Sri Vedaraneeswararswamy Devasthanam vs The Dominion of India and Another

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

Court: Supreme Court of India

Case Number: Civil Appeal No.371 of 1956

Decision Date: 15 February 1961

Coram: Gajendragadkar

In this matter, the Supreme Court of India heard a petition filed by Sri Vedaraneeswararswamy Devasthanam against the Dominion of India and another respondent, with the judgment rendered on 15 February 1961. The Devasthanam claimed title to certain properties that had been granted to it by the Rajas of Tanjore centuries earlier in the form of inam, and that comprised salt‑pans. After the enactment of Regulation 1 of 1805, which prohibited the manufacture of salt except by the Government or with its express sanction, the East India Company seized possession of those salt‑pans in 1806. An order issued on behalf of the Board of Revenue recorded the parties’ agreement, stating that the Government had taken charge of the pagoda salt‑pans and sea customs of Thopputhurai belonging to the temple, and that a sum of 1,848 pagodas would be paid annually to the temple from the treasury, calculated on the average revenue of the preceding ten years, together with any assistance the Government could render. Correspondence between the Collector and the Board of Revenue demonstrated that the intention was to acquire the properties permanently for salt‑manufacture purposes, with compensation fixed on that basis. From 1886 until 1941 the Devasthanam allowed the company and its successors, identified as respondents 1 and 2, to remain in quiet possession of the disputed lands in return for the stipulated annual payment. The Devasthanam’s suit, which had been dismissed both by the trial court and by the High Court on appeal, argued that the agreement constituted a year‑to‑year lease and contended that, when construing a document executed by a Hindu‑temple manager, the limited authority of such a manager to alienate trust property must be respected, implying that the manager acted within his powers and did not exceed them. The Court held that the transaction was in fact a permanent lease and that the appeal must fail. While it is generally accepted that documents executed by a temple manager should be interpreted as being within his legitimate authority, the Court found that this principle did not apply here because more than a century had elapsed since the agreement was made, and because the manager, confronted by the prohibition on salt manufacture imposed by Regulation 1 of 1805, had no viable alternative but to enter the agreement to secure a recurring income for the Devasthanam. The decision cited the precedent set in Bawa Magniram Sitaram v. Kasturbai Manibhai.

In this case the Court recorded that it was applying the decision reported in (1921) L.R. 49 I.A. 54 and that it also referred to the authorities Maharanee Shibessouree Debta v. Mothoranath Acharjo, (1809) L.R. 13 Moo. I.A. 270; Nainapillai Marakayar v. Ramanathan Chettiar, (1923) L.R. 51 I.A. 83; and Palaniappa Chetty v. Deivasikamony Pandara, (1917) L.R. 44 I.A. 147.

The matter before the Court was Civil Appeal No. 371 of 1956, arising from the judgment and decree dated 28 August 1953 of the Madras High Court in A.S. No. 262 of 1949. Counsel for the appellant comprised senior advocates, while counsel for respondent No. 1 was also present. The judgment was delivered on 15 February 1961.

The appeal was filed on a certificate issued by the Madras High Court. It arose out of a suit instituted by the Managing Trustee of the appellant, Sri Vedaraneeswararswamy Devasthanam, against two respondents: the Dominion of India and the Province of Madras. In that suit the appellant sought a declaration that the lands in dispute belonged to it, and it asked the Court to order respondent 1 to deliver possession of those lands to the appellant. The appellant further prayed that respondent 1 be required to account for, and pay, mesne profits both for the past and for the future, and alternatively that the Court determine the proper rent that respondent 1 should pay to the appellant.

The trial judge of Mayuram rejected the appellant’s claim, and the appellant’s appeal against that judgment also failed. Consequently the appellant approached this Court.

According to the appellant, the suit properties cover approximately 2,400 acres and are located in the village of Agastiyampalli. The appellant asserted that the village had been granted in absolute inam by the Tanjore Rajas several centuries earlier. From the time of that grant the appellant claimed to have been in exclusive possession and enjoyment of the lands, with its trustees and managers collecting the profits for the benefit of the Devasthanam.

The appellant further stated that in 1806 an agreement was concluded between the East India Company and the appellant. Under that agreement the Company took possession of the lands in suit and, in return, promised to pay an annual sum of 1,848 Pagodas, of which 1,200 Pagodas represented the rent. The Company occupied the property and paid the agreed rent until 1858. In that year respondent 2, which had succeeded the Company, entered into possession on the same terms and continued to make the annual payment until 1937.

After 1937 respondent 1 assumed control of the salt‑revenue administration, and consequently the properties came into its possession. The appellant said that respondent 1 has been paying the agreed amount each year since that time.

In the suit the appellant asserted that the legal relationship between the parties was that of a lessor and a lessee and that the lease was not intended to be permanent but was instead an annual or yearly lease that was renewed from year to year. On that basis the appellant advanced the two alternative claims that had been specified in the pleadings. Respondent 1 denied that it held the properties under an annual lease. It contended that when the suit lands were taken over by the Company a single, definitive compensation had been fixed, using the average income derived from the appellant’s salt manufacture during the preceding ten years as the basis for that calculation. The properties, it argued, had come under the Company’s possession pursuant to proceedings brought under Regulation 1 of 1805 and that the amount of Rs 4,200, equivalent to 1,848 Pagodas, represented the annual compensation payable to the appellant. Respondent 1 also raised other pleas on the merits and advanced a defence based on limitation. The trial court responded by framing ten issues for determination. Concerning the principal point of dispute, the trial court held that a reading of the relevant documents clearly showed that when the Company assumed possession its intention was to take over the properties permanently from the Devasthanam and not to place itself at the mercy of the trustees who could evict it at any time. Accordingly, the trial court characterized the arrangement as permanent and concluded that the appellant was not entitled to claim possession. Even assuming a lessor‑lessee relationship, the trial court found that the lease was of a permanent character, subject only to the fixed rent of Rs 4,200 per annum, and consequently dismissed the appellant’s suit.

The appellant then appealed to the Madras High Court. The High Court, after reviewing the entire body of documentary evidence, agreed in substance with the trial court’s conclusions. It held that the documents demonstrated that the arrangement by which the Company took possession of the appellant’s properties was permanent, and that, if the arrangement were to be described as a lease, it would be a permanent lease. The High Court further observed that the appellant’s claim was barred by the limitation provision contained in Article 134(B) of the Limitation Act. Accordingly, the High Court affirmed the decree of the trial court and dismissed the appellant’s appeal. In the present appeal, counsel for the appellant raised the principal question of the true nature of the relationship between the parties with respect to the disputed properties.

The appellant argued that the main document labelled Ex. A. 1, which the respondent relied upon, should be interpreted as creating an annual lease rather than a permanent lease. He maintained that the High Court’s opposite conclusion was not supported by the language of the document. He further contended that the High Court, in interpreting Ex. A. 1, failed to apply the legal principles that govern the powers of the manager of a Hindu religious institution.

To examine this dispute, the Court looked at the relevant documents. The principal document, Ex. A. 1, purports to be a copy of an order issued by Mr. Wallace on 31 December 1806. The order is addressed to the manager of the temple and states: “As the Government have taken charge of the pagoda salt pans and Sea Customs of Thopputhurai, belonging to the above temple, the sum of 1848 Pagodas shall be given to the temple annually in cash from the treasury being calculated on the average amount of 10 years’ revenue besides which every possible assistance will be given to the temple.” The Court noted that the order does not specify any term of lease. On its face, the wording appears to indicate that the Government permanently assumed control of the salt pans and sea customs and, in return, promised to pay the specified sum to the temple each year.

The Court observed that the interpretation of Ex. A. 1 may be informed by earlier correspondence between the Collector and the Members of the Board of Revenue, and that this correspondence is admissible for construing the effect of the terms of Ex. A. 1. On 17 July 1806, a letter was sent to the President and Members of the Board of Revenue explaining the proposal to acquire the property. That letter stated that it would be preferable to grant the temple a commutation in land because such a grant would be “more certain and permanent than ready‑money payment.” In estimating the compensation payable to the temple, the accounts of the pagoda were examined. The pagoda derived revenue from duties levied at the ports of Thopputhurai and Kodikarai. A ten‑year account showed an average annual income of 283 Pagodas from these duties. Adding the average of magama (charitable and litigious fees) of 532 Pagodas and subtracting the average expenses of 46 Pagodas incurred in collecting the duties yielded a net average annual revenue of 486 Pagodas. An additional calculation of income from salt manufacture in the salt pans gave an average of 1 362 Pagodas. The total of these figures produced the amount of 1 848 Pagodas, which was the figure stipulated in Ex. A. 1.

The finding was that the total annual income of the temple amounted to one thousand eight hundred forty‑eight Pagodas. This figure resulted from a detailed computation that considered the various sources of revenue and the deductions applicable, thereby establishing the sum that ought to be paid as legitimate compensation for the deprivation of the temple’s possession of the property in question. After arriving at this amount, the question was whether the compensation should be provided in the form of land or in money. As previously noted, a recommendation was made that providing the compensation through a grant of land would be more certain and permanent than a monetary payment. Consequently, the examination of the document leaves no doubt that the intention was to acquire the property on a permanent basis for the purpose of manufacturing salt, and that the compensation amount was calculated on that basis. It appears that the proposal prepared by the Collector did not receive approval from the Government at Fort St. George. In a letter dated 28 October 1806, the Secretary to the Government recommended that a payment be made from the public treasury as compensation for the loss suffered by the Pagoda due to the introduction of the salt monopoly in the Province of Tanjore, with the amount not to exceed one thousand eight hundred forty‑eight Star Pagodas per annum. The Government’s proposal was accepted by the Board, and the decision was communicated in a letter dated 17 November 1806. It is against this background of correspondence that the effect of the terms contained in Exhibit A‑1 must be determined. From this consideration, it can be concluded that, although the property was not bought outright, it was taken under permanent charge for the purpose of salt manufacturing, and the compensation was set at an annual rate of one thousand eight hundred forty‑eight Pagodas.

Other documents cited by Mr Sastri were also examined. An extract from the inam register dated 27 November 1862 (Exhibit A‑18) was relied upon by the appellant. The appellant argued that columns 16 to 20 of the register, which record particulars of owners, do not refer to the Company’s right under the permanent arrangement, and that if the transaction were a permanent lease, the lessee’s rights would have been recorded in those columns. The Court was not persuaded by this argument. The primary purpose of the column is to record details of the owners, and it also provides that if the inam is subdivided, the name of each co‑sharer shall be entered. Therefore, the Court was not satisfied that the name of a permanent lessee was required to appear in this column. While it is true that, for the purpose of determining the additional assessment on excess area payable by the temple, the entire property is assumed to belong to the temple, this assumption does not contradict the possibility that the temple continued to act as lessor of the suit property. Accordingly, there is no inconsistency with the notion that the Company might have been the lessee under a permanent arrangement, and the inam register does not contain any element that undermines the case presented by respondent 1.

In this matter, the Court observed that even if the Company had become the lessee of the suit property through a document properly executed on its behalf, the entries made in the inam register could not alter or affect the nature of that leasehold right. Consequently, the Court held that there was nothing in Exhibit A‑18 that contradicted the case presented by respondent 1. The Court then turned to the reliance placed by counsel on Exhibit A‑2, a title deed issued by the Inam Commissioner in favour of the temple. That deed expressly recognised the temple’s title to the Devadayam or pagoda inam village of Agastiyampalli, made specific reference to the porambokes in that village, and declared that the entirety of the property was held for the support of the pagoda situated in the village of Vedaranyam. The Court applied the same reasoning it had used for the extract from the Inam Register to this title deed, concluding that the deed likewise did not undermine the appellant’s position. The factual record showed that from the year 1806, when the Company first took possession of the property, up to the year 1941, the appellant had permitted the Company and its successors to enjoy quiet possession of the premises, conditioned upon the receipt of an annual compensation payment each year. In 1941, a factory officer wrote to the appellant’s trustee requesting the names of the revenue villages to which the area covered by the salt factory had originally been attached before the acquisition, and also inquired whether any compensation had been paid to the temple for that acquisition. The Court noted that this correspondence appears to have initiated the appellant’s present claim. Shortly after receiving the officer’s letter, the appellant replied on 8 April 1941, asserting that the property had been leased to the Government for the manufacture of salt at a monthly rent of Rs 350, or an annual rent of Rs 4,200. By making this assertion, the appellant established a lessor‑lessee relationship between itself and respondent 1. Thereafter, the appellant approached the competent authorities seeking appropriate relief on various grounds. All of the appellant’s attempts to obtain possession of the property or to secure an enhancement of the compensation amount proved unsuccessful, and this failure gave rise to the present dispute. The principal argument advanced by counsel was that, in construing Exhibit A‑1, the Court must keep in mind the limitations on the powers of the temple manager at the relevant time. Counsel pointed out that the manager of a temple could not enter into a permanent lease unless there was a compelling necessity, because a permanent lease amounts to an alienation of temple property and must be justified as such, whereas an annual lease could be executed by the manager in the ordinary course of prudent management. The Court, however, rejected the notion that this reasoning applied to a permanent lease, and held that when interpreting the document, the manager’s desire and intention must be correctly attributed.

In this matter the Court considered the contention that the manager of the temple must be regarded as having acted within his authority and not beyond it. To support that contention, counsel referred to several Privy Council decisions, namely Maharanee Shibessouree Debia v. Mothooranath Acharjo (1), Nainapillai Marakayar v. Ramanathan Chettiar (2), and Palaniappa Chetty v. Deivasikamony Pandara (3). The argument advanced was that a fair and reasonable rule of construction requires the document to be treated as having been executed under the legitimate authority that the temple manager possessed, rather than as a document executed in breach of that authority. The Court noted that this position was not contested by the parties.

Applying that rule to the present dispute, the Court identified two material facts that could not be ignored. First, more than a century had passed since the document was executed. The Court therefore referred to the observation of the Privy Council in Bawa Magniram Sitaram v. Kasturbai Manibhai (4), which stated that when the validity of a permanent lease granted by a shebait is questioned many years after the grant—nearly one hundred years in the present case—and the circumstances of its making cannot be ascertained, the Court should presume that the grant was made out of necessity and therefore remains valid beyond the life of the grantor. The Court held that the same principle could be invoked by the first respondent, because indeed more than a hundred years had elapsed after the grant of the document known as Exhibit A.

The Court further observed that it was common ground that Regulation 1 of 1805 placed the manufacture and sale of salt under the immediate direction and control of the Government’s general agent, and that the manufacture, sale, transit, export and import of salt in the Presidency of Fort St. George were prohibited unless expressly sanctioned by the Government. The Regulation also provided that any salt manufactured, sold, conveyed, exported or imported, whether directly or indirectly, in contravention of its provisions was liable to seizure and confiscation. Consequently, a portion of the temple’s property that had been used for salt manufacture became entirely unsuitable for that purpose because the temple could no longer produce or permit the production of salt.

Faced with the loss of that source of income, the Court found it not unlikely that the temple manager was compelled to negotiate an arrangement with the Company in order to secure a substantial and recurring annual income for the temple. It was also established that the entire property was marshy and that the only profitable use that could be derived from it was limited, a point that underscored the necessity of entering into the permanent lease arrangement.

In this case the Court observed that the land which had been used for the manufacture of salt could no longer be employed for that purpose after Regulation 1 of 1805 was enacted. Accordingly, the Court agreed with the construction test invoked by Mr Sastri and held that the test was satisfied. Because the manager or trustee at that time faced no alternative, he was compelled to execute the agreement recorded in Exhibit A‑1. By entering into that agreement the manager created a recurring source of income for the temple, which in turn enabled the temple to maintain its premises, conduct worship of the idol and fulfil the trustee’s duties. The Court noted that the correspondence preceding the execution of the document clearly demonstrated the Company’s intention to acquire permanent possession of the property. Aware of the restrictions imposed by the Regulation, the temple’s manager also intended to transfer the property to the Company on a permanent basis so as to secure an enduring revenue stream for the temple. The Court further pointed out that the behaviour of the temple for more than one hundred years supported the view that the property had been permanently surrendered to the Company and contradicted the assertion that the lease was merely for one year. The uniform rent paid and accepted for over a century, despite numerous political and other changes, reinforced this conclusion. The Court observed that the appellant’s arguments concerning its relationship with the respondent regarding possession of the land had shifted repeatedly at various stages, indicating an attempt to find a basis for claiming either possession or a higher rent. Although the appellant might be motivated by the substantial profits that Respondent 1 derived from the property, such motivation could not prevail where the property had been permanently transferred in 1805 under the terms set out in Exhibit A‑1. Consequently, the Court affirmed the High Court’s determination that the transaction shown in Exhibit A‑1 constituted a permanent lease, that Respondent 1 was entitled to retain possession of the entire property on the stipulated terms, and that the appellant’s claims for possession or increased rent were properly dismissed. The appeal was therefore dismissed without any order as to costs.