Case: Larsen &amp; Toubro Ltd. Club House Road, Madras Vs. Trustees Of Dharmamurthy, Rao Bahadurcalavala Cunnan, Chett

3. On August 13, 1951, M/s Larsen & Toubro, the appellant company, took on lease from the respondent trustees a property situated in a busy central locality of the city of Madras. In 1975, the trustees filed a suit for possession. The appellant company respondent by claiming protection under Section 9 of the Tamil Nadu City Tenants Protection Act (3 of 1922) (hereinafter referred to as the Act). The short question that arises in the appeal is whether the company is entitled to this protection. The above piece of legislation was enacted primarily for the protection of small tenants, who in certain municipal towns and adjoining areas had constructed building on others lands, by ensuring that they are not evicted so long as they pay a fair rent for the land. The Act also contained a provision under which the tenant could put forward a claim to purchase the land in question from the owner at its average market value of the three immediately preceding years. It is highly doubtful whether the Act was intended to enable affluent persons or prosperous companies, like the present appellant, to take advantage of its provisions to compel a lessor to sell to them property of which they have obtained initial possession as lessees. However, the question has to be decided not on such general considerations but on the language of the statute itself and so we proceed to discuss the issue involved7. When the trustees filed the suit for ejectment, the company, as already stated, filed Application No. 1541 of 1976 under Section 9 of the Act. This application was accepted by the trial court. The court negatived the companys contention that it had exercised its option for the renewal of the lease for the period beyond the initial period of 21 years. However, it was of the opinion that the company was entitled to the benefit of the Act and appointed a commissioner to inspect the property, find out the market value of the property and fix the minimum extent of the property required by the defendant for convenient enjoyment of the superstructure which it would be entitled to purchase in terms of Section 98. The trustees filed an appeal. They contended that the lease in favour of the company was that of a building with appurtenant land and that, therefore, the respondent was not entitled to the protection of Section 9 of the Act and that, therefore, the application filed by the company should have been dismissed. The appeal was allowed. The company, thereupon, preferred a revision petition before the High Court. The learned Judge examined closely the terms of the lease deed between the parties, discussed certain earlier decisions of the court and concluded that the first appellate court was right in holding that the lease was of a building and not of land and that, therefore, the application of the company under section 9 was not maintainable. He, therefore, dismissed the revision petition. Hence the present appeal

Court's reasoning:
In other words, the High Court came to the conclusion that, in the present case, there had been a lease, not of vacant land but of a building with the land appurtenant thereto and that, therefore, the provisions of the Act would not apply11. In our opinion, the contentions of the learned counsel cannot be accepted. So far as the first contention is concerned, we do not think that the language employed is conclusive on the issue. It only shows that both land and building were leased. Whether the land is to be treated as an appurtenant or not would depend upon the extent and nature of the land and its situations the building thereon and not on whether the lease deed describes the subject matter as "all that land and building" or vice versa. Perhaps, if the deed had described the demised premises as building and appurtenant land that would have helped in ascertaining the intention of the parties but even that would not have been conclusive12. On the second question, we may point out that this Court had occasion to consider at length the meaning of the expression appurtenant to building in Maharaja Singh v. State of U. P. There the question was whether the land on which a cattle fair was being held could be said to be appurtenant to the building situated on the landThe High Court has applied its mind to the nature of the building as well as to the terms of the leas deed. It has kept in mind that the lease relates to a period about 35 years ago, a time when residential houses occupied large extents of land. There used to be a building in the middle surrounded by a vast area covered by garden, arbor, trees and the like. The lease also describes the building as "Club Chambers" with a municipal door number. The building is itself a substantial one occupying as many as two grounds. Having regard to the position pertaining at the time when the leas was executed, the first appellate court and High Court came to the conclusion that the land in this case was appurtenant to the building. We see no reason to disturb this finding. On the other hand, we agree that the use of the land, in the circumstances of this case, was incidental to the enjoyment and beneficial use of the building and, therefore, squarely fell within the definition which has been discussed above15. We are unable to accept this contention. We agree with the conclusion of the High Court that these clauses of the lease deed cannot be construed in the manner suggested by the lessees16. The clauses on which reliance has been placed on behalf of the appellant, in our opinion, do not lead to the inference suggested by the appellant. The High Court has pointed out that the rent for for the property was Rs. 1250 and that the bifurcation thereof into Rs. 900 and Rs. 350 had been introduced only with a limited purpose in view. The landlord wanted to protect himself against the possibility of demands of high municipal taxes being made against him as a result of the lessees putting up structures on the land or letting out parts of the property at high rents. So far as the other clauses are concerned, as rightly pointed out by the learned counsel for the respondents, they are just the usual clauses which find a place in a lease of immovable property. They are merely permissive in nature and enable the lessee to deal with the land, during the period of demises, to the best advantage without affecting the lessors interests. There was a substantial building existing on the land. There is no material to indicate that this was not sufficient for the purposes for which the building was taken on lease by the appellant. However, in case it was considered necessary to put up further structures, the lease deed permits the lessee to do so subject to safeguards against higher tax and compensation and with as stipulation that this should be removed at the time of termination of the lease. So far as the clause pertaining to sale is concerned, again, it merely provides for a possible eventuality. The execution of a lease deed does not prevent the lessor from disposing of the property, in whole or in part, subject to the lessees leasehold rights therein. The clause only provides that, in case the landlord decided to exercise this right, he should give a right ofn to the lessee. Thus all these are merely clauses which provide against the various contingencies that may occur during the period of the lease which may go up to 42 years. It is not possible to infer from these clauses that the parties had entered into two separate transactions of lease, though incorporated in a single document. In our opinion, this was a composite lease, as we have already said, of a building with appurtenant land and having regard to the definition contained in the Act, the lessee is not entitled to the rights conferred by Section 3 or Section 9 of the ActIn our opinion, this argument is. Whether the Act applies to the lease in question or not is something which has to be considered on the terms of the lease deed, having regard to the nature of the property. On this we have already expressed our conclusion. The clause regarding removal of structures is the normal clause that occurs in leases under the Transfer of Property Act. There may have been some force in the argument at least if there had been a clause specifically stating that the lessee will not be entitled to compensation for his structures. The clause here makes no mention of compensation and only talks of the lessees right to remove structures. Even if no such clause had been inserted, that would have been the position in law. It is not possible to infer form such a neutral claus that it was put in with a view to deny compensation to the lessee and thus get over the hurdle of the assessee putting in a claim for acquiring the property by purchase. It is clear that the lease deed between the parties is a simple lease deed containing the usual clauses and convents that one expects in it and nothing more. If, indeed, the parties had been conscious of the possibility of the lessee claiming any rights under the Act, the lessors would have tried to safeguard themselves by making it clear that what was being let out was only a building and appurtenant land. We, therefore, do not think that there is much force in this submission of the learned counsel for the appellant18. As the view we have taken is entirely based on a construction of the lease deed before us, we do not consider it necessary to refer to the various decisions discussed by the High Court in its judgment