Case Note & Summary
In a dispute arising from a 21-year lease of land, the lessors granted a parcel of land to the lessees at a monthly rent of Rs. 50, with the lessees undertaking to construct a double-storeyed building on the land at a cost of not less than Rs. 10,000 and to insure it for at least Rs. 12,000 jointly. The lease expressly provided that on the termination of the lease, the lessees would surrender the land together with the building to the lessors without any compensation. After the expiry of the lease period, the lessors filed a suit seeking a declaration of their entitlement to the building, possession thereof, and recovery of rents and profits. The lessees resisted the claim, contending that the building formed part of the demised premises and that they were tenants of the building, thereby entitled to protection from eviction under the Bombay Rents, Hotel and Lodging House Control Act, 1947. The lessors argued that the lease was exclusively of the land and the building was constructed by the lessees at their own cost, making the covenant to surrender a simple contractual obligation. The Supreme Court, construing the terms of the lease, held that the demise was only of the land and the building did not become part of the leased premises. The Court observed that while the building was affixed to the land, there was no absolute rule in India that whatever was affixed to the soil became part of it; the rights of the parties were governed by the contract. The building remained the property of the lessees during the currency of the lease, and the obligation to deliver it at the end was a contractual covenant, not a tenancy protected by the rent control legislation. The Court therefore concluded that the provisions of the Bombay Rents, Hotel and Lodging House Control Act, 1947 did not apply to the covenant for delivery of possession, and the lessors were entitled to the relief sought. The decision upheld the enforceability of the lessors' rights under the lease covenant without extending the protective shield of rent control to a building that was never demised to the lessees as tenants.
Headnote
A) Property Law - Lease of Land - Construction of Lease and Rights to Building - Bombay Rents, Hotel and Lodging House Control Act, 1947 - The lease was a demise of land only; the building constructed by the lessee did not form part of the demised premises; the covenant to deliver possession of the building at the end of the lease was a contractual obligation enforceable against the lessee and was not within the protective scope of the Bombay Rent Act. The building remained the lessee's property during the lease, and there is no absolute rule that whatever is affixed to soil becomes part of it. Held that the lessors were entitled to a declaration that they were entitled to the building and possession, and the lessees were not protected from eviction under the Act.
Issue of Consideration
Whether on a proper construction the lease comprised a demise of the building along with the land, and whether the lessees were tenants of the building protected from eviction under the Bombay Rents, Hotel and Lodging House Control Act, 1947
Final Decision
The Supreme Court held that the demise was of land only and not of the building; the building remained the lessees' property during the lease; the Bombay Rent Act did not apply to the covenant for delivery of possession; the lessors were entitled to a declaration that they were entitled to the building and possession.
Law Points
- Lease of land does not automatically include building constructed by lessee unless lease expressly includes it
- covenant to surrender building at end of land lease is a contractual obligation not a tenancy
- Bombay Rents
- Hotel and Lodging House Control Act
- 1947 does not extend lease period or protect lessee from eviction from building not demised as premises
