dedol-hf/india-case-legal-rag huggingface dataset:
C.K.  Daphtary,  Solicitor-General (S. B.  Jutbar,  with
him) for the appellant.
N.C.  Chatterjee (N. K. Gamadia, with him) for  the  re-
spondents.
    1951. October 5. The Judgment of Kania CJ., Das and Bose
JJ.  was read by Das J. Patanjali Sastri and  Chandrasekhara
Aiyar JJ. delivered separate Judgments.
45
    DAS  J.--This is an appeal from the judgment of a  Bench
of  the Bombay High Court (Sen and Dixit JJ.)  delivered  on
February 2, 1947, in an appeal filed under section 18 of the
Bombay City Land Revenue Act 11 of 1876 against the judgment
of  the  Revenue Judge at Bombay delivered  on  October  27,
1942,  in  a suit filed by the  respondents,  the  Municipal
Corporation  of  the City of Bombay, and  Madusudan  Damodar
Bhat,  the then Municipal Commissioner for the City of  Bom-
bay, against the Collector of Bombay.
    There is no substantial dispute as to the facts  leading
up  to this litigation and they may be shortly  stated.   In
1865, the Government of Bombay, having decided to  construct
an  Eastern Boulevard, called upon the Corporation  of  Jus-
tices  of the Peace for the City of Bombay, the  predecessor
in title of the respondent Corporation,  to remove its  then
existing  fish and vegetable markets from the site  required
for  the construction of the Boulevard.  The then  Municipal
Commissioner  Mr.  Arthur Crawford, after whom  the  present
municipal  market was named, applied for the site set  aside
for the exhibition buildings on the Esplanades for the  pur-
pose  of  constructing new markets as the  existing  markets
could  not be removed until new markets had  been  provided.
On December 5, 1865, the Architectural Improvement Committee
informed  the  Government that it had no  objection  to  the
proposed  she measuring about 7 acres being "rented  to  the
Municipal  Commissioner"  and  suggested  that  "the  annual
charge of one pie per square yard be levied in consideration
of the expense of filling in the ground."  Computed at  this
rate,  the  annual rental would have amounted to  about  Rs.
176.   On December 19, 1865, the Government passed the  fol-
lowing resolution :--
    "(1)  Government approve of the site and  authorise  its
grant.
    (2)  The  plans should be submitted  for  approval;  but
Government do not consider any rent should be charged to the
Municipality  as  the  markets will be,  like  other  public
buildings, for the benefit of the whole community."
46
Pursuant  to  the aforesaid Resolution,  possession  of
the  site  was  made  over to  the  then  Municipal  Commis-
sioner, but no formal grant was executed as required      by
Statute  22 & 23 Vic. C. 41.  It has nowhere  been      con-
tended  that even if the statutory formalities  had     been
complied  with the grant upon the terms mentioned    in  the
Resolution  would  nevertheless have been invalid  being  in
excess  of the powers of the Government. The Municipal  Com-
missioner had the site filled up and leveled at the  expense
of the Corporation.  The plans were approved by the  Govern-
ment  and the market buildings were erected by the  Corpora-
tion at considerable expense. The respondent Corporation was
incorporated in 1888 as the successor of the Corporation  of
the  Justices  of the Peace for the City of  Bombay  and  it
continued in possession of the land and the buildings  with-
out  paying  any  rent to the Government  according  to  the
Government  Resolution  of 1865.  Indeed, it is  pleaded  in
paragraph 7 of the plaint and it is not denied in the  writ-
ten  statement that acting upon the said grant contained  in
the Resolution and the terms contained therein the  respond-
ent Corporation and its predecessor spent considerable  sums
of money in building and improving the market and have  been
in possession of the land and the buildings thereon for over
70 years in accordance with the terms of the Resolution  and
that no land revenue or rent had been paid to the Government
ever  since  the  grant was made.  It is  in  evidence  that
besides  giving up the sites on which the old  markets   had
been  situate,  a total sum of Rs. 17,65,980-12-1  has  been
spent by the Corporation up to March 31,1940, in filling  up
and leveling the site and erecting. and maintaining the  new
market  buildings  on this site. In 1911, a portion  of  the
market site was acquired by the Government for the  widening
of  the  Palton Road.  Upon the Collector  of  Bombay  being
called upon to put in ,his claim, if any, to any part of the
compensation money awarded by the Land Acquisition  Officer,
the  Superintendent,, City Survey, on behalf of the  Collec-
tor, replied that Government had no claim in respect of  the
said land.  The respondent
47
Corporation, therefore,  received  the whole of the  compen-
sation  money and it continued in possession of the rest  of
the  land and the buildings thereon without payment  of  any
rent.  On March 18, 1938, the appellant Collector of  Bombay
informed  the respondent Municipal Commissioner that it  was
proposed to assess the land occupied by the Crawford  Market
under  section 8 of the Bombay City Land Revenue Act  II  of
1876  and asked for certain information to enable him to  do
so.  In his reply, the Municipal Commissioner wrote  to  say
that the site of the market had been given to the Municipal-
ity  as a gift for the construction of the market and  that,
therefore.  the  question of assessment did not  arise.  The
appellant Collector of Bombay having insisted that in  spite
of the Government Resolution of 1865 the Government had  the
right  to assess the site, the Mayor of Bombay on March  23,
1939, wrote a letter to the Government stating, inter  alia,
as follows :--
    "The Corporation have been advised that there can be  no
doubt  that  it was the intention of Government  to  make  a
permanent  grant of the land to the Municipality, and,  fur-
ther,  that it was also the intention that  permanent  grant
should  be free from rent and from assessment to land  reve-
nue.   I am to point out that the word 'rent' was.  used  in
official  documents with the greatest frequency with  refer-
ence to the land revenue leviable by the East India  Company
and  later  by Government in the City of Bombay and  in  the
Presidency.  It is, therefore, clear that it was the  inten-
tion  of Government in 1865 that this grant should  be  free
from  any form of rent or assessment. The  Corporation  were
put  into possession for a period of over 70  years,  during
which period the land has without interruption been  devoted
to  the  purpose for which the grant was  made.   Throughout
this  long period there has been no suggestion from  Govern-
ment that the grant was other than a permanent one, free  of
revenue,  or  that the terms of the grant were  in  any  way
subject to revision,"
48
    The above  contentions  were  repudiated by the  Govern-
ment  in  its letter of January 1, 1940,  in  the  following
terms:-
    " As regards the contention that the land has been  held
by the Municipality uninterruptedly for over 70 years  with-
out  any  suggestion from Government that it was  liable  to
assessment,  I am to state the right to levy the  assessment
is the prerogative of the Crown and a mere non-user of  this
prerogative  cannot  destroy it.  Besides,  conditions  have
considerably altered since the land was originally  allotted
to  the  Municipality without charging any  ground  rent  or
assessment; the Municipality has been recovering substantial
rents by letting out stalls in the market and should now  be
in  a  position  to pay the assessment.  Under  the  circum-
stances,  the levy of assessment in this case can no  longer
be foregone or postponed."
    On  January 31, 1940, the appellant  Collector  assessed
the land under section 8 of the Bombay Act II of 1876 with a
guarantee of 50 years as under :--
    "Assessment  Rs. 7,500 per annum for the first 10  years
from 1st April, 1940.
    Assessment Rs. 15,000 per annum for the next 10 years.
    Assessment  Rs.  30,000 per annum for the  remaining  30
years."
    The  assessment  was to begin to run from  I  st  April,
1940, and the first payment of the assessment was to  become
due  on  1st April, 1941.  The present  suit  was  thereupon
filed  in the Court of the Revenue Judge in accordance  with
the  provisions of the Bombay City Land Revenue  Act,  1876,
for the following reliefs, inter alia :---
    "(a)  that it may be declared that there is a  right  on
the  part of the plaintiff Corporation in limitation of  the
right  of  Government to assess the said land and  that  the
plaintiff Corporation is entitled to hold the said land  for
ever without payment of any assessment and that the  Govern-
ment has no right to assess the said premises,
49
(b)  That the said assessment may be declared  ultra  vires,
invalid and may be ordered to be set aside."
    By  his  judgment dated October 27,  1942,  the  learned
Revenue  Judge dismissed the suit with costs.  The  Corpora-
tion  appealed to the High Court. Before the High Court,  as
before  us, two of the learned Revenue  Judge's  conclusions
were not challenged. namely, (1) that the Government Resolu-
tion  of 1865 was-bad in law either as a grant or even as  a
contract and could not by itself operate to give any  inter-
est in the land to the respondent Corporation because of the
non-compliance with the formalities required to be  observed
by  Statute 22 & 23 Vic. C. 41 in the matter of  disposition
of  all real and personal estate vested in the  Crown  under
Statute 21 & 22 Vic. C. 106, and (2) that the Crown's  right
to  levy assessment on property was a prerogative  right  to
which the ordinary presumption that rights to property which
had  not  been asserted or exercised for a  long  period  of
years  had been granted away did not apply-  What was  urged
before and accepted by the High Court was that the right  of
the  Government to levy any assessment on the land in  ques-
tion had been lost and could not be asserted or exercised by
the Government by reason of the equity arising on the  facts
and  circumstances of the case in favour of  the  respondent
Corporation on the principle established by the decision  in
Ramsden v. Dyson(1) which was adopted by Jenkins C.J. in The
Municipal Corporation of the City of Bombay v. The Secretary
of State(2) and which equity was, on the authorities,  bind-
ing  on  the Crown. After dealing with the cases  of  Dadoba
Janardhan  v. The Collector of Bombay(3) and Jethabhoy  Rut-
tonsey v. The Collector of Bombay(4) the High Court observed
:--
    "We  think, on a reading of the language of the  Govern-
ment  Resolution  dated  the 19th December,  1865,  that  we
should  be justified in holding (within the meaning  of  the
rule in Ramsden v. Dyson) that an expectation was created or
encouraged by the landlord
(1)  (1866) L.R. 1 H.L. 129.      (3) (1901) I.L.R. 25  Bom.
714.
(2) (1905) I.L.R. 29 Bom. 580.    (4) (1901) I.L.R. 25  Bom.
752.
              7
50
that  the  Municipality was to get possession  of  the  land
rent-free  and that the latter took possession of  the  land
with the consent of the landlord, and upon such expectation,
with the knowledge of the landlord and without objection  by
him, laid out money upon the land."
    According to the High Court the rule of equity enunciat-
ed  in Ramsden v. Dyson (supra) was not, as pointed  out  by
Jenkins C.J. in Municipal Corporation of the City of  Bombay
v. The Secretary of State (supra), dependent on the validity
of  the  disposition and could be asserted  even  where  the
statutory  formalities  relating to the disposition  of  the
property had not been observed and performed, and that  this
equity  constituted  a right on the part of  the  respondent
Corporation in limitation of the right of the Government  in
consequence  of a specific limit to assessment  having  been
established  and preserved within the  meaning of section  8
of  the  Act II of 1876 so as to disentitle  the  Government
from  assessing the land in question. The High Court  relied
on the decision in Kamalavahooji Maharaj v. The Collector of
Bombay(1)  in  support of their view that section 8  of  the
Bombay  Act II of 1876 would apply even where  the  specific
limit  was nil. In the result, the High Court  reversed  the
decision  of the learned Revenue Judge, allowed  the  appeal
and  passed a decree declaring the rights of the  respondent
Corporation and awarding to it the costs in both Courts. The
Collector  of Bombay appealed to the Federal Court  and  the
appeal has now come up for hearing before us.
    There  has been considerable discussion before us as  to
the  precise  scope and effect of the  principle  of  equity
enunciated  in Ramsden v. Dyson (supra), as to whether  such
principle  should  be extended to the facts of  the  present
case,  whether the facts 'of this case attract the  applica-
tion of the equity established in Ramsden v. Dyson (supra)or
attract  the equity established in Maddison v. Alderson  (2)
and Walsh v. Lonsdale(3) and finally as to whether, in  view
of the decision
 (1)  (1937) 39 Bom. L.R. 1046.         (3) (1882)  L.R.  21
Ch. D. 9.
 (2) (1883) L.R. 8 App. Cas. 417.
51
of the Privy Council in Ariff v. Jadunath(1), the equity  in
Ramsden v. Dyson (supra) can prevail against the requirement
of  formalities laid down in the Victorian Statute  referred
to  above any more than the equity in Maddison  v.  Alderson
(supra)can  do against the requirements of the  Transfer  of
Property  Act  and  whether the decision  in  The  Municipal
Corporation  of  the  City of Bombay  v.  The  Secretary  of
State(2) requires reconsideration in the light of the  deci-
sion in Ariff's case (supra). In the view we have taken,  it
is not necessary to go into, and to express any opinion  on,
any of these questions, for this appeal can, in our opinion,
be disposed of on a narrower and shorter ground.
    The  Government claims to assess the lands in  terms  of
section 8 of the Bombay Act II of 1876 which runs thus :--
    "8.  It shall be the duty of the Collector,  subject  to
the orders of the Provincial Government, to fix and to  levy
the assessment for land revenue.
    Where  there  is no right on the part  of  the  superior
holder in limitation of the right of the Provincial  Govern-
ment to assess, the assessment shall be fixed at the discre-
tion of the Collector subject to the control of the  Provin-
cial Government.
    When there is a right on the part of the superior holder
in limitation of the right of the Provincial Government,  in
consequence  of a specific limit to assessment  having  been
established  and preserved, the assessment shall not  exceed
such specific limit."
    The  sole question for our consideration is whether,  on
the  facts  of  this case, the  respondent  Corporation  has
succeeded in establishing in itself a right in limitation of
the  right  of the Government to assess the land  in  conse-
quence of a specific limit to assessment having been  estab-
lished and preserved.  There is no dispute that by reason of
the  non-compliance with the statutory formalities the  Gov-
ernment Resolution of 1865 is not an effectual grant passing
title  in the land to the respondent Corporation and is  not
also an enforceable
(1)  (1931) L.R. 58 I.A. 91.       (2) (1905)I.L.R. 29  Bom.
580.
52
contract.  On  the other hand, there is no doubt as  to  the
existence  of an intention on the part of the Government  to
make  and on the part of the Corporation to take a grant  of
the  land  in terms of the Resolution of 1865  including  an
undertaking by the Government not to charge any rent.   Both
parties acted on the basis of that Resolution and the prede-
cessor  in  title of the respondent  Corporation  went  into
possession  of the land in question pursuant to the  Govern-
ment Resolution of 1865 and, acting upon the said Resolution
and the terms contained therein, the respondent  Corporation
and  its  predecessor in title spent  considerable  sums  of
money in leveling the site and erecting and maintaining  the
market buildings and have been in possession of the land for
over  70  years.  What, in the circumstances was  the  legal
position  of the respondent Corporation and its  predecessor
in title in relation to the land in question ? They were  in
possession  of the land to which they had no legal title  at
all.  Therefore, the position of the respondent  Corporation
and its predecessor in title was that of a person having  no
legal title but nevertheless holding possession of the  land
under  color of an invalid grant of the land  in  perpetuity
and  free from rent for the purpose of a market.  Such  pos-
session not being referable to any legal title it was  prima
facie adverse to the legal title of the Government as  owner
of the land from the very moment the predecessor in title of
the respondent Corporation took possession of the land under
the invalid grant.  This possession has continued openly, as
of  right  and  uninterruptedly for over 70  years  and  the
respondent Corporation has acquired the limited title it and
its predecessor in title had been prescribing for during all
this  period, that is to say, the right to hold the land  in
perpetuity  free  from rent but only for the purposes  of  a
market  in terms of the Government Resolution of 1865.   The
immunity  from the liability to pay rent is just as much  an
integral  part  or an inseverable incident of the  title  so
acquired  as  is  the obligation to hold the  land  for  the
purposes  of a market and for no other purpose. There is  no
question
53
    of acquisition by adverse possession of the Government's
prerogative  right to levy assessment. What  the  respondent
Corporation has acquired is the legal right to hold the land
in  perpetuity  free  of rent for the  specific  purpose  of
erecting  and  maintaining a market upon the  terms  of  the
Government  Resolution as if a legal grant had been made  to
it.  The  right thus acquired includes, as part  of  it,  an
immunity from payment of rent which must necessarily consti-
tute  a  right in limitation of the  Government's  right  to
assess  in  excess  of the specific  limit  established  and
preserved by the Government Resolution within the meaning of
section  8  of the Bombay Act II of 1876.  It  is  true,  as
pointed out by the Privy Council in Karnalavahooji   Maharaj
v. Collector of Bombay (supra) that the words of the section
would appear to apply rather to the case of a limitation  on
the right to assess than to the case of a complete exemption
from assessment  but  such a construction would not  protect
the cases of total exemption which, as conceded in that very
case, did in fact exist and were recognised and protected by
virtue  of  the words of section 8 of the Bombay Act  II  of
1876. It has not been suggested before us that there are  no
cases  of total exemption or that those cases are  protected
by  any provision of law other than that of this  very  sec-
tion.  There  is, therefore, no escape from  the  conclusion
arrived at by the High Court, with which we concur, that the
words of section 8 would apply to a case where total  exemp-
tion  from assessment was granted. In other words,  specific
limit may be nil for the purposes of section 8 of the Act.
    It  was sought to be argued that even if the  Government
be precluded from enhancing the "rent" in view of the  terms
of  the  Government Resolution, it cannot be  held  to  have
disentitled  itself  from its prerogative  right  to  assess
"land revenue". This contention is sought to be rounded on a
distinction between "rent" and" land revenue".  This conten-
tion,  however, was not raised in the written statement  and
was  not  made the subjectmatter of any issue on  which  the
parties  went  to  trial and was never  put  forward  before
either of the Courts
54
below.   Indeed, in the letter of the Mayor of Bombay  dated
March  22,  1939, to which reference has been made,  it  was
clearly  alleged that the word "rent" was used  in  official
documents  with the greatest frequency   with  reference  to
the  land  revenue leviable by the East  India  Company  and
later  by  the Government in the City of Bombay and  in  the
Presidency."   In the Government's reply dated  January  24,
1940, also quoted above this assertion was never  repudiated
or denied.  In the premises, the appellant cannot be permit-
ted  at this stage to raise this contention rounded  on  the
supposed  distinction,  if  any, between  "rent"  and  "land
revenue" and for the purpose of this case we must proceed on
the basis that the word "rent" in the Government  Resolution
of 1865 was synonymous with or included" land revenue."
     In  our opinion, for reasons stated above,  the  actual
decision  of  the  High Court was correct  and  this  appeal
should be dismissed with costs, and we order accordingly.
PATANJALI  SASTRI j.--I am of opinion that this  appeal
should  be  allowed and I will briefly indicate  my  reasons
without  recapitulating  the  facts which  have  been  fully
stated  in the judgment of my learned brother  Das  which  I
have had the advantage of reading.
     The  appeal concerns a claim by the Provincial  Govern-
ment  of Bombay to charge land revenue on a plot of land  on
which the predecessors of the respondent Municipality erect-
ed the buildings  known  as the Crawford Market in the  City
of  Bombay.  It is common ground that the land  in  question
would  be assessable to land revenue under section 8 of  the
Bombay  City  Land Revenue Act (No. II of 1876)  unless  the
respondent  established "a right in limitation of the  right
of  the Provincial Government in consequence of  a  specific
limit   to   assessment   having   been   established    and
preserved",  in which case, the assessment must  not  exceed
such  specific limit.  It has been held, and it is  not  now
disputed, that the words quoted above cover
55
a  right of total exemption from assessment,  the  "specific
limit" in such a case being nil (see Goswamini Shri  Kamala-
vahooji  v.  Collector of Bombay (1).   The  only  question,
therefore, is whether the respondent has established a right
to such exemption.
    The  resolution of  the Government dated  19th December,
1865,  authorising the grant of the land without  "any  rent
being charged to the Municipality as the market will be like
other buildings for the benefit     of the whole  community"
did  not  by  itself purport to pass title to  the  land  in
question or to confer on the Municipality a right to  exemp-
tion from land revenue. Admittedly no formal instrument  was
executed  either  granting  the land or  exempting  it  from
assessment. Nor could the resolution be regarded as a  valid
disposition  of property or an enforceable contract  not  to
charge  revenue on the land, as it did not comply  with  the
requirements  of  the statute 22& 23 Vic. C. 41  which  pre-
scribed certain formalities to be observed for such transac-
tions.  As pointed out by Jenkins C.J. in Municipal Corpora-
tion of the City of Bombay v. The Secretary of State (2) all
land in British India having been vested in the Crown by  21
&  22 Vic. C. 106, the Governor-in-Council in  Bombay  could
not  dispose of property or enter into a contract on  behalf
of  the  Crown except in exercise of the power  bestowed  on
them  for  the purpose under 22 & 23 Vic. C.  41,  and  that
power  could be exercised only by observing the  formalities
prescribed by that statute.  The learned Judges of the  High
Court,  while recognising this difficulty in the way of  the
respondent  establishing  a legal right  to  exemption  from
assessment, held that the conduct of the Provincial  Govern-
ment in allowing and, indeed, encouraging the respondent  to
erect the buildings at great cost on the faith of the  prom-
ise  not to charge land revenue contained in the  Resolution
of  19th  December, 1865, precluded the  respondent  on  the
equitable  principle  recognised in Ramsden  v.  Dyson  from
assessing the land in question, and that this
 (1)  L.R.  64 I.A. 334.                 (3) (1866)  L.R.  1
H.L. 129.
  (2) (1905) I.L.R. 29 Bom. 580.
56