Case: Fruit And Vegetable Merchants Union Vs. Delhi Improvement Trust

2. The sequence of events leading up to the institution of the suit by the appellant "the Fruit and Vegetable Merchants Union, Subzimandi" a registered body under the Indian Trade Unions Act, 1926, 16 of 1926 giving rise to this appeal may shortly be stated as follows:3. By an agreement dated March 31, 1937 (Exhibit D-5) between the Secretary of State for India in Council and the Delhi Improvement Trust, which will have to be set out in detail hereinafter and the construction of which is the main point in controversy between the parties, a certain area of the land admittedly belonging to Government was placed at the disposal of the Trust for the "orderly expansion of Delhi under the Supervision of a single authority". The said property was compendiously called "the Nazul Estate". By a letter dated May 1/2, 1939 (not exhibited but filed in the High Court at the appellate stage) the Chairman of the Trust forwarded a copy of the resolution No. 551 dated April 24, 1939 (Exhibit D-15) to Chief Commissioner of Delhi. The resolution acts out the scheme for the construction of the new Subzimandi Fruit Market on a gross area of 10.87 acres including certain lands which till then did not vest in the Trust. The Chairman asked for administrative sanction of the Government of India to place the additional area at the disposal of the trust on the same terms as those applicable to the Nazul Estate aforesaid held under the agreement, Ex. D-5. The resolution aforesaid sets out the object and history of the scheme. It contains the categorical statement that "Government is the owner of all the land included in the scheme. The position according to the revenue records is giver in the statement on the next page". The scheme then sets out in great detail the several structures to be constructed and the profit and loss figures. Under the headings "Computation of revenue surplus" occur the following significant statements very much relied upon by the appellant:"The revenue surplus of Rs. 4,530 is made up as follows; and is based on the recommendation that the Trust shall own and maintain the market."Under the heading "Future Jurisdiction" the following significant passage occurs:"At this stage, if the suggestion is accepted that the Trust should own and run the market at least until it is firmly established, and in view of fact that Government are the sole owners of the land, no difficulty is anticipated due to divided territorial jurisdiction of the two local authorities and no change is proposed."The letter enclosing the resolution of the Trust as aforesaid contains a summary of the scheme, a portion of which is as follows:"An estimated capital expenditure of Rs. 4.73 lakhs is involved. On this capital expenditure there will be a capital deficit of Rs. 4.20 lakhs and a recurring revenue surplus of Rs. 4,530. This financial result assumes ownership and management of the market by the Trust, and takes into account all charges on maintenance and day-to-day management which would otherwise fall to a local body. The scheme involves no acquisition of land, but assumes transfer free of charge of an area of 10.87 acres of Government land, all of which except for 1,510 square yards, falls within the limits of the Civil Lines Notified Area Committee". (Under-lined (here into ) by us)4. In answer to this communication from the Trust, the Chief Commissioner sent the letter (Ex. D-8) dated May 13, 1939 sanctioning under S. 22-A of the Trust Law the scheme of the "New Fruit and Vegetable Market", as proposed in the resolution aforesaid at a cost not exceeding Rs. 4,73,186. The sanction is in terms made subject to the remarks (1) that "the whole of the land required for the construction of the new market is the property of the Government", and (2) "the trust will administer the new market on its completion. It will thus appear that it was clearly understood that the land on which the market was to he constructed would continue to be the property of the Government in modification of the proposal made by the Trust as aforesaid, the Trust only being vested with the power to administer the new market5. On receipt of the letter aforesaid of the Chief Commissioner, the Chairman of the Trust requested the former to obtain the order of the Government of India to place the additional land required for the market at the disposal of the Trust under S. 54-A of the United Provinces Town Improvement Act, 8 of 1919 (which will hereinafter be referred to as the Improvement Act) as extended to the Province of Delhi, "on the same terms applicable to other Nazul estate held under the agreement between the Trust and the Government of India" (Ex. D-7). By his letter dated August 10, 1939 (Ex. D-6) the Chief Commissioner forwarded the orders dated June 21, 1939 of the Government of India agreeing to the proposal aforesaid of the Trust placing the additional area at the disposal of the Trust on the original terms aforesaid. This is the genesis of the New Fruit and Vegetable Market, Subzimandi, which hereinafter be referred to as the Market, for a period of six years with effect from May 25, 1942 at an annual rent of Rs. 35,000 rising every year by Rs. 2,000 to Rs. 45,000 in respect of the sixth year of the lease. In anticipation of the termination of the lease period aforesaid the Trust advertised the auction of the market for a fresh settlement. That occasioned the suit for an injunction by the plaintiff against the Trust in the Court of the Senior Subordinate Judge of Delhi, instituted on March 18, 1948. The Court granted the plaintiff an interim injunction restraining the defendant from putting the market to auction. The said ex-parte order of injunction was contested by the Trust with the result that the trial Court dissolved that injunction. The plaintiff carried an appeal to the High Court of Punjab at Simla. During the pendency of the appeal a settlement was arrived at between the parties and the plaintiffs offer of Rs. 1,50,000 as annual rent of the market on the expiry of the lease was accepted by the Trust. This settlement is evidenced by the resolution of the Trust dated February 24, 1949 (Ex. D-18). In pursuance of the settlement a fresh lease was executed. By the indenture (Ex. D-4) dated April 22, 1949 the plaintiff was granted a fresh lease for the period May 25, 1948 to March 31, 1950 at an annual rent of Rs. 1,50,000. One of the terms of the lease, which is a registered document, was -"That the lessee shall on expiry of the lease or on its determination by the lessor; vacate the premises and deliver its peaceful possession to the lessor. If the lessee fails to do so, he shall be liable to pay double the rent as liquidated damages for the unauthorised period of occupation till such time as he vacates it or he is ejected by process of law."Paragraph 22 of the indenture aforesaid contains the following important admission: -"that both the lessor and lessee agree that the premises in dispute are owned by the Government and the Provisions of the Delhi Ajmer Merwara Rent Control Act (1947) do not apply to the same."The effect of this admission is also one of the controversies between the parties and shall have to be adverted to later6. It appears that during the pendency of the second lease aforesaid negotiations had started between the parties for extension of the period of the lease. The plaintiff made an offer of a fresh lease for a further period of five years at an annual rent of rupees two lakhs. But the Trust by its resolution dated May 25, 1950 (Ex. D-12) agreed only to extend the period by two years "on the existing conditions, subject to enhancement of rent to Rs. 2 lakhs per year." The plaintiffs case in the plaint is that these onerous terms successively enhancing the rent to Rs. 2 lakhs per year were agreed to by it as it had no other alternative in view of the plaintiffs need. The plaintiff has been paying the enhanced rent of Rs. 2 lakhs per year in view of the resolution aforesaid of the Trust but has all the same started proceedings under S. 8 of the Control Act, for fixation of standard rent in respect of the market. The Trust got an advertisement inserted in the Hindustan Times, New Delhi, dated March 5, 1953 inviting tenders for the lease of the market for a period of three years from April 1, 1953. The plaintiffs case in the plaint is that the tenancy in favour of the plaintiff still subsisted and had not been terminated in accordance with law. That was the cause of action for the plaintiff to institute the present suit on March 9, 1953. The plaintiffs prayer in the plaint is that a decree for a permanent injunction may be passed in favour of the plaintiff restraining the defendant from evicting the plaintiff from the market7. The suit was contested by the Trust on the allegations that the market had been Constructed on Nazul land under the authority of the Delhi State Government with Government funds, that the market was Government property and was only being managed by the defendant on behalf of the Government, that the Control Act by virtue of S. 3 (a) thereof was not applicable to the premises in question and that therefore the plaintiff was liable to be ejected as the term of its lease had expired. Reliance was also placed on behalf of the defendant on the provisions of the Government Premises (Eviction) Act, XXVII of 1950, read with the Requisitioning and Acquisition of Immovable Property Act, XXX of 19528. On those pleadings a number of issues were joined between the parties of which the most important is issue No. l -"Whether the property in dispute belongs to the Government within the meaning of S. 3 (a) of the Rent Control Act, 1952?"Both the courts below have answered that issue in the affirmative, that is to say, in favour of the defendant. The plaintiff prayed for and obtained the necessary certificate from the High Court that the case involved substantial questions of law as to the interpretation of the relevant statute and the agreement (Ex. D-5) between the Government of India and the Delhi Improvement Trust. Hence this appeal.

Reasoning: It would thus appear that the power to transfer by way of sale, lease or otherwise vested in the Trust is not an unlimited or an unqualified power but a power circumscribed by such conditions as the Government or the Chief Commissioner, as the case may be, thought fit to impose.The imposition of those conditions is not consistent with the title to the property vesting absolutely in the Trust. On the other hand, the imposition of those conditions is more consistent with the proposition contended for by the learned Attorney-General on behalf of the respondent that the Trust was only constituted a statutory agent on behalf of the Government in accordance with the provisions of the Improvement Act and the terms of the indenture, Ex.. It is noteworthy that there are no provisions either in the Improvement Act or in the indenture, Ex. D-5 to the effect that the title to the Nazul Estate vested in the Trust.It must, therefore, be held that no grounds have been made out for holding that title to the land on which the market stands was conveyed by Government to the TrustThe Trust was to assume full liability for all expenditure to be incurred upon works of improvement and to arrange for the completion of those works to the satisfaction of Government. The Trust is also enjoined to maintain in accordance with the statutory rules separate accounts of all revenue realized from and all expenditure incurred upon, the said Nazul Estate and to pay to Government the sum of Rs. 2 lakhs being the equivalent of the net annual revenue in respect thereof subject to certain conditions, not material to this case14. It is clear upon the terms of the agreement shortly set out above that the market was constructed by the Trust on Government land with Government funds advanced by way of loan at interest. On those facts what is the legal position of the Trust vis-_is the government in respect of the ownership of the property? It is important, therefore, to determine the true nature of the initial relationship between the Government and the TrustIt is manifest upon a reading of the entire section that there are no express words of conveyance whereby title is transferred by Government to the Trust either absolutely or upon certain conditions.This argument assumes that the word "vest" necessarily signifies that title to the property resides in the Trust20. The question of the ownership of the structure built upon Government land by the Trust may be looked at from another point of view.We have already held that the Trust was in the position of a statutory agent of Government and had erected the structure with money belonging to Government but advanced at interest to the Trust. In such a situation the structure also would be the property of Government, though for the time being it may he at the disposal of the Trust for the purpose of managing it efficiently as a statutory body. Simply because the Trust erected the structure in question and later on paid up the amount advanced by Government for the purpose would not necessarily load to the legal inference that the structure was the property of the Trust.In this connection reference may be made to the decision of this Court in Bhatia Co-operative Housing Society Ltd. v. D. C. Patel, 1953 SCR, 185: (AIR 1953 SC 16  ) (G). The case is not on all fours with the facts of the present case21. In our opinion, therefore, it cannot he said that either under the provisions of the Improvement Act or in accordance with the terms of the agreement (Ex. D-5) or the two taken together, the market became the property of the Trust. We have already noticed the relevant, portions of the correspondence that passed between Government and the Trust to show that though at the initial stages the Trust proposed that the ownership of the market should vest in the Trust the final terms agreed between the parties in accordance with the provisions of S. 54-A left the ownership with Government.We have come to this conclusion without reference to the admission of the plaintiff contained in para. 22 of the indenture (Ex. D-4) quoted above. It is therefore not necessary for us to consider the question raised by the learned Attorney-General that the plaintiff was bound by that admission or whether that admission is vitiated by any pressure of circumstances or duress as pleaded by the plaintiff. Certainly that admission is a piece of evidence which could be considered on its merits oven apart from the question of estoppel which had not been specifically pleaded or formed the subject matter of a separate issue22. In view of our finding that the market, as also the land on which it stands, is the property of Government, the conclusion follows that the operative provisions of the Control Act do not apply to the premises in questionIt would thus appear that the word "vest" has not got a fixed connotation, meaning in all cases that the property is owned by the person or the authority in whom it vests. It may vest in title, or it may vest in possession, or it may vest in a limited sense, as indicated in the context in which it may have been used in a particular piece of legislation. The provisions of the Improvement Act, particularly Ss. 45 to 49 and 54 and 54-A when they speak of a certain building or street or square or other land vesting in a municipality or other local body or in a trust, do not necessarily mean that ownership has passed to any of them.