BHARAT PETROLEUM CORPORATION LIMITED versus R. CHANDRAMOULEESWARAN AND OTHERS on 28 January 2020

436

SUPREME COURT REPORTS

[2020] 3 S.C.R.

ABHARAT PETROLEUM CORPORATION LIMITED

v.

R. CHANDRAMOULEESWARAN AND OTHERS

(Civil Appeal No. 2870 of 2007)

BJANUARY 28, 2020

[N. V. RAMANA, SANJIV KHANNA ANDKRISHNA MURARI, JJ.]

Madras City Tenants’ Protection Act, 1921 – s.9 – The rightsof tenants in terms of – The appellants-Three oil companies hadCunder different written registered lease deeds with the landlordstaken land on long-term lease and had thereupon constructed petrolpumps that were given to and operated by the dealers appointed bythe appellant under the dealership agreements – The respondents-landlords filed suits for ejectment for recovery of possession of theDland – Thereafter, the appellant had filed applications purportedlyu/s. 9 of the Act for transfer/sale of the leasehold land in whole orin part at the price fixed by the Court – The applications wererejected by the High Court – On appeal, held: The appellant-tenantswould not be entitled to the benefit and rights under the Act unlessthey are in actual physical possession of the building constructedEby them – In other words, in case the appellants have let out or sub-let the building or given it to third parties, including dealers orlicensees, they would not be entitled to protection and benefit underthe Act – The orders passed by the High Court upheld.Madras City Tenants’ Protection Act, 1921 – Sub-clauses (i)Fand (ii) (a) to Cl.4 of s.2 – Applicability of – Held: Sub-clauses (i)and (ii)(a) to clause (4) of s. 2 of the Act apply to all tenants whohad entered into oral or unregistered written agreements or registeredwritten agreements without any stipulation with regard to ‘erectionof buildings’ for taking land on lease, and had subsequentlyGconstructed buildings – Such tenants would be entitled to protectionof the Act provided the tenant satisfies the conditions mentioned insub-clauses (i) or (ii)(a) to clause (4) of s.2 of the Act.

Madras City Tenants’ Protection Act, 1921 – Sub-clause (ii)(b)to Cl.4 of s.2 – Applicability of – Paragraph 1 of sub-clause (ii)(b)

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to clause (4) of s.2 of the Act applies to tenants who are not entitledto the rights under the Act by reason of the proviso to s.12 whichstood deleted vide the Amendment Act, 1972 – Paragraph 2 of thesaid sub-clause applies to cases where a decree of declaration ordecree or an order of possession or similar relief has been passedagainst a tenant on the ground that the proviso to s.12, which wasomitted by the Amendment Act, 1972, disentitles the tenant fromclaiming rights under the Act. Accordingly, sub-clause (b) to s.2(4)(ii)would apply only to tenancies which were earlier excluded from theprotection under the Act vide the proviso to s.12 which stands deletedwith retrospective effect vide the Amending Act, 1972.

Dismissing the appeals, the Court

Conclusion

Dismissing the appeals, the Court

HELD: 1. The amendments and modifications made by theAmendment Acts of 1972 and 1973 whereby sub-clause (b) toSection 2(4)(ii) of the Madras City Tenants’ Protection Act, 1921was added with retrospective effect, the proviso to Section 12was deleted with retrospective effect and the amendments toSection 9 were made with retrospective effect, have to be readholistically and in entirety, for it is a well-known canon ofconstruction that every section of a statute is to be construedwith reference to the context and other sections of the statute,so as, as far as possible, to make a consistent enactment of thewhole statute. By these amendments, the tenants excluded fromthe benefit/privilege of the Act vide the proviso to Section 12were brought within the ambit of the protection and rights givenunder the Act but with different conditions and stipulations. Inother words, sub-clause (ii)(b) to section 2(4) is restricted andapplies to only those tenants who were covered by the proviso toSection 12 and not those tenants who were already entitled toprotection and rights under the Act. This is clear from the latterportion of sub-clause (ii)(b) to Section 2(4) of the Act which refersto the proviso to Section 12 and also a decree for declaration orpossession or similar relief passed against the person on theground that proviso to Section 12 had disentitled such personsfrom claiming rights under the Act. The amendment made byadding sub-clause (b) to Section 2(4)(ii) vide the Amendment Act,1973 was not to dilute or impose new conditions on the tenantswho were otherwise entitled to protection as tenants under Section AB

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A2(4)(i) or to Section 2(4)(ii)(a) of the Act read with Sections 3, 4and 9 of the Act. This also flows from the legislature using theword ‘continues in possession’ in sub-clause (ii)(a) to Section 2(4),whereas the words used in sub-clause (ii)(b) are ‘continues inactual physical possession’. The legislature deliberately has useddifferent words in sub-clauses (ii)(a) and (ii)(b). The enactmentBof sub-clause (ii)(b) has to be read with other amendments madevide the Amendment Acts of 1972 and 1973 and would accordinglyapply to those tenants who were brought under the umbrella andprotection of the Act by deleting the proviso to Section 12.Therefore, sub-clause (ii)(b) to Section 2(4) would apply to tenantsCwho were covered by the deleted proviso to Section 12, whereassub-clause (ii)(a) to Section 2(4) would apply to tenants who hadtaken land on lease without any written registered instrumentrelating to the ‘erection of buildings’. [Para 15][453-C-H; 454-A-B]

D2. This Court holds as under:(i) Sub-clauses (i) and (ii)(a) to clause (4) of Section 2 of theAct apply to all tenants who had entered into oral or unregisteredwritten agreements or registered written agreements without anystipulation with regard to ‘erection of buildings’ for taking landEon lease, and had subsequently constructed buildings. Suchtenants would be entitled to protection of the Act provided thetenant 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 SectionF2 of the Act applies to tenants who are not entitled to the rightsunder the Act by reason of the proviso to Section 12 which stooddeleted vide the Amendment Act, 1972. Paragraph 2 of the saidsub-clause applies to cases where a decree of declaration ordecree or an order of possession or similar relief has been passedagainst a tenant on the ground that the proviso to Section 12,Gwhich was omitted by the Amendment Act, 1972, disentitles thetenant from claiming rights under the Act. Accordingly, sub-clause(b) to Section 2(4)(ii) would apply only to tenancies which wereearlier excluded from the protection under the Act vide theproviso to Section 12 which stands deleted with retrospectiveHeffect vide the Amending Act, 1972.

(iii) Sub-clause (ii)(c) to clause (4) of Section 2 states thatheirs 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, itexpressly excludes a sub-tenant or heirs of the sub-tenant. [Para21][457-D-H; 458-A-B]

3. Recording the aforesaid position, this Court dismissesthe present appeals by the appellant, that is, the three petroleumcompanies, and uphold the orders passed by the High Court thatthe appellant tenants would not be entitled to the benefit andrights under the Act unless they are in actual physical possessionof the building constructed by them. In other words, in case theappellants have let out or sub-let the building or given it to thirdparties, including dealers or licensees, they would not be entitledto protection and benefit under the Act. [Para 22][458-B-C]

Bharat Petroleum Corporation Ltd. v. Nirmala andAnother [C.A.No. 5903 of 2006 dated 03.12.2021];P. Ananthakrishnan nair and Anr. v. Dr. G.Ramakrishnan and Anr. (1987) 2 SCC 429; S.R.Radhakrishnan and Others v. Neelamegam (2003) 10SCC 705 – relied on.

N. Vajrapani Naidu v. New Theatres Carnatic TalkiesLtd., Coimbatore [1964] 6 SCR 1015; HaridasGirdhardas and Others v. Varadaraja Pillai and Anr.(1971) 2 SCC 601; Swami Motor Transports (P) Ltdand Another v. Sri Sankaraswamigal Mutt and Anr.[1963] Supp 1 SCR 282; Dr. K.A. Dhairyawan andOthers v. J.R. Thakur and Others [1959] SCR 799;Raghbir Singh Gill v. Gurcharan Singh Tohra andOthers [1980] SCR 3 1302 – referred to.

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BCIVIL APPELLATE JURISDICTION: Civil Appeal No. 2870of 2007.

From the Judgment and Order dated 06.02.2007 of the HighCourt at Madras in Second Appeal Nos. 904 and 929 of 1996.

WithC

Civil Appeal Nos. 761, 763, 765, 766, 767, 768, 769, 770-771, 772,773, 774, 775-776 of 2020.

Sudhir Chandra, Kailash Vasdev, S. Guru Krishnakumar,Ms. Meenakshi Arora, Shekhar Naphade, Ms. V. Mohana,DR. Balasubramanian, Mohan Parasaran, Col. R.Balasubramanian, Sr.Advs., Parijat Sinha, Anil Kumar Mishra, Ms. Reshmi Rea Sinha, RudraDutta, Devesh Mishra, Ms. Akriti Jain, Ms. Pallak Bhagat, Ms. MalaNarayan, Rahul Narayan, Shashwat Goel, Digvijay, S.C. Ghosh, AbhikalpPratap Singh, Ms. Aishwarya Dash, B. Ragunath, Mrs. N.C. Kavitha,Ms. Nikitha Cooper, Ms. Anikitha Sharma, Vijay Kumar, M.A.EChinnasamy, C. Rubavathi, B. Karunakaran, V. Senthil Kumar, P. RajaRam, T. Meikandan, V. Balaji, Asaithambi MSM, Vinod Mehta, PraveshThakur, Ms. Sripradha K., Rakesh K. Sharma, Narendra Kumar, T. R.B. Sivakumar, M. Yogesh Kanna, S. Ramesh, R. Venkataraman, ThangaThurai, Kumar Dushyant Singh, K. Ethiraj, N. L. Ganapathi, Shiv PrakashFPandey, Chandra Shekher Yadav, Desh Ratan Nigam, Pankaj Kumar,Awanish Sinha, Vikas Mehta, K. K. Mohan, Mrs. Prabha Swami,Mrs. Divya Swami, Nikhil Swami, Amitabh Sinha, Chandra BhushanPrasad, T.K. Nayak, E. C. Agrawala, Rishi Agrawala, Ms. MadhaviAgarwal, Rajesh Kumar, Ms. Abha Saigal, Ms. Prashi Tyagi, M. A.Krishna Moorthy, Ms. Neela Gokhale, Ms. Kamakshi S. Mehlwal,GK. Rajendran, Roshan Chapagain, Pukhrambam Ramesh Kumar, Advs.for the appearing parties.

The Judgment of the Court was delivered by SANJIV KHANNA, J.

1. 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 CorporationLimited and Hindustan Petroleum Corporation Limited (hereinafterreferred to as ‘the appellant’), raise an identical question of law relatingto 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 orderwhereby the landlords could be directed to sell the leasehold land inwhole or in part at the price fixed by the court.

3. Briefly, the appellant had under different written registered leasedeeds with the landlords taken land on long-term lease and had thereuponconstructed petrol pumps that were given to and operated by the dealersappointed by the appellant under the dealership agreements. In somecases the leases were renewed on nationalisation of companies in termsof Burmah Shell (Acquisition of Undertakings in India) Act, 1976, Caltex(Acquisition of Shares of Caltex Oil Refining (India) Limited and of theUndertakings in India of Caltex (India) Limited) Act, 1977, and Esso(Acquisition of Undertakings in India) Act, 1974. However, it is anaccepted position that the term or duration of the leases, even whereleases 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 theland. The appellant had filed applications purportedly in exercise of theirright under Section 9 of the Act for transfer/sale of the leasehold land inwhole or in part at the price fixed by the court. By different impugnedjudgments, some of which have arisen from the remand order dated 3[rd]December 2009 passed by the Division Bench of this Court, the MadrasHigh Court has rejected the applications filed by the appellant, eitheraffirming or reversing the findings of the trial court or the lower appellatecourt.

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

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

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WHEREAS it is necessary to give protection to tenants who inmany parts of the City of Madras have constructed buildings onothers’ lands in the hope that they would not be evicted so long asthey pay a fair rent for the land and WHEREAS the sanction of the Governor-General has beenobtained under section 80-A (3) of the Government of India Act”

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The Objects and Reasons of the Act read as under:

“In many parts of the City of Madras, dwelling houses and otherbuildings have, from time to time, been erected by tenants onlands belonging to others, in the full expectation that subject toCpayment of a fair ground rent, they would be left in undisturbedpossession, notwithstanding the absence of any specific contractas to the duration of the lease or the terms on which the buildingswere to be leased. Recently, attempts made on steps taken toevict a large number of such tenants have shown that suchDexpectations are likely to be defeated. The tenants, if they areevicted, can at the best remove the superstructure, which canonly be done by pulling down the buildings. As a result of suchwholesale destruction, congested parts of the City will becomemore congested to the serious detriment of public health. In thesecircumstances, it is just and reasonable that the landlords whenEthey evict the tenants should pay for and take the buildings. Theremay, however, be cases where the landlord is unwilling to eject atenant if he can get a fair rent for the land. The Act provides forthe payment of compensation to the tenant in case of ejectmentfor the value of any building which may have been erected by himFor his predecessors-in-interest. It also provides for the settlementof fair rent at the instance of the landlord or tenant. Provision isalso made to enable the tenant to purchase the land in his occupationsubject to certain conditions.”

The Act as enacted in 1921 was to give protection to a certainGclass of tenants in the city of Madras who had before the enactment ofthe Act, and not after the enactment, constructed structures on theleasehold lands in the city of Madras. The objects and reasons refer to apeculiar situation prevailing in the city of Madras where dwelling housesand other buildings had been erected by the tenants on land taken onlease in expectation and belief that their possession would not be disturbed,H

subject to payment of fair-ground rent to the landlords. The agreementswith the landlords, reasons record, would be silent on duration of thelease and the terms on which the buildings were to be leased. Reasonsfurther state that recently, that is before the enactment in 1921, attemptsand steps had been initiated by the landlords to evict large number ofsuch tenants, thereby the general expectations of the tenants were likelyto be defeated as they were liable to be evicted. Therefore, the Act wasenacted to prevent wholesale destruction of the buildings/superstructureswhich were required to be pulled down by the tenants on eviction. Thiswould have caused serious detriment to public health as buildings wereto 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 fairmarket 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, theAct provided for enhancement of rent in such cases so that the landlordwould get fair market rent. The Act dealt with payment of compensationof the value of the building by the landlord in case the tenant did notwant to purchase or pay fair market value of the land.

6. The Act has undergone a paradigm shift in terms of its reachand ambit by extending protection to leases and constructions made post-1921 and extension to areas other than the ones recognised in the originalenactment as well as by enhancing and modifying the terms of protectionavailable to the tenants. These amendments particularly vide the MadrasAct No. 19 of 1955, Tamil Nadu Act No. 13 of 1960, Tamil Nadu ActNo. 4 of 1972 and Tamil Nadu Act No. 24 of 1973 which have beenhereinafter 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. Toavoid prolixity, we have avoided quoting and referring to the history ofthe 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]. Bythe Tamil Nadu Adaptation of Laws Order, 1969 as amended by theTamil Nadu Adaptation of Laws (Second Amendment) Order, 1969, theexpression ‘State of Tamil Nadu’ was substituted for the words ‘State 1 This was further amended by the Madras City Tenants’ Protection (Amendment) act,1979 whereby the words “municipal towns” were substituted by the words “municipaltowns and townships”.

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Aof Madras’. The Amendment Act, 1972 had also amended the Preambleby 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 municipaltowns and townships and adjoining areas in the State of TamilBNadu.

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

CWith the amendments, the Act was extended to be applied evento leases of land executed post the enactment and enforcement of theAct in 1921. However, the Act even post the amendments applies onlyto those leases of land on which building was constructed by the tenantprior to the date specified and not post the date specified.D

8. We would begin our interpretation by referring to in brief thescheme of the Act which postulates and grants certain rights that maybe exercised by the tenant facing eviction proceedings. Under Section 3of the Act, the tenant is entitled to be paid compensation equivalent tothe value of the building, which he or any of his predecessors in interestEor any person not in occupation at the time of ejectment who derivedtitle from either of them, had erected and for which compensation hasnot been already paid. The tenant is also entitled to the value of the treesand any improvements which may have been planted/made by him.Section 9 of the Act grants the tenant, who is entitled to compensationunder Section 3 and against whom a suit for ejectment has been institutedFor proceeding under Section 41 of the Presidency Small Cause CourtsAct, 1882 (Central Act XV of 1882) taken by the landlord, to apply foran 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. Underclause (b) to Section 9(1), the court shall decide the minimum extent ofGthe land which is necessary for the convenient enjoyment by the tenantand accordingly fix the price for the land either as prayed by the applicantor 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 toits amendment vide the Amendment Act, 1972, the override andH

paramountcy of the Act was not applicable to written registered leasesof land that had stipulations as to the ‘erection of buildings’. Section 12as originally enacted had stated:

“12. Effect of contracts made by tenants. – Nothing in anycontract made by a tenant shall take away or limit his rights underthis Act provided that nothing herein contained shall affect anystipulations made by the tenant in writing registered as to theerection of buildings, in so far as they relate to buildings erectedafter the date of the contract.”

Thus, the proviso to Section 12 had given primacy to the writtenregistered document with a covenant as to ‘erection of buildings’ afterthe date of the agreement. Parties are ad idem that the effect of theproviso was to effectively deny the tenants the statutory right to purchaseland under Section 9 or enforce other rights under the Act where thewritten registered agreement had a stipulation relating to ‘erection ofbuildings’ by the tenant, in which event parties would be bound by theterms of the agreement and the Transfer of Property Act, 1882, and theAct, that is the Madras City Tenants’ Protection Act, 1921, would notapply. The proviso to Section 12 viz., the words ‘provided that nothingherein contained shall affect any stipulations made by the tenant inwriting registered as to the erection of buildings insofar as theyrelate to buildings erected after the date of the contract’ were deletedvide 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 withthe words “provided that” and ending with the words “date of thecontract” shall be, and shall be deemed always to have been,omitted.”

Section 3 of the Amendment Act, 1972 postulates that the deletedwords shall be always deemed to have been omitted and did not formpart of the statute. A deeming provision with retrospective effect wasthus enacted. We are not dealing with the constitutional validity of theamendment made and, therefore, would not comment upon this aspect.

10. In N. Vajrapani Naidu v. New Theatres Carnatic TalkiesLtd., Coimbatore,[2] the Constitution Bench of five judges had upheldvalidity of the Act, as it existed before the amendments vide the2 (1964) 6 SCR 1015

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AAmendment Acts of 1972 and 1973, after referring to Section 12 whichhad then vide the proviso excluded the written registered lease deedswith the stipulation as to ‘erection of buildings’ from application of theAct, 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 witheffect from which the Act was extended to the town or village. TheBpurpose and objective behind the enactment was to give protection tothe tenants who had, notwithstanding the usual covenant relating to thedetermination of tenancies, obtained land on lease in the hope that aslong 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 toCappreciation in land values and increase in rents had put such tenants togreat inconvenience and harassment as they were faced with actions ofejectment involving dismantling of properties constructed by them andeviction. Upholding the Act, as it then existed, the Constitution Benchobserved that the protection and rights granted under the Act becomeeffective only when the landlord seeks to obtain, in breach of mutualDunderstanding, benefit of unearned increase in the land values byinstituting a suit for ejectment. The Act was manifestly in the interest ofgeneral public to effectuate the mutual understanding between thelandlords and the tenants as to the duration of the tenancies, and toconserve the existing buildings so constructed. Section 9 did not do muchEto deprive the landlord of his property or to acquire his rights as it was togive effect to the real agreement between the landlord and the tenantconsequent to which the tenant was induced to construct a building onthe plot let out to him. The restriction would be in the interest of thegeneral public and, therefore, the Act did not offend the right to propertyunder Article 19(1)(f) of the Constitution of India. Referring to theFamendments vide the Amendment Act, 1960, it was observed that thecourt can direct sale only of minimum area of land necessary forconvenient enjoyment by the tenant of the property/building built by himand the price to be paid was the average market value of three yearsimmediately preceding the date of the order. In this decision, the majorityGhad differed from the minority on the meaning of the expression ‘erectionof buildings’ in the context of written registered lease deed in question,with the majority holding that the tenant was not covered by the provisoas the clauses of the written registered lease deed did not relate to‘erection of buildings’. The expression ‘erection of buildings’ in the provisoto Section 12 was subsequently interpreted in Haridas GirdhardasH

R. CHANDRAMOULEESWARAN AND OTHERS [SANJIV KHANNA, J.]

and Others v. Varadaraja Pillai and Another[3]. However, we need notgo into the said aspect and interpretation of the expression ‘erection ofbuildings’ because this question neither arises in the present appeals noris raised and argued before us.

11. We would now reproduce clause (4) to Section 2 of the Actwhich 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, andevery other person deriving title from him, and includes personswho continue in possession after the termination of the tenancy.”

By the Amendment Act, 1960 which came into force on 27[th] July1960, 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, undera tenancy agreement express or implied, and

(ii) includes%

(a) any such person as is referred to in sub-clause (i) whocontinues in possession of the land after the determination of thetenancy 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) hadadded 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 continuesin possession of the land after the determination of the tenancyagreement, 3 (1971) 2 SCC 601

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

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(1) such person was not entitled to the rights under this Act byreason of the proviso to Section 12 of this Act as it stood beforethe date of the publication of the Madras City Tenants’ Protection(Amendment) Act, 1972 (Tamil Nadu Act 4 of 1972), or C(2) a decree for declaration or a decree or an order for possessionor for similar relief has been passed against such person on theground that the proviso to Section 12 of this Act as it stood beforethe date of the publication of the Madras City Tenants’ Protection(Amendment) Act, 1972 (Tamil Nadu Act 4 of 1972) disentitledsuch person for claiming the rights under this Act, andD

(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 theEamendment in Section 2(4) gave retrospective effect to the amendmentsfrom 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.%FFor sub-clause (ii) of clause (4) of section 2 of the Madras CityTenants’ 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 beensubstituted […]”

G12. A Division Bench of this Court vide order dated 3[rd] December2009 in C.A. No. 5903 of 2006 titled Bharat Petroleum CorporationLtd. v. Nirmala and Another and other connected matters whileinterpreting sub-clause (b) to Section 2(4)(ii) has held that the expression‘actual physical possession of land and building’ would mean and requirethe tenant to be in actual physical possession. The provisions would notH

BHARAT PETROLEUM CORPORATION LIMITED v.R. CHANDRAMOULEESWARAN AND OTHERS [SANJIV KHANNA, J.]

be applicable if the tenant is not in actual physical possession and hasgiven 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 isavailable to the appellant under Section 2(4)(i) or Section 2(4)(ii)(a). Weare reproducing the relevant portion of the order which reads as under:

“7. As regards sub-clause (b) of Section 2(4), we do not agreewith the contention of Mr. Nariman. On a plain reading of sub-clause (b) we notice that it uses the words “actual physicalpossession”. Had the word ’possession’ alone been used in clause(b), as has been done in clause (a), the legal position may havebeen different. However, the words ‘actual physical possession’are strong and emphatic. That means that the factual state ofaffairs has to be seen, not the legal or deemed state of affairs.There is no doubt that the appellant had handed over possessionto his licensee/agent who was in actual physical possession of thesuit 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 interpretationwhich means that if the meaning of a Statute is plain and clearthen it should not be given a twisted or strained meaning. We willbe giving a strained and artificial interpretation to the words ‘actualphysical possession’ if we say that the appellant is deemed to bein actual physical possession. We cannot give such an interpretationto sub-clause (b) of Section 2(4) of the Act particularly sinceclause (a) only uses the word ‘possession’ and not ‘actual physicalpossession’. Hence, we reject the contention of Mr. R.F. Nariman,learned counsel appearing for the appellant and hold that theappellant was not in actual physical possession.

8. The Preamble of the Act makes it clear that the Act applieswhere superstructure is constructed on the land, which is leased.Hence, the submission that clause (a) applies when there is nosuperstructure erected on the vacant land which was leased isnot correct. In fact, the Act was meant to give some protection toleased land on which the tenant constructed some superstructure.

9. As regards the submission of Mr. Nariman that the appellant isentitled 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 HighCourt. In our opinion, the High Court should have considered A

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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 whetherthe 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 Courtto have recorded a finding on the said issue. Therefore, we setaside the impugned judgment and order of the High Court andremand the matter back to the Division Bench of the High Courtto record a finding on the question whether the appellant is entitledto the benefit of Section 2(4)(i) and sub-clause (a) of Section2(4)(ii) of the Act. Needless to mention, that the Division Benchof the High Court shall decide the said question in accordancewith law and uninfluenced by any observation made by us in thisorder except the finding that the appellant is not covered bysubclause (b) of Section 2(4) of the Act. We make it clear thatwe 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 B

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dispose of the case expeditiously and preferably within a periodof six months from the date a copy of this order is produced beforeit.

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12. We are further of the opinion that where the lessee is in actualphysical possession of the land over which he has madeconstruction then he is entitled to an additional benefit given bySection 9(1)(a) (ii) of the Act. However, if the lessee who hasmade construction on the land let out to him but was notsubsequently in possession of the same, as is the case of theappellants in the present cases, then he is not entitled to the benefitof Section 9(1)(a)(ii) though he may be entitled to the benefit ofSection 9 (1)(a)(i). These are the questions on which the DivisionBench of the High Court will record a finding.

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G13. Therefore, we set aside the impugned judgments and ordersof the High Court and remand the matter back to the DivisionBench of the High Court to record a finding on the question whetherthe appellant is covered by Section 2(4)(i) and sub-clause (a) ofSection 2(4)(ii) of the Act and is entitled to the benefit of Section9(1). Needless to mention, the Division Bench of the High CourtHshall decide the said question in accordance with law and uninfluenced by any observation made by us in this order exceptour finding about clause (b) of Section 2(4). We make it clear thatwe are not expressing any opinion of our own on other issues. Wehope and trust that the Division Bench of the High Court willdispose of these cases expeditiously and preferably within a periodof six months from the date a copy of this order is produced beforeit.”

Thus, while interpreting sub-clause (b) to Section 2(4)(ii), this Courthas held that the expression ‘actual physical possession of land andbuilding’ would mean and require the tenant to be in actual possessionand the sub-clause(b) would not apply if the tenant has sub-let the buildingor has given the premises on leave and licence basis. The aforesaiddecision would operate as res judicata in the case of the appellant andthe landlords who were parties to the decision. In other cases, it wouldoperate as a binding precedent under Article 141 of the Constitution.

13. Before we go on to examine the challenge raised by theappellant, it is apparent that the Act essentially protects the rights ofthree categories of tenants as enlisted under Section 2(4) of the Act,viz., those covered under sub-clauses (i) and (ii)(a) who have alwaysbeen protected under the provisions of the Act; and by addition of clause(b) with retrospective effect the tenants who were originally disallowedthe benefits on account of the proviso to Section 12 of the Act; and lastlyas per sub-clause (c), heirs of the tenants covered under the aforesaidcategories, but not sub-tenants and heirs of sub-tenants. By excludingsub-tenants and their heirs, the legislature has made it clear that sub-tenants would not be entitled to benefits and rights conferred under theAct including right to purchase the land under Section 9 or compensationpayable for the construction etc. under Sections 3 and 4[4] of the Act.Sub-tenants or the heirs of sub-tenants are not ‘tenants’ and hence intheir case the question of possession or actual physical possession isimmaterial.

4 “4. Disposal of suits for ejectment. – (1) In a suit for ejectment against a tenant inwhich 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 sofound due and direct that, on payment by the landlord into Court, within threemonths from the date of the decree, of the amount so found due, the tenant shall putthe 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 AB

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A14. The Amendment Acts of 1972 and 1973 were wide and farreaching, beyond the object and purpose of the Act as originally enacted.Moreover, several amendments to Sections 2(4), 9 and 12 of the Actwere with retrospective effect. We have already referred to the deletionof the proviso in Section 12 with retrospective effect. The consequenceof the deletion was that written registered leases for land with stipulationBrelating to ‘erection of buildings’ would no longer enjoy primacy andwould be governed by the provisions of the Act as applicable. In otherwords, statutory mandate of Sections 3, 4 and 9 of the Act would applynotwithstanding the terms of the written registered lease deed relatingto the ‘erection of buildings’ by the tenant and Section 108(h)[5] of theCTransfer of Property Act. As the proviso to Section 12 stood deleted, thedistinction carved out in terms of Section 12 between written registeredlease agreements with specific stipulations relating to ‘erection ofbuildings’ and other lease agreements, ceased to be applicable withretrospective effect and the landlords and tenants with written registeredleases were at par with those holding oral tenancies or unregisteredDleases of land or written registered tenancies without any stipulationwith regard to ‘erection of building’ on the land. Pertinently, even beforethe deletion of the words/proviso to Section 12 of the Act, the tenants, asdefined by Section 2(4)(i) and (ii)(a) were entitled to protection and Ethe amount of compensation payable under Section 3 and shall pass an interim orderdeclaring the amount so found due and stating that, on payment by the landlord intoCourt within three months of the date of the said interim order of the amount sofound due, the landlord shall be entitled to the order contemplated by Section 43 ofthe 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 thetenant to the landlord for rent or otherwise in respect of the tenancy, the Court shallFset 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 amountpayable to the tenant on ejectment, the amount, if any, remaining due to him aftersuch set off.

(4) If the amount found due is not paid into Court within three months from the dateof the decree under sub-section (1) or of the interim order under sub-section (2), or ifno application is made under Section 6, the suit or application, as the case may be,Gshall stand dismissed, and the landlord shall not be entitled to institute a fresh suit forejectment, or present a fresh application for recovery of possession for a period offive years from the date of such dismissal.”

5 “108. Rights and liabilities of lessor and lessee.— [...] (h) the lessee may 1 [evenafter the determination of the lease] remove, at any time 2 [whilst he is in possessionof the property leased but not afterwards,] all things which he has attached to theHearth: provided he leaves the property in the state in which he received it:”

benefit of Sections 3, 4 and 9 of the Act. The amendments made videthe Amendment Acts of 1972 and 1973 did not, in any manner, dilute orwithdraw the benefit or the protection granted to the tenants not coveredby the proviso to Section 12 of the Act. The amendments vide theAmendments Acts of 1972 and 1973 were not to dilute the rights of thealready protected tenants, but to expand the Act’s protection and scopeto the tenants who were denied the benefit of the Act vide the proviso toSection 12 of the Act.

15. The amendments and modifications made by the AmendmentActs of 1972 and 1973 whereby sub-clause (b) to Section 2(4)(ii) wasadded with retrospective effect, the proviso to Section 12 was deletedwith retrospective effect and the amendments to Section 9 were madewith retrospective effect, have to be read holistically and in entirety, forit is a well-known canon of construction that every section of a statute isto be construed with reference to the context and other sections of thestatute, so as, as far as possible, to make a consistent enactment of thewhole statute.[6] By these amendments, the tenants excluded from thebenefit/privilege of the Act vide the proviso to Section 12 were broughtwithin the ambit of the protection and rights given under the Act but withdifferent conditions and stipulations. In other words, sub-clause (ii)(b) tosection 2(4) is restricted and applies to only those tenants who werecovered by the proviso to Section 12 and not those tenants who werealready entitled to protection and rights under the Act. This is clear fromthe latter portion of sub-clause (ii)(b) to Section 2(4) of the Act whichrefers to the proviso to Section 12 and also a decree for declaration orpossession or similar relief passed against the person on the ground thatproviso to Section 12 had disentitled such persons from claiming rightsunder the Act. The amendment made by adding sub-clause (b) to Section2(4)(ii) vide the Amendment Act, 1973 was not to dilute or impose newconditions on the tenants who were otherwise entitled to protection astenants under Section 2(4)(i) or to Section 2(4)(ii)(a) of the Act readwith Sections 3, 4 and 9 of the Act. This also flows from the legislatureusing the word ‘continues in possession’ in sub-clause (ii)(a) to Section2(4), whereas the words used in sub-clause (ii)(b) are ‘continues inactual physical possession’. The legislature deliberately has useddifferent 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 6Raghbir Singh Gill v. Gurcharan Singh Tohra and Others 1980 SCR (3)1302quoting R v. Board of Trade, [1965] 1 Q.B. 603.

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AAmendment Acts of 1972 and 1973 and would accordingly apply tothose tenants who were brought under the umbrella and protection ofthe 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 thedeleted 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 writtenBregistered instrument relating to the ‘erection of buildings’.

16. No doubt, sub-clause (ii)(a) to Section 2(4) refers to land, andthe words ‘land’ and ‘building’ have been separately defined vide clauses(2) and (1) to Section 2 respectively, with the postulate that land doesnot include building, however we are not inclined to hold that the distinctionCbetween sub-clauses (ii)(a) and (ii)(b) to Section 2(4) is based uponwhether 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 notin agreement with the contention that where the tenant of a land has notconstructed building, sub-clause (ii)(a) would apply and where a tenantDof land has constructed a building, sub-clause (ii)(b) would apply. Thereason is obvious. The Act as per the objects and purposes was enactedand enforced to grant certain rights to tenants who had acquired leasesof land and had thereupon constructed a building with the impliedunderstanding that they would not be evicted as long as they paid thefair rent. The tenants covered by sub-clause (ii)(a) were protected underEthe 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 enactedwith Section 2(4) defining the term ‘tenant’ before its amendment videthe Amendment Act, 1973 would apply to all the tenants who had acquiredleasehold land and thereafter constructed a building, except the tenantsFwho had entered into written registered contracts with terms relating to‘erection of buildings’ who were covered by the deleted proviso to Section12.

17. Decision of the Constitution Bench of six judges in SwamiMotor Transports (P) Ltd. And Another v. Sri Sankaraswamigal MuttGand Another[7]on which reliance was placed by the counsel for theappellant, though relating to the Act, relates to the challenge to theAmendment Act, 1960 by which non-residential buildings constructedon the leasehold land in the municipal towns of Tanjore were excludedand denied the benefit of the Act. This judgment upheld constitutional

validity predicated on the principle of classification under Article 14 andalso the right to property under Article 19(1)(f) read with Article 31(1)of the Constitution. Even in respect of pending ejectment proceedings, itwas observed that the law in India does not recognise equitable estates.Further, the statutory right to purchase land is, or confers, no interest orright in the property but only a right to purchase land. In the view of thisCourt, a statutory right to apply for the purchase of the land is a non-proprietary right. On the question of equitable estates, it was observedthat Section 9 of the Act confers only a right in respect of the landowned by the landlord and not in the superstructure which was ownedby the tenant. The right of the tenant on the superstructure is neithertaken away nor affected under Section 9 of the Act or the amendmentmade vide the Amendment Act, 1960. Even earlier, this Court in Dr.K.A. Dhairyawan and Others v. J.R. Thakur and Others[8], afterreferring to several decisions of the Privy Council, had held that therewas no absolute rule of law that whatever is affixed or built on the soilbecomes a part of it, and is subjected to the same rights of a property asthe soil itself. We do not in India apply the doctrine of English law as tobuildings viz. that they should belong to the owner of the land. Whereclause (h) of Section 108 of the Transfer of Property Act would apply,the lessee can remove all the structures and the buildings erected on thedemised land while he is in possession of the property but not afterwards,meaning thereby the ownership of the building is with the lessee and notwith the lessor. At the same time, nothing prevents the lessee fromcontracting to hand over the building or the structure erected on the landconstructed by him without receiving compensation.

18. In P. Ananthakrishnan Nair and Another v. Dr G.Ramakrishnan and Another,[9] a Division Bench of this Courtinterpreting Section 2(4) and Section 9 of the Act had held that as perthe 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 thetenant”. The words in italics were emphasised by the Division Bench toobserve that the court may, on facts of a particular case, come to aconclusion that the tenant may not require any portion of the land and inthat event it may reject the application and decree the suit for ejectment 8 1959 SCR 7999 (1987) 2 SCC 429

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Aand direct the landlord to pay compensation to the tenant. Section 9confers a privilege on the tenant and not a vested right, but the privilegegranted by the statute is equitable in nature. Elucidating further, it wasobserved:

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

In the said case, an eviction decree was passed observing thatthe tenant had in the small portion of the land kept account books of thebusiness and rest of the land and structure standing thereon had been inDoccupation of sub-tenants since 1964.

19. In S.R. Radhakrishnan and Others v. Neelamegam[10], thisCourt had again interpreted Section 2(4) and 9 of the Act after referringto the dictum in P. Ananthakrishnan (supra) elucidating that the policyunderlying Section 9 is to safeguard eviction of those tenants who mayEhave constructed superstructure on the demised land, so that they maycontinue to occupy the same for the purpose of residence or business.Thus, the tenant not in actual possession of most of the demised premisesin P.Ananthakrishnan (supra) had suffered a decree for eviction.Therefore, it was held in P. Ananthakrishnan (supra) that it will beunreasonable to direct the landlord to sell the land to the tenant. In theFsaid case, application under Section 9 filed by the legal heir of the tenantwas dismissed observing that admittedly he was not in possession of thedemised premises and had ceased to be a tenant.

20. The counsel for the appellant had made a valiant attempt todistinguish the said decisions as P. Ananthakrishnan (supra) was aGcase of sub-letting and in S.R. Radhakrishnan (supra), the court hadrelied upon the reply of the defendant No.1 stating that he had nothing todo with the property as defendant Nos. 2 and 3 were in possession thereof. It is correct that P. Ananthakrishnan (supra) was a case ofsub-letting which means parting of possession by the tenant to the sub-tenant. However, the said case records observations as to the objectand purpose behind Section 9 and the tenants whose interests weresought to be protected. In S.R. Radhakrishnan (supra), the land hadbeen given on lease to the father of the defendant No. 1 who hadthereafter in terms of lease made constructions for setting up and runninga printing press, in which business he had taken his younger brothers,defendant Nos. 2 and 3, possibly as partners. Thereafter, he had executeda deed in favour of defendant Nos. 2 and 3 relinquishing his business ofthe printing press. For the same reasons, we would hold that theobservations made relating to the interpretation of Sections 2(4) and 9are relevant even if we hold that the ratios are not applicable as thefacts 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 theAct apply to all tenants who had entered into oral orunregistered written agreements or registered writtenagreements without any stipulation with regard to ‘erectionof buildings’ for taking land on lease, and had subsequentlyconstructed buildings. Such tenants would be entitled toprotection of the Act provided the tenant satisfies theconditions 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 2of the Act applies to tenants who are not entitled to therights under the Act by reason of the proviso to Section 12which stood deleted vide the Amendment Act, 1972.Paragraph 2 of the said sub-clause applies to cases wherea decree of declaration or decree or an order of possessionor similar relief has been passed against a tenant on theground that the proviso to Section 12, which was omittedby the Amendment Act, 1972, disentitles the tenant fromclaiming rights under the Act. Accordingly, sub-clause (b)to Section 2(4)(ii) would apply only to tenancies which wereearlier excluded from the protection under the Act vide the A

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458SUPREME COURT REPORTS

Aproviso to Section 12 which stands deleted withretrospective effect vide the Amending Act, 1972.[11]

(III)Sub-clause (ii)(c) to clause (4) of Section 2 states that heirsof 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,Bit expressly excludes a sub-tenant or heirs of the sub-tenant.

22. Recording the aforesaid position, we dismiss the present appealsby the appellant, that is, the three petroleum companies, and uphold theorders passed by the High Court that the appellant tenants would not beentitled to the benefit and rights under the Act unless they are in actualCphysical 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 tothird parties, including dealers or licensees, they would not be entitled toprotection and benefit under the Act.

In the facts of the case, there would be no order as to costs.

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Ankit Gyan

Appeals dismissed.

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11 Paragraph 2 in sub-clause (ii)(b) to clause (4) of Section 2 of the Act, has beeninterpreted in different judgments by the Madras High Court, including the decisionin Haridas Girdhardas and Others v. M. Varadaraja Pillai and Another[(1976) 89Madras Law Weekly 1)]. Pertinently, in the aforementioned case, the Madras HighGCourt dealt with the applicability of sub-section (3A) to Section 9 of the Act whichstipulates the reopening or reviewing of a decree or order passed, in terms of thedeleted 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 theAct. We are not required to examine the true impact and effect of the said paragraph2 or sub-section (3A) to Section 9 of the Act as they are not relevant for the presentHdecision. On this aspect, we make no comment.