Case: R. Venkataswami Naidu And Another Vs. Narasram Naraindas

Sarkar, J. (Subba Rao and Mudholkar, JJ. with him) 1. 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 breach of the covenant by putting up a building on the land. 2. 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 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. 3. The question naturally turns upon the provisions of the Act the relevant parts of which we will, therefore, set out at once. Section 2 (4). Tenant means tenant of land liable to pay rent on it. Section 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. Section 9. Any tenant who is entitled to compensation under S. 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. Section 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 buildings 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 reference 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. 4. 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. 5. 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 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 where there was such a covenant. Learned counsel 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. 6. 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. 7. 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 Section 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 S. 3 ....... to the tenants who were authorised by the terms of the lease to put up a building. Prima facie, 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. 8. We think that the word tenant in S. 3 must be understood only in the sense that 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 founded. Therefore, the appellants are tenants as contemplated by S. 3. Now the covenant says that the tenant 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 of the lease or it does not. If it does not, then no further question arises; there will 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 tenants 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. 9. 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 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 Judges views. We must, however, observe that this argument was; not advanced in this Court. 10. 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 operated 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. 11. We think it right to point out before we conclude that N. Vajrapani Naidu v. New Theatre Carnatic Talkies Ltd., AIR 1964 SC 1440 , 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. 12. For these reasons we think that the judgment under appeal was erroneous and must be set aside. We agree with Anantanarayanan, J., that the appellants 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.

Decision reasoning: 1[ds]7. 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 Section 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 S. 3 ....... to the tenants who were authorised by the terms of the lease to put up a building. Prima facie, 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 proposition8. We think that the word tenant in S. 3 must be understood only in the sense that 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 founded. Therefore, the appellants are tenants as contemplated by S. 3. Now the covenant says that the tenant 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 of the lease or it does not. If it does not, then no further question arises; there will 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 tenants 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 them10. 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 operated to annul a Section. We must here also say that learned counsel for the lessor did not rely on the preamble to support his contention11. We think it right to point out before we conclude that N. Vajrapani Naidu v. New Theatre Carnatic Talkies Ltd., AIR 1964 SC 1440 , 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.