Case: Mylapore Hindu Permanant Ltd. Madras Vs. K. S. Subramania Iyer

lease deed was not a registered document and, as such, the application of the proviso to Section 12 was summarily ruled out. Hidayatullah, J. (as he then was), in his separate judgment, while agreeing with conclusion reached by the other learned Judges, has emphasised that by the first part of Section 12, the tenant is protected against his own contract and the landlord is protected by the second part of the said section; but in the case before them the landlord could not seek protection of the second part because the lease deed was not registered. 30. In V. S. Mudaliar v. N. A. Raghavacharry, 1969-2 SCR 158 = (AIR 1969 SC 435 ) by registered lease a vacant land was let to a tenant on the specific condition that the tenant should not erect any kind of permanent superstructures on the vacant site so as to entitle him to claim in future the value thereof . . . In contravention of this stipulation and without any authority from the landlord, the tenant put up a permanent superstructure on the land. The lease was for a period of 5 years. As the tenant refused to vacate the land on the expiry of the lease term, the landlord filed a suit for recovery of possession of the land. The tenant claimed protection under the Act and also filed an application under Section 9. The High Court of Madras decreed the suit of the landlord and rejected the application filed by the tenant under Section 9. This Court, after again adverting to the scheme of the Act with special reference to Ss. 3, 9 and 12 distinguished the decision of this Court in Naidus case, 1966-1 SCR 110 = (AIR 1966 SC 361 ) on the ground that the stipulation which was almost identical with the one before them was contained in an unregistered lease deed and ultimately held that a stipulation by a tenant, made in a registered lease deed that he would not build any permanent structure on the land so as to entitle him to claim in future the value thereof, is a stipulation as to the erection for a building within the proviso to Section 12 and, as such, upheld the decision of the High Court which declined to grant relief to the tenant. In the said decision, this Court again emphasised that Section 3 and 9 are subject to and controlled by the proviso to S 12. Though Section 3 provides that a tenant shall, on ejectment, be entitled to be paid as compensation the value of any building erected by him, the right conferred on the tenant by Section 3 is controlled by the stipulation in the registered lease deed that he shall not erect permanent structures of any kind on the land so as to entitle him to claim in future the value thereof. This Court further held that the said stipulation in the registered lease deed overrides the tenants rights under Section 3 and that if a tenant erects a permanent structure in contravention of the stipulation, he is not entitled to any compensation under Section 3. It was further held that as the said tenant was not entitled to any compensation under S. 3, he cannot claim the benefit of S. 9. 31. If a stipulation, contained in a registered lease deed that the tenant shall not erect permanent structures on the land so as to entitle him to claim the value thereof and if such a stipulation overrides the tenants rights under Sec. 3 disentitling him to claim compensation under S. 3 in respect of buildings put up by him in contravention of the said stipulation, as held in Mudaliars Case, 1969-2 SCR 158 = (AIR 1969 SC 435 );we have no hesitation in holding that Clause 4 read with Clause 2 of Exhibit A-1, under which the respondent has agreed to limit the quantum of compensation payable in respect of the buildings constructed by him is a stipulation as to the erection of buildings, attracting the proviso to Section 12 of the Act. In this view, we further hold that the said stipulation overrides the tenants rights under Section 3, as he will not be eligible to claim compensation under the Act. It follows that as he is not entitled to compensation under Section 3, but only to the value of the building as per the agreement Exhibit A-1, the tenant cannot claim the benefit of Section 9. Therefore, it follows that the decree and judgment of the Letters Patent Bench under appeal has to be set aside. 32. Before we conclude we may also state that Mr. Natesan drew our attention to a Division Bench Judgment of the Madras High Court in Palaniappa Gounder v. Sridharan Nair, 1963-2 Mad LJ 559 = (AIR 1964 Mad 285 ). We do not propose to consider that decision as it is seen that the learned Judges had to consider the question whether a term in the contract as to transfer of ownership of the building without any claim for compensation, at the termination of the lease, could be construed to be a stipulation made by the tenant as to the erection for buildings. The clauses that arise for consideration before us to which reference has been made, are entirely different. Though under Exhibit A-1 the respondent is bound to surrender possession of the land and the building, after receiving the sum for Rs. 5,000/- as the value of the building, during the arguments Mr. Natesan, learned counsel for the appellant-landlord has quite fairly stated that his clients are prepared to pay a sum of Rs. 10,000/- as the value of the building provided the respondent-tenant surrenders vacant possession of the building and the land to the landlord within a period of six months from the date of this judgment, without putting the appellant to the necessity of taking out execution proceedings. We are of the view that the appellants offer is quite reasonable.

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

Explanation:
1[ds]In the said decision, this Court again emphasised that Section 3 and 9 are subject to and controlled by the proviso to S 12. Though Section 3 provides that a tenant shall, on ejectment, be entitled to be paid as compensation the value of any building erected by him, the right conferred on the tenant by Section 3 is controlled by the stipulation in the registered lease deed that he shall not erect permanent structures of any kind on the land so as to entitle him to claim in future the value thereof. This Court further held that the said stipulation in the registered lease deed overrides the tenants rights under Section 3 and that if a tenant erects a permanent structure in contravention of the stipulation, he is not entitled to any compensation under Section 3. It was further held that as the said tenant was not entitled to any compensation under S. 3, he cannot claim the benefit of S. 9If a stipulation, contained in a registered lease deed that the tenant shall not erect permanent structures on the land so as to entitle him to claim the value thereof and if such a stipulation overrides the tenants rights under Sec. 3 disentitling him to claim compensation under S. 3 in respect of buildings put up by him in contravention of the said stipulation, as held in Mudaliars Case, 1969-2 SCR 158   = (AIR 1969 SC 435  );we have no hesitation in holding that Clause 4 read with Clause 2 of Exhibit A-1, under which the respondent has agreed to limit the quantum of compensation payable in respect of the buildings constructed by him is a stipulation as to the erection of buildings, attracting the proviso to Section 12 of the Act. In this view, we further hold that the said stipulation overrides the tenants rights under Section 3, as he will not be eligible to claim compensation under the Act. It follows that as he is not entitled to compensation under Section 3, but only to the value of the building as per the agreement Exhibit A-1, the tenant cannot claim the benefit of Section9.Therefore, it follows that thedecree and judgment of the Letters Patent Bench under appeal has to be set asideBefore we conclude we may also state that Mr. Natesan drew our attention to a Division Bench Judgment of the Madras High Court in Palaniappa Gounder v. Sridharan Nair, 1963-2 Mad LJ 559 = (AIR 1964 Mad 285  ). We do not propose to consider that decision as it is seen that the learned Judges had to consider the question whether a term in the contract as to transfer of ownership of the building without any claim for compensation, at the termination of the lease, could be construed to be a stipulation made by the tenant as to the erection for buildings. The clauses that arise for consideration before us to which reference has been made, are entirely different. Though under Exhibit A-1 the respondent is bound to surrender possession of the land and the building, after receiving the sum for Rs. 5,000/- as the value of the building, during the arguments Mr. Natesan, learned counsel for the appellant-landlord has quite fairly stated that his clients are prepared to pay a sum of Rs. 10,000/- as the value of the building provided the respondent-tenant surrenders vacant possession of the building and the land to the landlord within a period of six months from the date of this judgment, without putting the appellant to the necessity of taking out execution proceedings. We are of the view that the appellants offer is quite reasonable.