Mrs. Dossibai N. B. Jeejeebhoy vs Khemchand Gorumal and Others

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

Court: Supreme Court of India

Case Number: Civil Appeals Nos. 503 to 506 of 1958

Decision Date: 29 September 1961

Coram: Das Gupta

In this matter the petitioner was Mrs Dossibai N. B. Jeejeebhoy and the respondents were Khemchand Gorumal and others. The case was decided by the Supreme Court of India on 29 September 1961. The dispute arose under the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947, particularly sections 6, 15, 25 and 28 of Part II and Schedule 1 of that Act. The petitioner had taken a lease of an open parcel of land situated in the city of Bombay with the purpose of erecting buildings that could be used for residential, commercial, industrial or office purposes. After constructing the buildings, the petitioner instituted several suits in the City Civil Court, Bombay, seeking recovery of arrears of rent for the built premises. In the plaints the petitioner asserted that the Bombay Rent Control Act, 1947, did not apply to the premises in question. The respondents, however, contended that the Act did apply and that the City Civil Court lacked jurisdiction to entertain the suits. The trial judge examined the provisions of the Act and held that Part II of the Act was applicable to the premises because they fell within the area described in Schedule 1. Accordingly, the judge concluded that only the special courts mentioned in section 28 of the Act had jurisdiction, and ordered that the plaints be returned to the petitioner for filing before the appropriate court. Both of the respondents appealed this decision, but the Bombay High Court dismissed the appeals summarily, leaving the trial judge’s order undisturbed.

The principal question that the Supreme Court had to decide was whether, when a lessee takes a lease of open land for the purpose of constructing buildings that are intended to be used for residence or for business, such a lease constitutes “letting for residence” or “letting for business” within the meaning of section 6 of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947. The petitioner argued that because the land itself was not being used directly for residence or business, but only for construction of buildings that would later serve those purposes, the lease of the land could not be described as a letting for residence or business. The Court examined the language of section 6, which provides that “let for residence, education, business or storage” includes any letting made with the objective of achieving those purposes, whether the premises are occupied directly or are to be constructed for such use. The Court held that the expression was sufficiently broad to encompass a lease of open land taken with the intention of erecting buildings for residential, commercial, industrial or office purposes. Relying on the earlier decision in Vinayak Gopal v Laxman Kashinath I. L. R. (1956) Bom 827, the Court affirmed that the land, once let for the purpose of constructing suitable buildings, became “premises” within the meaning of section 6(1). Consequently, the provisions of Part II of the Act applied to the case, and the jurisdiction of the special courts under section 28 was affirmed.

Special leave was granted to appeal the judgment and orders dated 4 August 1957 of the Bombay High Court in Letters Patent Appeals numbered 29 to 32 of 1957. The appellants were represented by counsel J C Bhatt, R P Bhatt, R A Gagrat and G Gopalakrishnan. For the respondent in Civil Appeal No 503 of 1958, counsel N C Chatterjee, Madhowdas C Bhagat and Radhey Lal Agarwal appeared, while Madhowdas C Bhagat and Radhey Lal Agarwal also represented the respondents in Civil Appeals Nos 504 to 506 of 1958. The judgment of the Supreme Court was delivered on 29 September 1961 by Justice Das Gupta. The central question before the Court was whether a lessee who takes a lease of open land for the purpose of erecting buildings intended for residential or business use is engaged in a “letting for residence” or a “letting for business” within the meaning of the statutory provisions. The appellants had instituted four suits in the City Civil Courts of Bombay seeking recovery of rent arrears for the premises described in each plaint. Under the law, if the provisions of Part II of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947 (hereinafter referred to as the “Rent Act”) applied to the premises, the City Civil Court would lack jurisdiction to try the matters. Consequently, each plaint expressly contended that the Rent Act did not apply to the demised premises. Each defendant, however, asserted the opposite, arguing that the Rent Act did indeed apply and that therefore the City Civil Court was without jurisdiction. The first issue framed in each suit therefore concerned the Court’s jurisdiction to entertain the suit. The learned trial judge held that Part II of the Rent Act applied to the premises in each case, and consequently only the special court specified in section 28 of the Rent Act possessed jurisdiction. He accordingly ordered each plaint to be returned to the plaintiff for presentation before the appropriate court. The plaintiffs appealed this decision to the Bombay High Court, but all four appeals were summarily dismissed. The subsequent Letters Patent appeals filed by the plaintiffs against the Single Judge’s decision were also dismissed summarily. The present Letters Patent appeals have been filed against those dismissals, having obtained special leave from this Court. Section 5, sub‑section 8 of the Rent Act defines “premises”, unless the context indicates otherwise, to include, among other things, any land not being used for agricultural purposes. It is undisputed that the land concerned in these suits was not used for agriculture and therefore falls within the definition of “premises” under section 5. The provisions of Part II, however, do not automatically apply to every premise that meets this definition. Section 6, which opens Part II, provides in its first sub‑section that the part applies to premises let for residence, education, business, trade or storage in the areas specified in Schedule 1, subject to a proviso allowing the State Government to direct that the part shall cease to apply to premises let for any of those purposes in a given area, and a further proviso permitting the State Government to again re‑apply the part in such an area. No notification under these provisos affecting the premises in question has been issued, and the Court is therefore not concerned with them, nor with sub‑section 1(A) that permits the State Government to extend the part to premises let for other purposes. The four premises that are the subject of the four suits are all situated within the relevant jurisdiction.

In this case, the Court explained that the provisions of Part II of the Act do not automatically apply to every premise that meets the definition in Section 5. Section 6, which opens Part II, states in its first subsection that the part applies only to premises let for residence, education, business, trade or storage in the areas listed in Schedule 1. A proviso allows the State Government to issue a direction that, in any of those areas, the part will cease to apply to premises let for any of the specified purposes, and another proviso permits the State Government to later direct that the part will again apply to premises let for those purposes. Because no notification under these provisos has been made that would affect the premises involved in the suits, the Court held that those provisions were not relevant to the present dispute. Likewise, the Court was not concerned with subsection 1(A), which empowers the State Government to direct that the part shall apply to premises let for other purposes. All four premises that gave rise to the suits are located within the city of Bombay and therefore fall within the area described in the Schedule of the Act. Consequently, the Court needed to examine the purpose of each lease and decide whether the lease was for residence, education, business, trade or storage. The lease documents state that the lessee will construct buildings suitable for residential, business, industrial or office uses. The plaintiff argued that because the land was open and intended to be used for the construction of buildings rather than for immediate residence or business, the land was not being let for residence or business. The respondent, represented by counsel, argued that the letting was for residence or business because the ultimate purpose of taking the lease was to provide space for those activities. Counsel for the respondent addressed only the question of whether the letting could be said to be for residence and did not separately discuss business, reasoning that if the land could not be considered let for residence, it could not be considered let for business either. The respondent’s principal contention was that open land can never be let for residence, and therefore, when Section 6 mentions premises let for residence, land as defined in subsection 8(a) of Section 5 falls outside the term “premises.” The Court found no substance in that contention. It observed that open land can indeed be used for residence and there is no reason to exclude such land from the term “premises” when Section 6 refers to premises let for residence. The more substantial question, therefore, was whether leasing open land, not for immediate residential use but for the purpose of constructing buildings that will later be used for residence, can reasonably be described as a letting for residence.

In this case, the Court observed that when open land was let with the intention of constructing buildings on it for the purpose of residence, the letting of that land could reasonably be described as a letting for residence. Counsel for the respondent argued that the question to be considered was whether the land itself was let for residence, and that the land could not be said to be for residence unless the structures to be built on it were also let for that purpose. According to that argument, the land was let for the construction of a building, not for residence. The Court was unable to accept this reasoning. It noted that land could be used for many different purposes, including agriculture, human habitation, keeping cattle or other animals, holding meetings, carrying on business or trade, storing goods, supplying water by excavating tanks, and numerous other activities. Some of these purposes could be achieved on open land without any buildings, while others could be better accomplished if a structure were erected. The Court found it reasonable to conclude that when the Bombay Legislature deliberately included open land not being used for agricultural purposes within the definition of “premises,” and then proceeded in the following section to speak of premises being let for certain specified purposes, the Legislature was thinking of the purposes to which the land would be used, regardless of whether those purposes would be achieved with or without the construction of a structure.

The Court further explained that the purpose of mentioning only certain purposes—namely residence, education, business, trade, or storage—in section 6 was to exclude land let for purposes such as keeping cattle (except where it was done as a business or trade) and many other uses from the benefit of Part II of the Act. It observed that ordinary conversation about land being let for business generally focuses on the ultimate objective that business will be carried out, without regard to whether the business will be conducted on the land in its present state, by erecting temporary sheds, or by constructing permanent buildings. Likewise, when a person says he will lease a plot of land for storing his goods, he intends to achieve the objective of storage, whether that requires a structure or not. In the same way, the Court reasoned, when land is let for the purpose of constructing buildings for residence, people will describe the letting as being for residence, just as they would say the land is let for residence if the lessee intends to use it as a caravan site where people may live on the open land.

In this case the Court observed that the expression “let for residence, education, business, trade or storage” is sufficiently expansive to cover a letting that is intended to achieve any of those purposes either by erecting buildings on the land or by using the land without any structures. Counsel for the respondent, Mr Bhatt, then drew attention to sub‑a(i) of section 15 of the Rent Act, which lies in Part II of the same statute. He argued that the legislative scheme indicated that the Parliament could not have meant to include land let for the construction of residential buildings within the phrase “premises let for residence”. The Court reproduced the wording of section 15 as it stands after the amendment effected by the Bombay Act 49 of 1959, which reads: “Notwithstanding anything contained in any law, but subject to any contract to the contrary, it shall not be lawful, after the coming into operation of this Act for any tenant to sublet the whole or any part of the premises let to him or to assign or transfer in any other manner his interest therein.” The Court noted that when the provision was originally drafted, the words “but subject to any contract to the contrary” were absent. The 1959 amendment inserted those words and further provided that they shall be deemed always to have been part of the section. Consequently, even after the amendment, it remains unlawful for a tenant of premises to sublet the whole or any part thereof where no contract to the contrary exists.

Mr Bhatt contended that, in every situation where such a contract is lacking, a problem would arise if land let for the construction of residential buildings were treated as “premises let for residence” within the meaning of clause 6. He explained that once a building has been constructed, the lessee would be unable to sublet the building or any portion of it, thereby defeating the original intention of acquiring the land for the purpose of erecting a building that could subsequently be let out. This difficulty was more persuasive when the protective phrase “but subject to any contract to the contrary” was not part of the provision. The Court, however, observed that with the present wording, the circumstances in which such a difficulty would occur are likely to be rare. It is reasonable to expect that a person who takes a lease of land for the purpose of constructing a building intended to be let to others for residence will, in the lease agreement, include a clause permitting the sub‑letting of the building. Even assuming that there may be instances where the lease does not contain such a term, and assuming further that the lessee would be prohibited from letting out the building he has constructed, the likelihood of this problem arising in any significant number of cases is minimal.

In this case the Court observed that it was unnecessary to determine whether, in the absence of a contractual provision to the contrary, section 15 would actually prevent a lessee of land from letting out buildings that he had constructed on that land. The Court nevertheless noted that the argument advanced by the Bombay High Court in Vinayak Gopal v. Laxman Kashinath, reported in I.L.R. [1956] Bom. 827, carried considerable weight. That argument, which is now before this Court, held that the restriction imposed by section 15 applies only to the letting of the land itself that is subject to a lease and does not extend to the letting of a building erected on that land. The Bombay High Court had further held that when land is leased for the purpose of constructing residential buildings, the land is “let for residence” within the meaning of section 6 of the Rent Act. Counsel Mr Bhatt spent a substantial part of his submission trying to show that some of the reasons given in that judgment were not sustainable. The Court considered it unnecessary to scrutinise each reason, because, as already indicated, a proper construction of the phrase “let for residence” includes situations where open land is let for the purpose of erecting residential buildings, and therefore the conclusion reached in Vinayak Gopal’s case was correct. The Court also found it unnecessary to consider, for the purposes of the present appeals, the consequences for a sub‑lessee if, under a particular lease, the building ultimately vests in the landowner, or the consequences if the constructing lessee obtains a right to remove the building. Such considerations, the Court held, do not affect the construction of the words “let for residence”. Turning to the facts, the Court found that in each of the matters before it the lease had been taken with the intention of constructing buildings for residential, business, industrial or office use. Accordingly, the premises that were let fell within the definition of “premises” under section 6(1) of the Rent Act, so that the provisions of Part II of that Act applied. The trial court and the High Court were therefore correct in holding that the City Civil Court, Bombay, lacked jurisdiction to try the suits. Consequently, the appeals were dismissed with costs, a single set of hearing fees was ordered for the four appeals, and the appeals were dismissed.