Case: Damodhar Tukaram Mangalmurtiand Others Vs. The State Of Bombay

1. These two appeals arise out of a litigation which has had a chequered career in the courts below. The short facts are these. The suit out of which the appeals arise was instituted on 13-1-1941, but the plaint was amended on 4-5-1942. The amended plaint was to the effect that in or about the year 1905 the defendant, the then Provincial Government of the Central Provinces and Berar, Nagpur, "opened up" an area known as the Craddock Town Area which was originally called the Sitabuldi Extension Area or Dhantoli Area. Due to the scarcity of residential accommodation in the city of Nagpur, the then Provincial Government along with some prominent members of the Nagpur Municipal Committee devised a scheme to extend residential accommodation by acquiring agricultural land and making it available for residential purposes. With that object in view, the area in question was acquired and building sites of the average size of about 10,000 sq. ft. each were carved out. These were leased out on a premium of Rs. 350 and an annual rental Rs. 3/8/0 each. The indenture of lease in each case contained a clause to the following effect:"III. And the lessor does further covenant that he will at the end of the term of 30 years hereby granted and so on from time to time thereafter at the end of each successive further term of years as shall be granted at the request of the lessee minute to him a renewed lease of the land hereby demised for the term of 30 years; Provided that the rent of the land hereby demised shall be subject to such fair an equitable enhancement is the lessor shall determine the grant of every renewal : Provided also that every such renewed lease of the land shall contain such of the covenants, provisions and conditions in these presents contained as shall be applicable and shall always contain a covenant for further renewal of the lease."5. From the decision of the learned Additional District Judge, two appeals were taken to the then High Court of Judicature at Nagpur by the defendant Government. The appeals were first placed before a single Judge who directed that they should be heard by a Division Bench. The appeals were then heard by B. P. Sinha C. J. (as he then was) and Mudholkar J. The learned Chief Justice came to the conclusion that the suit must fail on the ground that the authority of the court had been invoked in a matter which really lay in contract and the civil court had no jurisdiction to determine the fair and equitable rent. Mudholkar J. came to a contrary conclusing and held that the suit was maintainable and the courts below could determine the fair and equitable rent. On the question of what should be the fair and equitable rent, the learned Chief Justice gave no finding except saying that "the decision of the lower appellate court on the question of assessment of fair and equitable rent was not satisfactory, because it had gone more by the rule of the thumb than upon the evidence adduced in the case or upon any other sound basis". Mudholkar J., however, said that he saw no adequate ground for differing from the view taken by the lower appellate court with regard to the quantum of fair and equitable rent. On this difference of opinion between the learned Chief Justice and Mudholkar J., the case was referred to a third Judge, namely, Hemeon J, who agreed with the view of the learned Chief Justice that, on a proper construction of cl. III of the indenture of lease, the civil court had no jurisdiction to determine the fair and equitable rent and the parties had consciously and deliberately stipulated to abide by the lessors fixation of a fair and equitable enhancement of rent; and in that view of the matter, he expressed no opinion as to what should be the fair and equitable rent6. In accordance with the opinion of the majority of Judges, the appeals in the High Court were allowed and the suit was dismissed with costs. The plaintiffs, who are the appellants here, then asked for a certificate of fitness under Art. 133 (1)(c) of the Constitution of India. The High Court granted the necessary certificate by an order dated October 23, 1953 and the present appeal; have been filed in pursuance of that certificate. The area in question being now within the State of Bombay, the State of Bombay has been substituted as the respondent before us.

Reasoning:
8. We think that the clause should be read as a whole and every effort should be made to give effect to all the words used therein. The relevant portion of the clause states- "such fair an equitable enhancement as the lessor shall determine". If the construction is that whatever the lessor determines as fair and equitable enhancement must be treated as binding on the lessee, then the words fair and equitable are not given the meaning and sense which they have according to the ordinary acceptation of those words. Fair and equitable mean fair and equitable in fact, and not what the lessor subjectively considered to be fair and equitable. The words fair and equitable both mean just or unbiased (see the Concise Oxford Dictionary, 4th Edn. p. 426 and p. 402). If the intention was to leave the enhancement to the subjective determination of the lessor, the clause would have more aptly said-such enhancement as the lessor shall determine. We consider that the words fair and equitable must be given their due meaning and proper effect. The question then asked is-what meaning is to be given to the words such.... as the lessor shall determine. It is indeed true that these words constitute an adjectival clause to the expression fair and equitable enhancement but we consider that the meaning of the adjectival clause is merely this: the lessor must first determine what it considers to be fair and equitable enhancement but if in fact it is not so, it is open to the lessee to ask the Court to determine that is fair and equitable enhancement. We do not think that on a proper construction of the clause, the intention was to oust the jurisdiction of the Court and make the determination of the enhancement by the lessor final and binding on the lessee.We think that the conclusion at which Mudholkar J. arrived on this point was correct, though not exactly for the reasons given by him10. Our attention has been drawn to some English decisions in which the point arose if a contract which appoints a way of determining the price can be specifically enforced. There are two lines of decisions. InMilnes v. Gery, (1807) 14 Ves 400: 33 ER 574the contract provided that the price shall be valued by two different persons to be nominated and if they happened to disagree then those two persons shall choose a third person whose determination shall be final The question was whether such a contract could be specifically performed and the answer given by the Master of the Rolls can be best put in his own words:"The more I have considered this case, the more I am satisfied, that, independently of all other objections, there is no such agreement between the parties, as can be carried into execution. The only agreement, into which the Defendant entered, was to purchase at a price, to be ascertained in a specified mode. No price having ever been fixed in that mode, the parties have not agreed upon any prize. Where then is the complete and concluded contract, which this Court is called upon to execute?"r v. Brewer, (1813) 1 M and S 290: 105 ER 108a claim to compensation was founded on the resolution of a committee which provided that "such remuneration be made as should be deemed right. It was held that the engagement was merely an engagement of honour and no claim could be made on it. An example of the other line of decisions is furnished by Gourlay v. Duke of Somerset, (1815) 19 Ves 429: 34 ER 576. In that case the agreement provided for "all such usual and proper conditions, reservations, and agreements, as shall be judged reasonable and proper by John Gale, land surveyor, and in case of his death, by some other proper and competent person to be mutually agreed upon by the said parties". The plaintiff came to court and the question arose whether the reference to settle the lease to be made by the defendant to the plaintiff should be to the Master or to Mr. Gale, the defendant contending that the court decreeing specific performance will take the whole subject to itself and determine by its own officer, not by a particular individual, what are usual and proper covenants. Sir William Grant, Master of the Rolls, said:-"When the agreement is, that the price of the estate shall be fixed by arbitrators, and they do not fix it, there is no contract as the price is of the essence of a contract of sale, and the Court cannot make a contract, where there is none: but, where the Court has determined, that the agreement is binding and concluded and such as ought to be executed, it does not require foreign aid to carry the details into execution. Gales agency is not of the essence of this contract . . . . . . If the parties had gone to Gale, and got him to settle a lease, and one of them had objected to the covenants as improper, and the Bill had been filed by the other, the Court would have inspected the lease; and if it were found unreasonable, would not have decreed an execution of the agreement."We consider that the present case comes within the rule laid down in (1815) 19 Ves 429: 34 ER 576. Learned counsel for the respondent placed strong reliance onCollier v. Mason, (1858) 25 Beav 200: 53 ER 613. That was a case in which the defendant had agreed to purchase a property at a valuation to be made by AB; the Court, though it considered ABs valuation very high and perhaps exorbitant, decreed specific performance, there appearing neither fraud, mistake or miscarriage. The case was decided on the footing that the contract provided that the property shall be purchased at such a price or sum as should be fixed by reference to AB, and it was pointed out that there being no evidence of fraud, mistake or miscarriage the forties were bound by the contract they had made. There was no question in that case of the court stepping in, under the terms of the contract, to determine what was fair and reasonable. Learned counsel for the respondent also relied on Tekchand Kapurchand v. Mt. Birzabai, AIR 1942 Nag l2. For the reasons given above, we hold that the decision of the majority of the learned Judges of the High Court with regard to the interpretation of cl. III of the indenture of lease is not correct and these appeals must go back for a fresh hearing by the High Court in accordance with law for determination of what should be the fair and equitable enhancement. On that point there was no concluded finding by the majority of the learned Judges of the High Court, but learned counsel for the appellants submitted that the finding of the learned Additional District Judge on the quantum of fair and equitable enhancement was a finding of fact and therefore binding in second appeal. At this stage we express no opinion on such a submission, nor do we express any opinion whether the courts below or any of them have gone wrong in principle in determining what should be the fair and equitable enhancement and whether on merits it should be as. 7 or Rs. 14 or Rs. 21-14-0, or even a higher sum. All these points must be considered afresh by the High Court