Bharat Petroleum Corp.Ltd. vs R.Chandramouleeswaran And Ors. on 28 January, 2020


Supreme Court of India

Bharat Petroleum Corp.Ltd. vs R.Chandramouleeswaran And Ors. on 28 January, 2020

Author: Sanjiv Khanna

Bench: N.V. Ramana, Sanjiv Khanna, Krishna Murari

                                                                                 REPORTABLE

                                              IN THE SUPREME COURT OF INDIA

                                                CIVIL APPELLATE JURISDICTION

                                                CIVIL APPEAL NO. 2870 OF 2007

          BHARAT PETROLEUM CORPORATION LIMITED
                                                                           ...   APPELLANT(S)

                                                 VERSUS

          R. CHANDRAMOULEESWARAN AND OTHERS
                                                                           ... RESPONDENT(S)

                                                                    WITH

                                                 CIVIL APPEAL NO.761 OF 2020
                         (ARISING OUT OF SPECIAL LEAVE PETITION (CIVIL) NO. 2645 OF 2010)

                                                  CIVIL APPEAL NO.763 OF 2020
                            (ARISING OUT OF SPECIAL LEAVE PETITION (CIVIL) NO. 19246 OF 2010)

                                                  CIVIL APPEAL NO.765 OF 2020
                            (ARISING OUT OF SPECIAL LEAVE PETITION (CIVIL) NO. 34955 OF 2011)

                                                 CIVIL APPEAL NO.766 OF 2020
                            (ARISING OUT OF SPECIAL LEAVE PETITION (CIVIL) NO. 34945 OF 2011)

                                                  CIVIL APPEAL NO.767 OF 2020
                            (ARISING OUT OF SPECIAL LEAVE PETITION (CIVIL) NO. 34839 OF 2011)

                                                  CIVIL APPEAL NO.768 OF 2020
                            (ARISING OUT OF SPECIAL LEAVE PETITION (CIVIL) NO. 16686 OF 2012)

                                                  CIVIL APPEAL NO.769 OF 2020
                            (ARISING OUT OF SPECIAL LEAVE PETITION (CIVIL) NO. 17435 OF 2012)
Signature Not Verified

Digitally signed by
GEETA AHUJA
                                              CIVIL APPEAL NOS.770-771 OF 2020
Date: 2020.01.28
16:24:01 IST
Reason:
                         (ARISING OUT OF SPECIAL LEAVE PETITION (CIVIL) NOS.29712-713 OF 2013)

                                                  CIVIL APPEAL NO.772 OF 2020
                            (ARISING OUT OF SPECIAL LEAVE PETITION (CIVIL) NO. 7165 OF 2016)

                         Civil Appeal No. 2870 of 2007 and Others                     Page 1 of 30
                         CIVIL APPEAL NO.773 OF 2020
     (ARISING OUT OF SPECIAL LEAVE PETITION (CIVIL) NO. 3842 OF 2017)

                         CIVIL APPEAL NO.774 OF 2020
     (ARISING OUT OF SPECIAL LEAVE PETITION (CIVIL) NO. 32286 OF 2017)

                                           AND

                      CIVIL APPEAL NO.775-776 OF 2020
(ARISING OUT OF SPECIAL LEAVE PETITION (CIVIL) NOS.18342-343 OF 2018)



                               JUDGMENT

SANJIV KHANNA, J.

Leave granted in the special leave petitions.

2. The above-captioned appeals filed by the three oil companies,

namely, Bharat Petroleum Corporation Limited, Indian Oil

Corporation Limited and Hindustan Petroleum Corporation Limited

(hereinafter referred to as ‘the appellant’), raise an identical

question of law relating to the right of a tenant, in terms of Section

9 of the Madras City Tenants’ Protection Act, 1921 (hereinafter

referred to as the ‘Act’), to an order whereby the landlords could

be directed to sell the leasehold land in whole or in part at the

price fixed by the court.

3. Briefly, the appellant had under different written registered lease

deeds with the landlords taken land on long-term lease and had

thereupon constructed petrol pumps that were given to and

Civil Appeal No. 2870 of 2007 and Others Page 2 of 30
operated by the dealers appointed by the appellant under the

dealership agreements. In some cases the leases were renewed

on nationalisation of companies in terms of Burmah Shell

(Acquisition of Undertakings in India) Act, 1976, Caltex

(Acquisition of Shares of Caltex Oil Refining (India) Limited and of

the Undertakings in India of Caltex (India) Limited) Act, 1977, and

Esso (Acquisition of Undertakings in India) Act, 1974. However, it

is an accepted position that the term or duration of the leases,

even where leases were renewed, has expired in all cases.

4. The landlords, who are the contesting respondents before us, had

or have filed suits for ejectment for recovery of possession of the

land. The appellant had filed applications purportedly in exercise

of their right under Section 9 of the Act for transfer/sale of the

leasehold land in whole or in part at the price fixed by the court.

By different impugned judgments, some of which have arisen from

the remand order dated 3rd December 2009 passed by the

Division Bench of this Court, the Madras High Court has rejected

the applications filed by the appellant, either affirming or reversing

the findings of the trial court or the lower appellate court.

5. Preamble of the Act as originally enacted in 1921 had stated:

“An Act to give protection to certain classes of tenants
in the City of Madras.

Civil Appeal No. 2870 of 2007 and Others Page 3 of 30
WHEREAS it is necessary to give protection to tenants
who in many parts of the City of Madras have
constructed buildings on others’ lands in the hope that
they would not be evicted so long as they pay a fair
rent for the land and

WHEREAS the sanction of the Governor-General has
been obtained under section 80-A (3) of the
Government of India Act”

The Objects and Reasons of the Act read as under:

“In many parts of the City of Madras, dwelling houses
and other buildings have, from time to time, been
erected by tenants on lands belonging to others, in the
full expectation that subject to payment of a fair ground
rent, they would be left in undisturbed possession,
notwithstanding the absence of any specific contract as
to the duration of the lease or the terms on which the
buildings were to be leased. Recently, attempts made
on steps taken to evict a large number of such tenants
have shown that such expectations are likely to be
defeated. The tenants, if they are evicted, can at the
best remove the superstructure, which can only be
done by pulling down the buildings. As a result of such
wholesale destruction, congested parts of the City will
become more congested to the serious detriment of
public health. In these circumstances, it is just and
reasonable that the landlords when they evict the
tenants should pay for and take the buildings. There
may, however, be cases where the landlord is unwilling
to eject a tenant if he can get a fair rent for the land.

The Act provides for the payment of compensation to
the tenant in case of ejectment for the value of any
building which may have been erected by him or his
predecessors-in-interest. It also provides for the
settlement of fair rent at the instance of the landlord or
tenant. Provision is also made to enable the tenant to
purchase the land in his occupation subject to certain
conditions.”

The Act as enacted in 1921 was to give protection to a

certain class of tenants in the city of Madras who had before the

Civil Appeal No. 2870 of 2007 and Others Page 4 of 30
enactment of the Act, and not after the enactment, constructed

structures on the leasehold lands in the city of Madras. The

objects and reasons refer to a peculiar situation prevailing in the

city of Madras where dwelling houses and other buildings had

been erected by the tenants on land taken on lease in expectation

and belief that their possession would not be disturbed, subject to

payment of fair-ground rent to the landlords. The agreements with

the landlords, reasons record, would be silent on duration of the

lease and the terms on which the buildings were to be leased.

Reasons further state that recently, that is before the enactment in

1921, attempts and steps had been initiated by the landlords to

evict large number of such tenants, thereby the general

expectations of the tenants were likely to be defeated as they

were liable to be evicted. Therefore, the Act was enacted to

prevent wholesale destruction of the buildings/superstructures

which were required to be pulled down by the tenants on eviction.

This would have caused serious detriment to public health as

buildings were to be demolished in the congested parts of the city.

In these circumstances, it was reasonable and proper that the

tenants should be asked to pay fair market price of the land to the

landlords and become owners of the land. As some landlords

would not be interested in ejectment of a tenant, the Act provided

for enhancement of rent in such cases so that the landlord would
Civil Appeal No. 2870 of 2007 and Others Page 5 of 30
get fair market rent. The Act dealt with payment of compensation

of the value of the building by the landlord in case the tenant did

not want to purchase or pay fair market value of the land.

6. The Act has undergone a paradigm shift in terms of its reach and

ambit by extending protection to leases and constructions made

post-1921 and extension to areas other than the ones recognised

in the original enactment as well as by enhancing and modifying

the terms of protection available to the tenants. These

amendments particularly vide the Madras Act No. 19 of 1955,

Tamil Nadu Act No. 13 of 1960, Tamil Nadu Act No. 4 of 1972 and

Tamil Nadu Act No. 24 of 1973 which have been hereinafter

referred to as the Amendment Act, 1955; Amendment Act, 1960;

Amendment Act, 1972 and Amendment Act, 1973, respectively,

shall be expounded to the extent necessary for the present

decision. To avoid prolixity, we have avoided quoting and referring

to the history of the legislation and the changes made thereto.

7. By the Amendment Act, 1955, the Act was extended to ‘municipal

towns and adjoining areas in the State of Madras’ 1. By the Tamil

Nadu Adaptation of Laws Order, 1969 as amended by the Tamil

Nadu Adaptation of Laws (Second Amendment) Order, 1969, the

expression ‘State of Tamil Nadu’ was substituted for the words
1
This was further amended by the Madras City Tenants’ Protection (Amendment) act, 1979 whereby
the words “municipal towns” were substituted by the words “municipal towns and townships”.

Civil Appeal No. 2870 of 2007 and Others Page 6 of 30
‘State of Madras’. The Amendment Act, 1972 had also amended

the Preamble by deleting the words ‘in the hope that they would

not be evicted’. The Preamble as it stands now reads as under:

“An Act to give protection to certain classes of tenants
in municipal towns and townships and adjoining areas
in the State of Tamil Nadu.

WHEREAS, it is necessary to give protection against
eviction to tenants, who in municipal towns and
townships and adjoining areas in the State of Tamil
Nadu have constructed buildings on others’ land so
long as they pay a fair rent for the land;”

With the amendments, the Act was extended to be applied

even to leases of land executed post the enactment and

enforcement of the Act in 1921. However, the Act even post the

amendments applies only to those leases of land on which

building was constructed by the tenant prior to the date specified

and not post the date specified.

8. We would begin our interpretation by referring to in brief the

scheme of the Act which postulates and grants certain rights that

may be exercised by the tenant facing eviction proceedings.

Under Section 3 of the Act, the tenant is entitled to be paid

compensation equivalent to the value of the building, which he or

any of his predecessors in interest or any person not in occupation

at the time of ejectment who derived title from either of them, had

erected and for which compensation has not been already paid.

Civil Appeal No. 2870 of 2007 and Others Page 7 of 30
The tenant is also entitled to the value of the trees and any

improvements which may have been planted/made by him.

Section 9 of the Act grants the tenant, who is entitled to

compensation under Section 3 and against whom a suit for

ejectment has been instituted or proceeding under Section 41 of

the Presidency Small Cause Courts Act, 1882 (Central Act XV of

1882) taken by the landlord, to apply for an order directing the

landlord to sell for a price to be fixed by the court, in whole or in

part, the extent of land specified in the application. Under clause

(b) to Section 9(1), the court shall decide the minimum extent of

the land which is necessary for the convenient enjoyment by the

tenant and accordingly fix the price for the land either as prayed

by the applicant or as determined by the court, whichever is less.

9. Section 12 protects the rights of a tenant against eviction,

notwithstanding the contract entered into by a tenant. However,

prior to its amendment vide the Amendment Act, 1972, the

override and paramountcy of the Act was not applicable to written

registered leases of land that had stipulations as to the ‘erection of

buildings’. Section 12 as originally enacted had stated:

“12. Effect of contracts made by tenants. – Nothing
in any contract made by a tenant shall take away or
limit his rights under this Act provided that nothing
herein contained shall affect any stipulations made by
the tenant in writing registered as to the erection of

Civil Appeal No. 2870 of 2007 and Others Page 8 of 30
buildings, in so far as they relate to buildings erected
after the date of the contract.”

Thus, the proviso to Section 12 had given primacy to the

written registered document with a covenant as to ‘erection of

buildings’ after the date of the agreement. Parties are ad idem that

the effect of the proviso was to effectively deny the tenants the

statutory right to purchase land under Section 9 or enforce other

rights under the Act where the written registered agreement had a

stipulation relating to ‘erection of buildings’ by the tenant, in which

event parties would be bound by the terms of the agreement and

the Transfer of Property Act, 1882, and the Act, that is the Madras

City Tenants’ Protection Act, 1921, would not apply. The proviso to

Section 12 viz., the words ‘provided that nothing herein contained

shall affect any stipulations made by the tenant in writing

registered as to the erection of buildings insofar as they relate to

buildings erected after the date of the contract’ were deleted vide

Section 3 of the Amendment Act, 1972 which reads:

“3. Amendment of Section 12, Tamil Nadu Act III of
1922.─ In section 12 of the principal Act, the portion
commencing with the words “provided that” and ending
with the words “date of the contract” shall be, and shall
be deemed always to have been, omitted.”

Section 3 of the Amendment Act, 1972 postulates that the

deleted words shall be always deemed to have been omitted and

did not form part of the statute. A deeming provision with

Civil Appeal No. 2870 of 2007 and Others Page 9 of 30
retrospective effect was thus enacted. We are not dealing with the

constitutional validity of the amendment made and, therefore,

would not comment upon this aspect.

10. In N. Vajrapani Naidu v. New Theatres Carnatic Talkies Ltd.,

Coimbatore,2 the Constitution Bench of five judges had upheld

validity of the Act, as it existed before the amendments vide the

Amendment Acts of 1972 and 1973, after referring to Section 12

which had then vide the proviso excluded the written registered

lease deeds with the stipulation as to ‘erection of buildings’ from

application of the Act, to observe that the Act applies only to a

limited class of land, that is, land granted on lease for construction

of buildings before the date with effect from which the Act was

extended to the town or village. The purpose and objective behind

the enactment was to give protection to the tenants who had,

notwithstanding the usual covenant relating to the determination of

tenancies, obtained land on lease in the hope that as long as they

pay and continue to pay fair rent, they would not be evicted.

However, the changed circumstances as a result of the war

leading to appreciation in land values and increase in rents had

put such tenants to great inconvenience and harassment as they

were faced with actions of ejectment involving dismantling of

properties constructed by them and eviction. Upholding the Act, as
2
(1964) 6 SCR 1015

Civil Appeal No. 2870 of 2007 and Others Page 10 of 30
it then existed, the Constitution Bench observed that the

protection and rights granted under the Act become effective only

when the landlord seeks to obtain, in breach of mutual

understanding, benefit of unearned increase in the land values by

instituting a suit for ejectment. The Act was manifestly in the

interest of general public to effectuate the mutual understanding

between the landlords and the tenants as to the duration of the

tenancies, and to conserve the existing buildings so constructed.

Section 9 did not do much to deprive the landlord of his property

or to acquire his rights as it was to give effect to the real

agreement between the landlord and the tenant consequent to

which the tenant was induced to construct a building on the plot let

out to him. The restriction would be in the interest of the general

public and, therefore, the Act did not offend the right to property

under Article 19(1)(f) of the Constitution of India. Referring to the

amendments vide the Amendment Act, 1960, it was observed that

the court can direct sale only of minimum area of land necessary

for convenient enjoyment by the tenant of the property/building

built by him and the price to be paid was the average market value

of three years immediately preceding the date of the order. In this

decision, the majority had differed from the minority on the

meaning of the expression ‘erection of buildings’ in the context of

written registered lease deed in question, with the majority holding
Civil Appeal No. 2870 of 2007 and Others Page 11 of 30
that the tenant was not covered by the proviso as the clauses of

the written registered lease deed did not relate to ‘erection of

buildings’. The expression ‘erection of buildings’ in the proviso to

Section 12 was subsequently interpreted in Haridas Girdhardas

and Others v. Varadaraja Pillai and Another3. However, we

need not go into the said aspect and interpretation of the

expression ‘erection of buildings’ because this question neither

arises in the present appeals nor is raised and argued before us.

11. We would now reproduce clause (4) to Section 2 of the Act which

defines the expression ‘tenant’ as amended from time to time.

Originally Section 2(4) of the Act read as under:

“4. ‘tenant’ means tenant of land liable to pay
rent on it, and every other person deriving title
from him, and includes persons who continue in
possession after the termination of the tenancy.”

By the Amendment Act, 1960 which came into force on 27 th

July 1960, the definition of ‘tenant’ was substituted to read as

under:

“4. ‘Tenant’ in relation to any land –

(i) means a person liable to pay rent in respect of
such land, under a tenancy agreement express or
implied, and

(ii) includes─

(a) any such person as is referred to in sub-

clause (i) who continues in possession of the land

3
(1971) 2 SCC 601

Civil Appeal No. 2870 of 2007 and Others Page 12 of 30
after the determination of the tenancy agreement,
and

(b) the heirs of any such person as is referred to
in sub-clause (i) or sub-clause (ii)(a), but does not
include a sub-tenant or his heirs.”

The Amendment Act, 1973, while retaining sub-clause (ii)(a)

had added a new sub-clause (b) in Section 2(4)(ii). The earlier

sub-clause (b) inserted vide the Amendment Act, 1960 was

transposed as sub-clause (c). Post the amendment vide the

Amendment Act, 1973, clause (4) to Section 2 defining the term

‘tenant’ would read as under:

“(4) ‘Tenant’ in relation to any land –

(i) means a person liable to pay rent in respect of
such land, under a tenancy agreement express or
implied, and

(ii) includes –

(a) any such person as is referred to in sub-

clause (i) who continues in possession of the land
after the determination of the tenancy agreement,

(b) any person who was a tenant in respect of
such land under a tenancy agreement to which
this Act is applicable under sub-section (3) of
Section 1 and who or any of his predecessors in
interest had erected any building on such land
and who continues in actual physical possession
of such land and building, notwithstanding thatꟷ

(1) such person was not entitled to the rights
under this Act by reason of the proviso to Section
12 of this Act as it stood before the date of the
publication of the Madras City Tenants’ Protection
(Amendment) Act, 1972 (Tamil Nadu Act 4 of
1972), or

Civil Appeal No. 2870 of 2007 and Others Page 13 of 30
(2) a decree for declaration or a decree or an
order for possession or for similar relief has been
passed against such person on the ground that
the proviso to Section 12 of this Act as it stood
before the date of the publication of the Madras
City Tenants’ Protection (Amendment) Act, 1972
(Tamil Nadu Act 4 of 1972) disentitled such
person for claiming the rights under this Act, and

(c) the heirs of any such person as is referred to
in sub-clause (i) or sub-clause (ii)(a) or (ii)(b),
but does not include a sub-tenant or his heirs;”

Section 2 of the Amendment Act, 1973 which brought in the

amendment in Section 2(4) gave retrospective effect to the

amendments from the date of enforcement of the Act, that is, 21 st

February 1922. For clarity, we would like to reproduce Section 2

of the Amendment Act, 1973 which reads as under:

“2. Amendment of section 2, Tamil Nadu Act III
of 1922.─ For sub-clause (ii) of clause (4) of
section 2 of the Madras City Tenants’ Protection
Act
, 1921 (Tamil Nadu Act III of 1922) (hereinafter
referred to as the principal Act), the following sub-
clause shall be and shall be deemed always to
have been substituted […]”

12. A Division Bench of this Court vide order dated 3 rd December 2009

in C.A. No. 5903 of 2006 titled Bharat Petroleum Corporation

Ltd. v. Nirmala and Another and other connected matters while

interpreting sub-clause (b) to Section 2(4)(ii) has held that the

expression ‘actual physical possession of land and building’ would

mean and require the tenant to be in actual physical possession.

The provisions would not be applicable if the tenant is not in actual

Civil Appeal No. 2870 of 2007 and Others Page 14 of 30
physical possession and has given the premises on lease or

licence basis to a third party. The Court, however, did not give

any finding on the question whether such benefit is available to

the appellant under Section 2(4)(i) or Section 2(4)(ii)(a). We are

reproducing the relevant portion of the order which reads as

under:

“7. As regards sub-clause (b) of Section 2(4), we
do not agree with the contention of Mr. Nariman.
On a plain reading of sub-clause (b) we notice
that it uses the words “actual physical
possession”. Had the word ’possession’ alone
been used in clause (b), as has been done in
clause (a), the legal position may have been
different. However, the words ‘actual physical
possession’ are strong and emphatic. That means
that the factual state of affairs has to be seen, not
the legal or deemed state of affairs. There is no
doubt that the appellant had handed over
possession to his licensee/agent who was in
actual physical possession of the suit premises.
When a Statute uses strong and emphatic words,
we cannot twist or give a strained interpretation to
the said words. The literal rule of interpretation is
the first rule of interpretation which means that if
the meaning of a Statute is plain and clear then it
should not be given a twisted or strained
meaning. We will be giving a strained and artificial
interpretation to the words ‘actual physical
possession’ if we say that the appellant is
deemed to be in actual physical possession. We
cannot give such an interpretation to sub-clause

(b) of Section 2(4) of the Act particularly since
clause (a) only uses the word ‘possession’ and
not ‘actual physical possession’. Hence, we reject
the contention of Mr. R.F. Nariman, learned
counsel appearing for the appellant and hold that
the appellant was not in actual physical
possession.

Civil Appeal No. 2870 of 2007 and Others Page 15 of 30

8. The Preamble of the Act makes it clear that the
Act applies where superstructure is constructed
on the land, which is leased. Hence, the
submission that clause (a) applies when there is
no superstructure erected on the vacant land
which was leased is not correct. In fact, the Act
was meant to give some protection to leased land
on which the tenant constructed some
superstructure.

9. As regards the submission of Mr. Nariman that
the appellant is entitled to the benefit of sub-
clause (a) of Section 2(4) of the Act, it appears
that this aspect has not been considered by the
High Court. In our opinion, the High Court should
have considered whether the appellant is entitled
to the benefit of Section 2(4)(i) and sub-clause (a)
of Section 2(4)(ii) of the Act.

10. We are not expressing any final opinion on
the question whether the appellant is entitled to
the benefit of Section 2(4)(i) and 2(4)(ii)(a) of the
Act as in our opinion it was incumbent upon the
High Court to have recorded a finding on the said
issue. Therefore, we set aside the impugned
judgment and order of the High Court and remand
the matter back to the Division Bench of the High
Court to record a finding on the question whether
the appellant is entitled to the benefit of Section
2(4)(i)
and sub-clause (a) of Section 2(4)(ii) of the
Act. Needless to mention, that the Division Bench
of the High Court shall decide the said question in
accordance with law and uninfluenced by any
observation made by us in this order except the
finding that the appellant is not covered by
subclause (b) of Section 2(4) of the Act. We make
it clear that we are not expressing any opinion of
our own on the other issue. We hope and trust
that the Division Bench of the High Court will
dispose of the case expeditiously and preferably
within a period of six months from the date a copy
of this order is produced before it.

xx xx xx

Civil Appeal No. 2870 of 2007 and Others Page 16 of 30

12. We are further of the opinion that where the
lessee is in actual physical possession of the land
over which he has made construction then he is
entitled to an additional benefit given by Section
9(1)(a)
(ii) of the Act. However, if the lessee who
has made construction on the land let out to him
but was not subsequently in possession of the
same, as is the case of the appellants in the
present cases, then he is not entitled to the
benefit of Section 9(1)(a)(ii) though he may be
entitled to the benefit of Section 9 (1)(a)(i). These
are the questions on which the Division Bench of
the High Court will record a finding.

13. Therefore, we set aside the impugned
judgments and orders of the High Court and
remand the matter back to the Division Bench of
the High Court to record a finding on the question
whether the appellant is covered by Section 2(4)

(i) and sub-clause (a) of Section 2(4)(ii) of the Act
and is entitled to the benefit of Section 9(1).

Needless to mention, the Division Bench of the
High Court shall decide the said question in
accordance with law and uninfluenced by any
observation made by us in this order except our
finding about clause (b) of Section 2(4). We make
it clear that we are not expressing any opinion of
our own on other issues. We hope and trust that
the Division Bench of the High Court will dispose
of these cases expeditiously and preferably within
a period of six months from the date a copy of this
order is produced before it.”

Thus, while interpreting sub-clause (b) to Section 2(4)(ii),

this Court has held that the expression ‘actual physical possession

of land and building’ would mean and require the tenant to be in

actual possession and the sub-clause(b) would not apply if the

tenant has sub-let the building or has given the premises on leave

and licence basis. The aforesaid decision would operate as res

Civil Appeal No. 2870 of 2007 and Others Page 17 of 30
judicata in the case of the appellant and the landlords who were

parties to the decision. In other cases, it would operate as a

binding precedent under Article 141 of the Constitution.

13. Before we go on to examine the challenge raised by the appellant,

it is apparent that the Act essentially protects the rights of three

categories of tenants as enlisted under Section 2(4) of the Act,

viz., those covered under sub-clauses (i) and (ii)(a) who have

always been protected under the provisions of the Act; and by

addition of clause (b) with retrospective effect the tenants who

were originally disallowed the benefits on account of the proviso to

Section 12 of the Act; and lastly as per sub-clause (c), heirs of the

tenants covered under the aforesaid categories, but not sub-

tenants and heirs of sub-tenants. By excluding sub-tenants and

their heirs, the legislature has made it clear that sub-tenants would

not be entitled to benefits and rights conferred under the Act

including right to purchase the land under Section 9 or

compensation payable for the construction etc. under Sections 3

and 44 of the Act. Sub-tenants or the heirs of sub-tenants are not
4
“4. Disposal of suits for ejectment. – (1) In a suit for ejectment against a tenant in which the
landlord succeeds, the Court shall ascertain the amount of compensation, if any, payable under
Section 3 and the decree in the suit shall declare the amount so found due and direct that, on
payment by the landlord into Court, within three months from the date of the decree, of the amount
so found due, the tenant shall put the landlord into possession of the land with the building and
trees thereon.

(2) In an application under Section 41 of the Presidency Small Cause Courts Act, 1882 (Central Act
XV of 1882), in which the landlord succeeds, the Court shall ascertain the amount of compensation
payable under Section 3 and shall pass an interim order declaring the amount so found due and
stating that, on payment by the landlord into Court within three months of the date of the said
interim order of the amount so found due, the landlord shall be entitled to the order contemplated by

Civil Appeal No. 2870 of 2007 and Others Page 18 of 30
‘tenants’ and hence in their case the question of possession or

actual physical possession is immaterial.

14. The Amendment Acts of 1972 and 1973 were wide and far

reaching, beyond the object and purpose of the Act as originally

enacted. Moreover, several amendments to Sections 2(4), 9 and

12 of the Act were with retrospective effect. We have already

referred to the deletion of the proviso in Section 12 with

retrospective effect. The consequence of the deletion was that

written registered leases for land with stipulation relating to

‘erection of buildings’ would no longer enjoy primacy and would be

governed by the provisions of the Act as applicable. In other

words, statutory mandate of Sections 3, 4 and 9 of the Act would

apply notwithstanding the terms of the written registered lease

deed relating to the ‘erection of buildings’ by the tenant and

Section 108(h)5 of the Transfer of Property Act. As the proviso to

Section 12 stood deleted, the distinction carved out in terms of

Section 43 of the Presidency Small Cause Courts Act, 1882 (Central Act XV of 1882).
(3) In in such suit or application, the Court finds that any sum of money is due by the tenant to the
landlord for rent or otherwise in respect of the tenancy, the Court shall set off such sum against the
sum found due under sub-section (1) or sub-section (2), as the case may be, and shall pass a
decree or interim order declaring as the amount payable to the tenant on ejectment, the amount, if
any, remaining due to him after such set off.

(4) If the amount found due is not paid into Court within three months from the date of the decree
under sub-section (1) or of the interim order under sub-section (2), or if no application is made
under Section 6, the suit or application, as the case may be, shall stand dismissed, and the landlord
shall not be entitled to institute a fresh suit for ejectment, or present a fresh application for recovery
of possession for a period of five years from the date of such dismissal.”
5
“108. Rights and liabilities of lessor and lessee.— […] (h) the lessee may 1 [even after the
determination of the lease] remove, at any time 2 [whilst he is in possession of the property leased
but not afterwards,] all things which he has attached to the earth: provided he leaves the property
in the state in which he received it:”

Civil Appeal No. 2870 of 2007 and Others Page 19 of 30
Section 12 between written registered lease agreements with

specific stipulations relating to ‘erection of buildings’ and other

lease agreements, ceased to be applicable with retrospective

effect and the landlords and tenants with written registered leases

were at par with those holding oral tenancies or unregistered

leases of land or written registered tenancies without any

stipulation with regard to ‘erection of building’ on the land.

Pertinently, even before the deletion of the words/proviso to

Section 12 of the Act, the tenants, as defined by Section 2(4)(i)

and (ii)(a) were entitled to protection and benefit of Sections 3, 4

and 9 of the Act. The amendments made vide the Amendment

Acts of 1972 and 1973 did not, in any manner, dilute or withdraw

the benefit or the protection granted to the tenants not covered by

the proviso to Section 12 of the Act. The amendments vide the

Amendments Acts of 1972 and 1973 were not to dilute the rights

of the already protected tenants, but to expand the Act’s protection

and scope to the tenants who were denied the benefit of the Act

vide the proviso to Section 12 of the Act.

15. The amendments and modifications made by the Amendment Acts

of 1972 and 1973 whereby sub-clause (b) to Section 2(4)(ii) was

added with retrospective effect, the proviso to Section 12 was

deleted with retrospective effect and the amendments to Section 9

Civil Appeal No. 2870 of 2007 and Others Page 20 of 30
were made with retrospective effect, have to be read holistically

and in entirety, for it is a well-known canon of construction that

every section of a statute is to be construed with reference to the

context and other sections of the statute, so as, as far as possible,

to make a consistent enactment of the whole statute.6 By these

amendments, the tenants excluded from the benefit/privilege of

the Act vide the proviso to Section 12 were brought within the

ambit of the protection and rights given under the Act but with

different conditions and stipulations. In other words, sub-clause (ii)

(b) to section 2(4) is restricted and applies to only those tenants

who were covered by the proviso to Section 12 and not those

tenants who were already entitled to protection and rights under

the Act. This is clear from the latter portion of sub-clause (ii)(b) to

Section 2(4) of the Act which refers to the proviso to Section 12

and also a decree for declaration or possession or similar relief

passed against the person on the ground that proviso to Section

12 had disentitled such persons from claiming rights under the

Act. The amendment made by adding sub-clause (b) to Section

2(4)(ii) vide the Amendment Act, 1973 was not to dilute or impose

new conditions on the tenants who were otherwise entitled to

protection as tenants under Section 2(4)(i) or to Section 2(4)(ii)(a)

of the Act read with Sections 3, 4 and 9 of the Act. This also flows
6
Raghbir Singh Gill v. Gurcharan Singh Tohra and Others 1980 SCR (3)1302 quoting R v.
Board of Trade
, [1965] 1 Q.B. 603.

Civil Appeal No. 2870 of 2007 and Others Page 21 of 30
from the legislature using the word ‘continues in possession’ in

sub-clause (ii)(a) to Section 2(4), whereas the words used in sub-

clause (ii)(b) are ‘continues in actual physical possession’. The

legislature deliberately has used different words in sub-clauses (ii)

(a) and (ii)(b). The enactment of sub-clause (ii)(b) has to be read

with other amendments made vide the Amendment Acts of 1972

and 1973 and would accordingly apply to those tenants who were

brought under the umbrella and protection of the Act by deleting

the proviso to Section 12. Therefore, sub-clause (ii)(b) to Section

2(4) would apply to tenants who were covered by the deleted

proviso to Section 12, whereas sub-clause (ii)(a) to Section 2(4)

would apply to tenants who had taken land on lease without any

written registered instrument relating to the ‘erection of buildings’.

16. No doubt, sub-clause (ii)(a) to Section 2(4) refers to land, and the

words ‘land’ and ‘building’ have been separately defined vide

clauses (2) and (1) to Section 2 respectively, with the postulate

that land does not include building, however we are not inclined to

hold that the distinction between sub-clauses (ii)(a) and (ii)(b) to

Section 2(4) is based upon whether a tenant had constructed a

building in which case sub-clause (ii)(b) would apply and not sub-

clause (ii)(a). In other words, we are not in agreement with the

contention that where the tenant of a land has not constructed

Civil Appeal No. 2870 of 2007 and Others Page 22 of 30
building, sub-clause (ii)(a) would apply and where a tenant of land

has constructed a building, sub-clause (ii)(b) would apply. The

reason is obvious. The Act as per the objects and purposes was

enacted and enforced to grant certain rights to tenants who had

acquired leases of land and had thereupon constructed a building

with the implied understanding that they would not be evicted as

long as they paid the fair rent. The tenants covered by sub-clause

(ii)(a) were protected under the Act even before the enactment of

sub-clause (b) to section 2(4)(ii) of the Act vide the Amendment

Act, 1973. The Act as originally enacted with Section 2(4) defining

the term ‘tenant’ before its amendment vide the Amendment Act,

1973 would apply to all the tenants who had acquired leasehold

land and thereafter constructed a building, except the tenants who

had entered into written registered contracts with terms relating to

‘erection of buildings’ who were covered by the deleted proviso to

Section 12.

17. Decision of the Constitution Bench of six judges in Swami Motor

Transports (P) Ltd. And Another v. Sri Sankaraswamigal Mutt

and Another7 on which reliance was placed by the counsel for the

appellant, though relating to the Act, relates to the challenge to the

Amendment Act, 1960 by which non-residential buildings

constructed on the leasehold land in the municipal towns of
7
1963 Supp (1) SCR 282

Civil Appeal No. 2870 of 2007 and Others Page 23 of 30
Tanjore were excluded and denied the benefit of the Act. This

judgment upheld constitutional validity predicated on the principle

of classification under Article 14 and also the right to property

under Article 19(1)(f) read with Article 31(1) of the Constitution.

Even in respect of pending ejectment proceedings, it was

observed that the law in India does not recognise equitable

estates. Further, the statutory right to purchase land is, or confers,

no interest or right in the property but only a right to purchase

land. In the view of this Court, a statutory right to apply for the

purchase of the land is a non-proprietary right. On the question of

equitable estates, it was observed that Section 9 of the Act

confers only a right in respect of the land owned by the landlord

and not in the superstructure which was owned by the tenant. The

right of the tenant on the superstructure is neither taken away nor

affected under Section 9 of the Act or the amendment made vide

the Amendment Act, 1960. Even earlier, this Court in Dr. K.A.

Dhairyawan and Others v. J.R. Thakur and Others8, after

referring to several decisions of the Privy Council, had held that

there was no absolute rule of law that whatever is affixed or built

on the soil becomes a part of it, and is subjected to the same

rights of a property as the soil itself. We do not in India apply the

doctrine of English law as to buildings viz. that they should belong

8
1959 SCR 799

Civil Appeal No. 2870 of 2007 and Others Page 24 of 30
to the owner of the land. Where clause (h) of Section 108 of the

Transfer of Property Act would apply, the lessee can remove all

the structures and the buildings erected on the demised land while

he is in possession of the property but not afterwards, meaning

thereby the ownership of the building is with the lessee and not

with the lessor. At the same time, nothing prevents the lessee from

contracting to hand over the building or the structure erected on

the land constructed by him without receiving compensation.

18. In P. Ananthakrishnan Nair and Another v. Dr G.

Ramakrishnan and Another,9 a Division Bench of this Court

interpreting Section 2(4) and Section 9 of the Act had held that as

per the mandate of Sections 3, 4 and 5, post the 1972 and 1973

amendments, it is mandatory for the court to first decide the

minimum extent of land “which may be necessary for the

convenient enjoyment by the tenant”. The words in italics were

emphasised by the Division Bench to observe that the court may,

on facts of a particular case, come to a conclusion that the tenant

may not require any portion of the land and in that event it may

reject the application and decree the suit for ejectment and direct

the landlord to pay compensation to the tenant. Section 9 confers

a privilege on the tenant and not a vested right, but the privilege

9
(1987) 2 SCC 429

Civil Appeal No. 2870 of 2007 and Others Page 25 of 30
granted by the statute is equitable in nature. Elucidating further, it

was observed:

“11. […]The enquiry presupposes that the tenant
making the application has been in the occupation of
the land and the superstructure wherein he may be
either residing or carrying on business, and on his
eviction he would be adversely affected. The policy
underlying Section 9 of the Act, is directed to safeguard
the eviction of those tenants who may have constructed
superstructure on the demised land, so that they may
continue to occupy the same for the purposes of their
residence or business.”

In the said case, an eviction decree was passed observing

that the tenant had in the small portion of the land kept account

books of the business and rest of the land and structure standing

thereon had been in occupation of sub-tenants since 1964.

19. In S.R. Radhakrishnan and Others v. Neelamegam10, this Court

had again interpreted Section 2(4) and 9 of the Act after referring

to the dictum in P. Ananthakrishnan (supra) elucidating that the

policy underlying Section 9 is to safeguard eviction of those

tenants who may have constructed superstructure on the demised

land, so that they may continue to occupy the same for the

purpose of residence or business. Thus, the tenant not in actual

possession of most of the demised premises in

P.Ananthakrishnan (supra) had suffered a decree for eviction.

Therefore, it was held in P. Ananthakrishnan (supra) that it will be

10
(2003) 10 SCC 705

Civil Appeal No. 2870 of 2007 and Others Page 26 of 30
unreasonable to direct the landlord to sell the land to the tenant. In

the said case, application under Section 9 filed by the legal heir of

the tenant was dismissed observing that admittedly he was not in

possession of the demised premises and had ceased to be a

tenant.

20. The counsel for the appellant had made a valiant attempt to

distinguish the said decisions as P. Ananthakrishnan (supra) was

a case of sub-letting and in S.R. Radhakrishnan (supra), the

court had relied upon the reply of the defendant No.1 stating that

he had nothing to do with the property as defendant Nos. 2 and 3

were in possession thereof. It is correct that P. Ananthakrishnan

(supra) was a case of sub-letting which means parting of

possession by the tenant to the sub-tenant. However, the said

case records observations as to the object and purpose behind

Section 9 and the tenants whose interests were sought to be

protected. In S.R. Radhakrishnan (supra), the land had been

given on lease to the father of the defendant No. 1 who had

thereafter in terms of lease made constructions for setting up and

running a printing press, in which business he had taken his

younger brothers, defendant Nos. 2 and 3, possibly as partners.

Thereafter, he had executed a deed in favour of defendant Nos. 2

and 3 relinquishing his business of the printing press. For the

Civil Appeal No. 2870 of 2007 and Others Page 27 of 30
same reasons, we would hold that the observations made relating

to the interpretation of Sections 2(4) and 9 are relevant even if we

hold that the ratios are not applicable as the facts are not identical.

21. In view of the aforesaid discussion, we hold as under:

(I) Sub-clauses (i) and (ii)(a) to clause (4) of Section 2 of the

Act apply to all tenants who had entered into oral or

unregistered written agreements or registered written

agreements without any stipulation with regard to ‘erection

of buildings’ for taking land on lease, and had subsequently

constructed buildings. Such tenants would be entitled to

protection of the Act provided the tenant satisfies the

conditions mentioned in sub-clauses (i) or (ii)(a) to clause (4)

of Section 2 of the Act.

(II) Paragraph 1 of sub-clause (ii)(b) to clause (4) of Section 2 of

the Act applies to tenants who are not entitled to the rights

under the Act by reason of the proviso to Section 12 which

stood deleted vide the Amendment Act, 1972. Paragraph 2

of the said sub-clause applies to cases where a decree of

declaration or decree or an order of possession or similar

relief has been passed against a tenant on the ground that

the proviso to Section 12, which was omitted by the

Amendment Act, 1972, disentitles the tenant from claiming

Civil Appeal No. 2870 of 2007 and Others Page 28 of 30
rights under the Act. Accordingly, sub-clause (b) to Section

2(4)(ii) would apply only to tenancies which were earlier

excluded from the protection under the Act vide the proviso

to Section 12 which stands deleted with retrospective effect

vide the Amending Act, 1972.11

(III) Sub-clause (ii)(c) to clause (4) of Section 2 states that heirs

of a tenant referred to in sub-clause (i) or sub-clauses (ii)(a)

or (ii)(b) would be entitled to benefit of the Act. However, it

expressly excludes a sub-tenant or heirs of the sub-tenant.

22. Recording the aforesaid position, we dismiss the present appeals

by the appellant, that is, the three petroleum companies, and

uphold the orders passed by the High Court that the appellant

tenants would not be entitled to the benefit and rights under the

Act unless they are in actual physical possession of the building

constructed by them. In other words, in case the appellants have

let out or sub-let the building or given it to third parties, including

dealers or licensees, they would not be entitled to protection and

benefit under the Act.

11
Paragraph 2 in sub-clause (ii)(b) to clause (4) of Section 2 of the Act, has been interpreted in
different judgments by the Madras High Court, including the decision in Haridas Girdhardas and
Others v. M. Varadaraja Pillai and Another
[(1976) 89 Madras Law Weekly 1)]. Pertinently, in the
aforementioned case, the Madras High Court dealt with the applicability of sub-section (3A) to
Section 9 of the Act which stipulates the reopening or reviewing of a decree or order passed, in
terms of the deleted proviso to Section 12 of the Act, against the interests of the tenant, that is,
those who are covered under paragraph 2 of sub-clause (ii)(b) to Section 2(4) of the Act. We are
not required to examine the true impact and effect of the said paragraph 2 or sub-section (3A) to
Section 9 of the Act as they are not relevant for the present decision. On this aspect, we make no
comment.

Civil Appeal No. 2870 of 2007 and Others Page 29 of 30
In the facts of the case, there would be no order as to costs.

………………………………..J.

(N.V. RAMANA)

………………………………..J.

(SANJIV KHANNA)

………………………………..J.

(KRISHNA MURARI)

NEW DELHI;

JANUARY 28, 2020.

Civil Appeal No. 2870 of 2007 and Others Page 30 of 30



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