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  • provisions of the Madras Buildings (Lease and Rent Control) Act.
  • Rent Control) Act
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Attorney(S)
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  • provisions of the Madras Buildings (Lease and Rent Control) Act.
  • Rent Control) Act
Smart Summary

Factual and Procedural Background

There are two appeals under consideration. In the first appeal (S. A. No. 1153 of 1960), the first defendant is the appellant, while in the second appeal (S. A. No. 1171 of 1961), the plaintiffs seek to evict the first defendant from the land in question. The land originally belonged to Hajee Peer Batcha Sahib. The plaintiffs claim to be settlees under a settlement executed by him on 12th October 1949. The first defendant held a lease executed by the original owner on 22nd September 1947 for ten years at a stipulated rent. The plaintiffs sought eviction after the lease period expired. The first defendant challenged the plaintiffs' status and claimed superior rights based on a varthamanam letter and a sale deed. The courts below rejected these defenses. During the pendency of the second appeal, new decisions under the Madras Buildings (Lease and Rent Control) Act were rendered, which formed the basis of a new ground raised by the first defendant in the second appeal.

Legal Issues Presented

  1. Whether the lease of a vacant site on which buildings were constructed during the lease period should be regarded as a lease of buildings under the Madras Buildings (Lease and Rent Control) Act, thereby entitling the lessee to protection under the Act.
  2. Whether the plaintiffs were entitled to evict the first defendant on grounds of subletting and denial of title, outside the scope of eviction proceedings under the Madras Buildings (Lease and Rent Control) Act.
  3. Whether the courts below erred in treating the suit as one for arrears of rent for the period beyond the lease term and in the measure of compensation awarded to the plaintiffs for that period.

Arguments of the Parties

First Defendant's Arguments

  • The first defendant contended that the plaintiffs had only limited rights under the settlement and thus lacked standing to sue.
  • He claimed superior rights over the plaintiffs based on a varthamanam letter and a sale deed executed by the original owner after the settlement.
  • In the second appeal, relying on recent decisions under the Madras Buildings (Lease and Rent Control) Act, he argued that although the lease was originally for a vacant site, the construction of buildings on the site during the lease period transformed the lease into one of buildings, entitling him to protection under the Act.
  • He relied on the precedent of Palaniappa Chettiar v. Vairavan Chettiar, which held that buildings put up on a vacant site leased out become integral to the land, making the lease one of buildings.

Plaintiffs' Arguments

  • The plaintiffs argued that the first defendant's interpretation of the settlement was incorrect and that the varthamanam letter should be regarded with suspicion.
  • They contended that the lease did not contemplate construction of buildings and that there was no renewal of the lease as in the precedent relied upon by the first defendant.
  • They further argued that the first defendant had sublet the site and denied the plaintiffs' title, grounds which they claimed entitled them to eviction.
  • In the second appeal, the plaintiffs contended that the courts below erred in awarding rent rather than damages for possession beyond the lease period and that higher compensation should have been granted.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Palaniappa Chettiar v. Vairavan Chettiar (1963) 1 M.L.J 130 = 76 L.W 21 Established that a lease originally of a vacant site on which buildings are constructed becomes a lease of buildings under the Madras Buildings (Lease and Rent Control) Act, granting protection to the lessee. The court applied this principle to hold that the first defendant’s lease, though originally for a vacant site, became a lease of buildings once buildings were constructed, entitling the first defendant to protection under the Act.

Court's Reasoning and Analysis

The court examined the first defendant's challenge to the plaintiffs' status and found the courts below rightly rejected the first defendant's interpretation of the settlement and the purported superior rights based on the varthamanam letter and sale deed. The court then considered the new ground raised under the Madras Buildings (Lease and Rent Control) Act, specifically whether the lease of a vacant site transformed into a lease of buildings once buildings were constructed. Applying the principle from Palaniappa Chettiar v. Vairavan Chettiar, the court held that the buildings and land became integral, and thus the lease should be treated as one of buildings, entitling the first defendant to protection under the Act. The court rejected the plaintiffs' argument that the absence of a lease renewal distinguished the present case from the precedent. Regarding the plaintiffs' contention that subletting and denial of title warranted eviction, the court held these issues must be addressed through eviction proceedings under the Act and not in this appeal. In the second appeal by the plaintiffs, the court acknowledged that possession beyond the lease term is wrongful but found no error in the courts below awarding compensation as rent rather than damages, noting the rent was calculated at the original rate and there was no evidence of increased rent value. The court therefore declined to interfere with the lower courts' decision on compensation.

Holding and Implications

The first appeal (S. A. No. 1153 of 1960) is allowed with no costs, resulting in dismissal of the suit for possession against the first defendant.

The second appeal (S. A. No. 1171 of 1961) by the plaintiffs is dismissed with no costs.

The decision grants the first defendant protection under the Madras Buildings (Lease and Rent Control) Act by treating the lease as one of buildings due to the construction on the leased vacant site. The plaintiffs' claims related to subletting and denial of title must be pursued through appropriate eviction proceedings under the Act. The court did not set any new precedent beyond applying existing principles from the cited case. The compensation awarded beyond the lease term as rent at the stipulated rate stands affirmed.

    Palaniappa Chettiar v. Babu Sahib Alias Sheik Mytheen Sahib And Others.

    In the first of these appeals (S. A. No. 1153 of 1960), the first defendant is the appellant and in the other (S. A. No. 1171 of 1961), the plaintiffs, who brought the suit for evicting the first defendant from the land in question. It is common ground that the land originally belonged to Hajee Peer Batcha Sahib. The plaintiffs claim to be settlees under a settlement executed by him on 12th October 1949. The lease in favour of the first defendant was executed by the original owner of the land on 22nd September 1947 for a term of ten years at the rent stipulated in the document. The plaintiffs sought to evict the first defendant after the period of ten years. On behalf of the first defendant, various defences were taken which were, I think rightly repelled by the Courts below. The first defendant questioned the status of the plaintiffs to bring the suit on the ground that under the settlement of the original owner of the land, the plaintiffs had only limited rights. The first defendant also contended that he had a superior right over the settlees on account of a varthamanam letter and a sale deed in his favour executed by Hajee Peer Batcha Sahib. As to the first point, the Courts below were of the view that the interpretation placed by the first defendant on the terms of the settlement was not correct. It seems to me that no exception can be taken to this view. The Courts below thought that the varthamanam letter relied on by the first defendant should be looked upon with suspicion and that so far as the sale deed was concerned, that was executed only after the settlement. Here again the Courts below were not wrong. During the pendency of the second appeal certain decisions of this Court were rendered under the provisions of the Madras Buildings (Lease and Rent Control) Act. The second appeal of the first defendant is mainly rested on a new ground taken on the basis of these decisions.

    Though the point has been taken for the first time in the second appeal, inasmuch as it raised no new facts, I granted leave to the first defendant to raise it in this Court. The ground is that although the lease in 1947 in his favour was of a vacant site, inasmuch as it Contemplated putting up buildings by the first defendant on the vacant site, during the period of the lease and actually such buildings were put up, the buildings so put up became part of the vacant site and the vacant site should, therefore, be regarded as part of the buildings and that it followed from this that the lease became a lease of a building within the meaning of the Act. Learned Counsel for the first defendant-appellant in support of this contention relies on Palaniappa Chettiar v. Vairavan Chettiar(1). There a Division Bench of this Court following and applying earlier cases held that though a lease originally was of a vacant site, nevertheless, the lessee, who had put up buildings on it and then got a renewal of the lease, was entitled to a protection under the Madras Buildings (Lease and Rent Control) Act on the ground that the buildings as well as the land became an integral part of each other and that, therefore, the land which was originally leased was part of the buildings constructed on it. Learned Counsel for the plaintiffs-respondents seeks to distinguish this case on the ground that in the instant case, there was no renewal of a lease. But it seems to me that on principle this distinction is without a difference. The principle of Palaniappa Chettiar v. Vairavan Chettiar, as I understand the judgment, is that when a vacant site is leased out for putting up buildings thereon and buildings are actually put up on the land they become part of the land so that the land is also a part of the buildings with the result that the lease should be regarded as one of buildings, notwithstanding the fact that the buildings do not balong to the lessor. This principle, as it seems to me, does not depend on a renewal of a lease, the essence of it being when the buildings are put up, they become the integral part of the land and the land for the purpose of lease can no longer be regarded as a vacant site. The terms of the lease in favour of the first defendant no doubt, state nothing about the lessee's liberty to construct buildings on the site. In the varthamanam letter, however, supposed to have been written by the original owner of the land in January, 1948, it was stated that as he had granted permission to the first defendant to level up the low lying vacant site and construct buildings thereon, he would not ask the first defendant to remove the buildings put up and that should any chance arise for him to sell the site, he would sell the same to the first defendant himself. But the Courts below, as I said, considered that this varthamanam letter should be looked upon with suspicion. All the same, in the lawyer's notice sent by the plaintiffs on 24th October, 1959, it was conceded that the lease was for the purpose of the first defendant putting up a shop and a house on the vacant site and to carry on his business. It is, therefore, clear that although the lease itself did not specifically mention the purpose, it was a lease to enable the first defendant to put up buildings on the site, and to carry on his business. The lease having, therefore clearly contemplated the vacant site let out for being built upon and when such buildings were put up during the currency of the lease, the buildings became part of the land and, therefore, the land became indistinguishable from the buildings. In other words, they were integral parts of each other for the purpose of the lease and the lease should, therefore, be regarded as of buildings as well. Applying the principle of Palaniappa Chettiar v. Vairvaran Chettiar, to this case, I am of the view that the first defendant in respect of his possession of the site is entitled to protection under the provisions of the Madras Buildings (Lease and Rent Control) Act.

    It is, however, contended on behalf of the plaintiffs-respondents that contrary to the terms of the lease, the first defendant sublet the vacant site, that he had gone to the extent of denying the title of the plaintiffs and that, therefore the plaintiffs were entitled to evict the first defendant. But these are considerations which the plaintiffs could only urge in eviction proceedings under the provisions of the Madras Buildings (Lease and Rent Control) Act and they do not fall to be decided in this appeal. S. A. 1153 of 1960 is allowed but with no costs in this Court. The suit for possession of the site leased out to the first defendant will stand dismissed.

    In the other second appeal of the plaintiffs, the point urged is that the Courts below were wrong in decreeing the suit as one for arrears of rent for the period subsequent to the expiry of the lease period of ten years and that, in any case, for that period a higher compensation should have been granted to the plaintiffs. It is true that when a lessee of immoveable property holds over beyond the period stipulated in the lease, his continued possession would be wrongful. In that sense, the plaintiffs would be entitled to recover damages from the person in wrongful possession and not rent. But in this case, I am not inclined to interfere with the decisions of the Courts below, because in substance, the plaintiffs have been given compensation for the period of possession beyond the lease period, though the compensation has been given not as damages but by way of rent. The rent for that period has been calculated at the same rate as in the rent deed. What is contended is that it is not a proper measure of damages. But I am unable to accept this contention. The parties themselves stipulated rent for the land and there is no reason, in the circumstances of the case, to think that the rent for the land would have appreciated considerably after the expiry of ten years. Thie second appeal is dismissed but with no costs. No leave in both the appeals.

    V.C.S

    (1) (1963) 1 M.L.J 130=76 L.W 21.

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    Comments

    Palaniappa Chettiar v. Babu Sahib Alias Sheik Mytheen Sahib And Others.
    (Sep 19, 1963)