The Collector Of Bombay vs Nusserwanji Rattanji Mistri and Others

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

Court: supreme-court

Case Number: Civil Appeal No. 74 of 1952

Decision Date: 28 February 1955

Coram: Vivian Bose, B. Jagannadhadas, Bhuvneshwar P. Sinha, T.L. Venkatarama Ayyar

The case titled The Collector of Bombay versus Nusserwanji Rattanji Mistri and Others was decided on the twenty-eighth day of February, 1955. The judgment was delivered by a bench consisting of Justice Vivian Bose, Justice B. Jagannadhadas, and Justice Bhuvneshwar P. Sinha. The petition was presented by the Collector of Bombay, who acted as the appellant, while the respondents were Nusserwanji Rattanji Mistri together with other parties. The citation for this decision appears in the 1955 Annual Report of Indian Reports at page 298 and also as 1955 Supreme Court Reporter (1) 1311. The statutory provisions referred to in the judgment include the Land Revenue Assessment – Bombay Government’s authority to levy – Foras tenure – Incidents – Foras Land Act (Bombay Act VI of 1851), section two; the effect of land acquisition under the Land Acquisition Act (Bombay Act VI of 1857), section eight; the Crown Grants Act (Bombay Act XV of 1857), section three; and the scope of the Bombay City Land Revenue Act (Bombay Act II of 1876). The headnote summarizes the factual matrix: in the island of Bombay certain lands were held under a tenure known as “Foras”. Under section two of the Bombay Act of 1851 the occupants were entitled to hold the lands provided they paid the revenue that was then payable. Between the years 1864 and 1867 the Government of India acquired those lands pursuant to the Land Acquisition Act of 1857. On the twenty-second day of November, 1938 the Governor-General sold the acquired lands to certain persons, and the present respondents claimed title under that sale. In April 1942 the appellant, relying on the Bombay City Land Revenue Act of 1876, issued notices to the respondents proposing to levy assessment on the lands at the rates specified in the notice.

The respondents responded by instituting two separate suits challenging the appellant’s authority to assess revenue on the lands. Their contention was threefold. First, they argued that under the Foras Land Act the occupants had acquired a right to hold the lands on payment of revenue not exceeding the amount payable at the time of their occupation. Second, they maintained that the right to levy any assessment, even the stated amount, was extinguished when the Government acquired the lands under the Land Acquisition Act, thereby removing the government’s power to assess revenue. Third, they claimed that the Governor-General, by conveying the lands absolutely in the deed dated twenty-second November 1938, had transferred the lands to them free of revenue liability, and that even if any revenue were payable, it could not exceed the amount prescribed under the Foras Land Act. The Court held that, firstly, the Foras Land Act of 1851 conferred upon the occupants a specific right to hold the land on payment of assessment not exceeding the amount then payable. Secondly, the government’s power to levy assessment was not part of the land acquisition proceedings; those proceedings only extinguished the occupants’ rights and vested the land absolutely in the government. Thirdly, an absolute sale by the Crown does not automatically imply that the land is conveyed free of revenue, because the construction of the grant depends on the terms of the deed, and no implication can be drawn beyond what is expressly granted. Fourthly, the Court observed that the Foras tenure became extinct upon acquisition of the lands under the Land Acquisition Act and could not be revived when the lands were later sold on twenty-second November 1938; consequently, the respondents could not rely on a right to pay assessment at the rate prescribed by the Foras Land Act. The judgment further referred to earlier authorities such as Goswami Shri Kamala Vahooji v. Collector of Bombay ([1937] L.R. 64 I.A. 334), Shapurji Jivanji v. The Collector of Bombay ([1885] I.L.E. 9 Bom. 483, 488), Naoroji Beramji v. Rogers (4 Bom. H.C.R. 1), Deputy Collector, Calicut Division v. Aiyavu Pillay ([1911] 9 I.C. 341), Dadoba v. Collector of Bombay ([1901] I.L.R. 25 Bom. 714), Thakur Jagannoth Baksh Singh v. The United Provinces ([1946] F.L.J. 88), and Collector of Bombay v. Municipal Corporation of the City of Bombay.

The Court observed that the matter required a determination of the exact rights that had been granted under the deed. It held that Section 3 of the Crown Grants Act (XV of 1895), which provides that “all provisions, restrictions, conditions and limitations … shall take effect according to their tenor,” could not be applied to the question of liability to pay revenue. The Court further held that the Foras tenure was extinguished when the lands were acquired under the Land Acquisition proceedings and that this extinguishment could not be revived by the later sale of the lands on 22-11-1938. Consequently, the respondents could not claim a right to pay assessment only at the rate that had previously been payable under the Foras Land Act. In reaching this conclusion, the Court referred to the authorities Goswammi Shri Kamala Vahooji v. Collector of Bombay ([1937] L.R. 64 I.A. 334), Shapurji Jivanji v. Collector of Bombay ([1885] I.L.E. 9 Bom. 483, 488), Naoroji Beramji v. Rogers (4 Bom. H.C.R. 1), Deputy Collector, Calicut Division v. Aiyavu Pillay ([1911] 9 I.C. 341), Dadoba v. Collector of Bombay ([1901] I.L.R. 25 Bom. 714), Thakur Jagannoth Baksh Singh v. The United Provinces ([1946] F.L.J. 88) and Collector of Bombay v. Municipal Corporation of the City of Bombay and others ([1952] S.C.R. 43).

The judgment was rendered in civil appellate jurisdiction as Civil Appeal No. 74 of 1952, filed by special leave against the judgment and decree dated 10 November 1948 of the High Court of Judicature at Bombay. That judgment had arisen from Original Decree No. 274 of 1945, which itself followed the decree of 17 March 1945 of the Court of Revenue Judge, Bombay, in Suits Nos. 7 and 23 of 1943. The appellant was represented by the Solicitor-General for India, while the respondents were represented by the Attorney-General for India and counsel. The judgment was delivered on 28 February 1955 by Justice Venkatarama Ayyar. The point for decision concerned whether certain lands situated within the City of Bombay were liable to assessment under the Bombay City Land Revenue Act No. II of 1876. These lands had originally been classified as Foras lands, and the occupants’ rights had been settled by Bombay Act No. VI of 1851, known as the Foras Act. The precise extent of those rights was contested. Between 1864 and 1867 the Government had acquired the lands for the B.B.C.I. Railway under the Land Acquisition Act No. VI of 1857. On 22-11-1938, when the railway no longer required the lands, they were sold by the Governor-General to Lady Pochkhanawalla and others as joint tenants under a deed (Exhibit A). On 28-3-1939 the surviving purchaser conveyed the lands in trust under Exhibit B, appointing the respondents as trustees. In April 1942 the appellant, acting under the Bombay City Land Revenue Act, issued notices to the respondents proposing to levy revenue assessment on the lands.

In April 1942 the Collector issued notices proposing to levy revenue assessment on the lands at the rates specified in the notices and invited the occupants to appear and defend their rights. The occupants responded by denying that the Collector possessed any authority to assess the lands for revenue. They subsequently instituted two separate suits before the Revenue Judge, seeking a judicial declaration of their ownership rights. In the plaints they asserted that, according to the Foras Act, the maximum assessment that could be levied on the lands was nine reas per burga and that the Government had no power to increase that amount. They further contended that the land-acquisition proceedings carried out between 1864 and 1867 had extinguished the State’s right to levy even that limited assessment. Moreover, they argued that because the properties had been purchased outright from the Governor-General under Exhibit A, the purchasers were entitled to hold them without any liability to pay revenue. Consequently, they prayed that the Court declare that the Government had no right to levy any assessment on the lands, or, in the alternative, that any assessment could not exceed the amount prescribed under Bombay Act No. VI of 1851. The Collector contested the suit. The Revenue Judge held that the acquisition proceedings of 1864-1867 had caused the lands, while vested in the Government, to be freed from any liability to pay assessment. He further found that when the Governor-General transferred the lands under Exhibit A without reserving any right to assess them, the purchasers acquired the lands free of any revenue liability. Accordingly, the Judge granted a declaration that the Collector had no authority to levy assessment and that the notices issued under Act No. II of 1876 were illegal. The respondents appealed this decision to the High Court of Bombay. The High Court, through Chief Justice Chagla and a concurring judgment of Justice Bhagwati, affirmed that Bombay Act No. VI of 1851 imposed a specific ceiling on the Government’s power to assess the lands in question. It further held that, by reason of the earlier acquisition proceedings, the Provincial Government’s right to levy assessment—even within the limits set by Act No. VI of 1851—had been extinguished. Finally, the Court concluded that the transfer of the lands by the Central Government to Lady Pochkhanawalla and others resulted in the lands being received as revenue-free. The appeal was dismissed, and the decision of the Revenue Judge stood.

The present appeal, granted by special leave, challenges that decision. The Collector’s statutory authority to levy assessment on the lands is derived from section 8 of Bombay Act No. 11 of 1876, which provides: “It shall be the duty of the Collector, subject to the orders of Government, to fix and to levy the assessment for land revenue. When there is no right on the part of the superior holder in limitation of the right of Government to assess, the assessment shall be fixed at the discretion of the Collector subject to the control of Government. When there is a right on the part of the superior holder in limitation of the right of Government, in consequence of a specific limit to assessment having been established and….” The Collector issued the 1942 notices on the basis that the respondents were “superior holders” as defined in the Act. In their replies and the plaints, the respondents did not challenge their status as superior holders; instead, they argued, invoking section 8, that they possessed a specific statutory right that limited the Government’s power to assess the lands. The core dispute before the lower courts was whether the respondents had successfully established that specific limiting right. No argument was raised that they were not superior holders, which would have barred any assessment under section 8. In the present proceedings, the Attorney-General, for the first time, contended that the Collector’s proceedings under section 8 were incompetent because that provision applied only to lands held by superior holders, and that the definition of “superior holder” in section 3(4) should be interpreted in a particular way.

In this case, the statutory provision stated that “preserved, the assessment shall not exceed such specific limit”. The Collector relied on the premise that the respondents were “superior holders” as defined in the Act, and therefore issued notices to them in April 1942. In the respondents’ reply notices and in their plaints, they did not dispute that they were superior holders; instead they argued, invoking section 8, that they possessed a specific right that limited the Government’s authority to assess the lands. The lower courts had to decide whether the respondents had established such a limiting right. No party argued that the respondents were not superior holders within the meaning of the Act, and consequently no argument was made that section 8 could not be used to impose an assessment. At the stage of argument before this Court, the Attorney-General attempted for the first time to contend that the Collector’s proceedings under section 8 were invalid because that section applied only to lands held by superior holders. He further argued that the definition of “superior holder” in section 3(4)—which describes “the person having the highest title under the Provincial Government to any land in the City of Bombay”—should be read to include only persons who hold a derivative tenure from the Government. Accordingly, persons who acquired land by an outright sale from the Government could not be described as superior holders, and therefore the respondents’ lands fell outside the operation of section 8. The Solicitor General, on behalf of the appellant, objected to allowing this question to be raised at this point, reasoning that it would require an inquiry into both factual and legal matters. Those matters included whether owners of lands in the City of Bombay held them as superior holders, whether under Indian law the payment made by a land occupier was characterised as rent or revenue, whether the Crown retained a prerogative right to assess lands in the Presidency towns of Calcutta, Bombay and Madras, and several other issues for which the record did not contain sufficient material. The Court upheld the Solicitor General’s objection. Because the respondents, at every stage, maintained that they were exempt from assessment on the basis of section 8, the Court found it inappropriate to permit them to change their position now and adopt a stance wholly inconsistent with their earlier submissions. Allowing such a reversal would necessitate an investigation of facts that had not been made. Consequently, the Court proceeded on the assumption that the respondents are “superior holders” as defined in section 3(4) of Act No. 11 of 1876, and that their rights must be determined in accordance with section 8 of that Act. In interpreting section 8, the Court referred to the Privy Council decision in Goswamini’ Shri Kamala Vahooji v. Collector of Bombay (1), which set out two propositions: first, although the wording of the section more suitably applies when the dispute concerns the amount of assessment, the question of whether the right to levy assessment exists is not itself contested; second, a superior holder may plead and prove that the State has no right to levy any assessment, and the burden of establishing such a limitation rests on the person who raises it.

In the matter before the Court, it was observed that although the parties disagreed only about the amount of assessment payable, the fundamental right of the State to levy an assessment was not itself contested. Consequently, the Court held that a superior holder, as defined in section 3(4) of Act No. 11 of 1876, could nevertheless raise a defence that the State possessed no authority to levy any assessment at all, provided that the person asserting such a limitation could demonstrate it with clear and unequivocal evidence. Accordingly, the respondents were permitted to contend that the lands in question were entirely exempt from revenue demands, but the burden of proof lay heavily upon them. The learned Attorney-General attempted to establish a limitation on the Collector’s power to assess the lands on three separate bases: firstly, the Foras Act No. VI of 1851; secondly, land-acquisition proceedings conducted under Act No. VI of 1857; and thirdly, the sale deed identified as Exhibit A.

To interpret the Foras Act correctly, the Court found it necessary to consider the historical background of the lands to which the Act applied. The Island of Bombay had formerly been part of the Portuguese possessions in India. In 1661, when Princess Infant Catherine married King Charles II of England, the island was transferred by the King of Portugal to the British Crown as part of the dowry, and a Royal Charter dated 27 March 1668 subsequently granted the island to the East India Company. At that time the island comprised only the Fort and the town; everything beyond the town walls consisted largely of rock and marsh that became a cluster of islands at high tide, as recorded in Shapurji Jivanji v. Collector of Bombay (1). According to the reports of Warden on the Landed Tenures in Bombay and Le Mesurier on the Foras lands, during the eighteenth century the East India Company began reclaiming these islands, inviting occupants to cultivate the newly created land. Initially the occupants paid no assessment; later they were charged at favourable rates, and these payments were termed “Foras.” The term “Foras” was explained by Westropp, J., in his note to Naoroji Beramji v. Rogers (1), stating that it derived from the Portuguese word “fora” (Latin “foras,” from “foris,” meaning “outside”) and signified rent or revenue derived from outlying lands. Under Portuguese rule the entire island fell under this denomination because it was a peripheral dependency of Bassein. Over time, however, the expression was mostly, though not exclusively, applied to the reclaimed salt-batty ground and other waste lands situated outside the Fort, the Native Town, and the older cultivated areas, or to the quitrent arising from those reclaimed portions. Thus, the salt-batty lands reclaimed from the sea came to be known as Foras lands.

In this case the Court explained that the lands which were called Foras were identified together with the assessments that were payable on those lands, which were also termed “Foras.” The precise character of the interest that the occupants possessed in the Foras lands was a matter of extensive discussion at the start of the nineteenth century. In the year 1804 the East India Company resumed a portion of the Foras lands so that people who had been displaced from the Town area could be settled there. This resumption gave rise to a suit brought by a certain Sheik Abdul Ambly, who challenged the Company’s authority to take back the lands. The suit was dismissed; the Court affirmed the Company’s right to resume the lands, but it also observed that the Company’s act of dispossessing the occupants would “appear and be felt as a grievous hardship, if not an open and downright injury,” as recorded in the Warden’s Report on the Landed Tenures of Bombay, pages 60 and 61. Following this decision the Company ordered a further examination of the matter, resulting in reports prepared by Warden in 1814 and by Le Mesurier in 1843. Ultimately the Company resolved to recognise the rights of the occupants, a step that culminated in the enactment of Act VI of 1851. The preamble to that Act declared that the East India Company were legally entitled to the freehold reversion of the several lands previously paying a render called Foras, the outline of which was shown in a plan numbered 1, and that these lands were subject to tenancies at will or from year to year; it further stated that, as a matter of grace and favour, the Company’s rights in all of the lands included in plan 1 should be extinguished, except as later specified. Section 2 of the Act then provided that, from the first day of July, the Company’s rights in all lands shown in plan 1, except those listed in plan 2, would be extinguished in favour of the persons who then held the lands as immediate rent-payers to the Company, while preserving the rents that were then payable, which would continue to be recoverable by distress or by any method by which land revenue in Bombay is or shall be recoverable under any Act or Regulation. Section 4 added that nothing in the Act would exempt such lands from liability to any further general taxes on land in Bombay. The appellant contended that the effect of these provisions was to confer upon the occupants a permanent, heritable and alienable tenure, but not to grant them a permanent assessment. The appellant also relied on the decision in Shapurji Jivanji v. The Collector of Bombay, where it was held that the Government possessed the right under section 8 of the Act to increase the assessments on Foras lands. Some support for this contention was found in the wording of the Act itself.

The Court observed that the preamble of the Act, as reported in the 1885 Indian Law Reports, Bombay series, stated that the occupants of the lands were tenants at will or from year to year and that the reversionary interest remained with the East India Company. Consequently, the Company possessed the power to eject those occupants. However, the Court noted that under the Act the Company voluntarily relinquished this ejectment right as an act of grace, apparently to encourage settlement and cultivation of the lands. It accomplished this relinquishment by extinguishing its reversionary landlordship, thereby conferring upon the tenants a status akin to ownership of the lands. The Court further explained that even if this were the sole effect of Act No VI of 1851, it could not be said that the State’s authority to increase land assessments was eliminated, because mere ownership does not inherently provide immunity from assessment enhancement exercised as a sovereign prerogative. Moreover, occupants of Foras lands could not claim a more favorable position than owners of ryotwari lands, whose assessments were subject to periodic revision.

The Court then turned to the argument that section 2 of the Act did more than merely extinguish the Company’s reversionary rights. Section 2 expressly preserved “the rents now severally payable in respect of such lands,” using the term “rent” to mean assessment, and added that such rents “shall continue to be payable.” The respondents contended that these words limited the Government’s right to recover only the assessment amount that was then payable, thereby restricting its power to raise assessments. Both parties agreed that the assessment in force at the relevant time was nine reas per burga, a rate documented by Exhibit N as having been collected continuously from 1858 until the Government acquired the lands through acquisition proceedings. The respondents argued that, under the Act, the Government could not claim a higher assessment than nine reas per burga. The appellant, however, urged that the phrase “now severally payable” should not be interpreted as imposing a ceiling on the Government’s power to augment assessments, because the phrase occurred within a saving clause intended to protect the Company’s rights rather than to grant additional rights to the occupants. The Court acknowledged that the context of the wording indeed favored reserving rights for the Company rather than creating new rights for the occupants, but warned that accepting the appellant’s construction would render the expressions “now severally payable” and “which shall continue to be payable” effectively meaningless.

The Court observed that, although the drafting of the clause was inelegant, its true meaning was clear: the Government’s authority to recover the assessment was preserved, yet it was confined to the amount that was then payable by the occupants. Consequently, the respondents’ contention that, under the Foras Act, they obtained a specific right to hold the lands on the condition of paying an assessment that did not exceed the amount then due, had to be accepted.

The next issue for determination was the effect of the proceedings initiated by the Government under the Land Acquisition Act No VI of 1857 during the period from 1864 to 1867 on the parties’ rights. Section VIII of that Act provided: “When the Collector or other officer has made an award or directed a reference to arbitration, he may take immediate possession of the land which shall thenceforward be vested absolutely in the Government, free from all other estates, rights, titles and interests.” The respondents, a position that had been endorsed by the lower courts, argued that the operation of this section caused the vesting of the lands in the Government to extinguish all pre-existing interests, including the Government’s own right to levy an assessment, and that such a right was therefore also extinguished.

It was further contended that, upon acquisition of land under the Act, the valuation made by the Government encompassed every interest existing in the land, such as the Crown’s assessment right as well as the claimants’ proprietary interests. Accordingly, the amount paid to the owners was not the full market value of the land but rather the value of their respective interests after deducting the value of the Government’s assessment right. This deduction was characterised as compensation for the extinguishment of the assessment right, and it was asserted that, by this reasoning, the assessment right was extinguished together with the claimants’ rights.

The respondents relied upon an award identified as Exhibit P, which stated that the compensation to the claimants was “for their interest in the said lands.” However, the award merely instructed the Government to pay the specified sums to the claimants and contained no provision for any payment to the Government as compensation for its assessment right, nor did it assign any monetary value to that right. The respondents argued that, because the Government itself was the paying authority, it could be said to have paid itself, and that even if a right to compensation existed, their failure to claim it should not alter the conclusion that the assessment right was extinguished. The Court could not accept this argument. It held that, when the Government acquires land under the Land Acquisition Act, the acquisition must be for a public purpose and with a view to...

In order to achieve the public purpose for which lands are acquired, the Government must acquire the entire aggregate of private interests that exist in those lands. When the Government itself already holds an interest in a particular parcel, it is required only to acquire the remaining interests that belong to others so that it may subsequently convey the land absolutely for public use. The Court considered this principle in the earlier case titled The Government of Bombay v. Esupali Salebhai, where Batchelor, J. observed that the Government is not barred from acquiring and paying for the only outstanding interests merely because the Act primarily envisions all interests as being held outside the Government. The decision quoted the provision that compensation must be based upon the market value of the whole of the land and must be distributed among the claimants. In that case the Government claimed ownership of the land on which the claimants’ buildings stood, and the Court held that the Government was obligated to acquire and pay only for the superstructure, since it already owned the site itself. A similar view was expressed in Deputy Collector, Calicut Division v. Aiyavu Pillay, where Wallis, J., then a judge, stated that it is clear the Act does not contemplate or provide for the acquisition of any interest that already belongs to the Government in land which is being acquired, but only for the acquisition of interests that do not already belong to the Government. The present Court fully agrees with those observations. When the Government possesses an interest in land that is subject to acquisition under the Act, that interest lies outside the scope of the acquisition because the Government cannot acquire what it already owns. Although a detailed investigation into the nature and value of that Governmental interest may be required to determine the compensation payable for the remaining claimant interests, such an investigation does not convert the Government’s own interest into a part of the acquisition. The wording of section VIII of Act No. VI of 1857 supports this construction, as it provides that the lands vest in the Government “free from all other estates, rights, titles and interests,” which clearly refers to interests other than those already possessed by the Government.

The award identified as Exhibit P was framed on the basis of that understanding of section VIII. Its scheme is to identify and value the interests of the occupants and to direct the Government to pay the compensation fixed for those interests. The award makes no provision for valuing the Government’s right to levy assessment on the lands, nor does it award any compensation for such a right. Up to this point, the respondents and the Court had assumed that the Government’s right to levy assessment constituted an interest in land within the meaning of section VIII, as reflected in the citation [1911] 9 I-C-341 of Act VI of 1857. However, the Court finds that assumption to be unfounded. In its ordinary sense, the term “interest” denotes rights that constitute ownership, such as mortgage, lease, charge, easement and similar rights. The right to impose a tax on land, by contrast, is a prerogative right of the Crown, lying outside the concept of ownership and therefore outside the class of interests contemplated by the Act.

The Court explained that the term “ownership” comprises rights such as mortgage, lease, charge, easement and similar interests. However, the power to levy a tax on land is not an interest in ownership; it is a sovereign prerogative of the Crown that stands above and outside any private ownership rights. According to the scheme of the Land Acquisition Act, the acquisition process concerns only the ownership of the land and the subordinate rights that are part of that ownership. Section 3(b) of the Land Acquisition Act No 1 of 1894 defines a “person interested” to include all persons who claim compensation on account of land acquisition under the Act, and it adds that a person is deemed interested in land if he holds an easement affecting that land. Section 9 obliges the authorities to give notice to every person who is interested in the land. Section 11 requires the Collector to assess the value of the land and to allocate the compensation among the claimants in proportion to their respective interests. Section 16 provides that when the Collector makes an award, he may take possession of the land, which then vests absolutely in the Government free from all encumbrances. The Court held that the word “encumbrance” in this provision can refer only to interests for which compensation has been granted or could have been claimed under Section 11; it does not extend to the Government’s right to levy assessments on the land. Consequently, the Government itself does not fall within the definition of a “person interested” under Section 3(b), and the Act does not contemplate that the Government’s own interests be valued or compensated. Although the 1857 Act contains no provision analogous to Section 3(b) of the 1894 Act, an examination of the 1857 Act shows that its acquisition power was limited to ownership and its constituent rights, not to the Government’s assessment authority. The procedural rules for issuing notices and for apportioning compensation are substantially the same in both statutes. Furthermore, Section VIII of the 1857 Act directs that the Government shall acquire lands free from all other “estates, rights, title and interest”, and the term “interest” must be read ejusdem generis with “estates”, meaning rights over land that are of a nature similar to an estate, and therefore cannot include the Crown’s prerogative to assess. The Court concluded that the effect of the acquisition proceedings was solely to extinguish the occupants’ rights in the land and to vest the land absolutely in the Government, that the right to levy assessment was not part of the acquisition, and that any failure to assess the land for revenue after the award was due to the impossibility of the Government assessing its own lands. The Court then turned to consider whether the subsequent sale deed imposed any limitation on the Crown’s assessment right.

In this case, the Court examined whether the sale deed labelled Exhibit A placed any restriction on the Crown’s authority to assess the lands for revenue. The deed transferred the lands to the purchasers in an absolute manner, describing the conveyance as with “all rights, easements and appurtenances whatsoever” and stipulating that the estate was to be held “for ever”. The deed, however, did not expressly state that the lands were to be held free of revenue assessment. The respondents argued that an absolute sale by the Crown necessarily meant that the land was conveyed free of revenue liability. To support this position, they relied on section 3 of the Crown Grants Act No. XV of 1895 and on certain observations made in the decision of Dadoba v. Collector of Bombay (1901 I.L.R. 25 Bom. 714). Section 3 of the 1895 Act provided that “All provisions, restrictions, conditions and limitations over contained in any such grant or transfer as aforesaid shall be valid and take effect according to their tenor any rule of law, statute or enactment of the Legislature to the contrary notwithstanding.” The respondents contended that, because the grant was a free-hold estate without any reservation, the provision in section 3 required the grant to be interpreted as conferring an exemption from revenue assessment. They argued that refusing to read the provision in that way would extend the reach of section 3 beyond its intended limits. The object of the Act, as expressed in its preamble, was to eliminate doubts concerning the extent and operation of the Transfer of Property Act, 1882, and to clarify the Crown’s power to impose limitations and restrictions on grants and transfers of land made by it or under its authority. Section 2 of the Act declared that the provisions of the Transfer of Property Act did not apply to Crown grants, and section 3 then positively affirmed that “all provisions, restrictions, conditions and limitations over” would take effect according to their tenor.

Reading the entire enactment, the Court observed that section 3 was intended to preserve provisions, restrictions, conditions and limitations that would be invalid under the Transfer of Property Act, such as restraints on alienation, conditions inconsistent with the nature of the estate, or limitations that violated the rule against perpetuities. The Court noted that there was no issue in the present case concerning the validity of any provision, restriction, condition or limitation contained in Exhibit A on the ground that it contravened any part of the Transfer of Property Act; consequently, there was nothing on which section 3 could be said to take effect. The Attorney-General argued that the limitation on the scope of the Act applied only to section 2 and that section 3 operated in a broader, unqualified manner. The Court referred to the Privy Council’s consideration of section 3 in Thakur Jagannath Baksh Singh v. The United Provinces (1946 F.L.J. 88), where Lord Wright remarked that the general wording of section 3 could not be read in an overly expansive sense. This observation reinforced the view that section 3 should be interpreted in light of the Act’s preamble and its purpose, and that it did not, on its plain terms, grant the respondents a right to hold the lands free of revenue assessment.

The Court explained that the entire Crown Grants Act was enacted to resolve uncertainties that had arisen concerning the operation of the Transfer of Property Act, 1882, and therefore the Act had to be interpreted in light of its overall purpose and context. In that perspective, the Court held that section 3 of the Act must also be read together with the preamble, and when it is so read, the provision cannot, for the reasons already set out, affect the rights of the parties to the present dispute. The provision in section 3 simply provides that “all provisions, restrictions, conditions and limitations over” shall be given effect according to their tenor. The respondents, however, were relying not on any such provision, restriction, condition or limitation in Exhibit A that, by its terms, would give them a rent-free enjoyment of the lands, but rather on the absolute nature of the interest that Exhibit A purported to convey. Consequently, the Court concluded that section 3 does not apply to the present case. The respondents further cited certain observations in Dadoba v. Collector of Bombay as support for their position. The Court recounted the facts of that earlier case: the Government had granted a parcel of land to the Free Church Mission of Scotland free of revenue by a deed dated 1-10-1884; by a subsequent deed dated 20-12-1887 the Government released its reversionary right over two other parcels that the Mission held as tenants, subject only to the payment of taxes, rates, charges, assessments levied or chargeable in respect of the premises. On 16-1-1888 the Mission sold all three parcels to a person named Janardan Gopal, and the Secretary of State joined the conveyance to effectually release the Government’s reversion. Prior to the purchase, correspondence had taken place between the purchaser’s solicitors and the Government concerning the assessment payable on the lands, and the Government had indicated that the assessment would be nine pies per square yard per annum. After the sale, the Collector raised the assessment, and the issue for determination was whether that increase was lawful. Sir Lawrence Jenkins, deciding that it was not, observed that the purchaser had paid full value for the lands based on the Government’s representation that the assessment of nine pies per square yard would remain fixed, and that the circumstances fell within section 115 of the Evidence Act, thereby estopping the Government from increasing the assessment. He was also prepared to hold that the pre-sale correspondence amounted to a collateral contract not to raise the assessment. Chandavarkar J. agreed with this conclusion and further noted that, considering the nature of the transaction—namely, that the Government was selling the property outright as any private proprietor—the overall language indicated that the parties intended the purchaser to be liable only for the assessment of nine pies per square yard.

In the earlier judgment the learned Judge observed that the purchaser was to pay “9 pies per square yard per annum then levied as assessment and no more”. Those observations have been cited to support the view that an absolute sale by the Government creates an agreement not to impose any assessment higher than the amount payable at the time of sale. However, the Judge’s remarks referred specifically to the recitals contained in the deed dated 20-12-1887 and to the negotiations that took place between the purchaser and the Government, which are described in the passage. The observations did not rely on the notion that the transfer was an absolute sale per se. The decision therefore rested on a finding of estoppel or on the existence of a collateral contract that could be inferred from the correspondence between the purchaser and the Government. Neither Section 3 of the Crown Grants Act nor the observations recorded in Dadoba v. Collector of Bombay lend any support to the contention that an absolute sale of Government lands automatically gives the purchaser a right to hold the lands free of revenue. Consequently the Court had to consider whether, on the terms of Exhibit A, such a right had been granted. During the arguments before the Bar, the correct rule of construction applicable to Exhibit A was debated. The learned Solicitor-General, appearing for the appellant, contended that because Exhibit A constituted a Crown grant, it should be construed in favour of the Crown and against the grantee. In contrast, the learned Attorney-General argued that the identity of the grantor – whether the Crown or a private individual – should make no difference to the construction of the grant. He emphasized that the real question in either case is what has actually been granted, and that determination must be made on the basis of the language used in the deed. On close examination the two positions were found not to be in genuine conflict. The Solicitor-General’s view represented a rule of substantive law, according to which a transferee from a private person acquires, unless the deed says otherwise, all the rights that the transferor possessed in the property, as provided by Section 8 of the Transfer of Property Act. By contrast, a grantee from the Crown receives only those rights that are expressly granted by the deed, and no rights pass by implication. Yet, when the grant is embodied in a deed, the ultimate enquiry reduces to determining precisely what the deed confers. The Court’s task, therefore, was to ascertain the grantor’s intention from the wording of the document. Since the same words cannot reasonably bear two different meanings, the source of the grant – Crown or private individual – does not alter their effect. If words used in a private grant would be sufficient to pass a particular interest, those same words must be equally sufficient to pass the same interest when used in a Crown grant.

Addressing this issue, the Court referred to the observation made by Sir John Coleridge in the case of Lord v. Sydney, wherein he stated, “But it”. The citation underscores the principle that the construction of a grant must be guided by the same rules of common sense and justice, irrespective of whether the grantor is the Crown or a private party. The Court therefore concluded that the proper construction of Exhibit A must be carried out in accordance with these principles, focusing on the language of the deed and the intention it reveals, rather than implying any automatic freedom from assessment based solely on the character of the sale as an absolute transaction.

The Court observed that further discussion on the point was unnecessary because it was clear, based on a proper construction of the grant, that the creek forming the boundary of the land was included within the conveyance. In reaching this conclusion, the Court did not intend to depart from established authorities concerning Crown grants; it held that, when interpreting the meaning of words, the same principles of common sense and justice apply whether the grant originates from the Crown or from a private individual. The determination of the parties’ intention must be drawn from the language used in the instrument, read in the context of surrounding circumstances. Accordingly, Exhibit A should be interpreted according to these principles.

The Court noted that the deed contained no provision indicating that the purchasers were entitled to hold the lands free from assessment. On the contrary, Exhibit A expressly stipulated that the properties were subject “to the payment of all cesses, taxes, rates, assessments, dues and duties whatsoever now or hereafter to become payable in respect thereof.” The Court explained that, in their natural and ordinary sense, these words necessarily encompass any present assessment. The Court then referred to the decision in Dadoba v. Collector of Bombay, where a similar clause was examined. In that case, the Court held that when a deed states that the property is sold “subject to the payment of all taxes, rates, charges, assessments leviable or chargeable,” the question of which taxes are “leviable or chargeable” remains open, and extrinsic evidence may be admitted to clarify the parties’ understanding, provided it does not contradict the deed’s terms. The earlier case dealt with a dispute over the amount of assessment payable, not with the existence of a liability, and it was possible to view the clause as leaving the quantum of assessment undecided.

In the present matter, however, the issue was whether the purchasers received any right to hold the lands free of any assessment liability. The Court found that Exhibit A plainly negated any such right. Even assuming, as in Dadoba, that the clause left the question open, the respondents had failed to establish, from any other source, a right to hold the lands free from assessment. Consequently, the Court concluded that, far from exempting the lands from revenue assessment, Exhibit A expressly subjected them to such assessment.

The respondents finally argued that, even if the land-acquisition proceedings conducted between 1864 and 1867 had not extinguished the Government’s authority to impose assessment, and even if Exhibit A did not grant the purchasers a right to hold the land free from revenue, the assessment that the Government could levy under section 8 of Act No II of 1876 was limited to the amount payable under the Foras Act No VI of 1851, and therefore the Government could not levy an assessment at a rate higher than that amount. To support this contention, they contended that the fixed assessment was an incident of the Foras tenure under which the lands were held, that the occupants were bound to pay only that fixed assessment, that this incident was annexed to the lands and could not be separated from them, and that between the date of acquisition under Land Acquisition Act No VI of 1857 and 22-11-1938, when the lands were sold under Exhibit A, the lands retained their character as Foras lands. They further asserted that if no assessment had been paid during that interval, it was because the same party that collected the assessment also paid it, and that when the lands passed to the respondents under Exhibit A, they became subject again to the Foras tenure, making the respondents liable to assessment only at the rate prescribed by Act No VI of 1851. The Court found this contention wholly untenable. It held that when the lands were acquired under the Land Acquisition Act No VI of 1857, the entire “estate, right, title and interest” in them was extinguished, and the lands vested in the Government free of the Foras tenure. Consequently, when the Government sold the lands under Exhibit A, the purchasers obtained freehold title, not Foras tenure. Because the original tenure had been extinguished, it could not be revived upon sale. In support of the respondents’ argument that the incidents of the Foras tenure continued to bind the lands, the learned Attorney General cited observations of Das, J. in Collector of Bombay v. Municipal Corporation of the City of Bombay and others, stating that “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.” However, the Court noted that the issue in that case was whether the Municipal Corporation could acquire, by prescription, a right to hold lands rent-free after entering possession under a governmental resolution that no rent would be charged, and that the quoted passage merely set forth that principle.

The Court noted that when the Municipal Corporation obtained title to land by prescription, one of the rights that formed part of that prescriptive title was the right to hold the land without paying revenue. The Court then explained that the present issue was whether the right to hold the land under a fixed assessment survived the acquisition of the land by the Government under the land acquisition proceedings, and that answer depended on the effect of section VIII of Act VI of 1857. The Court observed that, as stated in the earlier passage, the liability to pay assessment was described as “an integral part or an inseverable incident of the title”; consequently, that liability would have been extinguished together with the occupants’ title under section VIII of Act VI of 1857. The Court identified another difficulty in accepting the respondents’ contention. It pointed out that the Foras Act had been repealed in 1870 by Act XIV of 1870, long before the date of Exhibit A, and therefore, even if the Court were to hold that the Foras tenure was revived in the hands of the purchasers under Exhibit A, the rights created by the Foras Act were no longer available with respect to the lands. Section I of Act XIV of 1870 saved rights “already acquired or accrued”, and the respondents argued that the rights they now claimed fell within that saving clause. However, the Court observed that the lands had all been acquired under Act VI of 1857 between 1864 and 1867, so no rights in respect of the lands could have subsisted at the time of the repeal, and the rights claimed by the respondents, cited in 1952 S.C.R. 43, 52, were therefore not covered by the saving provision. In the result, the Court held that the appellant’s right to levy assessment under section 8 of Act II of 1876 was not limited by any right claimed by the respondents. Accordingly, the appeal was allowed, the judgments of the lower courts were set aside, and both suits instituted by the respondents were dismissed with costs throughout.