accepting the view which appealed to the High Court and the Tribunal is that we find nothing in the language of sub section
4 of section 12 to support it
No doubt the sub section first mentions the letting of the machinery plant or furniture and then refers to the letting of the building and further uses the word also  in connection with the letting of the building
We however think that this is too slender a foundation for the conclu sion that the intention was that the primary letting must be of the machinery plant or furnitures
In the absence of a much 793 stronger indication in the language used there is no war rant for saying that the sub section contemplated that the letting of the building had to be incidental to the letting of the plant machinery or furniture
It is pertinent to ask that if the intention was that the letting of the plant machinery or furniture should be primary why did not the section say so Furthermore we find it practically impossi ble to imagine how the letting of a building could be in cidental to the letting of furniture though we can see that the letting of a factory building may be incidental to the letting of the machinery or plant in it for the object there may be really to work the machinery
If we are right in our view as we think we are that the letting of a building can never be incidental to the letting of furniture contained in it then it must be held that no consideration of primary or secondary lettings arises inconstruing the section for what must apply when furniture is let and also buildings must equally apply when plant and machinery are let and also buildings
We think all that sub section
4 of section 12 contem plates is that the letting of machinery plant or furniture should be inseparable from the letting of the buildings The Court proceeded then to consider the concept of insepa rable letting  and observed It seems to us that the inseparability referred to in sub section 4 is an inseparability arising from the intention of the parties
That intention may be ascertained by flaming the following questions Was it the intention in making the lease and it matters not whether there is one lease or two that is separate leases in respect of the furniture and the building that the two should be enjoyed together Was it the intention to make the letting of the two practically one letting Would one have been let alone or a lease of it accepted without the other If the answers to the first two questions are in the affirmative and the last in the nega tive then in our view it has to be held that it was in tended that the lettings would be inseparable
This view also provides a justification for taking the case of the income from the lease of a building out of section 9 and putting it under section 12 as a residuary head of income
It then be comes a new kind of income not covered by section 9 that is income not from the ownership of the building alone but an income which 794 though arising from a building would not have arisen if the plant machinery and furniture had not also been let along with it
 Though the context was somewhat different the observations in that case are of great assistance
We think that in the context here also we should be guided not by any theory of dominant purpose but by the consideration as to whether the parties intended that that the building and land should go together or whether the lessor could have intended to let out the land without the building
The latter inference can perhaps be generally drawn in certain cases where only the lease of land dominated the thoughts of the parties but the mere fact that the building is small or that the land is vast or that the lessee had in mind a particular purpose cannot be conclusive
Let us now turn in the above background to a consider ation of the lease deed in the present case
As already mentioned counsel for the appellant strongly relies on the purpose of the lease and seeks to make out that the building kaichalai was not really a significant part of the lease
This contention is stoutly refuted on behalf of the respond ents
It is pointed out that the kaichalai was of substan tial dimensions and that counsel for the appellant is not fight in characterising it as a mere cattle shed
It is pointed out that the shed was also admittedly used by the appellants for the purposes of its business and there is nothing to show that this was also not in contemplation at the time of the lease
Again it is pointed out that in some parts of the lease deeds the vernacular version gives first place to the kaichalai rather than to the vacant site
Also every one of the lease deeds attaches special emphasis that the kaichalai should not be removed but should be returned to the lessor without any damage
We may also advert to one more circumstance which shows beyond doubt that the kaicha lai was not an insignificant structure
We have earlier referred to the fact that Ramaswamy Gounder had filed an earlier eviction petition on the ground that he needed the premises for personal occupation and immediate demolition
The lessee s defence to this was not that the kaichalai was a cattle shed unfit for personal occupation The defence was that it had been let out for a non residential purpose and could not be converted to residential use without permis sion
This certainly demonstrates that the kaichalai was capable of use both for residential and non residential purposes
Counsel for the respondent in fact wanted to go a little further and hold it against the appellant that he had not taken in those proceedings the plea now put for ward that the Rent Control Act could not at all be invoked
We will not however 795 hold this against the appellant as at that time the benefits of the Tenants  Protection Act had not been extend ed to Udumalpettai and the tenant would not have gained anything by raising any such point
But the pleadings in those proceedings as well as the order of the Rent Control ler therein leave no doubt that the kaichalai was a material structure let out as such to the lessee for non residential purposes and which with necessary permission could also have been used for residential purposes
Having regard to all these circumstances the correct inference appears to be that what the lessor intended was a lease of both the land and the building
The land was to be put to use for a petrol pump so far as the building was concerned the lessee was at liberty to use it as he liked but he had to maintain it in good condition and return it at the end of the lease
This was a composite lease with a composite purpose
It is difficult to break up the integrity of the lease as one of land alone or of building alone
In these circumstances we think this letting would come in within the scope of the Rent Control Act for the reasons already explained
Before concluding we may touch upon two more relevant aspects
The first is the use of the word separately in section 22
This however does not affect our above construction of the section
That word is intended to emphasise that for purposes of the Act a building means any unit comprising the whole or part of a building that is separately let out
It does not mean it cannot mean that composite leases of land and building would not be covered by it
That would be clearly contrary to the language of the whole clause which specifically talks of joint letting of land and building
The second is the restriction of the applicability of section 22 to cases of letting of building and appurtenant lands only
It may be suggested that the lands here are not appurtenant except perhaps to the extent required for providing access to the Kaichalai
This argument is not very helpful to the appellants
At best it can mean that the Kaichalai and only a part of land needed for its enjoyment or use would be governed by the Rent Control Act
But this was not the contention of the appellant and no attempt has been made to ascertain what the extent of such appurtenant land could be
That apart we are inclined to think that the word appurtenant has in the context a much wider mean ing
It is not just restricted to land which on a consider ation of the circumstances a court may consider necessary or imperative for its enjoyment
It should be construed as comprehending the land which the parties considered appro priate to let along with the building
To hold to the con trary may give rise to practical difficulties
Suppose there is in the middle of a metropolis a bungalow with a vast extent of land sur 796 rounding it such as for eg in the Larsen  Toubro case and this is let out to a tenant
If a very strict and narrow interpretation is given to the word appurtenant it is arguable that a considerable part of the surrounding land is surplus to the requirements of the lessee of the building
But we think no argument is needed to say that such a lease would be a lease of building for the purposes of the Rent Control Act
Where a person leases a building together with land it seems impermissible in the absence of clear intention spelt out in the deed to dissect the lease as a of building and appurtenant land covered by the Rent Control Act and b of land alone governed by other relevant statu tory provisions
What the parties have joined one would think the court cannot tear as under
In fact we may point out that a wider meaning for this word was convassed in Irani vs Chidambaram Chettiar AIR 1953 Madras 650 which the court had no necessity to go into in the view taken by it on the interpretation of the lease deed
In this case also no contention has been raised in regard to this aspect and so we shall also leave open the precise connotation of the word except to say that it may warrant a wide meaning in the context
For the reasons discussed above we see no grounds to interfere with the judgments of the courts below
The appeal is dismissed but we make no order as to costs
RSS Appeal dis missed


Summary:
The appellants had given the highest offers for certain specified plots for lease in response to invitation by public tender by the respondent Corporation a Government Company and complied with the requirements of deposit
The respondent however rejected the said offers without as signing any reason
The appellants challenged the action of the respondent before the High Court as arbitrary unconstitutional and contrary to rule of law
The High Court dismissed the writ petitions in limine
In these appeals by special leave it was contended for the appellants that the respondent Corporation was a State  under Article 12 of the Constitution that the power of rejection of offers without assigning any reason was unregu lated and unfettered contrary to the requirement of rule of law and that it was in the interest of the public authority itself the State and everyone in the society at large that reasons for State action are placed on record and or even communicated to the persons from whom the offers came
827 Dismissing the appeals the Court HELD 1
The respondent No 1 was State  within the meaning of Article 12 of the Constitution and in its deal ings with the citizens of India it would be required to act within the ambit of rule of law and would not be permitted to conduct its activities arbitrarily
829B C RD Shetty vs International Airport Authority of India Sehravardi   referred to 2
The State is certainly entitled to look for the best deal in regard to its properties
In the instant case there was no allegation of mala fides in the conduct of respondent No 1 in refusing to accept the highest offers
It could therefore be presumed that in so doing the respondent had been actuated by the consideration of looking for better offers for the specific plots in its economic interest
There was thus no arbitrariness in respondent trying to get proper price for its plots
829E F 828E F 3
When highest offers of commercial nature are rejected reasons sufficient to indicate the stand of the public authority should be made available and the same should be communicated to the concerned parties unless there be any specific justification not to do so
That would assure credibility to the action discipline public conduct and improve the culture of accountability and provide an oppor tunity for an objective review in appropriate cases both by the administrative superior and by the judicial process
830F G E F State of UP vs Raj Narain  Ors   re ferred to