Case: Life Insurance Corporation Of India Vs. India Automobiles And Company

( 2 ) THE property, which is the subject matter of the present dispute, originallyformed part of an extent of land situated on Mount Road, Madras, bearing doors Nos. 2, and 3 and measuring 41 grounds and 2005 sq. ft. It belonged to several co-owners. These co-owners had leased out the properties under two lease deeds in favour of M/s. India Automobiles, which was then the sole proprietary concern of one of themselves, Ganshyamdas Girdhardas (G. G.), but was converted subsequently, in 1961, into a partnership concern of G. G. and his four sons. The firmand its partners are hereinafter compendiously referred to as the tenants. The first lease (Ext. P-1) was dated 22-9-1947 and related to Door No. 2 (Item No. 1 in Schedule A to the plaint ). This was a property comprising of an area of 4 grounds and 151 square feet with certain buildings thereon. The rent for the premises was Rs. 150. 00 per month. The second lease deed (Ext. P-2), dated 3-10-1947, relating to Door No. 3 (Item 2 in Schedule A to the plaint) covered an area. of 8700 sq. ft. and some building thereon. The rent as per lease deed was Rs. 200. 00 per month( 3 ) ON 30-7-1953, all the co-owners of the property (including G. G.) sold the property to the United India Life Assurance Company and the New Guardian of India Life Insurance Company Ltd. In 1956, the Life Insurance Corporation of India (LIC) stepped into the shoes of these two insurance companies and became the owner of the property( 4 ) ON 20-7-65, the LIC moved two applications (being HRC Nos. 3310 and 3311 of 1965) in the Court of the Rent Controller (Sri A. Varadarajan who later became a Judge of this Court) for fixation of a "fair rent" for each of the premises. The fair rent claimed was computed at Rs. 2,399. 03 per month in respect of item No. 1 as against the rent of Rs. 150 p. m. fixed under the lease deed. In respect of item 2 the fair rent claimed was Rs. 3266. 50 as against Rs. 200 p. m. payable under the lease deed. The defendants (G. G. and his sons) filed their objections to the above applications. They claimed that, under both the lease deeds, what had been leased out to them was only a vacant land and that the superstructure had been built by them. They claimed, therefore, that they were entitled to relief under the Madras City Tenants Protection Act and that the Rent Control Court had no jurisdiction to fix a fair rent( 5 ) THE Rent Controller accepted the above argument so far as item 1 was concerned. So far as item 2 was concerned, it appears that, at the time of the hearing, it was conceded before the Rent Controller that the respondents were tenants of the entire properties covered by the lease deed and that they had not constructed any of the premises thereupon. In view of this the Rent Controller dismissed H. R. C. 3310/65 relating to item No. 1 and, in H. R. C. 3311/65, fixed the fair rent in respect of item No. 2 at Rs. 1451 p. m. The order of the Rent Controller was dated 9-3-1966( 6 ) THERE were appeals to the Court of Small Causes. In respect of item No. 1, in H. R. A. 534/66, the Court, on a perusal of the sale-deed dated 30-7-53 filed by the LIC before it came to the conclusion that the buildings on the land leased under Ex. P-1 had also been conveyed to the LIC and that the LIC was entitled to seek fixation of fair rent in respect of this premises also. The fair rent fixed by the Rent Controller at Rs. 994 p. m. was upheld. The order of the Rent Controller in respect of item 2 was aiso upheld. It may be mentioned here that, even in certain earlier proceedings for fixation of fair rent and eviction (H. R. C. 867/73 and H. R. C. 2557/64),it had been held by the Rent Controller that item No. 1 (door No.) belonged to the LIC but his order of eviction had been set aside by the appellate. Court on some other ground. In the circumstances, the Court of Small Causes, in the appeals now being referred to (H. R. A. 534/66), did not treat the earlier decision as res judicata but came independently to the same conclusion that item No. 1 belonged to the L. I. C. This was on 19/04/1967. The tenants filed revision petitions against the order of the Court of Small Causes but these were dismissed on 20-11-1968( 7 ) AFTER the Civil Revision Petitions by the tenant were dismissed, the L. I. C. filed C. S. 64/1969 on the original side of the Madras High Court against the tenants for recovery of arrears of rent on the basis of the fair rents fixed, which were computed at Rs. 98,250. 97 in respect of the two items of property. Further interest at the rate of 12% thereon from date of plaint to the date of decree and at 6% thereafter till the date of realisation was also claimed( 8 ) IT may be mentioned here that the tenant filed C. S. 87 of 1972 claiming protection under the Madras City Tenants Protection Act but this suit and further appeals therefrom have been dismissed. Turning now to C. S. No. 54. of 1969 (which was disposed of along with C. S. No. 87 of 72 by a common judgment dated 23-10-1972), the contention urged on behalf of the tenants was that, since the subject-matter of the lease under Ex. P- 1 was only a vacant site, the Rent Controller had no jurisdiction to fix the fair rent in respect thereof and that, therefore, the claim in the suit for arrears of rent, based on the Rent Controllers order in respect of the premises covered by Ex. P-1 had to fail. The Court addressed -itself to this question. It came to the conclusion that Ex. P-1 did not, in law, create a valid lease between the co-owners and the tenants. After referring to the terms of the sale-deed (Ex. P-3), the super structure constructed on the land was held to have been conveyed to the vendee under the sale-deed dated 30-7-1953 and to have thus vested in the LIC. The Rent Controller was, therefore, held to have had jurisdiction to fix the fair rent in respect of the premises. It was, therefore, held that the plaintiffs claim in the suit should succeed. The suit was decreed accordingly( 9 ) THE tenants filed an appeal being Q. S. A. No. 62 of 1973. The Appellate Bench confirmed the decree in respect of item No. 2 subject to certain modifications which are not here relevant. However, so far as item No. 1 was concerned, the Appellate Bench vacated the decree passed by the trial Court. It held that there was a valid lease between the quondam owners and the tenants under Exts. P-1 and P-2. Having regard to the express recitals in Ex. P-3, the Appellate Bench held that it was impossible to hold that the buildings, which admittedly belonged to the defendants and had been constructed by them on the vacant land taken on lease under Ex. P-1, ever were or could be the subjectmatter of the sale under Ex. P-3. In view of this finding, it was held that the Rent Controller had no jurisdiction to entertain the application for fixation of fair rent in respect of the property which was only a vacant piece of land. In consequence, it was held, the LIC could not maintain the suit for recovery of rent based on the order made by the statutory tribunal under the Rent Control Act and claim the difference between the so-called fair rent and the contract rent. The claim of the LIC for recovery of Rs. 39,224. 71, as arrears of rent, in respect of item 1 was thus held to be not maintainable. O. S. A. 62 of 1973 was, therefore, allowed to that extent. The present appeal, by Special Leave granted on 3-7-1979, is from the order of the Division Bench rejecting the appellants claim for arrears of rent in respect of item No. 1 of the property set out in Schedule A to the plaint based on the difference between the fair rent fixed by the Rent Controller and the rent payable therefor under Ex. P-1

Court's reasoning:
( 11 ) SO far as the first question is concerned, we have no doubt that the Division Bench of the High Court has come to the correct conclusion. In our view, the conclusion of the learned single Judge that the lease Ex. P-1, executed by the co-owners of the property in favour of one of them was invalid was erroneous. Section 5 ofthe Transfer of Property Act, 1882, clearly envisages transfers of property by a person to , one or more living persons or to himself, or to himself and one or more other living persons". Whatever may be the position, in spite of this provision, in respect of a purported transfer by a person to himself alone (which is very often the position in the case of trusts) - which was considered by the House of Lords inRye v. Rye (1962 AC, there is no reason to hold that a contract between a person with himself and others is invalid. The Division Bench, we think, has rightly distinguished the decisions in Girish Chandra v. Srinath (3 CLJ 141) andRye v. Rye (1962 AC496 ). The observations of Lord Denning, extracted by the learned Judges are quite apposite to the situation in the present case( 12 ) ONCE this objection is out of the way, the question is whether the constructions put upon the leased land by the lessees formed part of the property conveyed to the L. I. C. Sri Parasaran pointed out that they did not and drew our attention to subsequent correspondence between the parties to show that even the L. I. C. had not claimed at any stage any rent in respect of the superstructures (apart from the contractual rent, which was in respect of the land) and that both parties have -all along been proceeding on the footing that the superstructure on item 1 belonged to the lessees. This appears to be correct but it cannot be conclusive of the rights of the parties. We have therefore gone carefully into the terms of Ex. P. 1 and Ex. P 3. They clearly make out that the superstructures put up by the lessee under Ex. P-1 were not included in the property conveyed under the terms of Ex. P-3 and that, whatever may be the rights of the LIC to evict the tenant with liberty to demolish the superstructure on the termination of the lease, it had no property in the superstructure so long as the lease subsisted. We, therefore, answer the first question posed by us in the affirmative( 23 ) WE are of opinion, in the light of the decided cases referred to above, that the contention on behalf of the respondents has to be accepted. We are concerned with the jurisdiction of a civil Court. The extensive jurisdiction conferred on civil courts under S. 9 of theCode of Civil Procedure should not be curtailed without a specific statutory warrant or except on some clear principle. There is nothing in the Tamil Nadu Rent Control Act which,in any way, takes away, or narrows down, the civil Courts jurisdiction as, for example, there is, in the Delhi Rent Control Act (S. 50 ). As to principle, whether we look at it on the analogy of res judicata or adopt the approach of Sri Iyer as to whether the order in the earlier proceedings is to be treated as an order that is null and void or merely one that is valid until set aside, the answer has to turn on the true nature and scope of the jurisdiction conferred on the. Rent Controller under the Act. Is it possible, we have to ask ourselves, having regard to the context, scheme and terms of the legislation, that the statute could have envisaged the Rent Controller (and the authorities to whom appeal or revision could be preferred from his orders) to be final authorities to adjudicate on issues of title also ? The answer, in our opinion, has to be in the negative. Section 4 of the Rent Control Act, as already pointed out, provides only a machinery for fixation of fair rent in respect of certain premises. It is the quantum of fair rent that arises for determination by the Rent Controller. There is no doubt that, since an application for this purpose cannot lie except at the instance of a landlord or a tenant, the Rent Controller has to deal with this incidentally but this is not one of the direct issues before the Rent Controller. If, and only if, this relationship exists between the parties, the Rent Controller steps in for a limited purpose to determine what the fair rent is and then fades out of the picture. Where a fair rent is fixed by, a Controller, the Rent Control Act does not provide for a machinery for recovery of the amount. The amount has to be recovered by the landlord only by recourse to a civil Court. This gives an indication that the determination of the relationship that gives rise to the application is also not conclusive. This is indeed made clear by the provisions relating to eviction. We have already referred to the effect of the provisons of S. 10 (2) (vii) read with the proviso to S. 1 0 (1) and pointed out how jurisdiction to decide questions of title is denied to the Rent Controller. The position cannot be different under S. 4. Having regard to the much narrower scope of S. 4, it would be anomalous to read a wider jurisdiction to the Rent Controller thereunder than under S. 10. In our opinion, on a proper construction of the Rent Control Act, the question on which the jurisdiction of the civil Court is excluded is only the determination as to the fair rent of the premises. If the civil Court in this case had come to the conclusion that there is a relationship of a landlord and a tenant and that the LIC was entitled to recover the rent from the tenants, it will have to pass a decree in favour of the LIC on the basis of the fair rent fixed by the Rent Controller. It will not be open to the civil Court to re-determine the rent payable ,by the tenant to the landlord because that is a matter squarely and exclusively within the jurisdiction of the Rent Controller and, therefore, impliedly excluded from the purview of the civil Court. But his decision is not final on the issue that opens up his jurisdiction and cannot preclude an owner from contending, in a civil Court, that he should not be asked to pay rent for his own property to some one else.