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.