Case: Bhatia Co-Operative Housingsociety Ltd Vs. D. C. Patel

of security for the preservation of the building which, on the expiry or sooner determination of the lease, will vest in the lessor. This line of reasoning has found favour with the High court which has held that although in form the building belongs to the Bombay Municipality who are the successors-in-interest of the lessors, in ,substance the building belongs to the appellant, the assignee of the lessee, and not to the Bombay Municipality. We are unable to accept this reasoning for, we see no reason to hold, in the circumstance of this case, that the substance does not follow the form. By the operative part of the lease, the demise is not only of the land but also of the building standing thereon. This demise is certainly an act of ownership exercised by the lessor over the land as well as the buildings. Under s. 105, T. P. Act, a lease is a transfer only of a right to enjoy the demised premises, but there is no transfer of ownership or interest in the demised premises to the lessee such as there is in a sale (s. 54) or a mortgage (s. 58). In the present case, the lessee cannot, on his own covenant, use the buildings in any way he likes. He has to use the same only as offices or schools or for residential purposes and cannot, without the lessors consent, use them for purposes of any trade or business. He cannot pull down the buildings or make any additions or alterations without the lessors consent. He cannot build upon the open space. He must, if the premises are destroyed by fire or otherwise, reinstate it. The lessor has the right to enter upon and inspect the premises at any time on giving 48 hours notice. All these covenants clearly indicate that the lessor has the dominant voice and the real ownership. What are called attributes of ownership of the lessee are only the rights of enjoyment which are common to all lessees under well-drawn leases, but the ownership in the land and in the building is in the lessor. It is true that the lessee erected the building at his own cost but he did so for the lessor and on the lessors land on agreed terms. The fact that the lessee incurred expenses in putting up the building is precisely the consideration for the lessor granting him a lease for 999 years not only of the building but of the land as well at what may, for all we know, be a cheap rent which the lessor may not have otherwise agreed to do. By the agreement the building became the property of the lessor and the lessor demised the land and the building which, in the circumstances, in law, and in fact belonged to the lessor. The law of fixtures under s. 108, T. P. Act, may be different from the English law, but s. 108 is subject to any agreement that the parties may choose to make. Here by the agreement the building became part, of the land and the property of the. lessor and the lessee took a lease on that footing. The lessee or a person claiming title through him cannot now be heard to say that the building does not belong to the lessor, Forfeiture does not, for the first time, give title to the lower. On forfeiture he re-enters upon what has. all along been his own property. said Lord Macnaghten in Heritable Reversionary Company v. Mullar,L. R. (1892) A. C. 598 at p. 621 :"The words property and belonging to are not technical words in the law of Scotland. They are to be understood, I think in their ordinary signification. They are in fact convertible terms; You can hardly explain the one except. by using the other. A mans property that which, is his own, that which. belongs to him. What belongs to, him is his Property."15. In our opinion the interest of the lessor in the demised premises cannot possibly be described as a contingent interest which will become vested on the expiry or sooner determination of the lease, for then the lessor could not have demised the premises including the building as he did or before the determination of the lease exercise any act of ownership or any control over it as he obviously has the right to do under the covenants referred to above. The truth is that the lesser, after the building was erected, became the owner of it and all the time thereafter the demised premises which include the building have belonged to him subject to the right of enjoyment of the lessee in terms of the lease. If it were to be held that the building belonged to the lessee by reason of his having pur it up at his own cost and by reason of the attributes of ownership relied on by learned counsel, then as between the local authority (the lessor) and the lessee also the building must for the same reason founded on what have been called the attributes of ownership be held to belong to the lessee and the Act will apply. Surely that could not possibly be the case, for, it would mean that the Government or a local authority will always be bound by the Act in respect of the building put up by the lessee under building leases granted by it in respect of land belonging to it.In that case the immunity given to the Government or a local authority will be wholly illusory and worthless. In our view, in the case before us, the demised premises including the building belong to a local authority and are outside the operation of the Act. This Act being out of the way, the appellants were well within their rights to file the suit in ejectment in the City Civil Court and that Court had jurisdiction to entertain the suit and to pass the decree that it did.

Court's decision (1 = petition accepted / positive for appellant, 0 = rejected / negative): 1

Reasoning from the judgment:
1[ds]13. It is said that if the first part of the section is so construed as to . exempt the premises from the operation of the Act, not only as between the Government or a local authority on the one hand and its lessee on the other, but also as between that lessee, and histhen the whole purpose of the Act will be frustrated, for it is, well known that most of the lands in Greater Bombay belong to the Government or one or other local authority, e. g., Bombay Port Trust and Bombay Municipality and the greater number of tenants will not be able to avail themselves of the benefit and protection of the Act. In the first place, the preamble to the Act clearly shows that the object of the Act was to consolidate the law relating to the control of rents and repairs of certain premises and not of all premises. The Legislature may well have thought that an immunity given to premises belonging to the Government or a local authority will facilitate the speedy development of its lands by inducing lessees to take up building leases on terms advantageous to the Government or a local authority. Further as Pointed out by Romer L. J., in clarkv. Downes, (1931) 145 L. T.20, which case was approved by Lord Goddard C. J. in Rudlerv. Franks, (1947) 1 K.B.530, such immunity will increase the value of the right of reversion belonging to the Government or a local authority. The fact that the Government or a local authority may be trusted to act fairly and reasonably may have induced the Legislature all the more readily to give such immunity to premises belonging to the Government or a local authority but it cannot be overlooked that the primary object of giving this immunity was to protect the interests of the Government or a local authority. This protection requires that the immunity should be held to attach to the premises itself and the benefit of it should be available not only to the Government or a local authority but also to the lessee deriving title from it. If the benefit of the immunity was given only to the Government or a local authority and not to its lessee as suggested bycounsel for therespondent and the Act applied to the premises as against the lessee, then it must follow that under s. 15 of the Act it will not be lawful for the lessee to sublet the premises or any part of it. If such were the consequences, nobody will take a building lease from the Government or a local authority and the immunity given to the Government or a local authority will, for all practical purposes and in so far at any rate as the building leases are concerned, be wholly illusory and worthless and the underlying purpose for bestowing such immunity will be rendered wholly ineffective. In our opinion, therefore, the consideration of the protection of the interests of thein premises belonging to the Government or a local authority. cannot override. the plain meaning of the preamble or the first part of s.4(1) and frustrate the real purpose of protecting and furthering the interests of the Government or a local authority by conferring on its property an immunity from the operation of theis pointed out that it was the lessee who erected the building at his own cost, he is to hold it for 999 years, he has the right of subletting the building in Whole or in part on rent and terms to be fixed by him, of ejectingand of assigning the lease. Therefore, it may fairly be said that the premises or, at any rate, the building belongs to the lessee and the rights reserved by the lease to the lessor are only by way of security for the preservation of the building which, on the expiry or sooner determination of the lease, will vest in the lessor. This line of reasoning has found favour with the High court which has held that although in form the building belongs to the Bombay Municipality who are theof the lessors, in ,substance the building belongs to the appellant, the assignee of the lessee, and not to the Bombay Municipality. We are unable to accept this reasoning for, we see no reason to hold, in the circumstance of this case, that the substance does not follow the form. By the operative part of the lease, the demise is not only of the land but also of the building standing thereon. This demise is certainly an act of ownership exercised by the lessor over the land as well as the buildings. Under s. 105, T. P. Act, a lease is a transfer only of a right to enjoy the demised premises, but there is no transfer of ownership or interest in the demised premises to the lessee such as there is in a sale (s. 54) or a mortgage (s. 58). In the present case, the lessee cannot, on his own covenant, use the buildings in any way he likes. He has to use the same only as offices or schools or for residential purposes and cannot, without the lessors consent, use them for purposes of any trade or business. He cannot pull down the buildings or make any additions or alterations without the lessors consent. He cannot build upon the open space. He must, if the premises are destroyed by fire or otherwise, reinstate it. The lessor has the right to enter upon and inspect the premises at any time on giving 48 hours notice. All these covenants clearly indicate that the lessor has the dominant voice and the real ownership. What are called attributes of ownership of the lessee are only the rights of enjoyment which are common to all lessees underleases, but the ownership in the land and in the building is in the lessor. It is true that the lessee erected the building at his own cost but he did so for the lessor and on the lessors land on agreed terms. The fact that the lessee incurred expenses in putting up the building is precisely the consideration for the lessor granting him a lease for 999 years not only of the building but of the land as well at what may, for all we know, be a cheap rent which the lessor may not have otherwise agreed to do. By the agreement the building became the property of the lessor and the lessor demised the land and the building which, in the circumstances, in law, and in fact belonged to the lessor. The law of fixtures under s. 108, T. P. Act, may be different from the English law, but s. 108 is subject to any agreement that the parties may choose to make. Here by the agreement the building became part, of the land and the property of the. lessor and the lessee took a lease on that footing. The lessee or a person claiming title through him cannot now be heard to say that the building does not belong to the lessor, Forfeiture does not, for the first time, give title to the lower. On forfeiture heupon what has. all along been his own property. said Lord Macnaghten in HeritableReversionary Company v. Mullar,L. R. (1892) A. C. 598 at p.e words property and belonging to are not technical words in the law of Scotland. They are to be understood, I think in their ordinary signification. They are in fact convertible terms; You can hardly explain the one except. by using the other. A mans property that which, is his own, that which. belongs to him. What belongs to, him is his Property.In our opinion the interest of the lessor in the demised premises cannot possibly be described as a contingent interest which will become vested on the expiry or sooner determination of the lease, for then the lessor could not have demised the premises including the building as he did or before the determination of the lease exercise any act of ownership or any control over it as he obviously has the right to do under the covenants referred to above. The truth is that the lesser, after the building was erected, became the owner of it and all the time thereafter the demised premises which include the building have belonged to him subject to the right of enjoyment of the lessee in terms of the lease. If it were to be held that the building belonged to the lessee by reason of his having pur it up at his own cost and by reason of the attributes of ownership relied on by, then as between the local authority (the lessor) and the lessee also the building must for the same reason founded on what have been called the attributes of ownership be held to belong to the lessee and the Act will apply. Surely that could not possibly be the case, for, it would mean that the Government or a local authority will always be bound by the Act in respect of the building put up by the lessee under building leases granted by it in respect of land belonging to it.In that case the immunity given to the Government or a local authority will be wholly illusory and worthless. In our view, in the case before us, the demised premises including the building belong to a local authority and are outside the operation of the Act. This Act being out of the way, the appellants were well within their rights to file the suit in ejectment in the City Civil Court and that Court had jurisdiction to entertain the suit and to pass the decree that it did.