Vithal Yeshwant Jathar vs Shikandarkhan Makhtumkhansardesai

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

Court: Supreme Court of India

Case Number: Civil Appeal No. 379 of 1957

Decision Date: 19 April 1962

Coram: K.C. Das Gupta, A.K. Sarkar, K.N. Wanchoo, N. Rajagopala Ayyangar

In the case Vithal Yeshwant Jathar versus Shikandarkhan Makhtumkhansardesai, decided on 19 April 1962, the Supreme Court of India delivered its judgment. The bench consisted of Justices K.C. Das Gupta, A.K. Sarkar, K.N. Wanchoo and N. Rajagopala Ayyangar. The petitioner was Vithal Yeshwant Jathar and the respondent was Shikandarkhan Makhtumkhansardesai. The judgment was reported in 1963 AIR 385 and 1963 SCR (2) 285, with later citations including RF 1971 SC 442, 13 R 1989 SC 2240, and references to the statutory issues concerning Watan lands, perpetual lease, fixation of higher rent by the Government, whether the Watandar was entitled to enhance rent, compulsory acquisition, apportionment of compensation and whether the Watandar was entitled only to the capitalised value of rent, all under the Bombay Hereditary Offices Act, 1874 (Bombay Act III of 1874), sections 5 and 9. The factual background was that in 1863 the Watandar granted a permanent lease of watan lands at a fixed rent of Rs 727 per year. In 1907 the Watandar applied under section 9 of the Watan Act for a declaration that the lease should be held null and void and for possession of the lands. The Collector refused to make such a declaration but directed that an additional amount of rent be paid. Subsequently the Government, by an order dated 23 May 1911, fixed the rent at Rs 1245¼. Later some of the lands were compulsorily acquired and the compensation was apportioned between the Watandar and the tenant in the proportion of 10 : 6. On appeal, the High Court held that the Watandar was entitled to claim that the tenant should pay the enhanced rent and, on that basis, apportioned the compensation in the proportion of 55 : 45. The Supreme Court held that the Watandar was not entitled to enhance the rent; he was only entitled to the capitalised value of the rent as his share of compensation. The Court explained that in an application under section 9 of the Watan Act the Collector must first decide whether there are sufficient reasons to declare the alienation null and void. If such reasons exist, the Collector may issue the declaration and then either transfer possession to the Watandar or, under section 9(2), retain possession of the alienated land and collect from the holder the appropriate amount as profit of the land for payment to the Watandar. Where the alienation is a lease, the former lease ceases to be effective and the lessee continues in possession only by virtue of the Collector’s permission. However, if the Collector finds no reason to declare the lease null and void, he has no power to act under section 9(2). In the 1907 proceeding the Collector had refused the declaration and therefore lacked jurisdiction to make any order under section 9(2); his order directing the tenant to pay additional rent was therefore without jurisdiction. From that order it could not be inferred that he had declared the lease null and void, nor did the Government declare the 1863 lease null and void; it merely ordered that the rent should be revised and fixed at Rs 1245¼.

The Government order did not declare the lease null and void; it merely directed that the rent be revised and fixed at Rs. 1245/4/-. The order operated on the assumption that the lease continued to exist. Accordingly, the Government’s sanction authorised the holder of the Watan lands to remain in possession on payment of the revised rent, while preserving the other lease terms, namely that the lease was permanent and that the rent would remain unchanged thereafter. Because the order merely sanctioned the existing lease and adjusted the rent, the Court held that the Government’s action fell within the scope of section 5 of the relevant Act, and not within section 9. The judgment that follows concerns Civil Appeal No. 379 of 1957, an appeal from the judgment and decree dated 3 December 1954 of the Bombay High Court in F.A. No. 287 of 1953. The appellant was represented by counsel S.B. Jather, E. Udayarathnam and B.P. Maheshwari, while the respondent was represented by counsel S.G. Patwardhan, J.B. Dadachanji, S. V. Andley, Rameshwar Nath and P.L. Vohra. The decision was delivered on 19 April 1962 by Justice Das Gupta.

The appeal arose from a reference made under section 30 of the Land Acquisition Act concerning the apportionment of a compensation amount of Rs. 35,102‑10‑0, which had been awarded for two plots of land identified as Survey No. 37, Kambhapur and Survey No. 137, Narendra. It was undisputed that these plots formed part of a Watan. The contention over the apportionment was between the Watandar, who was the landlord, and the actual possessor of the land, who is the appellant before this Court. The Land Acquisition Judge had ordered that the compensation be divided in the ratio of ten to six, meaning that ten‑fifteenths of the sum should be given to the landlord and the remainder to the tenant. This order was challenged on appeal. The appellant argued that the rent had been fixed in perpetuity and that the landlord possessed no authority to increase the rent; therefore, the landlord should receive only the capitalised value of the rent payable for the acquired lands, with the balance going to the tenant. The High Court, however, held that the landlord retained the right to claim an enhanced rent and directed that the compensation be apportioned in the proportion of 55 percent to the landlord and 45 percent to the tenant. The present appeal was preferred against that decision on a certificate granted by the High Court. The principal issue for determination was whether, at the date of acquisition, the landlord (the Watandar) had any right to raise the rent on the lands in question. The record shows that in 1963 a permanent lease was executed by the then‑Watandar in favour of the appellant’s predecessors, fixing the rent permanently at Rs. 727/‑ per year. Earlier, in 1907, the Watandar had filed an application under section 9 of the Bombay Hereditary Offices Act, 1874—commonly called the “Watan Act”—seeking a declaration that the alienation created by the 1863 lease be declared null and void and that the Watandar be restored to possession of the leased land. The application was initially considered by the Assistant

The Collector, before whom the Watandar’s application was heard, rejected the request and declined both to restore the Watandar in possession of the land and to cancel the lease of 1863. The Watandar appealed, and on 16 March 1908 the Collector affirmed the Assistant Collector’s decision but added that the lessees should pay an additional amount of rent equal to the rent already being paid on the land. An appeal to the Commissioner was dismissed. Subsequently the Watandar approached the Government of Bombay, which on 23 May 1911 issued an order fixing the rent payable for the lands covered by the 1863 lease at Rs 1245 ¼. The effect of this government order required careful analysis. In 1926 the Watandar again petitioned the Government, this time seeking either a further increase of the rent or the restoration of the lands. In response, the Government made a 1927 order fixing the rent at Rs 4300 and directing that the rent be reviewed every ten years.

In 1928 the tenant instituted a suit before the First‑Class Subordinate Judge of Dharwar against the Secretary of State for India and the Watandar, seeking a declaration that the lands listed in the plaint’s schedule did not constitute Watan lands, that the plaintiffs had acquired the status of Watandars, and that the government resolutions of 1911 and 1927 were beyond the Government’s authority. The Subordinate Judge held that the lands were indeed part of the Watan and that the Watan Act applied to them. He found that, although the Collector’s 1908 order was defective in form, it was substantively an order made under section 9, sub‑section 2 of the Watan Act and therefore could not be said to be ultra vires. He further held that the Government’s 1911 order fixing rent at Rs 1245 ¼, which exceeded the Collector’s amount, was ultra vires; however, because of the law of limitation, the plaintiff could not obtain a declaration that the 1911 order was ultra vires. The Judge also concluded that the 1927 government order was ultra vires. Accordingly, he directed the first defendant, the Secretary of State for India in Council, not to levy rent higher than Rs 1245 ¼ as per the 1911 resolution and declared that the higher rent claimed under the 1927 resolution was unauthorized. He ordered the recovery of the excess amount of Rs 4582 2‑0 from defendants 1 and 2. The Secretary of State for India (defendant 1) and the Watandar (defendant 2) appealed this decision to the High Court, while the plaintiff did not file any appeal.

In this appeal, the High Court consisting of Chief Justice Beaumont and Justice Wassoodew dismissed the petition except for the part that required both defendants, Nos 1 and 2, to pay the excess amount claimed by the plaintiff. The Court modified that portion of the decree by directing that the recovery of the excess amount should be made solely from Defendant No 2, the Watandar, and it dismissed all other reliefs sought. The judges concurred with the findings of the Subordinate Judge in holding that the Government’s order of 1927 was ultra vires. Further, the High Court expressed two specific opinions. First, it held that the Government’s order of 1911 was not an order made under section 9 of the Watan Act and that it could be regarded as lawful only because it amounted to a grant of a fresh lease by the Watandar at a rent of Rs 1245⁄4, a grant that had the Government’s sanction under section 5 of the same Act. Second, the Court observed that, irrespective of the first view, the Government had acted beyond its authority when it issued the order of 1927, since any action contemplated by section 9 of the Watan Act must initially be taken by the Collector and cannot be taken directly by the Government. As a result of these findings, the Court concluded that, between the parties – that is, the Watandar and the tenant – there could no longer be any dispute that the Government resolution fixing the rent of the Watan lands at Rs 1245⁄4 was legally binding. The Court noted that, in order to determine whether the Watandar was entitled to increase the rent thereafter, it was necessary to decide whether the Government’s action should be characterised as one taken under section 9 of the Act or as a sanction of a fresh lease at the stated rent.

Before the High Court, the tenant‑appellant contended that the earlier decision of that Court, which had been mentioned above, that the Government’s 1911 order fixing the rent at Rs 1245⁄4 was not an order under section 9 but merely a sanction of a fresh lease, operated as res judicata between the parties. The High Court judges rejected that contention, holding that the earlier pronouncement was obiter. The appellant now challenged that view before this Court, arguing that although the High Court had given another ground for its conclusion that the 1927 Government order could not stand, that alternative ground did not alter the position that the finding that the 1911 Government order was not an order under section 9 but a sanction of a fresh lease was also decided as a basis for the final conclusion. The appellant further relied on the settled principle that where a final decision in any matter between the parties rests on more than one point, and each point alone would have been sufficient to support the ultimate decision, the decision on each individual point operates as res judicata between those parties.

In this case the Court observed that when several points on which a decision is based are each sufficient to support the final outcome, each of those points operates as res judicata between the parties, as established in Kishori Lal v. Devi Prasad and Annammalai v. Lakshmanan. The respondent, however, contended that the tenant never appealed the Subordinate Judge’s order refusing to interfere with the Government’s 1911 order, and consequently, before the High Court the validity of the 1911 order had not been litigated. On that basis the respondent argued that the earlier High Court decision addressing the nature of the 1911 order could not be said to bind the parties as res judicata. The Court noted the earlier authorities cited, namely A.I.R. (1950) Pat. 50 and A.I.R. (1939) Mad. 433, but declined to examine whether the High Court’s previous ruling that the 1911 Government order legally amounted to sanctioning a fresh lease should be treated as res judicata. Independently of that earlier ruling, the Court held that the 1911 Government order does not fall within section 9(2) of the Watan Act; instead, it merely constituted a sanction of a new lease. Section 9 of the Watan Act provides that when, before the Act came into force, any watan or part thereof, or any of its profits, was transferred to a person who was not the watandar without a decree of a British Court, the Collector may, after recording written reasons, declare such alienation null and void and order that the watan or its profits revert to the original watandar, also allowing the Collector to recover and pay the appropriate profits to the watandar. Sub‑section 2 further permits the Collector, where the alienated portion is land, to forgo transferring possession and instead demand and recover the full rent ordinarily payable by tenants of similar land in the same locality; that recovered amount is to be treated as the profit, and the Collector’s determination of the full rent is final. The relief available to a watandar under this provision begins with a declaration that the alienation was null and void. Following such a declaration, the Collector may either convey possession of the watan land to the watandar as a consequential step, or, in lieu of transferring possession, may collect from the current possessor the full rent assessed as the profit and pay that amount to the watandar. The measure of the profit is therefore the full rent ordinarily …

In this case the Court explained that when a Watandar files an application for relief under section 9, the Collector’s first duty is to decide whether there exist sufficient reasons to declare the alienation null and void. If the Collector finds no such reasons, the application must be dismissed. Conversely, if the Collector is satisfied that good reasons exist, he must state those reasons in writing and issue a declaration that the alienation is null and void. After making such a declaration the Collector must then choose between two alternatives: either to transfer possession of the land back to the Watandar as a consequential relief, or to invoke subsection 2 of section 9, whereby instead of transferring possession the Collector collects from the current possessor the amount he considers to be the full rent ordinarily paid by tenants of comparable land in the same locality, and pays that amount to the Watandar. The Court stressed that action under subsection 2 is permissible only on the premise that the alienation has lost all legal effect. Thus, where the alienation was a lease, subsection 2 can be applied only if the lease is no longer legally valid and the landlord‑tenant relationship between the Watandar and the possessor has terminated. When the Collector acts under subsection 2, the former lessee remains in possession, not as a lessee but solely by virtue of the Collector’s permission, and no new lease is created; the possessor simply continues under the condition of paying the rent determined by the Collector. The Assistant Collector, before whom the Watandar’s application was originally presented, rejected the request of Matunkhan to restore to Bhaskarrao Jather full possession of lands held on a perpetual lease dating from 1863, thereby refusing both the declaration of nullity and the consequential relief. The Collector who heard the appeal, while agreeing that the order under appeal was largely correct, nonetheless ordered that an additional rent equal to the cess be paid. The Collector’s order did not indicate that he disagreed with the Assistant Collector’s view that there were no grounds to declare the alienation null and void; rather, it showed concurrence with that view while still directing the payment of additional rent.

The Court observed that the Assistant Collector had held the view that the alienation could not be declared null and void. The Court warned that to interpret the appellate order as implying a declaration that the lease of 1863 was null and void would require inserting words that are not present in the order and would contradict the plain meaning of the language actually used. In the Court’s opinion there was no reason to conclude that when the Collector ordered the payment of an additional amount of rent equal to the cess, he must have been relying on the provisions of section 9(2) of the Watan Act. Accordingly, the Court said it would be incorrect to read the Collector’s order as, first, implying a declaration that the 1863 lease was null and void, and, second, as an order for the collection of profits on behalf of the Watandar from the person in possession.

The Court further noted that, according to law, the Collector could not lawfully make an order for the payment of additional rent unless he first declared the previous lease to be null and void and then determined that the sum of the previous rent together with the additional amount represented the full rent normally paid by tenants of land of similar description in the same locality. The Court held that the mere fact that the Collector directed payment of an additional amount of rent equal to the cess did not permit the Court to infer or imagine a declaration that the lease had been voided, because such a declaration was not expressed by the Collector.

When the matter was referred to the government after the Commissioner dismissed the appeal against the Collector’s decision, the Court pointed out that the government also made no declaration that the lease of 1863 was null and void. However, after outlining certain circumstances indicating that, at the time the lease was granted, the lessee – who occupied a quasi‑fiduciary relationship with the Watandar – had not properly considered the Watandar’s interests, the government issued an order stating: “The rent should therefore now be revised and fixed at Rs 1245/4/- being a sum equal to the present rental plus the judi plus the local fund cess.” The Court explained that the government was clearly acting on the premise that the person in possession was a tenant of the Watandar and that the rent for that tenancy should be fixed at Rs 1245/4/-. The Court emphasized that such an action could not, by any reasonable interpretation, be treated as an exercise of power under section 9 of the Watan Act.

Finally, the Court identified that the only legal authority for the government’s action lay in section 5 of the Watan Act. That provision states that, without the sanction of the State Government, it is not competent for a Watandar to mortgage, charge, lease or alienate, for a period beyond his natural life, any watan or any part thereof, or any interest therein, to any person who is not a Watandar of the same watan. By necessary implication, the Court observed, this section authorises the State Government to sanction such mortgage, charge, lease or alienation.

In this case, the Court explained that the provision allowing a Watandar to alienate or lease any portion of a watan, or any interest therein, for a period extending beyond his natural life, required the prior sanction of the State Government; once such sanction was granted, the Watandar possessed the authority to act accordingly. The Court observed that after the Government issued its order in 1911, the former tenant continued to occupy the land and the Watandar began to receive from him the rent fixed by that order, namely Rs.1245‑4/‑ for the entire watan. Considering these facts, the Court found it reasonable to conclude that the 1911 Government order effectively sanctioned a lease of the watan lands to the person then in possession, and that the lease was to be taken at the revised rental amount. Consequently, the Government’s order created a new lease operating at the rate of Rs.1245‑4/‑, which replaced the earlier lease dated 1863. The Court then addressed whether the Watandar could lawfully increase the rent thereafter. It noted that no written document existed to evidence a lease created after the 1911 order. Nevertheless, the Court pointed out that the Government’s order clearly indicated that the sole alteration permitted in the terms of the former lease concerned the rental amount, which was changed from Rs.727/‑ to Rs.1245‑4/‑, while the other essential terms—namely, that the lease was permanent and that the rent would remain fixed from the lease’s inception—were left unchanged. Citing the earlier judgment of Chief Justice Beaumont, the Court quoted that “the Government resolution dated the 23rd May, 1911 amounts to an opinion to a confirmation of the 1863 lease with a modification as to the rent.” On this basis, the Court held that the Watandar had no right to further increase the rent. As a result, the Court determined that, of the total compensation awarded for the lands, the respondent, who was the landlord, was entitled only to the capitalised value of the rent. The rent for the whole watan, comprising 400 acres, was Rs.1245‑4/‑; therefore, the proportionate rent for the portion of land acquired—30 acres and 32 gunthas—was approximately Rs.95‑9/‑. Multiplying this amount by twenty‑five to obtain its capitalised value yielded Rs.2389‑1/‑. Accordingly, the Court directed that Rs.2389‑1/‑ of the compensation be awarded to the respondent, with the balance to be paid to the appellant. The Court further ordered that the appellant bear his costs both in this proceeding and in the lower court. The appeal was thus allowed, and the compensation was apportioned as specified.