Kanji Manji vs The Trustees Of The Port Of Bombay

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

Court: Supreme Court of India

Case Number: Civil Appeal No. 302 of 1961

Decision Date: 27 February 1962

Coram: M. Hidayatullah, S.K. Das, J.C. Shah

In the matter titled Kanji Manji versus The Trustees of the Port of Bombay, the Supreme Court of India delivered its judgment on 27 February 1962. The opinion was authored by Justice M. Hidayatullah and the bench was composed of Justices M. Hidayatullah, S. K. Das and J. C. Shah. The petitioner was Kanji Manji and the respondent was the Trustees of the Port of Bombay. The judgment bears the citation 1963 AIR 468 and 1962 SCR Supl.(3) 461, and it has been cited subsequently in several reports including R 1988 SC 832, D 1988 SC 1313, and D 1990 SC 2053. The case concerned an ejectment action brought by a government or local authority against assignees of leased land and building, and it examined the applicability of the Bombay Rents, Hotel and Lodging Houses Rates (Control) Act, 1947 (Bom. 57 of 1947), specifically sections 4, 5(8) and 15. The headnote outlines that in 1924 the Trustees of the Port of Bombay granted a ten‑year lease of land to a partnership firm, requiring the lessee to construct certain buildings on the land at its own expense according to the Trustees’ specifications, and permitting the lessee to remove those buildings within three months after the lease term expired. The record does not clarify what transpired after the ten‑year term ended. In 1942 the Trustees leased the land and the standing buildings to M/s D and O, together with their heirs, executors, administrators and assigns, on a monthly tenancy, and it was agreed that upon the termination of the tenancy the buildings would have to be removed from the demised land. In 1947 M/s D and O assigned their lease rights to an individual identified as R and to the appellant identified as K, an assignment that the Trustees accepted. After giving proper notice in 1956, the Trustees instituted a suit for ejectment against R and K in the Bombay City Civil Court. R died before the suit was filed, and the plaint was subsequently amended to strike out R’s name. The appellant, as defendant, raised several pleas: (a) that the notice was invalid because it had been served only on one of the lessees, (b) that the suit was defective for non‑joinder of the heirs and legal representatives of the deceased joint tenant R, (c) that the jurisdiction of the City Civil Court was improper because the suit was governed by the Rent Act, and (d) that the contract to deliver vacant possession was impossible to perform, rendering the plaintiffs’ claim incompetent. The Court held that once the tenancy was established as joint, a notice served on any one of the joint tenants was sufficient, and consequently the suit for ejectment was valid.

The Court held that the notice served on one of the joint tenants was sufficient, and on that basis the suit for vacant possession of the site, which was instituted in the City Civil Court, was deemed competent. The Court further examined the definition of “premises” contained in section 5(8) and the circumstances that led to the amendment of section 4. It concluded that the amendment was intended to narrow the operation of the phrase “any premises belonging to the Government or a local authority” by excluding buildings that were occupied by sub‑tenants, even though such buildings remained property of the Government or continued to be owned by it. Consequently, any action taken by the Government or a local authority in relation to the land is to be governed by sub‑section (1) and not by sub‑section (4)(a) of the Rent‑control Act. In view of this interpretation, the Court held that when the Government or a local authority seeks to evict a person from land, the provisions of the Bombay Rents, Hotel and Lodging Houses Rates (Control) Act, 1947 do not obstruct that eviction. For the same reason, the Court explained that the suit for ejectment need not be filed in the Court of Small Causes as required by the Rent‑Control Act; instead, the appropriate forum is the City Civil Court. The Court also observed that if the original lessees had taken a lease covering both the land and the building, their assignees could not contend that government ownership extended only to the land and not to the building. The Court further noted that the appellant’s inability to evict his tenant in order to remove the building, although unfortunate, does not entitle him to defeat the rights of the Port Authorities.

The Court then considered the question of whether the Port Trust Authorities may evict sub‑tenants and referred to the authorities cited in Bhatia Co‑operative Housing Society Ltd. v. D.C. Patel, (1953) S.C.R. 185 and Bara Bhaywandas v. Bombay Corporation, A.I.R. 1956 Bom. 364. The judgment was delivered in a civil appellate jurisdiction arising from Civil Appeal No. 302 of 1961, which was taken up by special leave from the judgment and order dated 24 September 1959 of the Bombay High Court in FA No. 731 of 1959. Counsel for the appellant were B. Sen and I. N. Shroff, while the respondents were represented by M. C. Setalvad, Attorney General of India, B. Parthasarthi, J. B. Dadachanji, O. C. Mathur and Ravinder Narain. The judgment was pronounced on 27 February 1962 by Justice Hidayatullah. This appeal arose from a suit tried in the Bombay City Civil Court filed by the respondents, the Trustees of the Port of Bombay, seeking the ejectment of the appellant, Kanji Manji, and of Rupji Jeraji, who had died before the suit was filed, from a plot situated at Haji Bunder, Mazgaon, Sewri Reclamation Estate, Bombay, and seeking possession of the land. A claim for arrears of water charges and property taxes amounting to Rs. 10,871‑14‑0 was also part of the suit, but the Court noted that it was not the subject of its consideration. The City Civil Court decreed the suit, ordering the appellant to vacate the suit premises and to deliver vacant possession thereof.

In this case the appellant, Kanji Manji, appealed the decree of the Bombay City Civil Court that ordered him to vacate and deliver vacant possession of the land at Haji Bunder Mazgaon, Sewri Reclamation Estate. The decree had been challenged in the High Court of Judicature at Bombay, but the High Court dismissed the appeal summarily on 24 September 1959. The High Court also refused to grant a certificate of appeal, prompting the appellant to seek special leave. After obtaining special leave, the appellant filed the present appeal before this Court.

The factual background reveals that in 1924 the Trustees of the Port of Bombay granted a lease of the disputed plot to five individuals who conducted business in partnership under the name Mancherji Vadilal and Company. The lease was for a term of ten years commencing on 14 December 1923. For the initial six‑month period the lease required payment of a conventional rent of pepper corn, if demanded; thereafter the lessees were obliged to pay a monthly rent of Re 633‑5‑4 on the first day of each month. The lessees were also required to pay all rates, taxes, assessments and other charges payable in respect of the premises.

A key covenant of the lease required the lessees, at their own expense and within the first six months, to erect on the demised land buildings to be used as bullock stables and offices. The construction had to conform to specifications furnished by the Trustees and subsequently approved by them. The lease further provided that, upon expiry of the ten‑year term, if the lessees had complied with all covenants, they would be permitted, at their own expense, to remove the buildings they had erected. Such removal had to be completed within three calendar months after the term ended. During this three‑month removal period the lessees were required to continue paying the monthly rent and all rates and taxes. If the lessees failed to remove the buildings within the prescribed three months, or failed to fill any excavations, level and restore the land, the right to remove the buildings would be deemed terminated. In that event the buildings would become the property of the Trustees, who could then remove, clear, level and restore the land and recover the related costs from the former lessees.

The record does not clearly indicate what actually transpired after the expiry of the original lease term. However, on 11 August 1942 the Trustees entered into a new agreement granting a monthly tenancy of the same land, together with the existing buildings and all rights, easements and appurtenances, to Moreshwar Narayan Dhotre and Dinshaw Rustomji Ogre, who carried on business as Messrs Dinshaw and Company, and to their respective heirs, executors, administrators and assigns. Under this tenancy the lessees were required to pay a monthly rent of Rs 300 clear of all deductions on the first day of each calendar month, and to discharge all rates, taxes and other charges. The lessees covenanted not to add to or alter the buildings or other conveniences without the prior written consent of the Trustees, and to maintain the property in good repair at their own cost.

Additionally, the lessees agreed “to peacefully leave and, yield up the demised premises together with all buildings thereon as prepared and kept at the expiration or sooner determination of the tenancy hereby created or in the event of the Tenants becoming entitled to remove the buildings standing on the demised land at the expiration or sooner determination of the tenancy hereby created pursuant to the proviso in that behalf hereafter contained to peaceably leave and yield up the demised land cleared and leveled to the satisfaction in all respects of the Trustees.” The tenancy agreement contained several provisos, including a covenant that either party could terminate the tenancy by giving one calendar month’s written notice to the other, such notice to take effect on the first day of any calendar month. The agreement further provided that during any notice period the tenants were permitted to remove the buildings that had been standing on the demised land.

They were also required to keep the property in good repair at their own expense. They further agreed to “peacefully leave and yield up the demised premises together with all buildings thereon as prepared and kept at the expiration or sooner determination of the tenancy hereby created or in the event of the Tenants becoming entitled to remove the buildings standing on the demised land at the expiration or sooner determination of the tenancy hereby created pursuant to the proviso in that behalf hereafter contained to peaceably leave and yield up the demised land cleared and leveled to the satisfaction in all respects of the Trustees.” The lease contained several additional covenants. Clause two provided that either party could terminate the tenancy by giving the other a written notice of one calendar month, with termination effective on the first day of any calendar month. Clause four allowed the Tenants, during the notice period required for termination under clause two, to remove any buildings standing on the demised land, provided that all rent had been paid up to the date of termination and that the Tenants had complied with every covenant and condition applicable to them. On 28 February 1947, Moreshwar Narayan Dhotre and Dinshaw Rustomji Ogra assigned their lease rights to Rupji Jeraj and Kanji Manji; the deed of assignment (Ex.D) recorded a payment of Rs. 22,250 to the assignors, and the lessors apparently accepted the assignment. On 25 January 1956, the Trustees of the Port of Bombay served a notice on Rupji Jeraj and Kanji Manji demanding that they vacate the premises and deliver vacant and peaceful possession of the land by 29 February 1956. The notice was not obeyed, and the Trustees instituted ejectment proceedings against the lessees. The plaint sought an order directing the defendants to deliver vacant and peaceful possession of the demised premises situated in the Mazagaon Sewri Reclamation Estate, as described in Exhibit A. Exhibit A identified the land as the parcel at Haji Bunder, Mazagaon Sewri Reclamation Estate, Bombay, measuring approximately 5,066 619 square yards and bearing Cadastral Survey No. 272/145 of the Parel‑Sewree Division. The suit was originally filed against both Rupji Jeraj and Kanji Manji, but the plaint was later amended to remove Rupji Jeraj’s name because he had died earlier. The appellant, now defendant, raised several pleas. His principal objection was that the notice dated 25 January 1956 was invalid because it had been served only on one lessee, namely Kanji Manji, and not on the heirs or legal representatives of the deceased Rupji Jeraj. He also argued that the suit was defective for failing to joinder the heirs and legal representatives of Rupji Jeraj, who he claimed were necessary parties.

In this case, the Court observed that the appellant had pleaded that the suit should have been filed in the Court of Small Causes, Bombay, because it was governed by the Bombay Rents, Hotel and Lodging Houses Rates (Control) Act, 1947. He asserted that the protection available under sub‑section 4(a) of that Act applied to him, not the provision of sub‑section 4(1). On that basis, he contended that the Act prohibited him from evicting his sub‑tenants, rendering the contract to deliver vacant possession impossible and therefore making the plaintiffs’ claim incompetent. All of those pleas were rejected. The Court held that the tenancy in question was a joint tenancy and that a notice served upon one of the joint tenants satisfied the statutory requirement. Accordingly, the suit was not defective for failure to join the heirs and legal representatives of Rupji Jeraj. The trial judge had earlier concluded that the present agreement was enforceable because the case was governed by sub‑section 4(1) rather than sub‑section 4(a) of section 4 of the Act, and that the suit was properly instituted in the Bombay City Civil Court. The same contentions were raised before this Court, and they were considered in the same order. The argument concerning notice was dealt with briefly. By virtue of the deed of assignment dated 28 February 1947, the parties took the premises as joint tenants; the deed expressly stated that the assignors “do and each of them both hereby assign and assure with the assignees as Joint Tenants.” That deed was approved and accepted by the Trustees of the Port of Bombay, thereby making Rupji Jeraj and the appellant joint tenants. Consequently, the trial judge was correct in holding the tenancy to be joint and in finding that a notice to one joint tenant was sufficient, rendering the suit valid. Counsel for the appellant did not attempt to argue the opposite position. In the Court’s opinion, both the notice and the framing of the suit were proper, and the appellant’s contention on this point lacked merit. The principal controversy, however, centered on whether the Bombay Rents, Hotel and Lodging Houses Rates (Control) Act, 1947—hereinafter referred to as the Rent Control Act—applied to the present suit, and consequently, whether the Bombay City Civil Court possessed jurisdiction. The question of jurisdiction could arise only if the Rent Control Act applied to the facts, and therefore the Court examined the two issues together. It was noted that the suit sought only eviction from the land, and that under the Rent Control Act the term “premises” is defined by section 5(8) to include any land not being used for agricultural purposes.

In this section, the term “Premises” is defined to mean any land that is not being used for agricultural purposes. Before the amendment made by the Bombay Act IV of 1953, section 4(1) of the Act stated that the legislation would not apply to any premises owned by the Government or a local authority, nor would it apply against the Government to any tenancy or similar relationship created by a Government grant concerning premises that were leased or requisitioned by the Government; however, the Act would apply to premises that were let to the Government or a local authority. This subsection was examined by the Bombay High Court in a matter that later reached this Court on special leave. The decision of this Court is reported in Bhatia Co‑operative Housing Society Ltd. v. D. C. Patel. In that case, the City Improvement Trust of Bombay auctioned building sites in 1908, and the sale conditions required the successful bidder to construct a building of a specified value according to a plan approved by the Trust. Sitaram Laxman obtained the highest bid, complied with the construction requirement, and was subsequently granted a lease of the land together with the building for a term of 999 years. In 1925, the Bombay Municipality succeeded the City Improvement Trust, and the Bhatia Co‑operative Housing Society acquired the lessee’s interest. The Society then instituted a suit against its own tenants in the Bombay City Civil Court, contending that the suit should have been filed in the Court of Small Causes as mandated by the Rent Control Act. The plaintiff relied on subsection (1) of section 4 to argue that the Act did not apply to the suit, and this argument was accepted by the trial judge, who decreed in favour of the plaintiff.

The Bombay High Court, on appeal, held that subsection (1) of section 4 did not apply and that, as between the Co‑operative Society and its sub‑tenants, the suit fell within the scope of the Rent Control Act and therefore should have been brought before the Court of Small Causes. Consequently, the High Court ordered that the plaint be returned for presentation to the appropriate court. On special leave, this Court reversed the High Court’s decision and restored the trial judge’s decree. In its analysis, this Court observed that subsection (1) of section 4 contains three distinct provisions: (i) the Act shall not apply to premises belonging to the Government or a local authority; (ii) the Act shall not apply against the Government to any tenancy or similar relationship created by a Government grant concerning premises that are taken, leased, or requisitioned by the Government; and (iii) the Act shall apply to premises let out to the Government or a local authority. The Court further noted that the first provision, which excludes certain premises from the operation of the Act, does not refer to any tenancy or similar relationship and is of a general character, indicating a broader intention to exempt that class of premises entirely from the Act’s operation.

In this judgment, the Court observed that the first part of sub‑section (1) of section 4, identified as clause No (1), did not refer to any tenancy or similar relationship, and was drafted in a general manner. The Court explained that the purpose of this wording was clearly different from the later clauses; it was intended to remove from the operation of the Act all premises of a particular kind, and the exemption therefore attached to the premises themselves rather than to any contractual relationship. The Court had earlier set out several reasons for treating the exemption as general and absolute, but it stated that it was unnecessary to repeat those reasons at this stage.

The Court then turned to the relationship between the Bombay Municipality and the lessee. It held that both the land and the buildings on that land remained the property of the Municipality, not of the lessee, and that the lessee possessed only a right of enjoyment under the lease. Referring to the decision recorded on page 196, the Court quoted that “the truth is that the lessor after the building was erected became the owner of it and all the time thereafter the demised premises which include the building have belonged to him subject to the right of enjoyment of the lessee in terms of the lease.” Consequently, the Court concluded that the Rent Control Act could not be applied to suits arising from that relationship, and it therefore set aside the order of the High Court.

Subsequently, the legislature responded by first issuing an Ordinance and later enacting a law that inserted sub‑section 4(a) into section 4. The newly inserted provision read in full: “(4)(a). The expression ‘premises belonging to the Government or a local authority’ in sub‑section (1) shall, notwithstanding anything contained in the said sub‑section or in any judgment, decree or order of a Court, not include a building erected on any land held by any person from the Government or a local authority under an agreement, lease or other grant, although having regard to the provisions of such agreement, lease or grant the building so erected may belong or continue to belong to the Government or the local authority; (b) notwithstanding anything contained in section 15, such person shall be enabled to create a tenancy in respect of such building or a part thereof.”

The amendment accomplished two distinct aims. First, it permitted a lessee of a building that fell within clause (a) to create sub‑tenancies despite the prohibition on sub‑tenancies contained in section 15. Second, it removed from the operation of sub‑section (1) those buildings specifically described in clause (a). The amendment, however, said nothing about the connection between the Government or the local authority and the lessee regarding the underlying land. The term “premises” in sub‑section (2) could refer to land, to buildings, or to both, but sub‑section 4(a) dealt only with buildings because it used the word “buildings” rather than the broader term “premises”. Accordingly, the effect of sub‑section 4(a) was limited to buildings and did not extend to the land itself. The Court noted that the language of the sub‑section was drafted somewhat inartistically, and that the resulting obscurity presented interpretative difficulty.

In that proceeding, the trial judge relied on a decision of the Bombay High Court reported in Ram Bhagwandas v. Bombay Corporation. The earlier case involved a man named Khudabaksh Irani, who, about thirty years earlier, had taken a lease of several plots of land. He had erected structures on the vacant land and let those structures out as tenements. In 1947 Irani transferred his interest in the plots to a person named Tyaballi. Four years later, in 1951, the Municipal Corporation instituted suit to evict Tyaballi from the plots. The parties entered into a consent decree whereby Tyaballi promised to surrender vacant and peaceful possession of the plots, free of any structures. Tyaballi did not comply with the agreement and failed to remove the buildings, prompting the Municipal Corporation to move to enforce the decree. The tenants, in response, filed a suit under sections 21 and 103 of the Civil Procedure Code against the Municipal Corporation, but that suit was dismissed. On appeal before the High Court, it was admitted that the Municipal Corporation owned the plots, yet the tenants sought protection on the basis of sub‑section (4)(a) of section 4 of the Rent Control Act. The learned Chief Justice, Chagla, examined the legislative history of the amending Act and observed that the legislature intended to protect tenants who occupied buildings standing on land belonging to a government or local authority, provided the buildings had been erected under an agreement that imposed on the lessee an obligation to construct them. The Chief Justice emphasized that the protection conferred by sub‑section (4)(a) applied to the buildings themselves and not to the land. He explained that the phrase “under an agreement, lease or other grant” qualified both “held by any person from Government or local authority” and “erected on any land”. Consequently, the words “erected on any land held by any person from a local authority” described the building rather than the time of its erection. The emphasis, according to the Chief Justice, was that the nature of the building must satisfy the test of having been erected on land owned by a government or local authority, and that this test must be applied at the moment when protection is claimed. In the present case, it was contended, as it had been before the Bombay High Court, that once a building was constructed under an agreement with the Government or a local authority, the benefit of sub‑section (4)(a) of section 4 would continue to be available irrespective of how many times the property changed hands. The learned Chief Justice considered this argument and rejected it.

In our view, although the wording of the section is far from clear, the interpretation adopted by the learned Chief Justice is the only plausible meaning when the circumstances surrounding the enactment of the sub‑section are taken into account. Those circumstances were that, in a case where the holder of land belonging to a local authority sought to evict his sub‑tenants, it was held by

In this case the Bombay High Court had previously held that the dispute fell within the Rent Control Act. The Supreme Court, however, found that subsection (1) of the relevant provision applied, and consequently the suit was not governed by the Rent Control Act. The amendment to the statute was enacted to narrow the meaning of the phrase “any premises belonging to the Government or a local authority” by excluding only those buildings that were occupied by sub‑tenants, even though the buildings remained Government property or continued to be owned by the Government. Clause (b) of subsection (4) also excluded section 15, which prohibited a tenant from being subjected to certain restrictions; that exclusion, however, was limited solely to buildings and did not extend to land. Accordingly, any action taken by the Government or a local authority concerning land is governed by subsection (1) rather than subsection (4)(a), and subsection (1) places the matter outside the scope of the Rent Control Act. The practical effect of this interpretation is that when the Government or a local authority seeks to evict a person from land, the provisions of the Rent Control Act cannot impede that eviction. For the same reason, the suit for ejectment need not be filed in the Court of Small Causes as required by the Rent Control Act; instead it may be filed in the City Civil Court, which is precisely what occurred in the present proceedings. Another reason supporting this conclusion is the nature of the lease granted in 1942. At that time the lessees, from whom the appellant alleges an assignment, obtained a lease covering not only the land but also the buildings situated upon it. The agreement’s tenor shows that the lessees held a precarious title: it was a monthly tenancy that could be terminated by notice under the Transfer of Property Act, and the lessees were granted only a limited grace allowing them to remove the buildings within one month after eviction. This precarious interest was transferred to the assignee by assignment, and the same conditions applied to the assignee. Because the original lessees leased both the land and the buildings, their assignees cannot argue that the Government’s ownership was limited to the land alone. The deed of lease and its various clauses make it clear that the buildings cannot now be described as structures erected under a fresh agreement with the Government; rather, they are Government‑owned buildings that were leased together with the land, and the lessees were permitted, by concession, to remove the buildings within a month after eviction. In our view, therefore, the suit filed for vacant possession of the site in the City Civil Court was competent. The appellant contended that the contract was impossible to perform because, at least between him and his sub‑tenants, the provisions of the Rent Control Act would apply and prevent him from evicting them, rendering the portion of the lease dealing with delivery of vacant possession impossible to enforce.

The Court observed that the provisions of the Rent Control Act would be applicable, which meant that the appellant could not lawfully evict his sub‑tenants in the manner he desired. Accordingly, it was contended that the appellant’s inability to fulfil his obligation to deliver vacant possession rendered that specific clause of the lease deed unenforceable and void. The Court noted, however, that the appellant did not argue that the entire lease deed should be declared void on the ground of impossibility. The appellant’s claim was limited to the portion of the deed that required the delivery of vacant possession, which he asserted had become impossible to perform.

The Court referred to a similar situation decided by the Bombay High Court in Ram Bhagwandas v. Bombay Corporation (A.I.R. 1996 Bom. 364), where the assignee of a lessee was likewise unable to deliver vacant possession. The Court stated that it need not express an opinion on whether the Port Trust authorities would later be able to evict the appellant’s sub‑tenants. Even if the appellant were unable to evict his sub‑tenants and thereby unable to remove the buildings, the Court held that this unfortunate circumstance did not enable him to defeat the rights of the Port Trust authorities. The Port Trust authorities were only seeking vacant possession of the site. Under the lease agreement, if the appellant failed to remove the buildings within one month, the authorities would be entitled to take possession of the land together with the buildings, irrespective of any rights that the sub‑tenants might claim. The Court expressly declined to pass any judgment on the rights of the sub‑tenants. In conclusion, the Court held that the appeal must fail and dismissed it, but chose not to make any order regarding costs.