Holding

The express clause in the lease vested title of the buildings in the lessors when the lessee failed to remove them within the stipulated period, making the Government liable to compensate the lessors for those structures.

Summary

The appellants, owners of land leased to Narain Das Lachman Das Oil Mill (later Northern India Oil Industries Ltd), gave a notice on 26 February 1944 terminating the lease and allowing the lessee until 30 June 1944 to remove machinery, stores, and buildings as per clause 6 of the lease dated 2 June 1941. The lessee obtained an injunction against eviction and later applied for compulsory acquisition of the land, which the Government approved for the lessee's use. The appellants claimed compensation for both the land and the buildings left on the premises, but the lower courts awarded only land compensation, holding that the lessee retained title to the structures. The Supreme Court examined the effect of clause 6, s.108(h) of the Transfer of Property Act, and s.114A, concluding that the express lease provision overrode the statutory provision and vested title of the buildings in the lessors when the lessee failed to remove them within the stipulated period. Consequently, the Court held that the Government was liable to compensate the appellants for the buildings as well as the land, set aside the lower courts' orders on that point, and remanded the matter for fresh assessment of compensation.

Issues considered

Whether the express clause in the lease granting title of the buildings to the lessor upon failure of the lessee to remove them within four months vests such title notwithstanding s.108(h) of the Transfer of Property Act.
Whether the conditions of s.114A of the Transfer of Property Act, requiring a notice specifying breach and an opportunity to remedy, affect the lessor's right to claim title to the structures in the present case.
Whether the acceptance of rent after the termination notice amounts to a waiver of the notice, thereby preserving the lessee's tenancy and title to the structures.
Whether compensation for the buildings and structures is payable to the lessor upon compulsory acquisition of the land by the Government.

Legislation cited

Land Acquisition Act
Transfer of Property Acts. 108(h), s. 111(g), s. 114A

Subjects

lease terminationcompulsory acquisitioncompensation for buildingsTransfer of Property Acts.108(h)s.114Atitle vestingnotice waiver

Judgment

SlS

A

BASANT LAL (DEAD) BY LRS. & ANR.

v.
THE STATE OF U.P. AND ANR.
September 25, 1980

[S. MURTAZA FAZAL ALI AND A. D. KOSHAL, JJ.]

Transfer of Property Act, sections 108(/z) and 114A, scope and app/icabi- -C"
lily of.

The appellants terminated the lease of the suit lands by a notice dated
26th February, 1944 and allowed the lessee company "Narain Das Lachman
Das Oil Mill" time till 30th June, 1944 for the removal of machinery, stores,
buildings and other constructions in terms of clause (6) of the lease-deed dated
2nd Ju,ne, 1941. The company not only secured an order from a Civil Court
forbidding the appellants from ejecting it, but applied to the State Govern·
ment for compulsory acquisition of the suit land, In the land acquisition
proceedings, the claim of the appellants "for the machinery, st()res, buildings
and other constructions made by the Jessee" by virtue of automatic vesting
in the appellants in terms of clause (6) of the lease-deed dated 2nd June, 1941
and also, pursuant to notice of termination, was negatived. Having failed
before the District Court and the High Court to obtain the relief, the appel- E
lants obtained special leave of the Supreme Court.
Allowing the appeal, the Court
HELD : (1) Although the lessee continued to remain -in the premises after
the expiry of the notice terminating the lease, yet by force of the express
recitals in clause (6) of the lease-deed dated 2nd June, 1941, the buildings,
etc., became the property of the lessors. , Therefore, after the Government F
acquired the property it was bound to pay compensation to the appellants not
only for the land but also for the buildings and structures thereon.
[821H; 822AJ
_(2) There was no waiver of the notice by the appellants, There is no
reliable evidence at all in the instant case to show the exact date when the
rent was accepted or, at any rate, the fact that ihe rent was accepted between
the 26th February, 1944, when the notice was sent, and the 30th June, 1944, G
when the Company was asked to vacate -the premises, Besides there is a
fiinding of fact that the Company was treated as a trespasser ever since 26th
February, 1944, namely, the date when the notice was given and that any
rent which the appellants accepted was really not rent but m'ere compensation
for wrongful use and occupation of the land. [819C-E]
(3) It is no 'doubt true that s. l 14A of the Transfer of Property Act requires
two conditions to be fulfilled before a suit for ejectmeni ~ould lie-(i) that
H
a notide should be -given to· the· lessee specifyirtg the particular breach com-
plained of, and (ii) that the lessee should be called upon to remedy the
SUPREME COURT REPORTS [1981] 1 S.C.R.

breach. If these conditions are fulfilled, then alone the lessor would be entitled
to bring a suit for ejectment of the lessee. Section 114A merely bars a suit
:for ejectment of the lessee in the instant case as the land had been acquired
:for the purpose of the lessee, namely, the Company, the question of filing a
suit for ejectment did not arise at all. In fact, the lessees themselves tiled a
1mit and obtained injunction restminiug the appellants from ejecting them
before tbe land acquisition proceedings were taken in respect of the land in
B dispute. Thus, tbe non-compliance of sub-s. (b) of s. 114A is of no conse-
quence so far as tl1is particular case· is concerned. In the lease dated 2nd
June, 1941, clause (6) clearl.Y Jays down that within four months after the
c'xpiry of the period of the lease tbe lessee would be entitled to remove the
stocks and machinery. The last part of that clause also empowers the lessor
to re-enter possession and acquire title to tbe buildings etc., that may be
constructed by the lessee. [819H; 820B-D]

(4) A construction of claul!e (h) of s. 108 of the il'ransfer of Property
.Act clearly reveals that where there is a contract contrary to the provisi.:>ns
of tbat section would not apply. In the lease dated June 2, 1941, there is
not only an express clause under which the lessee was entitled to remove the
stocks and materials witbin four months after the termination of the lease but
thereafter there was another stipulation that in case the lessee failed to do
so, all the buildings etc. would become the property of the lessor. [82JA-B]
D
CIVIL APPELLATE JuR1smcnoN : Civil Appeal No. 1145 of
1970.
From the Judgment and Order dated 8-4-1969 of the Allahabad
High Court in First Appeal No. 45/55 .
.E
Mrs. Rani Chhabra for the Appellant
B. N. Dikshit, 0. P. Rana and Mrs. Shobha Dik9hit for the
Respondent.
The Judgment of the Court was delivered by
j
F
FAZAL Au, J.-This appeal by certificate is directed against a
judgment dated January 6, 1969 of the Allahabad High Court and
adses in the following circumstances.
The land in dispute originally belonged to Smt. Jawahar Devi who
had inherited the same fr6m her father Shankar Das who died some-
G time in or before the year 1905. Jawahar Devi had a daughter Putli
Bibi who had three sons, namely, Basantlal, Shankarlal and Girdhari-
lal. Jawahar Devi died in the year 1934.
On the 25th February 1905, Jawahar Devi let out the land to
the late Lala Lachman Das for the construction of a mill wi:lich was
H kriown as 'Narain Das Lachman Das Oil Mill'. The lease was to
continue for 50 years and cont;tined a clause for renewal. In ~he
year 1936-37, the lessee Lachmau. Das transferred his rightS in the
BASANT LAL V. U.P. STATE (Fazal Ali,!.) 817

lease to Northern India Oil Industries Limited (hereinafter referred A
'to as the 'Company'). Thereafter, the three sons of Prim Bi:bi sent
'a notiCe on the 15th of December 1937 to M/s. Narain Dass Lach-
'nian Dass claiming damages. At that stage Girdharilal sold
'bis rights in the land to his brother Basant Lal. In the year 1938, .a
·suit was filed by Basantlal and Shankarlal against M/s. Narain Dass
Lachman Dass as well as the Company. This suit was, however, B
'Compromised on the 2nd of June 1941 and on the same date a fresh
lease was executed by the two plaintiffs therein in favour of the
company. The terms of the lease were incorporated in the
compromise (Exhibit 31) but both .the lease and the compromise
were contained in unregistered documents.
c
Disputes again arose between the parties and led to the institu-
tion of a suit by the company against Basantlal and Shankarlal for
:specific performance of the compromise above mentioned (Exhibit
.31). This suit also ended on the 26th of May 1943 in a
~ompromise according to which a fresh lease embodying the terms of
.the lease dated the 2nd June 1941 was to be executed by Basantlal D
.and Shankarlal in favour of the Company and at its cost within a
week provided the company complied with the covenants contained
in that lease to the satisfaction of Rai Bahadur Lala Ram Narain,
Treasurer, Imperial Bank of India, Kanpur. Despite the second
•compromise disputes again cropped up between the parties and
ultimately Basantlal and .Shankarlal, who are the appellants before E
us, sent to the company a notice dated 26th of February 1944
(Exhibit 36-A) terminating the lease dated the 2nd June 1941 on the
·ground of breach by the company of covenants 2, 4 and 5 contained
therein. Time was allowed to the company till the 30th June 1944
for the removal of machinery, stores, buildings and other construc-
tions. The Company, however, secured an order from a civil court F
forbidding the appellants from ejecting i.t.
On the 7th June 1946, the Company applied to the State
'Government for compulsory acquis~tion of the land. Its request was
-accepted and the land covered by the lease was acquired by the
Government for the purpose of the company. In proceedings before G
rthe Collector the appellants claimed compensation not only for the
land but also for the buildings and other iitructures standing thereon.
•CompenMttion for the land was awarded to them but the rest of their
·claim was turned down. The matter was re-agita~ed before the
District Judge to whom it was referred and then in appeal before the
High Court. The District Judge and the High Court raised the H
..quantum of compensaition for the land but rejected the claim of the
.:appellants for compensation in respect of builaings and structures.
-s.·1s SUPREME COURT REPORTS [1981] 1 S.C.R.

A In the appeal before us no dispute subsists about the compensa-
tion for the land and the controversy is limited to the compensation
for the buildings, etc., which were constructed on the premises by
the lessee and to which the appellants claim title on the ground that
the company did not remove the same despite a period of more than
4 mo.nths granted to it for the purpose in the notice dated the 26th
B of February 1944 and that the title thereto had consequently vested
in the appellants wtth effect from 1st July 1944.

Before proceeding further we may recapitulate the manner in·
which the present disput1~ was dealt with by the two Courts below .
It was argued before the District Judge on behalf of the State that
c the lease dated the 2nd June 1941 being unregistered it was inadmis-
sible in evidence and that the Company, therefore, was not bound to
vacate the premises. The District Judge overruled the argument
(and in our opinion rightly) on the ground that the terms of the lease
formed part of the, decree based on compromise Exhibit 31, that the
compromise relailed to the property which was the subject-matter of
D the suit and that, therefore, the compromise did not require registra-
tion. The argument was. repea:!ed before the High Court and was
rejected for the same reason for which it was repelled by the District
Judge.

Another point taken before the District Judge was that as the
E a.ppellants had accepted the rent after having given the notice dated
February 26, 1944, their conduct in domg so amounted to waiver of
the notice as a result of which the tenancy continued to subsist.
The District Judge accepted this point and non-suited· the appellants
mainly on this ground. The High Court, however, did not agree
with the conclusion of the District Judge and held that, in the first
F place, there was no evidence to show that the rent was accepted at
any time after the noti~ was given to the company, and, secondly,
as the rent was accepted by the appellants under protest, it could
not amount to waiver because there was no intention on the part of
tJ1e lessor to :treat the lease as subsisting. In this connection, the·
G High Court observed as follows : -
"We have been taken through the deposition of Basant Lal,
but we have failed to find any,thing in that statement which may
go to show that rent for the period beginning after the termina-
tion of the lease was accepted by him. All that he said was as.
follows:-
H
" 'Rent was sent to me and I accepted some rent under·
. ,protest.' " .
BASANT LAL v. u. P. STATE (FazalAli, !.) Sl9•

"From that s1tatement, it cannot be said that the rent so A
accepted was for the period after termination of the lease. There
is another sentence in the statement of Basant Lal, which reads
as follows : - '
+ " 'I treaited the defendant as trespasser from 26th
February 1944 and accepted payment for use and occupation
B
of the land.' "
"The learned District Judge, therefore, was not right in
taking the view that the notice was ~aived."
We find ourselves in complete agreement with the view taken by
the High Court. There is no reliable evidence at all to show the exact
date when the rent"was accepted or, at any rate, the fact that the rent
c
was accepted between the 26th February 1944, when the notice was
sent, and the 30th June 1944, when the Company was asked to vacate
the premises. Furthermore, the High Court has pointed out from the
evidence of the appellants that the Company was treated as a trespasser
eversince 26th February 1944, namely, the date when the notice was D
given and has held that any rent which the appellants accepted was
really not rent but mere compensation for wrongful use and occupation
of the land. In these circumstances, we fully endorse the finding of the
High Court that there was no waiver of the notice such as was spelt by
. the District Judge. The High Court, however, upheld the order of the
District Judge for a different reason which was that there could not E
· be any forfeiture of the tenancy under s. 111 (g) of the Trans.fer of
Property Act unless a notice was given to the lessee by the lessor
expres:;ing his intention to terminate the lease aild in addition a notice
under s.114-A of that Act also affording an opportunity to the lessee
to comply with the terms, the non-compliance of which would result
in forfeiture. According to the High Court, as the second condiJtion F
was not complied with, there was no forfeiture and hence the title
to the structures, etc., continued to vest in the lessee and therefore
after the Government acquired the land under the Land Acquisition
Act, the appellants were not entitled to any compensation for the
structures and the materials as claimed by them. We are, however,
unable to agree with the view taken by the High Court for the reasons G
that we shall give hereafter.

It is no doubt true that s. 114-A of the Transfer of Property Act
requires two conditions to be fulfilled before a suit for ejectment could
lie-( l) that a notice should be given to the lessee specifying the
particular breach complained of,. and (2) that the lessee should be H
called upon to remedy the breach. If these conditions are fulfilled,
then alone the lessor would be entitled to bring a suit for ejectment
820 SUPREME COURT REPORTS [1981] 1 S.C.R.
of the lessee. In the instant case, it is no doubt common ground that
in the notice dated February 26, · 1944 the appellants did not at all
mention that the lessee should remedy the breach within a reasonable
period to be fixed by the lessor, but that does not advance the case
of the lessee because s.H4~A merely bars a suit. for ejectment of the
lessee. In the instant case, as the land had been acquired for the
B jpUrpose of the lessee, viz., the Company, the question of filing a
suit for ejectment did not arise at all. In fact, the lessees themselves
filed a suit and obtained an injunction restraining the appellants from
1ejecting them before the land acquisition proceedings were taken in
:respect of the land in dispute. Thus, the non-compliance of sub-·
:1ection (b) of s.114-A is of no consequence so far as this particular
c 1;:ase is concerned.

In the lease dated 2nd June, 1941, clause ( 6) clearly lays down
that within four months after the expiry of the period of the lease
the lessee would be entitled to remove the stocks and machinery. The
l ast part of that clause also empowers the lessor to re-enter possession
1

D and acquire title to the buildings, etc., thait may be constructed by
the lessee.
Mr. Dixit, appearing for the State of U.P., relied on s.108(h)
of the Transfer of Property Act which runs thus :

E "108 (h). The Jessee may even after the determination of
the lease remove, at any time whilst he is in possession of the
property leased, but not afterwards, all things which he has
attached to the earth, provided he leaves the property in the State
in which he received it."
He contended .that even if the lease was determined, the title to
F the construction, etc., would vest in the lessor only if the lessee does
not remove the materials ait any time whilst he is in possession of
the property leased. It was argued that in the instant case, as the
leased land was acquired by the Government while the lessee
was still in possession and continued to be in possession, by virtue of
G
ithe land having been acquired, the lessor could not claim any title
to the constructions· or the materials. There could be no doubt that
this is the real effect of clause (h) of s. 108 but s. 1O& opens with a
sort of a non-obstante clause which is as follows :
"In the absence of a contract or local usage to the contrary,
the lessor and the lessee of immovable property, as against one
H another, respectively, possess the rights and are subject to the
liabilities mentioned in the rules next following, or such of them
as are applicable to the property leased."
BASANT LAL v. U.P. STATE (Fazal Ali, 1.) . ' 821

A construction of this clause clearly reveals that where there is A.
a contractto the contrary the provisions of s.108(h) would not apply.
In the lease dated June 2, 1941, there is not only an express clause
under which the lesree was entitled to remove the stocks and materials
within four months after the termination of the lease but thereafter
there was another stipulation that in case the lessee failed to do so,
all the buildings, etc., would become tthe properlty of the lessor. Jn.
this connection, the relevant part of the lease may be extracted
thus:-
"6. That within four months after the expiry of the period
.of lease, the lessees, their successors or1 assigns will be entitled to
remove their stocks and machinery etc. pipelines, electric instal-
lation, fixtures, fittings, including stocks and materials of their
constructions and fittings which stand .on the plot of fand shown
by the letters A F H G in the accompanying map and will, on D
the expiry .at the period of lease have over to the lessors ·the
said plot of land (shown by letters A F H G in the accompany-
ing map) duly levelled but the lessees would not be entitled to
remove the boundary walls or any constructions or buildings
which at present are created, which may be created during the F;
period of lease on the plot of land shown by letters A B E F
in the accompanying map and which is outside the compound
+- of the lessees Oil Mills on the eastern side and on which at
present stand twenty three quarters facing Hamirpur Road, as

l their quarters or any other buildings that may be created in their
place or on their site w well as boundary walls would become
p.

the property of the le~ors on the expiry of the period of lease,
without any compe_nsation being paid for the same by the lessors
to the lessees."
(Emphasis ours) G.

Thus, although the lessee continued to remain in the premises
after the expiry of the notice terminating the lease, yet by force of the
express recitals in clause(6) extracted above, the buildings, etc.,
became the property of the lessors. Unfortunately, this aspect of the lJ
matter does not appear t.o have been considered by the High Court.
In these circumstances, therefore, the conclusion is inescapable that
:s22 SUPREME COURT REPORTS [1981] 1 S.C.R.

A after the Government acquired the property it was bound to pay
e-0mpensation to the appe;1J.ants not only for the land but also for the
buildings and structures thereon.

As, however, neither of the Courts below have assessed the: _..,.,
compensation for the buildings, etc., as they stood in the year 1946
B
when the land was acquired, the matter will have to be determined by
rthe District Judge afresh in so far as such compensation is concerned.
We would, therefore, allow this appeal with cost_s, set aside the Judg-

c
ments of the High Court and the District Judge -in so far as no
compensation has been awarded in respect of the buildings, structures,
etc., and remand the case to the District Judge for determining such
)
compensation according to the rates prevailing in 1946 and also to
determine the interest and solatium to be paid on such compensation
from 1946 upto the date of payment.

D
S.R. Appeal allowed.

----.

J