Case Note & Summary
The dispute arose from a registered lease deed dated September 19, 1934, by which N. Vajrapani Naidu and his mother Bangarammal leased an open site in Coimbatore to Abirama Chettiar for 20 years at an annual rent of Rs. 1,080, for the purpose of constructing a building suitable for use as a theatre. The lease contained a covenant that after the expiry of the term, the lessee would demolish the building and deliver vacant possession of the site. Abirama Chettiar constructed a theatre and assigned his rights to The New Theatre Carnatic Talkies Ltd., Coimbatore, which was recognised as the tenant. On March 9, 1954, the lessors served a notice requiring the company to vacate and surrender possession. The company failed to comply, so the lessors filed a suit for ejectment and mesne profits. The Subordinate Judge of Coimbatore decreed possession and mesne profits at Rs. 350 per month in favour of the lessors. The company appealed to the District Court, which was transferred to the High Court at Madras. During the appeal, by G.O. No. 608 dated February 10, 1958, the State of Madras extended the Madras City Tenants' Protection Act, 1922, as amended by Madras Act 19 of 1955, to the Municipal Town of Coimbatore. The company then applied under Section 9 of the Act for an order directing the lessors to sell the demised site to the company at a price fixed by the court. Panchapakesa Iyer, J. directed the lessors to sell the land to the company at full market value on the date of the order, with a Commissioner to fix the value based on the market value prevalent on July 28, 1958. The lessors' appeal under Clause 15 of the Letters Patent was dismissed by a Division Bench, and the lessors appealed to the Supreme Court by certificate. The legal issues before the Supreme Court were: first, whether the company was entitled to an order under Section 9 notwithstanding the terms of the lease; and second, whether Section 9 infringed the fundamental rights of the lessors under Articles 19(1)(f) and 31(1) of the Constitution. The lessors contended that the lease covenant requiring demolition and surrender disentitled the tenant from claiming protection, and that Section 9 unconstitutionally deprived them of property rights. The company argued that Section 12 of the Act protected tenants against contractual terms that would take away statutory rights, and that the proviso did not save the demolition covenant because it was not a stipulation as to erection of buildings. The company further argued that Section 9 was a reasonable restriction in the interest of the general public. The Supreme Court, by majority (Gajendragadkar, C.J., Shah and Sikri, JJ.), held that Section 12 was enacted to protect tenants against contractual engagements made expressly or by implication that would deprive them of the protection conferred by the statute. The only class of cases in which the protection became ineffective was where the tenant had made a registered written stipulation as to the erection of buildings. Those stipulations covered restrictions about size, nature, building materials, and purpose for which the building was to be utilised. A covenant to demolish and surrender was not a stipulation as to erection of buildings and therefore did not save the tenant from losing protection. Consequently, the company was entitled to apply under Section 9. On the constitutional question, the majority held that Section 9 was manifestly in the interest of the general public to effectuate mutual understanding between landlords and tenants as to duration of tenancies and to conserve building materials. The restriction on the landlord's right to obtain possession was not unreasonable. Section 9 did not deprive the landlord of property or acquire his rights; it gave effect to the real agreement that induced the tenant to construct. Hence, Section 9 was not invalid under Article 19(1)(f), and no independent infringement of Article 31(1) could be set up. The dissenting judges (Wanchoo and Ayyangar, JJ.) opined that the preamble indicated the Act did not protect a tenant who expressly contracted to demolish and surrender, and that the proviso to Section 12 should be construed broadly; they would have allowed the appeal. The majority dismissed the appeal, affirming the High Court's order directing the lessors to sell the land to the company under Section 9.
Headnote
A) Statutory Interpretation - Tenant Protection - Madras City Tenants' Protection Act, 1922, Section 12 - The proviso to Section 12 saves only registered written stipulations as to erection of buildings, such as restrictions about size, nature, building materials, and purpose; it does not save a covenant requiring the tenant to demolish the building and surrender vacant possession at the end of the lease term - The majority held that the clause requiring demolition and surrender was not a stipulation as to erection of buildings and therefore could not deprive the tenant of the statutory right to apply under Section 9 (Paras 1-8). B) Constitutional Law - Reasonable Restriction - Constitution of India, Articles 19(1)(f), 31(1); Madras City Tenants' Protection Act, 1922, Section 9 - Section 9 restricts the landlord's right to obtain possession but is in the interest of the general public, effectuates mutual understanding as to duration of tenancies, and conserves building materials; Section 9 does not deprive the landlord of property or acquire rights but gives effect to the real agreement that induced the tenant to construct - Held that Section 9 is not invalid under Article 19(1)(f) and no independent infringement of Article 31(1) arises (Paras 9-15). C) Dissenting Opinion - Statutory Interpretation - Madras City Tenants' Protection Act, 1922, Section 12 and Preamble - The preamble indicates the Act does not protect a tenant who expressly contracted in a registered lease deed to demolish the building and surrender the site; the proviso to Section 12 should be construed broadly to include any stipulation bearing on erection of buildings, including the relative rights of the parties if buildings are erected - The dissenting judges held that the High Court erred in interpreting the proviso, and the tenant who contracted to surrender could not be said to have constructed in the hope of not being evicted so long as rent is paid (Paras 16-20).
Issue of Consideration
Whether the respondent company was entitled to an order under Section 9 of the Madras City Tenants' Protection Act, 1922 notwithstanding the terms of the lease, and whether Section 9 infringes the fundamental rights of the lessors under Articles 19(1)(f) and 31(1) of the Constitution.
Final Decision
Appeal dismissed; the order of the High Court directing the lessors to sell the land to the company under Section 9 of the Madras City Tenants' Protection Act, 1922 was affirmed. Section 9 was held constitutionally valid, and the lease covenant for demolition and surrender did not bar the company's statutory right.
Law Points
- Section 12 of Madras City Tenants' Protection Act
- 1922 protects tenants against contractual terms depriving them of statutory rights
- proviso to Section 12 saves only registered written stipulations as to erection of buildings
- such as size
- nature
- materials
- and purpose
- a covenant to demolish and surrender at lease end is not a stipulation as to erection of buildings and is ineffective
- Section 9 is a reasonable restriction on landlord's right in the interest of general public
- Section 9 does not acquire landlord's property but gives effect to the real agreement inducing tenant to construct
- no independent violation of Article 31(1) if Article 19(1)(f) is not infringed
