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CaseMinister › Judgments › Supreme Court › 1996 › State of West Bengal v. Kailash Chandra Kapur .

State of West Bengal v. Kailash Chandra Kapur .

Supreme Court of India · 29 November 1996 · [1996] Supp. (9) S.C.R. 398

Court
Supreme Court of India
Decided
29 November 1996
Case no.
C.A. No. 15703 of 1996
Reported as
[1996] Supp. (9) S.C.R. 398
Result
Dismissed
Bench
K. Ramaswamy, G.T. Nanavati
Length
11 pages
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PETITIONER:
THE STATE OF WEST BENGAL & ANR.
Vs.
RESPONDENT:
KAILASH CHANDRA KAPUR & ORS.
DATE OF JUDGMENT: 29/11/1996
BENCH:
K. RAMASWAMY, G.T. NANAVATI

ACT

HEADNOTE

JUDGMENT

ORDER

Leave granted.

We have heard learned counsel on both sides.

This appeal by special leave arises from the judgment of the Division Bench of the Calcutta High Court, made on January 19, 1996 in Appeal No.182/95.

The admitted facts are that a lease for 999 years was granted by the Governor of west Bengal to one Tapan Kumar Mullick on July 28, 1983 assigning a plot of land No.CL-10 in Section II admeasuring 4,195 conttahs in Bindhannagar (Salt Lake) in Calcutta. The lessee had executed a Will in favour of the first respondent, a stranger to the family on July 22, 1992 of the lease-hold premises. The lessee died on May 22, 1993. Thereafter, the first respondent had applied for and was granted without any contest by the legal representatives of the lessee the probate to the Will by order of the Court dated May 19, 1994. It would, therefore, be obvious that the bequest was after receipt of consideration. Thereafter, the legatee had applied for mutation of his name in the record as lessee which was objected to and met with rejection. As a consequence, the respondent had filed writ petition under Article 226 of the Constitution. The learned single Judge directed to mutate the name of the first respondent as a lessee under the testamentary disposition made by the original lessee which was confirmed by the Division Bench of Calcutta High Court in Appeal No.183/95 by judgment dated January 19, 1996. Thus, this appeal by special leave.

Shri V.R. Reddy, learned Additional Solicitor General, has contended that clauses 7, 8 and 12 of the indenture of the lease should be read together which manifest the intention that the lease was for the enjoyment of leasehold right of the demised site or a building constructed thereon either by the lessee or his legal representatives and one among them alone should be made responsible to and answerable to the lessor-appellant, the Government of West Bengal. It prohibited sub-letting or transfer without prior permission of the Governor; thereby, there is and implied prohibition to bequeath the leasehold right in the property in favour of the strangers. In that background, the word ‘transfer’ employed in clause 8 of the lease deed would be understood in a broader sense. If so understood, any bequest made to a stranger, without the permission of the Government, does not bind the Governor. Therefore, the Government is not obliged to recognise a stranger as a lessee after the demise of the original lessee. In support thereof, he placed strong reliance on the judgment of a Division Bench of the Bombay High Court in Dr. Anant Trimbak Sabnis vs. Vasant Pratap Pandit [AIR 1980 Bom. 69]. He also further placed reliance on a report given by the Committee constituted in that behalf on May 3, 1984 of the misuse of the leasehold right granted by seeking transfer in favour of the distant relations. On receipt thereof, the Governor by a notification specified that the near relations shall mean and include the father, mother, brother, sister, son, daughter, husband and wife. It prohibited registration under Registration Act by any other relative. It would amplify the intention of the Government in that behalf in granting leasehold interest of their land for the benefit of use and enjoyment of the demised premises for the residential purpose by the members of the family or near relations. The strangers were not intended to be inducted in and given enjoyment of the leasehold interest of the property demised by the Government. Unless the Government gives permission for such a transfer, it cannot be considered to be valid in law. The High Court thereby committed grave error of law in directing that a stranger be treated as a lessee of the Governor.

Shri D.P. Gupta, learned senior counsel for the respondents, on the other hand, contends that we are concerned in this case with the covenants engrafted in the lease-deed. The relevant covenants are 7, 8, and 12. Each one deals, in its own parameters, with restricted covenants thereunder with different situations. Clause (12) is relevant in this behalf. It does not contemplate any restriction to will away the leasehold interest to a stranger. The word ‘person’ used in clause (12) would include the stranger also. The second Clause in para 2 of clause (12) would include heirs also. Thus, these covenants contained in clause (12) do indicated that the lessee is empowered to bequath his leasehold interest in favour of a stranger. The only restrictive covenant contained therein was that in the event of the bequest in favour of more that one person, one among them alone should be recognised as a person answerable to the Governor for compliance of the covenants contained in the lease deed. The succession may be either testamentary or intestate succession. In this case, it is testamentary succession. In support thereof, he placed reliance on the judgment of the Constitution Bench in Gian Devi Anand vs. Jeevan Kumar [(1985) 2 SCC 683]. He, therefore, contends that there is not prohibition for testamentary succession by the first respondent in respect of the leasehold interest given to Mullick. Shri V.R. Reddy sought to distinguish the judgment in Gian Devi’s case by relying upon Bhavarlal Labhchand Shah vs. Kanaiyalal Nathalal Intawala [(1986) 1 SCC 571] wherein this Court had held that it would not apply to testamentary succession and the landlord should not be trusted with a stranger as lessee.

In view of the diverse contentions, the question that arises for consideration is; what is the meaning of the word "person" in clause (12) of the covenants? It is necessary to read the relevant clauses in the lease deed, namely, clauses 7, 8 and 12 conjointly or independently. They read as under:

(7) The Lessee shall not sub-divide

or sub-let the demised land or the

building to be constructed without

the consent in writing of the

Government first had and obtained

and the Government shall have the

right and be entitled to refuse its

consent at its absolute discretion.

(8) The Lessee shall not assign or

transfer the demised land or any

part of the demised land and/or the

structure erected thereon without

the previous permission of the

Government in writing. In case of

transfer or assignment of the lease

the Lessor shall have the right of

pre-emption and upon the exercise

of this right the building

constructed by the lessee on the

land shall be taken over by the

lessor at a valuation of the

building made by the Lessor on the

basis of the costs of construction

of the building less depreciation

at the usual rate of the market

value thereof, whichever is less.

The value of the land will be the

amount of the salami or premium

paid by the Lessee. In the event of

difference between the parties as

to the value of the building, the

matters in dispute shall be

referred to the arbitration of an

arbitrator if the parties can agree

upon one or otherwise to two

arbitrators, one to be appointed by

each party with an Umpire. The

award of the arbitrator or

arbitrators or the Umpire, as the

case may be, shall be final and

binding on both the parties.

Provided however that in case the

Lessee transfers or assigns the

leasehold interest in the leasehold

interest in the land and/or

structure standing thereon in

favour of LIC or Nationalised Bank

or Government or Semi-Government

Organisation, or registered Housing

Co-operative Society, or Statutory

Body by creating mortgage for

repayment of loan for house

building purpose, Life Insurance

corporation of India or

Nationalised Bank or Government or

Semi-Government Organisation, or

registered Housing Co-Operative

Society, or statutory Body, as the

case may be, it may claim priority

over the Government of West Bengal

in respect of right of pre-emption

on the demised land and/or

structure standing thereon subject

to the condition that all the dues

of the Government as provided

herein shall be payable and

recoverable to the Government of

West Bengal either from the lessee

or from the Life Insurance

Corporation of India, or

Nationalised Bank or Government or

Semi-Government Organisation, or

registered Housing Co-operative

Society, or Statutory Body, as the

case may be. provided however such

charge if created shall be subject

to the terms and conditions of the

lease.

(12) If the Lessee dies after

having made a bequest of the lease

hold premises and the building

thereon, if any, in favour of more

than one person or die intestate

having more than one then heir,

then in such case the persons to

whom the leasehold premises with

the building thereon be so

bequeathed or the heirs of the

deceased Lessee, as the case may

be, shall hold the said partition

of the same by metes and bounds or

they shall nominate one person

amongst their number in whom the

same shall vest."

It is true that the object of grant of leasehold right in the land belonging to the Government in a long lease for 999 years, as explained by the Government in the report of the Committee and accepted by the Governor, was that the demised land would be granted to the lessee and enjoyed by him, a legal heirs and close relations of the lessee. Thereby, they would remain in possession and enjoyment of the leasehold interest together with the building constructed thereon to make right to residence as engrafted in Article 19(1)(e) of the Constitution a reality and fundamental right. When the Government distributes its material resources, as engrafted in Article 39(b) of the Constitution, the object of the policy is to effectuate the mandate of the Constitution in the Preamble of the Constitution, viz., social Justice and dignity of person with equal status. The lease was in furtherance thereof. But the question is: whether the lessee has a right to transfer in favour of a stranger in terms of the lease and whether it would frustrate the object thereof?

The Division Bench of the Bombay High Court, considering Section 15(1) of the Bombay Rent Act and the words "assignment" or "transfer" has held that the words ‘assign’ or ‘transfer’ are not defined under that Act. The dictionary meaning of the word would be considered in the absence of any definition given in the Act. It would suggest that to transfer or formality to make over to another. The word "assign" denotes "generally to transfer property especially personal estate or set over a right to another". In their generic sense, the words ‘assign’ or ‘transfer’ include every kind of transfer of the property from one to another including testamentary disposition. The restricted meaning of the word ‘transfer’ denied under Section 5 of the Transfer of Property Act requires to be considered in the light of a particular enactment and its scheme. It has, therefore, been held that the word ‘assign’ does include disposition by a Will. Thereby, it would be construed that in an appropriate case where the property was assigned by testamentary disposition, it may be a transfer for the purpose of a particular Act or a Regulation, as the case may be.

In Gian Devi’s case (supra), this Court had to consider, in the absence of any restriction under the Delhi Rent Control Act, the intestate succession by the heirs of the tenant of the leasehold right of commercial premises. This Court had considered the effect of the law in paragraphs 23, 31 and 36 as under:

"For an appreciation of the

question, it is necessary to

understand the kind of protection

that is sought to be afforded to a

tenant under the Rent Acts and his

status after the termination of the

contractual tenancy under the Rent

Acts. It is not in dispute that as

long as the contractual tenancy

remains subsisting, the contractual

tenancy creates heritable rights;

and, on the death of a contractual

tenant, the heirs and legal

representatives step into the

position of the contractual tenant;

and, in the same way on the death

of landlord the heirs and legal

representatives of a landlord

become entitled to all the rights

and privileges of the contractual

tenancy. A valid termination of the

contractual relationship. On the

determination of the contractual

tenancy, the landlord becomes

entitled under the law of the land

to recover possession of the

premises from the tenant in due

process of law and the tenant under

the general law of the land is

hardly in a position to resist

eviction, once the contractual

tenancy has been duly determined.

Because of scarcity of

accommodation and gradual high rise

in the rents due to various favors,

the landlords were in a position to

exploit the situation for

unjustified personal gains to the

serious detriment of the helpless

tenants. Under the circumstances,

it became imperative for the

legislature to intervene to protect

the tenants against harassment and

exploitation by avaricious

landlords and appropriate

legislation came to be passed in

all the States and Union

Territories where the situation

required an interference by the

legislature in this regard. It is

no doubt true that the Rent Acts

are essentially meant for the

benefit of the tenants. It is,

however, to be noticed that the

Rent Acts at the same time also

seek to safeguard legitimate

interests of the landlords. The

Rent Acts which are indeed in the

nature of social welfare

legislation are intended to protect

tenants against harassment and

exploitation by landlords,

safeguarding at the same time the

legitimate interests of the

landlords. The Rent Acts seek to

preserve social harmony and promote

social justice by safeguarding the

interests of the tenants mainly and

at the same time protecting the

legitimate interests of the

landlords. Though the purpose of

the various Rent Acts appear to be

the same, namely, to promote social

justice by affording protection to

tenants against undue harassment

and exploitation by landlords,

providing at the same time for

adequate safeguards of the

legitimate interests of the

landlords, the Rent Acts

undoubtedly lean more in favour of

the tenants for whose benefit the

Rent Acts are essentially passed.

It may also be noted that various

amendments have been introduced to

the various Rent Acts from time to

time as and when situation so

required for the purpose of

mitigating the hardship of

tenants.

We now proceed to deal with the

further argument advanced on behalf

of the landlords that the amendment

to the definition of ‘tenant’ with

retrospective effect introduced by

the Delhi Rent Control Amendment

Act (Act 18 of 1976) to give

personal protection and personal

right of continuing in possession

to the heirs of the deceased

statutory tenant in respect of

residential premises only and not

with regard to the heirs of the

‘so-called statutory tenant’ in

aspect of commercial premises,

indicates that the heirs of so-

called statutory tenants,

therefore, do not enjoy any

protection under the Act. This

argument proceeds on the basis that

in the absence of any specific

right created in favour of the ‘so-

called statutory tenant’ in respect

of his tenancy, the heirs of the

statutory tenant who do not acquire

any interest or estate in the

tenanted premises, become liable to

be evicted as a matter of course.

The very premise on the basis of

which the argument is advanced, is,

in our opinion, unsound. The

termination of the contractual

tenancy in view of the definition

of tenant in the Act does not bring

about any change in the status and

legal position of the tenant,

unless there are contrary

provisions in the Act; and, the

tenant notwithstanding the

termination of tenancy does enjoy

an estate or interest or estate

which the tenant under the Act

despite termination of the

contractual tenancy continues to

enjoy creates a heritable interest

in the absence of the any provision

to the contrary. We have earlier

noticed the decision of this Court

in Damadilal case. This view has

been taken by this Court in

Damadilal case and in our opinion

this decision represents the

correct position in law. The

observations of this Court in the

decision of the seven Judge Bench

in the case of V. Hanpal Chettiar

vs. Yesodai Ammal which we have

earlier quoted appear to conclude

the question. the amendment of the

definition of tenant by the Act 18

of 1976 introducing particularly

Section 2(1)(iii) does not in any

way mitigate against this view. The

said sub-clause (iii) with all the

three Explanations thereto is not

in any way inconsistent with or

contrary to sub-clause (ii) of

Section 2(1) which unequivocally

states that tenant included any

person continuing possession after

the termination of his tenancy. In

the absence of the provision

contained in Section 2(1)(iii), the

heritable interest of the heirs of

the statutory tenant would devolve

on all the heirs of the ‘so-called

statutory tenant’ on his death and

the heirs of such tenant would in

law step into his position. This

sub-clause (iii) of Section 2(1)

seeks to restrict this right

insofar as the residential premises

are concerned. The heritability of

the statutory tenancy which

otherwise flows from the Act is

restricted in case of residential

premises only to the heirs

mentioned in Section 2(1)(iii) and

the heirs therein are entitled to

remain in possession and to enjoy

and protection under the Act in the

manner and to the extent indicated

in Section 2(1)(iii). The

Legislature, which under the Rent

Act affords protection against

eviction to tenants whose tenancies

have been terminated and who

continue to remain in possession

and who are generally termed as

statutory tenants, is perfectly

competent to lay down the manner

and extent of the protection and

the rights and obligations of such

tenants and their heirs. Section

2(1)(iii) of the Act does not

create any additional or the ‘so-

called statutory tenant’ on his

death, but seeks to restrict the

right of the heirs of such tenant

in respect of residential premises.

As the status and right of a

contractual tenant even after

determination of his tenancy when

the tenant is at times described as

the statutory become entitled by

virtue of the provisions of the Act

to inherit the status and position

of the statutory tenant on his

death, the Legislature which has

created this right has thought it

fit in the case of residential

premises to limit the rights of the

heirs in the manner and to the

extent provided in Section

2(1)(iii). It appears that the

Legislature has not thought it fit

to put any such restrictions with

regard to tenants in respect of

commercial premises in this Act.

Accordingly, we hold that if

the Rent Act in question defines a

tenant in substance to mean ‘a

tenant who continues to remain in

possession even after the

termination of the contractual

tenancy till a decree for eviction

against him is passed’, the tenant

even after the determination of the

tenancy continues to have an estate

or interest in the tenanted

premises and the tenancy rights

both in respect of residential

premises and commercial premises

are heritable. The heirs of the

deceased tenant in the absence of

any provision in the Rent Act to

the contrary will step into the

position of the deceased tenant and

all the rights and obligations of

the deceased tenant including the

protection afforded to the deceased

tenant under the Act will devolve

on the heirs of the deceased

tenant. As the protection afforded

by the Rent Act to a tenant after

determination of the tenancy and to

his heirs on the death of such

tenant is a creation of the Act for

the benefit of the tenants, it is

open to the Legislature which

provides for such protection to

make appropriate provisions in the

Act with regard to the nature and

extent of the benefit and

protection to be enjoyed and the

manner in which the same is to be

enjoyed. If the Legislature makes

any provision in the Act limiting

or restricting the benefit and the

nature of the protection to be

enjoyed in a specified manner by

any particular class of heirs of

the deceased tenant on any

condition laid down being

fulfilled, the benefit of the

protection has necessarily to be

enjoyed on the fulfillment of the

condition in the manner and to the

extent stipulated in the Act. The

Legislature which by the Rent Act

seeks to confer the benefit on the

tenants and to afford protection

against eviction, is perfectly

competent to make appropriate

provision regulating the nature of

protection and the manner and

extent of enjoyment of such tenancy

rights after the termination of

contractual tenancy of the tenant

including the rights and the nature

of protection of the heirs on the

death of the tenant. Such

appropriate provision may be made

by the Legislature both with regard

to the residential tenancy and

commercial tenancy. It is, however,

entirely for the Legislature to

decide whether the Legislature will

make such provision or not. In the

absence of any provision regulating

the right of inheritance, and the

manner an extent thereof and in the

absence of any condition being

stipulated with regard to the

devolution of tenancy rights on the

heirs on the death of the tenant,

the devolution of tenancy rights

must necessarily be in accordance

with the ordinary law of

succession."

It was, therefore, held that in the absence of any definition the legal heirs of the tenants who succeeded by intestate succession became the tenants under the Rent Act for the purpose of continuance of tenancy rights had by the tenant even if it is after the determination of the contractual tenancy. The statutory tenancy steps in and gives protection to the legal heirs of the deceased tenant. It is true that in that case no distinction was made by this Court between testamentary succession or intestate succession. As far as testamentary succession is concerned, this Court had considered that question in Bhavarlal’s case (supra). In that case, Section 5(11) of the Bombay Rent Act defines the tenant and clause (c) defines the "restricted tenancy rights" in favour of the family members of the tenant. In that context, the question arose in that case whether a tenant can bequeath a Will in favour of a stranger? Considering the ratio in Gian Devi’s case (supra) and the object of the Act, this Court had held that the tenant cannot by a Will bequeath leasehold right in favour of strangers and induct the stranger as tenant of the demised premises against the will of the landlord and the landlord is not bound by such a bequest to recognise the legatee as a tenant. It is, thus, settled law that though lease hold interest may be bequeathed by a testamentary disposition, the landlord is not bound by it nor a stranger be trusted as tenant against the unwilling landlord.

In view of the above settled legal position, the question is: whether the bequest made by Mullick in favour of the respondent is valid in law and whether the Governor is bound to recognise him? It is seen that clauses (7), (8) and (12) are independent and each deals with separate situation. Clause (7) prohibits sub-lease of the demised land or the building erected thereon without prior consent in writing of the Government. Similarly, clause (8) deals with transfer of the demised premises or the building erected thereon without prior permission in writing of the Government. Thereunder, the restricted covenants have been incorporated by granting or refusing to grant permission with right of pre-emption. Similarly, clause (12) deals with the case of lessee dying after executing a Will. Thereunder, there is no such restrictive covenant contained for bequeath in favour of a stranger. The word ‘person’ has not been expressly specified whether it relates to the heirs of the lessee. On the other hand, it postulates that if the bequest is in favour of more than one person, then such persons to whom the leasehold right has been bequeathed or the heirs of the deceased lessee, as the case may be, shall hold the said property jointly without having any right to have a partition of the same and one among them should alone be answerable to and the Government would recognise only one such person. In the light of the language used therein, it is difficult to accept the contention of Shri V.R., Reddy, that the word ‘person’ should be construed with reference to the heirs or bequest should be considered to be a transfer. Transfer connotes, normally, between two living persons during life; Will takes effect after demise f the testator and transfer in that perspective becomes incongruous. Though, as indicated earlier, the assignment may be prohibited and Government intended to be so, a bequest in favour of a stranger by way of testamentary disposition does not appear to be intended, in view of the permissive language used in clause (12) of the covenants. We find no express prohibition as at present under the terms of the lease. Unless the Government amends the rules or imposes appropriate restrictive covenants prohibiting the bequest in favour of the strangers or by enacting appropriate law. There would be no statutory power to impose such restrictions prohibiting such bequest in favour of the strangers. It is seen that the object of assignment of the Government land in favour of the lessee is to provide him right to residence. If any such transfer is made contrary to the policy, obviously, it would be defeating the public purpose. But it would be open to the Government to regulate by appropriate covenants in the lease deed or appropriate statutory orders as per law or to make a law in this behalf. But so long as that is not done and in the light of the permissive language used in clause (12) of the lease deed, it cannot be said that the bequest in favour of strangers inducting a stranger into the demised premises or the building erected thereon is not governed by the provisions of the regulation or that prior permission should be required in that behalf. However, the stranger legatee should be bound by all the covenants or any new covenants or statutory base so as to bind all the existing lessees.

Under these circumstances, the action taken by the respondent cannot be said to be vitiated by an error of law. The High Courts, therefore, has not committed any manifest error of law warranting interference. As stated earlier, this order does not preclude the Government from taking such step as is warranted under law to prohibit transfer in violation of the covenants or defeating the public policy.

The appeal is accordingly dismissed. No costs.

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