Case: Collector Of Bombay Vs. Municipal Corporation Of The City Of Bombay And Others

Das J.1. This is an appeal from the judgment of a Bench of the Bombay High Court (Sen and Dixit JJ.) delivered on 2-2-1917 in an appeal filed under S. 18, Bombay City Land Revenue Act II of 1876 against the judgment of the Revenue Judge at Bombay delivered on 27-10-1947 in a suit filed by the respondents, the Municipal Corporation of the City of Bombay and Madusudan Damodar Bhat, the then Municipal Commissioner for the City of Bombay, against the Collector of Bombay.2. There is no substantial dispute as to the facts leading up to this litigation and they may be shortly stated.In 1865, the Government of Bombay, having decided to construct an Eastern Boulevard, called upon the Corporation of Justices of the Peace for the City of Bombay, the predecessor in title of the respondent Corporation, to remove its then existing fish and vegetable markets from the site required for the construction of the Boulevard. The then Municipal Commissioner Mr. Arthur Crawford, after whom the present municipal market was named, applied for the site set aside for the exhibition buildings on the Esplanade for the purpose of constructing new markets as the existing markets could not be removed until new markets had been provided. On 5-12-1865 the Architectural Improvement Committee informed that Government that it had no objection to the proposed site measuring about 7 acres being "rented to the Municipal Commissioner" and suggested that "the annual charge of one per square yard be levied in consideration of the expense of filling in the ground". Computed at this rate, the annual rental would have amounted to about Rs.176.On 19-12-1865, the Government passed the following resolution :"(1) Government approve of the site and authorise its grant.(2) The plans should be submitted for approval; but Government do not consider any rent should be charged to the Municipality as the markets will be, like other public buildings, for the benefit of the whole community."3. Pursuant to the aforesaid Resolution, possession of the site was made over to the then Municipal Commissioner, but no formal grant was executed as required by Statute 22 and 23 Vic. C. 41.It has now ever been contended that even if the statutory formalities had been complied with the grant upon the terms mentioned in the Resolution would nevertheless have been invalid being in excess of the powers of the Government. The Municipal Commissioner had the site filled up and levelled at the expense of the Corporation. The plans were approved by the Government and the market building were erected by the Corporation at considerable expense. The respondent Corporation was incorporated in 1888 as the successor of the Corporation of the Justices of the Peace for the City of Bombay and it continued in possession of the land and the buildings without paying any rent to the Government according to the Government Resolution of 1865. Indeed, it is pleaded in para. 7 of the plaint and it is not denied in the written statement that acting upon the said grant contained in the Resolution and the terms contained therein the respondent Corporation and its predecessor spent considerable sums of money in building and improving the market and have been in possession of the land and the buildings thereon for over 70 years in accordance with the terms of the Resolution and that no land revenue or rent had been paid to the Government ever since the grant was made. It is in evidence that besides giving up the sites on which the old markets had been situate, a total sum of Rs.17,65,980.12.1 has been spent by the Corporation up to 31-3-1940 in filling up and levelling the site and erecting and maintaining the new market buildings on this site. In 1911, a portion of the market site was acquired by the Government for the widening of the Palton Road. Upon the Collector of Bombay being called upon to put in his claim, if any, to any part of the compensation money awarded by the Land Acquisition Officer, the Superintendent, City Survey, on behalf of the Collector, replied that Government had no claim in respect of the said land.4. The respondent Corporation, therefore, received the whole of the compensation money and it continued in possession of the rest of the land and the buildings thereon without payment of any rent. On 18-3-1938, the appellant Collector of Bombay informed the respondent Municipal Commissioner that it was proposed to assess the land occupied by the Crawford Market under S. 8, Bombay City Land Revenue Act II of 1876, and asked for certain information to enable him to do so. In his reply, the Municipal Commissioner wrote to say that the site of the market had been given to the Municipality as a gift for the construction of the market and that, therefore, the question of assessment did not arise. The appellant Collector of Bombay having insisted that in spite of the Government Resolution of 1865 the Government had the right to assess the site, the Mayor of Bombay on 23-3-1939 wrote a letter to Government stating, inter aliaas follows :"The Corporation have been advised that there can be no doubt that was the intention of Government to make a permanent grant of the land to the Municipality, and, further, that it was also the intention that permanent grant should be free from rent and from assessment to land revenue. I am to point out that the word rent was used in official documents with the greatest frequency with reference to the land revenue leviable by the East India Company and later by Government in the City of Bombay and in the Presidency. It is, therefore clear that it was the intention of Government in 1866 that this grant should be free from any form of rent or assessment. The Corporation were put into possession for a period of over 70 years, during which period the land has without interruption been devoted to the purpose for which the grant was made. Throughout this long period there has been no suggestion from Government that the grant was other than a permanent one, free of revenue, or that the terms of the grant were in any way subject to revision."5. The above contentions were repudiated by the Government in its letter of 1-1-1940 in the following terms :"As regards the contention that the land has been held by the Municipality uninterruptedly for over 70 years without any suggestion from Government that it was liable to assessment, I am to state the right to levy the assessment is the prerogative of the Crown and a mere non-user of this prerogative cannot destroy it. Besides, conditions have considerably altered since the land was originally allotted to the Municipality without charging any ground rent or assessment: the Municipality has been recovering substantial rents by letting out stalls in the market and should now be in a position to pay the assessment. Under the circumstances, the levy of assessment in this case can no longer be foregone or postponed."6. On 31st January 1940, the appellant Collector assessed the land under S. 8, Bombay Act 9 of 1876 with a guarantee of 60 years as under :"Assessment Rs. 7,500 per annum for the first 10 years from 1-4-1940."Rs. 15,000 per annum for the next 10 years"Rs. 30,000 per annum for the remaining 30 years."7. The assessment was to begin to run from 1-4-1940 and the first payment of the assessment was to become due on 1-4-1941. The present suit was thereupon filed in the Court of the Revenue Judge in accordance with the provisions of the Bombay City Land Revenue Act. 1876, for the following reliefs, inter alia :(a) that it may be declared that there is a right on the part of the plaintiff Corporation in limitation of the right of Government to assess the said land and that the plaintiff Corporation is entitled to hold the said land for ever without payment of any assessment and that the Government has no right to assess the said premises.(b) That the said assessment may be declared ultra vires, invalid and may be ordered to be set aside."8. By his judgment dated 27th October 1942 the learned Revenue Judge dismissed the suit with costs. The Corporation appealed to the High Court. Before the High Court, as before us, two of the learned Revenue Judges conclusions were not challenged, namely, (1) that the Government Resolution of 1865 was bad in law either as a grant or even as a contract and could not by itself operate to give any interest in the land to the respondent Corporation because of the noncompliance with the formalities required to be observed by Statute 22 and 23 Vic. C.41 in the matter of disposition of all real and personal estate vested in the Crown under Statute 21 and 92 vic. C. 106, and (2)that the Crowns right to levy assessment on property was a prerogative right to which the ordinary presumption that rights to property which had not been asserted or exercised for a long period of years had been granted away did not apply. What was urged before and accepted by the High Court was that the right of the Government to levy any assessment on the land in question had been lost and could not be asserted or exercised by the Government by reason of the equity arising on the facts and circumstances of the case in favour of the respondent Corporation on the principle established by the decision in Ramsden v. Dyson,(1866)L.R.1 H.L. 129 which was adopted by Jenkins C. J. in Municipal Corporation of the City of Bombay v. Secretary of State,29 Bom. 580 and which equity was, on the authorities, binding on the Crown. After dealing with the cases ofDadoba Janardhan v. The Collector of Bombay, 25 Bom. 714 andJethabhoy Ruttonsey v. Collector of Bombay.25 Bom. 752 the High Court observed."We think, on a reading of the language of the Government Resolution dated 19th December 1865 that we should be justified in holding (within the meaning of the rule in Ramsden v. Dyson)that an expectation was created or encouraged by the landlord that the Municipality was to get possession of the land rent free and that the latter took possession of the land with the consent of the landlord, and upon such expectation with the knowledge of the landlord and without objection by him, laid out money upon the land."9. According to the High Court the rule of equity enunciated in Ramsden v. Dyson,(supra) was not, as pointed out by Jenkine C. J. in Municipal Corporation of the City of Bombay v. Secy. of State,(supra), dependent on the validity of the disposition and could be asserted even where the statutory formalities refuting to the disposition of the property had not been observed and performed, and that this equity constituted a right on the part of the Respondent Corporation in limitation of the right of the Government in consequence of a specific limit to assessment having been established and preserved within the meaning of S.8 of the Act II of 1876 so as to disentitle the Government from assessing the land in question. The High Court relied on the decision in Kamelavahooji v. Collector of Bombay,39 Bom. L. R. 1046 in support of their view that S.8, Bombay Act II of 1876 would apply even where the specific limit was nil. In the result the High Court reversed the decision of the learned Revenue Judge allowed the appeal and passed a decree declaring the rights at the Respondent Corporation and awarding to it the costs in both Courts. The Collector of Bombay appealed to the Federal Court and the appeal has now come up for hearing before us.10. There has been considerable discussion before us as to the precise scope and effect of the principle of equity enunciated in Ramsdan v. Dyson,(1866 L. R. 1 H.L. 129) (supra), as to whether such principle should be extended to the facts of the present case, whether the facts of this case attract the application of the equity established in Ramsden v. Dyson(supra) or attract the equity established in Maddison v. Alderson,(1863) 8 A. C. 467 and Walsh v. Lonsdale,(1882) 21 Ch. D. 9 and finally as to whether, in view of the decision of the Privy Council in Ariff v. Jadunath,68 Ind. App. 91 the equity in Ramsden v. Dyson(supra) can prevail against the requirement of formalities laid down in the Victorian Statute referred to above any more than the equity in Maddison v. Alderson(supra) can do against the requirements of the Transfer of Property Act and whether the decision in 29 Bom. 580 requires reconsideration in the light Of the decision in Ariffs case(supra). In the view we have taken it is not necessary to go into, and to express any opinion on, any of these questions, for this appeal can in our opinion, be disposed of on a narrower and shorter ground.11. The Government claims to assess the lands in terms of S. 8, Bombay Act II [2] of 1876 which runs thus:"8. It shall be the duty of the Collector, subject to the orders of the Provincial Government, to fix and to levy the assessment for land revenue.Where there is no right on the part of the superior holder in limitation of the right of the Provincial Government to assess, the assessment shall be fixed at the discretion of the Collector subject to the control of the Provincial Government.When there is a right on the part of the superior holder in limitation of the right of the Provincial Government, in consequence of a specific limit to assessment having been established and preserved the assessment shall not exceed such specific limit."12. The sole question for our consideration is whether, on the facts of this case, the Respondent Corporation has succeeded in establishing in itself a right in limitation of the right of the Government to assess the land in consequence of a specific limit to assessment having been established and preserved. There is no dispute that by reason of the non-compliance with the statutory formalities the Government Resolution of 1865 is not an effectual grant passing title in the land to the respondent Corporation and is not also an enforceable contract. On the other hand, there is no doubt as to the existence of an intention on the part of the Government to make and on the part of the Corporation to take a grant of the land in terms of the Resolution of 1865 including an undertaking by the Government not to charge any rent. Both parties acted on the basis of that Resolution and the predecessor in title of the Respondent Corporation went into possession of the land in question pursuant to the Government Resolution of 1865 and, acting upon the said Resolution and the terms contained therein, the Respondent Corporation and its predecessor in title spent considerable sums of money in leveling the site and erecting and maintaining the market buildings and have been in possession of the land for over 70 years. What, in the circumstances was the legal position of the respondent Corporation and its predecessor in title in relation to the land in question? They were in possession of the land to which they had no legal title at all.13. Therefore, the position of the respondent Corporation and its predecessor in title was that of a person having no legal title but nevertheless holding possession of the land under colour of an invalid grant of the land in perpetuity and free from rent for the purpose of a market. Such possession not being referable to any legal title it was prima facie adverse to the legal title of the Government as owner of the land from the very moment the predecessor in title of the respondent Corporation took possession of the land under the invalid grant. This possession has continued openly as of right and uninterruptedly for over 70 years and the respondent Corporation has acquired the limited title it and its predecessor in title had been prescribing for during all this period, that is to say, the right to hold the land in perpetuity, free from rent but only for the purposes of a market in terms of the Government Resolution of 1865. The immunity from the liability to pay rent is just as much an integral part or an in severable incident of the title so acquired as is the obligation to hold the land for the purposes of a market and for no other purpose. There is no question of acquisition by adverse possession of the Governments prerogative right to levy assessment. What the respondent Corporation has acquired is the legal right to hold the land in perpetuity free of rent for the specific purpose of erecting and maintaining a market upon the terms of the Government Resolution as if a legal grant had been a made to in. The right thus acquired includes, as part of it, an immunity from payment of rent which must necessarily constitute a right in limitation of the Governments right to assess in excess of the specific limit established and preserved by the Government Resolution within the meaning of S. 8 of the Bombay Act II [2] of 1876.It is true, as pointed out by the Privy Council in Kamalavahoojs Maharaj v. Collector of Bombay,(39 Bom. L. R. l046) (supra.) that the words of the section would appear to apply rather to the case of a limitation on the right to assess than to the case of a complete exemption from assessment but such a construction would not protect the case of total exemption which, as conceded in that very case, did in fact exist and were recognised and protected by virtue of the words of S. 8 of the Bombay Act II [2] of 1876. It has not been suggested before us that there are no cases of total exemption or that those cases are protected by any provision of law other than that of this very section. There is, therefore, no escape from the conclusion arrived at by the High Court, with which we concur, that the words of S. 8 would apply to a case where total exemption from assessment was granted. In other words, specific limit may be nil for the purposes of S. 8 of the Act.14. It was sought to be argued that even if the Government be precluded from enhancing the "rent" in view of the terms of the Government Resolution, it cannot be held to have disentitled itself from its prerogative right to assess "land revenue. This contention is sought to be founded on a distinction between "rent" and "land revenue." This contention, however, was not raised in the written statement and was not made the subject matter of any issue on which the parties went to trial and was never put forward before either of the Courts below. Indeed, in the letter of the Mayor of Bombay dated 22- 3-1939, to which reference has been made, it was clearly alleged that "the word "rent" was used in official documents with the greatest frequency with reference to, the land revenue leviable by the East India Company and later by the Government in the City of Bombay and in the Presidency " In the Governments reply dated 24-1-1940, also quoted above, this assertion was never repudiated or denied. In the premises, the appellant cannot be permitted at this stage to raise this contention founded on the supposed distinction, if any, between "rent" and "land revenue" and for the purpose of this case we must proceed on the basis that the word "rent" in the Government Resolution of 1865 was synonymous with or included "land revenue.”15.

Decision:
1[ds]Therefore, the position of the respondent Corporation and its predecessor in title was that of a person having no legal title but nevertheless holding possession of the land under colour of an invalid grant of the land in perpetuity and free from rent for the purpose of a market. Such possession not being referable to any legal title it was prima facie adverse to the legal title of the Government as owner of the land from the very moment the predecessor in title of the respondent Corporation took possession of the land under the invalid grant. This possession has continued openly as of right and uninterruptedly for over 70 years and the respondent Corporation has acquired the limited title it and its predecessor in title had been prescribing for during all this period, that is to say, the right to hold the land in perpetuity, free from rent but only for the purposes of a market in terms of the Government Resolution of 1865. The immunity from the liability to pay rent is just as much an integral part or an in severable incident of the title so acquired as is the obligation to hold the land for the purposes of a market and for no other purpose. There is no question of acquisition by adverse possession of the Governments prerogative right to levy assessment. What the respondent Corporation has acquired is the legal right to hold the land in perpetuity free of rent for the specific purpose of erecting and maintaining a market upon the terms of the Government Resolution as if a legal grant had been a made to in. The right thus acquired includes, as part of it, an immunity from payment of rent which must necessarily constitute a right in limitation of the Governments right to assess in excess of the specific limit established and preserved by the Government Resolution within the meaning of S. 8 of the Bombay Act II [2] ofis, therefore, no escape from the conclusion arrived at by the High Court, with which we concur, that the words of S. 8 would apply to a case where total exemption from assessment was granted. In other words, specific limit may be nil for the purposes of S. 8 of thecontention, however, was not raised in the written statement and was not made the subject matter of any issue on which the parties went to trial and was never put forward before either of the Courts below. Indeed, in the letter of the Mayor of Bombay dated 22- 3-1939, to which reference has been made, it was clearly alleged that "the word "rent" was used in official documents with the greatest frequency with reference to, the land revenue leviable by the East India Company and later by the Government in the City of Bombay and in the Presidency " In the Governments reply dated 24-1-1940, also quoted above, this assertion was never repudiated or denied. In the premises, the appellant cannot be permitted at this stage to raise this contention founded on the supposed distinction, if any, between "rent" and "land revenue" and for the purpose of this case we must proceed on the basis that the word "rent" in the Government Resolution of 1865 was synonymous with or included "land