Case: A.R. Salay Mohamed Sait etc Vs. Jaffer Mohamed Sait's Memorial Dispensary Charity &amp; Others

3. The relevant facts are as follows. On 3rd February, 1941, a lease deed was executed between one Abdul Rahiman Dulla Sait (lessee) and one Mohamed Hashim Sait (Lessor) in respect of Ac.of land in Goel Mohameds compound being part of S.No.for a period of 10 years from 29th January, 1941, with an option of renewal for a further term often years at an annual rent of Rs. 260 excluding water tax and the taxes on the buildings and sheds which had been erected by the lessee at his own cost. The lessee authorised the landlord in case of default in the payment of the yearly rent to confiscate the said building and sheds. It was a further term of the lease that at the expiry thereof the lessee would be at liberty to remove at his own cost all the materials of the buildings and sheds which had been erected on the land within two months from the date of the said expiry. The lessee hypothecated the buildings and sheds as security for the payment of the yearly rent. In case of renewal of the lease for another period of 10 years, the lessee was to execute a fresh lease for the said period, the rates and taxes on the land having to be borne by the lessors. It appears that the lessee put up at his own cost and risk a cinema hall and some other buildings over the demised land and enjoyed the same as a lessee. In 1945 the lessor created a trust in respect of the demised property and other properties by a deed of trust dated 21st February, 1945, and appointed himself and Haji Abdul Rahim Saite the trustees of the said trust. The original lessee paid rent to the trustees, upto March, 1948, and thereafter the 2ndpaid the same. The option of renewal of the lease was not exercised but the lessee continued to occupy as before from year to year. In 1957, the defendants agreed to pay rent at Rs. 500 per annum. They started to make default in payment of the rent from the month of June of that year. On 7th July, 1959 the trustees decided to determine the lease after the expiry of the yearly lease on 29th January, 1960, and gave notice to the tenants accordingly. On 13th November, 1945, there was another lease between the said trustees and one Thiruvengadam in respect of a portion of the land bearing S.No. 434/1 measuring about Ac.for a period of 7 years at an annual rental of Rs. 350 with an option of renewal for a further period of not more than 8 years on the same terms and conditions but at an increased rental of Rs. 400 per annum. The lease provided that the rent of the land for the first seven years was to commence from 1st January, 1945. The lessee was to have the right to use the land as a business place putting up shelters, erections and fixtures required for running his business at his own cost but he was not to have any right to remove or cause the same to be removed either before or after the expiration of the period or when it became necessary for the lessee to vacate the land for default in payment of rent. The lessee was further not to use the building as a cinema hall without the written permission of the lessor. The lessee exercised his option of renewal and got it for a further period up to 31st April, 1959. He however did not vacate the land and give possession thereof to the lessor in spite of demands.4. A common defence taken in both the suits was that the property demised to the defendants had actually vested in a family trust even as early as 1918 and Hashim Sait had no right to deal with the same as lessor in 1941 nor was he competent to create the trust in 1945 and hence the plaintiffs could not institute the suit. By the amendment of written statements in both the suits the defendants raised a plea that the suit was barred under the Madras Buildings (Lease and Rent Control) Act, 1960.5. The Subordinate Judge found that the plaintiffs had no right or locus standi to maintain the suit; but he also held that the said Act did not apply to the suit property.6. The appeals by the landlord were allowed by the District Judge. He held that it was not open to the tenants to deny their landlords title.7. In further appeal to the High Court it was held that the suits were maintainable and that there was no substance in the defence that the plaintiffs were not competent to institute the suits. The High Court held that though the plaintiffs had loosely described themselves as trustees in strict law they would be onlyof a wakf and any person in management of the wakf property like the plaintiffs could be mutawalis and competent to institute the suit on behalf of the wakf. The High Court found it unnecessary to consider the question about the Rent Control Act.

Court's reasoning:
10. With all respect to the learned Judges of the Madras High Court trying the cases in 1963 and 1964  referred to, it seems to us that in following Iranis case they fell into an error. In Iranis case, what was let out was not a vacant site. Even leaving out of account the superstructure of Gaiety Theatre there were certain stalls and structures on the land which would come within the definition of building in the Act then inseems to us therefore that neither in form nor in substance was there a letting of any building. In the first case there were some structures on the land in 1941 but the landlord had no interest thereon and the tenant unless he made default in payment of rent could remove at any time within 2 months after the expiry of the lease, the building materials by demolishing the structures. In the second case, although the structures were to become the property of the landlord at the end of the term the letting was only of the vacant land. The landlord did not let out any building which could come within the mischief of the Act.In order to determine whether the lease is of a vacant land or of a building within the meaning of the Act of 1960 we must take into account both the form and the substance of the transaction. In form the transactions in suit were leases of vacant land. The substance of the transactions points to the same conclusion. The lease of 1941 shows that the landlord was aware that there were certain structures on the land but what was let out Was not the structures but the entire land of Ac.It was with in the rights of the lessee to remove all the materials of the buildings and sheds which were erected on the land within 2 months after the date of the expiry of the agreement and the landlord was to have a charge thereon only in case of default of payment of the yearly rent. The structures belonged entirely to the lessee and they did not form theof the lease.The lease of 1945 was of a portion of S. No. E. 434/1 measuring Ac.The rent for the first seven years was to be Rs. 300 annually and for the second period of 8 years at Rs. 400 per annum. Although the lessee was to have the right to use the land as business premises and to put up erections and fixtures for running his business he was not to have any right to remove or cause them to be removed either before or after the expiration of the period mentioned. It is clear that what was let out in both leases was the land without any structures.Itseems to us therefore that neither in form nor in substance was there a letting of any building. In the first case there were some structures on the land in 1941 but the landlord had no interest thereon and the tenant unless he made default in payment of rent could remove at any time within 2 months after the expiry of the lease, the building materials by demolishing the structures. In the second case, although the structures were to become the property of the landlord at the end of the term the letting was only of the vacant land. The landlord did not let out any building which could come within the mischief of theseems to us that there is no substance in this contention either. The lease of 1945 was in favour of the trustees and the tenant could not be heard to deny the landlords title. As regards the lease of 1941 nothing was shown to us to take a view different from that arrived at by the High Court.