Case: Byramjee Jeejeebhoy (P) Ltd Vs. State Of Maharashtra

Banajee, and he was freed from liability to pay assessment. The freedom from liability to pay land revenue was subject to certain covenants - covenants to respect the rights of occupants of the land and not to introduce innovations in the rates of assessment in respect of all lands in the possession of tenants, to continue Dewasthans, Dharmadawas and allowances and to pay annual rent of Re. 1/- if demanded. The right to hold the villages free from liability to pay land revenue was therefore conferred by the indenture subject to the restrictions imposed by agreement between the East India Company and the grantee.11. Counsel for the appellant urged that the agreement contemplated by S. 2(d) of the Act is a personal agreement and not one relating to the estate granted, and submitted that the covenants in the indenture being not of that nature the appellant does not hold the villages under an agreement. We are unable to accept this contention. It is true that where property is transferred absolutely by one person to another, it cannot be said that the property transferred is held under an agreement with the transferor merely because of the covenant of title. But when the State transfers property to a citizen, it does not thereby, in the absence of an express provision, grant exemption from liability to pay revenue. The right to recover revenue is not an incident of ownership: it is a prerogative of the sovereign, or a liberty or franchise of some authority claiming derivatively from the sovereign. Mere grant of land by the State does not absolve the grantee from liability to pay revenue. Under the indenture dated September 22, 1847, the grantee was given a right to hold the villages free from liability to pay revenue on certain terms, one of which was to pay rent of Re. 1/- per annum when demanded. The villages were granted subject to the restrictions, in absolute right and freedom from liability to pay revenue in respect of the villages was given subject to certain conditions. Imposition of these conditions subject to which exemption from liability to pay land revenue was granted, and acceptance thereof constituted an agreement within the meaning of S. 2(d). The villages though held in absolute right are still in the matter of liability to pay land revenue held under an agreement from the State Government. In the grant in question there is in the first instance an obligation to pay annual rent, if demanded. There is also an obligation to respect the rights of the holders of the lands and of Dewasthans, Dharamdawas and to make allowance to Pals. There is then an obligation not to alter the rights of the holders of land to their prejudice, and the grant of the right to exemption from payment of revenue is made subject to all laws and regulations which are from time to time in force in the Island of Salsette touching the sale and manufacture of spirituous liquors or poisonous or injurious drugs or substances. These are all covenants which raise contractual obligations on the exemption from land revenue, absolute grant of the land notwithstanding. Both the conditions prescribed under the definition, namely, specification in the Schedule and holding under a kowl as defined under the Act were therefore fulfilled, and the villages were at the date of the Act, held under an agreement from the State of Bombay.12. The next question is whether the grant is exempt from the operation of sub-s. (1) of S. 3, under which all lands in an estate are and shall be liable to the payment of land revenue to the State Government. This liability is imposed notwithstanding anything contained in the kowl, or decree or order of a court or any other instrument or any law for the time being in force. Prima facie, the covenants contained in the kowl whereby the grantee was discharged and absolved from liability to pay land revenue must be regarded as superseded by the statutory imposition of liability to pay land revenue. But the operation of sub-s. (1) of S. 3 is subject to the provisions of sub-s. (3). That sub-section states that nothing in subsection (1) shall be deemed to affect the right of any person to hold land in an estate wholly or partially exempt from the payment of land revenue under a special contract, or grant made or recognized by the terms of the kowl in respect of the estate or under a law for the time being in force in favour of any person other than the estate-holder. This clause only protects the rights of a person to hold land in an estate exempt from payment of land revenue, if such exemption is under a special contract or grant made or recognised by the terms of the kowl in respect of the estate or under a law for the time being in force, and a person whose rights are not so affected must be a person other than the estate-holder. By sub-s. (1) therefore exemption granted from payment of land revenue to the grantee of the kowl is extinguished: sub-section (3) however saves the rights of persons other than the estate-holder, who hold land in the estate. By express provision the estate-holder is excluded from the benefit of sub-s. (3). The intention of the Legislature is clear: it is to withdraw the exemption in favour of the estate-holder from payment of land revenue if such right was granted under a kowl. That withdrawal is not to affect the rights of persons holding land in an estate under a special contract, or grant which was made or recognized by the terms of the kowl even if the right was to hold the land exempt from the payment of land revenue. The futility of the argument that the expression "person" when it first occurs in sub-s. (3) includes the estate-holder, becomes obvious if the clause is read after substituting the expression "estate-holder for "person".

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]We are unable to accept this contention. It is true that where property is transferred absolutely by one person to another, it cannot be said that the property transferred is held under an agreement with the transferor merely because of the covenant of title. But when the State transfers property to a citizen, it does not thereby, in the absence of an express provision, grant exemption from liability to pay revenue. The right to recover revenue is not an incident of ownership: it is a prerogative of the sovereign, or a liberty or franchise of some authority claiming derivatively from the sovereign. Mere grant of land by the State does not absolve the grantee from liability to pay revenue. Under the indenture dated September 22, 1847, the grantee was given a right to hold the villages free from liability to pay revenue on certain terms, one of which was to pay rent of Re. 1/- per annum when demanded. The villages were granted subject to the restrictions, in absolute right and freedom from liability to pay revenue in respect of the villages was given subject to certain conditions. Imposition of these conditions subject to which exemption from liability to pay land revenue was granted, and acceptance thereof constituted an agreement within the meaning of S. 2(d). The villages though held in absolute right are still in the matter of liability to pay land revenue held under an agreement from the State Government. In the grant in question there is in the first instance an obligation to pay annual rent, if demanded. There is also an obligation to respect the rights of the holders of the lands and of Dewasthans, Dharamdawas and to make allowance to Pals. There is then an obligation not to alter the rights of the holders of land to their prejudice, and the grant of the right to exemption from payment of revenue is made subject to all laws and regulations which are from time to time in force in the Island of Salsette touching the sale and manufacture of spirituous liquors or poisonous or injurious drugs or substances. These are all covenants which raise contractual obligations on the exemption from land revenue, absolute grant of the land notwithstanding. Both the conditions prescribed under the definition, namely, specification in the Schedule and holding under a kowl as defined under the Act were therefore fulfilled, and the villages were at the date of the Act, held under an agreement from the State of Bombay.12. The next question is whether the grant is exempt from the operation of sub-s. (1) of S. 3, under which all lands in an estate are and shall be liable to the payment of land revenue to the State Government. This liability is imposed notwithstanding anything contained in the kowl, or decree or order of a court or any other instrument or any law for the time being in force. Prima facie, the covenants contained in the kowl whereby the grantee was discharged and absolved from liability to pay land revenue must be regarded as superseded by the statutory imposition of liability to pay land revenue. But the operation of sub-s. (1) of S. 3 is subject to the provisions of sub-s. (3). That sub-section states that nothing in subsection (1) shall be deemed to affect the right of any person to hold land in an estate wholly or partially exempt from the payment of land revenue under a special contract, or grant made or recognized by the terms of the kowl in respect of the estate or under a law for the time being in force in favour of any person other than the estate-holder. This clause only protects the rights of a person to hold land in an estate exempt from payment of land revenue, if such exemption is under a special contract or grant made or recognised by the terms of the kowl in respect of the estate or under a law for the time being in force, and a person whose rights are not so affected must be a person other than the estate-holder. By sub-s. (1) therefore exemption granted from payment of land revenue to the grantee of the kowl is extinguished: sub-section (3) however saves the rights of persons other than the estate-holder, who hold land in the estate. By express provision the estate-holder is excluded from the benefit of sub-s. (3). The intention of the Legislature is clear: it is to withdraw the exemption in favour of the estate-holder from payment of land revenue if such right was granted under a kowl. That withdrawal is not to affect the rights of persons holding land in an estate under a special contract, or grant which was made or recognized by the terms of the kowl even if the right was to hold the land exempt from the payment of land revenue. The futility of the argument that the expression "person" when it first occurs in sub-s. (3) includes the estate-holder, becomes obvious if the clause is read after substituting the expression "estate-holder for "person".