STATE OF U.P versus ZAHOOR AHMAD & ANR

STATE OF P \>.

ZAHOOR AHMAD & ANR.

August 8, 1973

(A. N. RAY, C. J. AND D. G. PALEKAR, J.]

Transfer of Property Act, 1882, s. 116, and Government Grants ti.ct, 1895 Ss. 2 & 3-Lease of reserved forest' in U.P. whether not governed by s. 116 T.P. Act because of provisions of Government Grants Act. '

The appellant State was the proprietor of reserved forest. Th: respond-ent took on lease from the appellant plot of land for industrial purposes in the said forest area. As found , by the High Court th~ lease was orig1oally granted for one year in 1947 at an annual r~nt of Rs. 100. It was renewed in 1948 and 1949 for one year. After tbe termination of the lease in March 1949 the respondent continued to be in possession of the land and agreed to abide by the terms to be fixed by the appellant. Under the terms fixed by the appellan! the respondent was required to pay Rs. IOJO as annual rent for the ttccupation of the land till July 15, 1950. The respondent r ... mained in pos· session of the leased property after the determination of the lease in 1950, for further period of three years. 1he appellant want to enhanee the r.nt to which the respondent did not agree. In the constquent suit fil~d by the appel· lant the trial court passed decree in the suit all'Jw1ng Rs. 6000 as rent r the years 1950-51 and 1951-52 and Rs. 5000 as damages for 1952-53. The High Court reversed the decree. It held that n'J notice as required und::r s. 106 of the Transfer of Property Act had en given and since on the facts the respon .. dent must be: deemed to have held over within the m.aning of s. 116 of the Transfer of Property Act, the rent was payable as und:r the previous lease, On this view it passed decree in favour of the appellant for Rs. 300u being rent at Rs. 1000 per year for the th_ee y.'ars in questi'Jn, In appeal by special leave to this Court the appellant State contended that s. 116 of the Transfer of Property Act was not applicable to the case b~~ause of s. 2 of the Government Grants Act.

Dismissing the appeal,

HELD : l'he lease in the present case was for the purpose of erecting temporary rice mill and for no oth ?l' purpos~. The mere fact that the State is the lessor will not by itself tnakc it Governm nt grant wi:hin the meaning of the Government Grants Act. There was no evidence in the pr'sent case in the character of the land or in the making of the lease or in ihe content of the· l~ase to support the plea on ·half of the State that it was grant within the meaning of the Government Gran!s Act. [347E-G]

In the present case the High Court correctly found on the facts that the respondent after the det'.'rmination of the lease held over. Even if the Gov-ernment Grants Act applied section 116 of the Transfer of Property Act was not rcnc'c-red inap1 icablc. The effect of s~ction 2 of the Government Grants Act is that in the construct1on of an instrument governed by the Government Grants Act the court shall construe sych grant irrespective of th-. provisions of the Transfer qf Property Act. It does not me.an that all the provisions of the Transfer of Property .\er are Inapplicable. To illustratP, in the ca<i[0 ]of grant und·3'r the Government Grants Act section 14 of the Transfer of Property Act will not apply because section 14 which provides what .is known as the rule against perpetuity will not apply by reason of the prOvisions in th~ Govern-ment Grants Act. The a:rant shall be construed to take effect as if the Trans~ fer of Property Act does not apply. [3488-DJ

Section 3 of the Government Grants Act declares the unfettered discretion of the Government ,to impose such conditions and limitations as it thinks fit, no matter what the general law of the land be. Th-. meaning of sections 2 and 3 of the Government Grants is that the scope of that Act is not limited to

~ atrecti~g the provisions of tl:e Transfer of Pro~!1JI Act ~DIY: The Govem~'Jll has unfettered discretion to imppse any cond1ttons, hm1tations. or restnChOIJS in its grants, and the right,' principles and obligations of '!Ie- grantee '!~uld be regulated according to- the terms of the grant, notwithstanding any prov1s1om of any statutory or common law. [348D-F]

Jnanendra Nnth Nanda v. Jadu Nath Baner;e, J.L.R. [1938] I Cal. 62~. and Secretary of State for India. in Council v. Lal Mohan Chaudhuri, I :L ._R. 63 Cal. 623, applied.

Lala Kish"" Chand v. Sheo Dutta, I.L.R. 1958 All. 879, approved.

CML APPELLATE JUlUsDICTION: Civil Appeal No. 1718 of 1967.

Appeal by special leave from tne judgment and Order dated 23-10-64 of the Allahabad High Court at (Lucknow Bench) in First Appeal No. 89 of 1957.

G. N. Dikshit and 0. P. Rana, for the appellant.

S. S. Shukla, for respondent No. 1.

The Judgment of the Court was delivered by

RAY, C.J.-This is an appeal by special leave from the juctgrnent dated 23 October, 1964 of the Allahabad High Court.

The High Court reversed the decree for Rs. 11,000/- and passed decree for a·sum of Rs. 3,000/- with proportionate costs in favour of the appellant State.

The appellant is the proprietor of the reserved forest in Uttar Pra-desh. The respondent took lease from the appellant of plot of land 'E at Chandan Chowki, Sonaripur Range in the North Kheri Forest Divi-sion at an annual rent of Rs. 1,000/-.

The High Court found these facts. The appellant had granted lease to the respondent for one year from 18 March, 194 7 at an annual rent of Rs. 100/-. The lease wa' renewed the following year on 10 June, 1948 with effect from 18 March, 1948 for one year. The lease was renewed again in 1949 for one year. The lease expired on 18 March, 1950.. After the terinination of the lease in March, 1949 the respondent continued to b~ in possession of the land and agreed to abide by the terms to be fixed by the appellant. Under the terms fixed by the appellant the respondent was required to pay Rs. 1,000/- as ~nnual rent for the occupation of the land till 15 July, 1950.

The respondent remained in possession of the leased property after the determination of the lease on 15 July, 1950. The appellant allow-ed the respond~nt:t9 qe in occupation for three years !:Jeyond 15 July, 1950. The respondent did JJOt <!fil·ee to give any undertaking after 15 July, 1950 as in the year 1949 to agree to abide by the decision of the Government. The appellant was on the one hand anxious to charge as high rent as possible and the respondent on the other was willing to pay reasonable rent. On 27 August, 1951 the Forest Officer of the appel-lant wrote to the respondent for discussion regarding the rent for the year 1950-51. There is no evidence as to wheth~r there was any such discussion. This is however letter of the appellant dated 4 Decem-

ber, 1951 to the respondent where the respondent was asked to pay Rs. 3000/- for the year 1950-51 and if the respondent did not agree to pay the amount the rent would be reduced to Rs. 1800/- but the mill would not be allowed to have the lease in future in any circumstance. The respondent was allowed to continue in occupation of the land with-out any agreement as to the amount of rent payable for the year 1950-51. On 29 October, 1952 the Conservator of Forests on pan of the appellant sent notice to the respondent that the appellant offered to allow the respondent to run the mill beyond 15 July, 1950 for three years provided the respondent paid Rs. 3000/- p~r annum and for one year only in case the respondent was prepared to pay Rs. 1800/-with the further condition that the lease would not be renewed. The notice further siated that since the respondent had not executed any lease in-corporating the terms the respondent was mere licensee. The re pen-dent was asked to remove the plant within one month of the date of receipt of the notice and to pay Rs. 6000/- as damages for use and occu-pation. If the respondent did not do so the appellant gave notice of filing suit for recovery of damages at the rate of Rs. 5000/- per annum for future use and occupation. On the facts found by the High Court, the High Court concluded that the respondent continued in occupation with the consent of the appellant without any agreement as to the amount of rent or without any ondertaking that the respondent would pay the rent fixed by the appel-fant. The appellant, therefore, after the determination of the lease on 15 July, 1950 assented to the respondent continuing in possession. The lease was for industrial purposes. Under the terms of section 106 of the Transfer of Property Act such lease is from year to year. There-fore, there being no agreement to the contrary the continuance by the respondent in possession of the leased premises amounted to renewal of the lease from !(>July, 1950 as lease from year to year. It would be lease terminable by six months notice expiring with the end of the year of the tenancy. There was no such notice expiring with the end of year of tenancy in 1952. The renewed tenancy therefore continued and was not terminated. With regard to the amount of rent payable the provisions of section 116 of the Transfer of Property Act indicate that the renewal of the lease would mean that the terms and conditions would be the same as of the previous lease. The High Court, therefore. correctly found that in the absence of any agreement te> pay Rs. 3000/- as annual rent or in the absence of any agreement and undertaking that the respondent would accept the amount fixed 'by the appellant as the rent. The apoel-lant was not entitled to anything more than Rs. 1000/- year which was the amount of rent for the year 1949 ,to 1950.

With regard to the claim of the State for Rs. 5000/- for tlie year 1952-53 as damages for use and occupation the Hi~h Court found that 1ile respondent was holding over, and, therefore, the renewal of the lease would be on the same terms and conditions.

The High Court, therefore, allowed the State Rs. 3000/- at the rate of R<. 1000/- for each year for three years 1950-51, 1951-52 and i 952-53.

On behalf of the appellant it was contended that the provisions ol: the Transrer or Proper•y Ace did not app1y and tnerefore the respundent. could noc hold over w nnm the moanillg o~ ;ection 116 of the uano1er ot Property Act. The State retied on the Government Grants Act. Section 2 or the Governmem Granes Act enacts tllat noth.ng in the, Transrer of Property Act shall apply to any grant or other uans!er of land or of any mterest therem in ravour ot any person, out every such grant and transfer shall be construed and take e11ect as it the said Act had not been passed.An example of Government grant within the meaning of the Government l..irants Act occurs m me decision in Jnanendra Na1h Nanda v. Jadu,Na1h Banerji l.L.R. (1938) 1 Cal. 626. Two leases of two lots were granted by the Sunderban Commissioner on behah of the Secretary of Seate. The lands compnsed in the lols were waste lands o( the Government. The waste lanas of the Sunderbans were not the property of any subject. The Sundebans were vast impcnetraole forest. It was the property of the East India Company. i, later on vested in the Crown in those days by virtue of an Imperial sta.ute. The· history of the legislation showed that grants of Sunderbans lands which. were vested ·in the Crown at that time were Crown Grants within the meaning of the Crown Grants Act as it then stood. On the other hand, there is an illustration of what is not Govern-ment grant within the meaning of the Government Grants Act. The decision in Secretary of State for India in Council v. Lal Mohan Chau. dhuri I.L.R. 63 Cal. 523 furnishes that illustration. ·The Government in that case granted lease in respect of Khas Mahal lands. The lease of Khas Mahal was held not to fall within the category of grants as con-templated in the then Crown Grants Act.

The lease in the present case was for the purpose of erecting tem-porary rice mill and for no other purpose. The mere faot that the State is the lessor will not by itself make it Government grant within the meaning of the Government Grants Act. There is no evidence in the present case in the charactet of the land or in the making of the lease or in the content of the lease t<) support the plea on be~alf of the State that it was grant within the meaning of the Government Grants Act. The High Court in the present case relied on BcncJi decLion cf that Court. That is the case of Lala Kishun Chand v. Sheo Dutta I.LR. 1958 All. 879. The land in that case belonged to the Govcre-G ment and was nazul. The management thereof vested in the notified area of the Bindi Board. The land was taken on lease by the defencf~nt for period of I! years in the first instance and thereafter for 4t years. After the expiry of the lease the defendant was permitted by the Board to continue in occupation as tenant and the rent used to be realised' from him. In the mean time. the plaintiff ob•ained lease in regard to the land from the Commissioner. The plain•iff could not get po[0]<es-H sion. The plaintiff filed suit in the city civil court. The learnect single Judge of the High Court.affirmed the deci•ion of the conrts below that the defendant was tre<pa<ser and the derendant's r;ght as le<see came, to an end at the expiry of the lease in 1909. The High Court on

appeal held that the lessee remained in pos3es.sion after the termina-tion or the lease and therefore there was holding over within the mean-ing or section 116 of the Trans.er of Property Act. Tne contention wmch was advanced that sect10n 2 of the Government Grants Act rendered the provisions of the Transfer of Proper_ty Act inapplicable was not accepted. The High Court correctly held that when the court is called upon to construe an instrument granting land by the Govern-ment it shall construe irrespective of the provisions of the J:rausfer of Property Act. 'Che provisions of section 116 of the· Transfer of Property Act were correctly held by the High Court to be operative in that case.

In the present case the High Court correctly found on the facts that the respundent after the determination of the lease held over. Even if the Government Grants Act applied section 116 of the Transfer of Pro-c perty Act was not rendered inapplicable. The effect of section 2 of the Government Grants Act is that in the construction of an instrument governed by the Government Grants Act the court shall construe such grant irrespective of the provisions of the Transfer of Property Act. It does not mean that all the provisions of the Transfer of Property Act are inapplicable. To illustrate, in tb case of grant under the Govern-rnent Grants Act section 14 of the Transfer of Property Act will not apply because section 14 which provides what is known as the rule -against perpetuity will not apply by reason of the provisions in the Government Grants Act. The grant shall be construed to take effect as if the Transfer of Property Act does not apply.

Section 3 of the Government Grants Act declare• the unfettered dis-cretion ot the G0vermnent to impose such conditions and limi·ations as it thinb fit. no matter what the general law of the land be. The mean-ing of sections 2 and 3 of the Government Grants is that the scope of that Act i' not limited to affecting the provisions of the Transfer of Proper y Act only_ The Gove_rnment has unfettered discretion to in1po'ie nv conditions, ii imitations, or restrictions in its grants, and the right. privileges and obltgat1ons of the grantee would be r;1p1lated according to the terms of the grant, notwithstanding any prov1S1ons of any statutory or common law.

For these reasons the decree of the High Court that the respondent held over within rhe mean mg of section 11 fi of the Transfer of Property Act is upheld. The appeal is dismissed with costs.

Appeal dismissed.