Collector of Bombay v. Municipal Corporation of Bombay

Rewritten Version Notice: This is a rewritten version of the original judgment.

Court: Supreme Court of India

Case Number: Civil Appeal No. 44 of 1950

Decision Date: 5 October 1951

Coram: Hiralal J. Kania, N. Chandrasekhara Aiyar, Vivian Bose, Das, Patanjali Sastri

In this matter the Collector of Bombay brought an action against the Municipal Corporation of the City of Bombay and certain other parties, and the case was decided on 5 October 1951 by a Bench of the Supreme Court of India comprising Hiralal J. Kania, N. Chandrasekhara Aiyar and Vivian Bose. The judgment was authored by the same three judges, with Chief Justice Kania presiding. The petition was filed by the Collector of Bombay and the respondents were the Municipal Corporation of the City of Bombay together with additional respondents. The decision was reported in the 1951 All India Reporter at page 469 and in the 1952 Supreme Court Reports at page 43, and it has subsequently been cited in a number of later decisions.

The operative statutory provision was section 8 of the Bombay City Land Revenue Act, 1876 (second amendment). The central issue concerned a resolution of the Government of Bombay that purported to grant a parcel of land to the Municipal Corporation free of rent, even though the statutory formalities required for a valid conveyance had not been completed. The Corporation had occupied the land openly for more than seventy years, during which time it had erected extensive market structures at a cost exceeding seventeen lakh rupees. In 1940 the Collector of Bombay, after rejecting the Corporation’s objection, issued an assessment of land revenue on the basis of section 8, increasing the assessed value from seven thousand five hundred rupees to thirty thousand rupees for a period of fifty years.

The Corporation challenged the assessment, seeking a declaration that the Collector’s order was beyond the powers of the authority (ultra vires) and that the Corporation was entitled to retain the land forever without any liability for land revenue. The High Court of Bombay, applying the equitable principle illustrated in Ramsden v. Dyson, concluded that the Government had, by operation of equity, relinquished its right to assess the land because of the factual circumstances that favored the Corporation. Accordingly, the High Court held that a limitation existed on the Government’s power to levy assessment under section 8 of the Act.

The Supreme Court affirmed the High Court’s view. The Court, per Chief Justice Kania, Justice Das and Justice Bose, held that the Government was not entitled to impose a land-revenue assessment on the disputed parcel given the surrounding facts. The Court noted, however, that there was no effective grant of title by the Government to the Corporation because the statutory formalities required for such a conveyance had not been complied with. This observation set the stage for the Court’s further analysis of the rights that the Corporation had acquired through its long, uninterrupted, and open possession of the land despite the lack of a formal title.

Because the Corporation had, despite the absence of any formal conveyance, taken possession of the land pursuant to the Government’s resolution and had continued to occupy the land openly, uninterruptedly and as a matter of right for more than seventy years, the Court held that the Corporation had acquired a limited title described in the citation (1) (1866) L.R. 1 H.L. 129. 44. This limited title amounted to a perpetual right to hold the land without paying rent, but solely for the purpose of maintaining a market and for no other purpose. The right to hold the land without rent also carried with it an immunity from any rent payment, which operated as a limitation on the Government’s power to assess revenue beyond the specific ceiling set by the Government Resolution. The Court interpreted this limitation within the meaning of section 8 of the Bombay City Land Revenue Act (II of 1876), observing that, for the purposes of the present case, there was no distinction between rent and land revenue. Justice Chandrasekhara Aiyar explained that if the 1865 Resolution were read as granting rent-free land, the case would fall squarely within the doctrine of estoppel contained in section 115 of the Indian Evidence Act. Even if the resolution were merely understood as a promise that no rent would be charged in the future, the Government would be bound to honour that promise. He further noted that the power to levy assessment is a prerogative of the Government and it is difficult to conceive of a circumstance where such prerogative is lost by adverse possession. Accordingly, a court of equity must intervene to prevent a legal fraud.

Justice Patanjali Sastri, however, dissented. He asserted that the principle established in Ramsden v. Dyson could not override statutory requirements governing the disposition of property or the making of contracts by the Government. He found no basis for estoppel by representation because the Government had not made any factual representation that it now sought to deny. Moreover, he concluded that there was no estoppel by acquiescence, as the facts did not show any deception or a situation in which another party was lured into a trap. Consequently, no right of exemption could be said to arise from either an express or implied contract, nor from equitable doctrines of part-performance or estoppel by acquiescence. He emphasized that the authority to levy land revenue is a prerogative of the Crown and not a component of the Government’s property rights; therefore, the Crown’s prerogative to impose assessment could not be extinguished by adverse possession. The judgment then proceeded to set out the procedural posture of the appeal: it was a civil appeal No. 44 of 1950 in the Civil Appellate Jurisdiction, filed against the judgment and decree of the High Court of Bombay dated 21 February 1947 in First Appeal No. 64 of 1943. The appellant was represented by the Solicitor-General and counsel, while the respondents were represented by counsel. The judgment of Chief Justice Kania, Justice Das and Justice Bose was read by Justice Das, and separate judgments were delivered by Justices Patanjali Sastri and Chandrasekhara Aiyar. Justice Das concluded that this was an…

In this case the appeal was filed against a judgment of a bench of the Bombay High Court consisting of Justices Sen and Dixit, which had been delivered on 2 February 1947. The appeal proceeded under section 18 of the Bombay City Land Revenue Act, 1876, and challenged the order of the Revenue Judge at Bombay dated 27 October 1942. The original suit had been instituted by the respondents, namely the Municipal Corporation of the City of Bombay and Madusudan Damodar Bhat, who was then the Municipal Commissioner for the City of Bombay, and it was directed against the Collector of Bombay. The Court observed that the material facts leading to the litigation were not seriously contested and could be briefly outlined. In 1865 the Government of Bombay resolved to construct an Eastern Boulevard and therefore asked the Corporation of Justices of the Peace for the City of Bombay—the predecessor in title of the present respondent corporation—to vacate its fish and vegetable markets that occupied the land required for the boulevard. The Municipal Commissioner at that time, Mr Arthur Crawford, who gave his name to the present municipal market, applied for the portion of land earmarked for exhibition buildings on the Esplanade so that new markets could be erected, because the existing markets could not be cleared until replacement facilities were provided. On 5 December 1865 the Architectural Improvement Committee reported to the Government that it had no objection to the proposed site of approximately seven acres being “rented to the Municipal Commissioner” and recommended that an annual charge of one pie per square yard be levied to meet the expense of filling the ground, an amount that would have amounted to roughly Rs. 176 per year. Subsequently, on 19 December 1865 the Government issued a resolution stating that it approved the site and authorised its grant, that the plans should be submitted for approval, but that it did not consider it appropriate to impose any rent on the Municipality because the markets, like other public buildings, would be for the benefit of the entire community. In accordance with that resolution possession of the site was handed over to the Municipal Commissioner, although no formal grant was executed as required by Statute 22 & 23 Vic. C. 41. It was not alleged that even if the statutory formalities had been observed the grant contemplated in the resolution would have been invalid for being beyond the Government’s powers. The Municipal Commissioner caused the site to be filled and levelled at the Corporation’s expense, the Government approved the plans, and the Corporation erected the market buildings at considerable cost. The respondent corporation, which was incorporated in 1888 as the successor to the Corporation of the Justices of the Peace for the City of Bombay, continued to occupy the land and the buildings without paying any rent to the Government, in accordance with the 1865 Government resolution.

It was pleaded in paragraph seven of the plaint and was not denied in the written statement that, relying on the grant set out in the Government Resolution and on the terms contained therein, the respondent Municipal Corporation and its predecessor expended large amounts of money to construct and improve the market, and that they had remained in possession of the land and the buildings on it for more than seventy years in accordance with the Resolution, without paying any land revenue or rent to the Government since the grant was made. Evidence showed that, in addition to surrendering the sites on which the earlier markets had stood, the Corporation had spent a total of Rs. 17,65,980-12-1 up to 31 March 1940 on filling and leveling the present site and on erecting and maintaining the new market buildings there. In 1911 a portion of the market site was acquired by the Government for the widening of the Palton Road. When the Collector of Bombay was asked to submit any claim to the compensation awarded by the Land Acquisition Officer, the Superintendent of City Survey, responding on behalf of the Collector, stated that the Government had no claim over that land. Consequently the respondent Corporation received the entire compensation sum and continued to hold the remaining land and the buildings without paying any rent. On 18 March 1938 the appellant Collector of Bombay wrote to the respondent Municipal Commissioner informing him that the Collector proposed to assess the land occupied by Crawford Market under section eight of the Bombay City Land Revenue Act, 1876, and requested certain information to enable the assessment. The Municipal Commissioner replied that the market site had been given to the Municipality as a gift for the purpose of constructing the market and therefore the issue of assessment did not arise. The Collector of Bombay persisted that, notwithstanding the Government Resolution of 1865, the Government retained the right to assess the site. In response, the Mayor of Bombay, on 23 March 1939, sent a letter to the Government stating, inter alia, that the Corporation had been advised that there could be no doubt that the Government intended to make a permanent grant of the land to the Municipality and that the intention was that such a permanent grant should be free of rent and free of land-revenue assessment. The Mayor further explained that the term “rent” had been used in official documents chiefly to refer to the land revenue imposed by the East India Company and later by the Government in Bombay and the Presidency, and that it was therefore clear that the Government’s intention in 1865 was to confer a grant that was permanently exempt from rent and assessment.

The Government maintained that the grant of the land to the Municipality was intended to be free of any form of rent or assessment. The Municipality was placed in possession of the site for a period exceeding seventy years, and throughout that entire time the land was continuously used for the purpose for which the grant had been made. During those seven decades there was no indication from the Government that the grant was anything other than a permanent conveyance exempt from revenue, nor was there any suggestion that the terms of the grant were subject to alteration. The Government rejected these contentions in a letter dated 1 January 1940, stating that the authority to levy assessment belonged to the Crown and that a mere failure to exercise that authority could not extinguish it. The letter further observed that circumstances had changed significantly since the original allotment of the land without ground rent or assessment, noting that the Municipality had been collecting substantial rents by leasing market stalls and was therefore capable of paying an assessment. Accordingly, the Government declared that the levy of assessment could no longer be deferred or ignored. On 31 January 1940 the Collector, acting as appellant, issued an assessment under section 8 of the Bombay Act II of 1876, providing a guarantee for fifty years. The assessment stipulated a payment of Rs 7,500 per annum for the first ten years commencing 1 April 1940, Rs 15,000 per annum for the subsequent ten years, and Rs 30,000 per annum for the remaining thirty years. The assessment was to take effect from 1 April 1940, with the first instalment due on 1 April 1941. In response, the Municipality instituted suit before the Revenue Judge pursuant to the Bombay City Land Revenue Act, 1876, seeking, inter alia, a declaration that the Government’s right to assess the land was limited, that the Municipality was entitled to hold the land forever without payment of any assessment, and that the Government possessed no authority to levy assessment upon the premises. The suit also asked that the assessment be declared ultra vires, invalid, and set aside. By judgment dated 27 October 1942, the Revenue Judge dismissed the suit with costs. The Municipality appealed the decision to the High Court. Before the High Court, as before this Court, two conclusions of the Revenue Judge were not contested: first, that the Government Resolution of 1865 was, as a matter of law, either an invalid grant or an ineffective contract and therefore could not, by itself, create any interest in the land for the Municipality; and second, that the Crown’s prerogative right to levy assessment was not subject to the ordinary presumption that a property right, long unasserted or unexercised, had been relinquished.

The Court observed that the Government’s resolution of 1865 could not confer any interest in the land to the respondent Corporation because the disposition failed to comply with the formalities required by Statute 22 and 23 of the Victoria Code 41, which govern the transfer of all real and personal estate vested in the Crown under Statute 21 and 22 of the Victoria Code 106. In addition, the Court noted that the Crown’s authority to levy an assessment on the property was a prerogative right, and the ordinary presumption that a right to property, if not asserted or exercised for a long period, has been surrendered, did not apply to that prerogative.

The High Court had accepted the argument that the Government had lost its right to impose any assessment on the land in question. That argument was based on the equity that arose from the facts and circumstances of the case, relying on the principle established in Ramsden v. Dyson (1866) L.R. 1 H.L. 129, a principle later adopted by Jenkins C.J. in The Municipal Corporation of the City of Bombay v. The Secretary of State (1905) I.L.R. 29 Bom. 580, and which, according to authority, was binding on the Crown. After analysing the earlier cases of Dadoba Janardhan v. The Collector of Bombay (1901) I.L.R. 25 Bom. 714 and Jethabhoy Ruttonsey v. The Collector of Bombay (1901) I.L.R. 25 Bom. 752, the High Court stated that a reading of the Government Resolution dated 19 December 1865 justified, within the meaning of the rule in Ramsden v. Dyson, the conclusion that an expectation had been created or encouraged by the landlord that the Municipality would obtain possession of the land rent-free. The High Court explained that the landlord had consented to the Municipality’s taking possession, and, on that expectation, with the landlord’s knowledge and without objection, the Municipality had laid out money upon the land.

The High Court further held that the equity articulated in Ramsden v. Dyson was not, as Jenkins C.J. had pointed out in the Municipal Corporation case, dependent on the validity of the disposition. Consequently, the equity could be asserted even where the statutory formalities required for the disposition of the property had not been observed or performed. The Court explained that this equity created a right for the respondent Corporation that limited the Government’s right to assess, because a specific limit to assessment had been established and preserved within the meaning of section 8 of the Bombay Act II of 1876. That limitation, the Court said, displaced the Government’s authority to assess the land in question. In support of this view, the High Court relied on the decision in Kamalavahooji Maharaj v. The Collector of Bombay (1937) 39 Bom. L.R. 1046, arguing that section 8 of the Bombay Act II of 1876 would apply even where the specific limit was nil.

In that case the High Court set aside the decision of the learned Revenue Judge, allowed the appeal, and issued a decree that declared the rights of the respondent Municipal Corporation and ordered that the costs of both courts be awarded to it. The Collector of Bombay then appealed that judgment to the Federal Court, and the present appeal was now before this Court. Considerable debate had arisen before this Court concerning the exact reach and operation of the equitable principle articulated in Ramsden v. Dyson. The Court examined whether that principle should be applied to the facts of the present dispute, whether the facts of this case invoked the equity created in Ramsden v. Dyson or rather the equity recognized in Maddison v. Alderson and Walsh v. Lonsdale, and whether, in view of the Privy Council decision in Ariff v. Jadunath, the equity in Ramsden v. Dyson could override the formalities prescribed in the Victorian statute cited earlier any more than the equity in Maddison v. Alderson could overcome the requirements of the Transfer of Property Act. The Court also considered whether the earlier decision of the Municipal Corporation of the City of Bombay v. The Secretary of State needed to be revisited in light of the ruling in Ariff’s case. The Court ultimately concluded that it was unnecessary to address or express an opinion on any of those detailed questions, because the appeal could be resolved on a narrower and more concise ground. The Government asserted that the assessment of the lands was governed by section 8 of the Bombay Act II of 1876, which reads: “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 Government to assess, the assessment shall be fixed at the discretion of the Collector subject to the control of the Provincial 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 this Court was whether, based on the facts of the case, the respondent Corporation had successfully established a right that limited the Government’s authority to assess the land because a specific limit to assessment had been created and preserved. The Court noted that there was no dispute that, due to the failure to comply with the statutory formalities, the Government Resolution of 1865 was not an effective conveyance of title in the land to the respondent Corporation.

The Court observed that the Government Resolution of 1865 did not actually transfer a legal title to the respondent Corporation and therefore could not be enforced as a contract (1) (1931) L.R. 58 I.A. 91. (2) (1905) I.L.R. 29 Bom. 580. On the contrary, there was no dispute that both the Government and the Corporation intended that the Resolution would create a grant of the land to the Corporation, and that the Government expressly undertook not to demand any rent. Acting on that understanding, the predecessor in title of the respondent Corporation entered into possession of the disputed land pursuant to the 1865 Resolution, and, relying upon the terms of that Resolution, the Corporation and its predecessor expended considerable sums of money in leveling the site, constructing market buildings, and maintaining those structures for more than seventy years.

In view of these facts, the Court considered the legal position of the respondent Corporation and its predecessor in relation to the land. It held that they were in possession of land for which they possessed no legal title at all. Consequently, they occupied the land under the color of an invalid grant that purported to give them perpetual, rent-free possession for the purpose of a market. Because the possession was not founded upon any valid title, it was prima facie adverse to the Government’s legal title as owner from the moment the predecessor took possession under the void grant. The possession, however, continued openly, as of right and without interruption for over seventy years, thereby giving the respondent Corporation the limited title it had been asserting throughout that period – namely, the right to hold the land perpetually, free of rent, but only for the purpose of a market as stipulated in the Government Resolution of 1865.

The Court further explained that the immunity from rent was an integral and inseverable incident of the title, just as the obligation to use the land exclusively for market purposes was. The respondent did not acquire, by adverse possession, the Government’s prerogative right to levy assessment. Rather, what the corporation obtained was a legal right to possess the land perpetually, rent-free, for the specific purpose of erecting and maintaining a market, as if a valid grant had been made. This acquired right necessarily included an immunity from rent, which consequently constituted a right that limited the Government’s power to assess the land beyond the specific limit preserved by the 1865 Resolution.

The Court explained that the limitation in question related to the Government’s authority to levy an assessment that exceeded the specific ceiling fixed and preserved by the Government Resolution, as defined in section 8 of the Bombay Act II of 1876. It noted that the Privy Council, in the earlier decision of Karnalavahooji Maharaj v. Collector of Bombay, had observed that the language of the section appeared more suited to a restriction on the right to assess rather than to a complete exemption from assessment. However, the Court held that such an interpretation would fail to protect cases of total exemption, which the Privy Council itself had acknowledged and safeguarded under the same provision. No argument had been presented before the Court that cases of total exemption did not exist or that they were protected by any other statutory provision. Consequently, the Court agreed with the High Court’s conclusion that section 8 also encompassed situations where the assessment was wholly waived, meaning that the “specific limit” could effectively be zero for the purposes of the Act.

The Court then turned to the contention raised by the appellant that, even if the Government were barred from increasing the “rent” under the terms of the Government Resolution, it could not be said to have relinquished its sovereign power to assess “land revenue”. This argument was framed as a distinction between “rent” and “land revenue”. The Court observed that this issue had never been raised in the written statement, had never formed the subject of any issue at trial, and had not been placed before either of the lower courts. Moreover, a letter dated 22 March 1939 from the Mayor of Bombay, which had been cited, plainly stated that the term “rent” was used in official documents to refer to the land revenue imposed by the East India Company and later by the Government in Bombay and the Presidency. The Government’s reply of 24 January 1940 did not deny this assertion. Accordingly, the Court held that the appellant could not now introduce the alleged distinction, and for the purposes of this case the word “rent” in the 1865 Government Resolution must be understood as synonymous with, or inclusive of, “land revenue”. In light of the foregoing reasoning, the Court affirmed the High Court’s decision, dismissed the appeal with costs, and ordered the relief accordingly. A dissenting judge expressed a contrary view and indicated that the appeal should be allowed, without repeating the facts already set out in the majority judgment.

In this appeal, the Provincial Government of Bombay claimed that land revenue should be levied on a parcel of land on which the predecessors of the respondent Municipal Corporation had constructed the buildings known as Crawford Market in the City of Bombay. Both parties agreed that, unless the respondent could establish a specific limitation on the provincial government’s assessment power, the land would be liable to assessment under section eight of the Bombay City Land Revenue Act, No II of 1876. The statute provides that the assessment must not exceed a defined specific limit if the respondent can prove a “right in limitation of the right of the Provincial Government in consequence of a specific limit to assessment having been established and preserved.” Earlier authorities, including Goswamini Shri Kamala-vahooji v. Collector of Bombay (1), have interpreted those words to describe a total exemption from assessment, the specific limit in such a case being nil. Consequently, the sole issue before the Court was whether the respondent had succeeded in establishing a right to such exemption. The resolution issued by the Government on 19 December 1865 authorised the grant of the land to the Municipality without any rent being charged, stating that the market would operate like other buildings for the benefit of the whole community. That resolution, however, did not purport to convey title to the land nor did it expressly confer a right to exemption from land revenue. No formal instrument was executed to grant the land or to exempt it from assessment, and the resolution could not be treated as a valid disposition of property or an enforceable contract because it failed to satisfy the formalities required by the statutes of 22 & 23 Vic. C. 41. As observed by Chief Justice Jenkins in Municipal Corporation of the City of Bombay v. The Secretary of State (2), all land in British India had been vested in the Crown by the enactment of 21 & 22 Vic. C. 106, and consequently the Governor-in-Council in Bombay could only dispose of such property or enter into contracts on the Crown’s behalf pursuant to the powers conferred under 22 & 23 Vic. C. 41, powers that could be exercised only after compliance with the prescribed formalities. The learned judges of the High Court, while acknowledging the difficulty this created for the respondent in establishing a legal right to exemption, concluded that the conduct of the Provincial Government—allowing and indeed encouraging the respondent to erect the market buildings at considerable expense on the basis of the promise not to levy land revenue contained in the 1865 resolution—engaged the equitable principle articulated in Ramsden v. Dyson. On that basis, they held that the respondent was precluded from assessing the land, treating the equitable consideration as a “right” that limited the Provincial Government’s power to assess.

In this case, the Court noted that earlier authorities such as L.R. 64 I.A. 334, L.R. 1 H.L. 129 (1866) and I.L.R. 29 Bom. 580 described equity as a “right” that limited the Provincial Government’s power to assess, but the Court could not adopt that view. It expressed the opinion that there was no occasion to apply the principle laid down in Ramsden v. Dyson. The Court observed that the Privy Council had explained the decision in Ariff v. Jadunath, holding that the case rested on the equitable doctrine of part performance, which the Lords said could not be used to nullify the express provisions of the Transfer of Property Act relating to the creation of leases. The Privy Council quoted: “Whether an English equitable doctrine should, in any case, be applied so as to modify the effect of an Indian statute may well be doubted; but that an English equitable doctrine, affecting the provisions of an English statute … should be applied, by analogy, to such a statute as the Transfer of Property Act and with such a result as to create without any writing an interest which the statute says can only be created by means of a registered instrument, appears to … be impossible.” After referring to Lord Kingsdown’s judgment, the Privy Council remarked that Lord Kingsdown was dealing with an express verbal contract or something equivalent and did not mention estoppel. They indicated that Lord Kingsdown was addressing merely the equitable doctrine of part performance, a view confirmed by his reference to Gregory v. Mighall (1811) 18 Ves. 328. The Privy Council added that even if Lord Kingsdown’s language were intended to cover matters beyond part performance, any equitable enforcement of a title against the legal owner must still rest on an express or implied contract or on a factual statement that creates an estoppel. In the later case Mian Pir Bux v. Sardar Mahorned, the Privy Council reiterated that English equitable doctrines did not provide a valid defence in an Indian ejectment action based on title. After considering the Privy Council decisions that clarified the principles underlying Ramsden v. Dyson and Maddison v. Alderson, the Court concluded that those principles could not be applied to the present facts. The Court held that they could not prevail over statutory provisions concerning the disposition of property or the making of contracts by the Government, just as they could not override the Transfer of Property Act’s requirement that certain transactions be effected by a registered instrument.

The Court explained that the Transfer of Property Act obliges certain transactions to be effected only by duly registered instruments. In the present case there was no ground for an estoppel by representation because the Government had never made any factual representation that it later attempted to deny. Nor could an estoppel by acquiescence be founded on the facts, since both the Government and the Municipality were fully aware of the circumstances and neither party was misled or induced into error. The Court noted that there was no deception or conduct that would “let another run into a trap,” quoting Cotton L.J. in Russell v. Watts.

The Court observed that the parties’ conduct was based on an express agreement recorded in the Government Resolution dated 19 December 1865. That resolution authorised a grant of the land free of rent, a term that in the context also encompassed freedom from revenue liability. Consequently, the Court held that no implied contract could be inferred from the parties’ actions. Unfortunately for the respondent, the express agreement could not be enforced because it failed to comply with the statutory formalities prescribed for such transactions, even though both sides acted in accordance with the resolution.

Regarding the respondent’s title to the land, the Court acknowledged that the title appeared to have become perfected by the mere lapse of time. However, the Court underscored that no right of exemption from assessment or revenue had been established on the basis of either an express contract, an implied contract, or any equitable principle such as part performance or estoppel by acquiescence. The Court cited the authorities (1) (1878) 6 I.A. 388, (2) (1866) L.R. 1 H.L. 129, (3) (1883) 8 App. Cas. 467, and (4) (1884) 25 Ch. D. 559 to support this conclusion.

The respondent later argued that, by analogy with cases where a limited interest in land could be acquired through adverse possession after the statutory period, its possession of the disputed land without payment of any quit rent or revenue for more than seventy years, known to the Government, had perfected a title free of any revenue liability. The Court found this argument unpersuasive. It stressed that the respondent was not seeking a limited interest but was claiming full ownership together with a complete exemption from assessment. The Government’s position was confirmed by a letter dated 26 June 1921 addressed to the Land Acquisition Officer for the City of Bombay, in which the Government expressly stated that no Government claim was made over the land because the land “vests in the Municipality.” The Court also noted that the Government made no claim to any portion of the compensation on the basis of a right of resumption, as the 1865 resolution contained no such reservation.

Accordingly, the Court concluded that throughout the period of alleged adverse possession, the Municipality regarded itself, and was regarded by the Government, as the absolute owner of the land, enjoying the additional right of exemption from land-revenue assessment. This understanding led to the result that the Government’s

The Court observed that the right to the land which was the subject of the alleged adverse possession was extinguished under section twenty-eight of the Limitation Act. However, the Court clarified that the authority to levy land revenue was not part of the Government’s proprietary right in the land. Instead, that authority was a prerogative of the Crown, which had been placed on a statutory footing by the Bombay City Land Revenue Act of 1876. The Court explained that the power to impose assessment could be exercised only against land that belonged to another, the so-called “superior holder,” because the very claim to levy assessment implied recognition of another’s ownership. Consequently, the Court found it difficult to accept that an adverse possession of the land could give the respondent a right to exemption from land-revenue assessment.

The Court rejected the contention that the Government had intended to grant the land free of quit-rent or revenue and that the respondent’s adverse possession had perfected a title incorporating a covenant of exemption. The Court described this argument as fallacious. It held that had the Government formally executed an instrument expressing its intention and complied with the required formalities, the respondent would have obtained a valid title to the property together with a contractual obligation on the Government not to assess revenue, supported by consideration. However, the Court noted that the Government’s promise not to charge land revenue was unenforceable from the beginning, and that the respondent’s adverse possession, even though accompanied by a claim to exemption, could not extinguish the Crown’s prerogative right to impose assessment.

The Court then referred to a similar issue that arose in the case of Goswamini Shri Kamala Vahooji v. Collector of Bombay (1937) 64 I.A. 334. In that case the Government admitted that no land revenue had ever been demanded for land that the occupiers had enjoyed for more than a century without payment. The Government argued that such long-standing enjoyment should give rise to a presumption of a lost grant of the land free from revenue liability. The Court rejected this argument, quoting the learned judges: “The appellant submits that in the circumstances a lost grant should be presumed, and that this lost grant should be presumed to contain an exemption from land revenue or a ‘right in limitation of the right of Government to assess the property.’ The law may presume the existence of a grant which has been lost where it is sought to disturb a person in the enjoyment of right which he and his predecessors have immemorially enjoyed, but it is a different thing to seek to presume that the.” The Court concluded that the presumption of a lost grant could not be extended to include an exemption from land revenue, and that such exemption was collateral to title, not part of the title itself.

The Court observed that the Crown could not rely on an alleged lost grant as a basis for claiming that it had relinquished its prerogative power to levy taxes on the property of its subjects, and the Court held that such a contention could not be sustained. The judgment clarified that an exemption from land revenue was not an intrinsic element of the legal title to land; rather, it was a collateral benefit that did not form part of the ownership itself. Consequently, the Court reasoned that if a presumed lost grant could not be used to confer such an exemption, then a title derived from adverse possession could not either. On this basis, the Court permitted the appeal but declined to make any specific order regarding the allocation of costs.

Justice Chandrasekhara Aiyer, having reviewed the draft opinion prepared by his colleague Justice Das, concurred with the conclusion reached in that opinion and added further observations on several points raised during the hearing. He first noted that the term “rent” appearing in paragraph two of the Government Resolution dated 19 December 1865 must be understood to mean “assessment” in the context of that document. While the word “rent” is ordinarily employed in landlord-tenant relations, the Justice emphasized that the Government, in that resolution, was disposing of land that was vested in the Crown in favour of the Municipal Corporation of Bombay. Accordingly, the reference to rent was intended not merely to address a landlord’s right to collect a lease payment but also to reflect the Crown’s prerogative authority to impose an assessment. He explained that the land was earmarked for the construction of markets that would serve the public at large, and therefore the Government’s intention was that the land should not be subject to a rent charge. This purpose, he observed, related more closely to the Crown’s prerogative power to assess revenue than to a conventional landlord-tenant rent. The Justice further explained that, traditionally, a “rent-free grant” or an “inam” issued by the Government was understood to convey relief from land revenue or assessment. The Resolution under consideration authorised the grant of the site but no written instrument complying with the statutory formalities then in force appears to have been executed. A portion of the site had been required for the erection of stables, and the question of title to that portion had previously been examined and decided in the case of The Municipal Corporation of the City of Bombay v. The Secretary of State for India in Council, where the Government had served a notice to quit and had instituted a suit for rent on the alleged tenancy. The Justice regarded that earlier decision as part of the same transaction now before the Court and concluded that no valid grant had ever been made. Nevertheless, after the authorised grant, the Corporation entered into possession of the land and proceeded to construct the Crawford Market at considerable expense. Although the original grant was invalid, the Justice observed that the Corporation had, by virtue of uninterrupted possession for a period exceeding sixty years, acquired title to the market site by adverse possession. He contrasted this outcome with the situation concerning the stable site addressed in the earlier Bombay decision, noting that the adjudication of title in that case did not result in a comparable acquisition by adverse possession.

In this case the Court observed that the Crawford Market site had been occupied by the Municipal Corporation for more than sixty years under a grant that was later declared invalid, and that the grant expressly stipulated that no rent should be charged. The Court stated that it was not required to consider any claim for ejectment or any determination of tenancy. It then examined whether the Corporation’s long-standing, rent-free possession could have caused the Government’s right to levy an assessment on the land to be lost by adverse possession. The Court found it difficult to answer that question affirmatively. It explained that, before a right could be said to be acquired or lost by adverse possession, the right must first have been the subject of possession by a person without title against the person who possessed the rightful title. The authority to levy assessment was characterised as a prerogative right of the Government, and the Court held that it was hard to imagine a situation in which such a governmental prerogative could be extinguished by adverse possession. While acknowledging that a limited right, such as that of a mortgagee, lessee or permanent tenant, might be possessed adversely, the Court stressed that the possessor must have exercised the right in a manner contrary to the claim of the true owner. The Court further noted that it was unnecessary to explore the broader issue of whether the denial of the assessment right together with possession of the property for more than sixty years would negate that right. It was sufficient to observe that no assessment had been levied on the land before March 1938 and that the denial of assessment occurred only thereafter. Nevertheless, the Court said, this fact did not decide the case in favour of the appellant because an equitable consideration remained, a point on which the appellant had failed in the lower court. The Court then turned to the representation made by the Government when the Architectural Improvement Committee proposed a nominal rent, stating that no rent should be charged because the markets to be built would benefit the entire community. The Court held that this representation was made at the time the site was granted and possession taken, and that it was not essential to examine in great detail how far the Corporation considered this representation when it accepted the grant. The Court noted that it was possible the Corporation would have accepted the site even with a nominal rent, but it was equally possible that, had the Corporation known the rent to be a form of assessment liable to periodic enhancement, it might have insisted on obtaining a site free from such assessment in exchange for the land surrendered for the eastern Boulevard. The plaint’s allegation that the Corporation acted on the terms contained in the grant was not denied by the Government, and the Court concluded that the invalidity of the grant did not erase the existence of the representation that the Corporation relied upon.

In this case, the Court observed that the existence of the representation that the Corporation relied upon cannot be dismissed. Even if the plaintiff had filed an ejectment suit within the sixty-year limitation period and the Corporation had been unable to defend such a claim, the authority to impose an assessment might have been viewed differently. Nevertheless, the Court stated that it would have been within the competence of a court of equity to award compensation for the Corporation’s expenditures and to preserve its possession pending determination. The Court noted that Lord Kingsdown discussed this point in Ramsden v. Dyson (1). The Court then held that the Corporation now stands on considerably stronger footing because it has acquired a legal title to the land that the Government is unable to overturn or contest. This title arose by operation of the law of limitation and is unrelated to any act of the Corporation that could have nullified the representation concerning non-liability to assessment. The Court further held that the invalidity of the grant does not erase the representation. The Court asked whether the Government may now repudiate the representation, and if it does, whether that would amount to permitting a form of legal fraud that equity must prevent. If the resolution is read to indicate that the grant conveyed rent-free land, the matter falls squarely within the doctrine of estoppel set out in section 115 of the Indian Evidence Act. Even if the representation was merely a promise that no rent would be levied in the future, the Court concluded that the Government is bound by that promise in the present circumstances. The Court explained that it is irrelevant whether the applicable principle is the equity recognized in Ramsden’s case (1) or another form of equity; the essential requirement is that courts must administer justice by fostering honesty and good faith to the extent possible. Citing Jenkins C.J. in Dadoba Janardhan’s case (2), the Court observed that any other conclusion would be opposed to reason, probability and fairness. The Court further held that the Privy Council decision in Ariff v. Jadunath (3) does not apply, because the doctrine of part performance (1) (1866) L.R. 1 H.L. 129, as explained in Dadoba Janardan v. The Collector of Bombay (1901) I.L.R. 25 Born. 714 (2), is not invoked here. In that earlier case, part performance served to vest title only when a person pursued or complied with certain legal formalities. Here, the Court reiterated that the Corporation became the full and absolute owner of the site upon the lapse of fifty years from the date of the grant. Accordingly, the appeal was dismissed.

The proceedings record indicates that counsel for the respondent was present and formally appeared on behalf of the respondent. The court’s note specifies that the counsel’s identity was entered in the official record, although the name itself is not reproduced here. This appearance signified that the respondent was duly represented by legal counsel throughout the hearing. The counsel for the respondent participated in the session, responded to the court’s inquiries, and was listed among the parties’ representatives. The appearance of counsel for the respondent fulfilled the procedural requirement that each side be represented by an authorized advocate or agent during the adjudication. By being present, the counsel for the respondent ensured that the respondent’s position could be articulated and defended in accordance with the court’s procedural rules. The record therefore reflects that the respondent’s legal interests were managed by counsel, whose appearance was formally noted in the case docket.