1965 (4) TMI 122 - SC - Indian Laws

Summary

Issues Involved:
1. Validity and enforceability of the covenant not to build.
2. Applicability of Sections 3 and 9 of the Madras City Tenants' Protection Act, 1921.
3. Interpretation of the term "tenant" under the Act.
4. Effect of the unregistered lease agreement on the tenant's rights.
5. Relevance of the preamble of the Act in interpreting its provisions.

Issue-wise Detailed Analysis:

1. Validity and Enforceability of the Covenant Not to Build:
The primary issue was whether the covenant in the lease agreement, which prohibited the tenants from constructing any buildings on the leased land, was valid and enforceable. The tenants had breached this covenant by erecting a building on the land. The Division Bench of the High Court had held that this covenant was valid and enforceable, and therefore, the tenants were not entitled to compensation under Section 3 of the Madras City Tenants' Protection Act, 1921. However, the Supreme Court found this reasoning to be fallacious. It was held that the covenant not to build did not affect the tenant's right to claim compensation under Section 3, as the Act explicitly stated that nothing in any contract made by a tenant shall take away or limit his rights under the Act (Section 12).

2. Applicability of Sections 3 and 9 of the Madras City Tenants' Protection Act, 1921:
Sections 3 and 9 of the Act were central to the case. Section 3 entitles tenants to compensation for any buildings erected by them upon ejectment, and Section 9 allows tenants to apply for an order directing the landlord to sell the land to them. The Supreme Court held that the tenants were entitled to the benefits of these sections despite the covenant not to build. It was emphasized that the word "tenant" in Section 3 must be understood as defined in the Act, which includes all tenants liable to pay rent, irrespective of any covenant not to build.

3. Interpretation of the Term "Tenant" Under the Act:
The term "tenant" was defined in Section 2(4) of the Act as a tenant liable to pay rent on the land. The Supreme Court reiterated that there was no reason to exclude tenants who had erected buildings in breach of a covenant from the definition of "tenant" under the Act. The court held that the tenants in this case were indeed tenants as contemplated by Section 3 and were entitled to compensation and the right to purchase the land under Sections 3 and 9, respectively.

4. Effect of the Unregistered Lease Agreement on the Tenant's Rights:
The lease agreement in question was unregistered. The Supreme Court noted that Section 12 of the Act provided that nothing in any contract made by a tenant shall take away or limit his rights under the Act, unless the stipulations were made in writing and registered. Since the lease agreement was not registered, the covenant not to build could not affect the tenants' statutory rights under the Act. Therefore, the tenants were entitled to their rights under Sections 3 and 9 despite the unregistered lease agreement.

5. Relevance of the Preamble of the Act in Interpreting its Provisions:
The preamble of the Act stated that it was intended to give protection to tenants who had constructed buildings on others' lands in the hope that they would not be evicted. The Division Bench of the High Court had found the preamble too vague to define a definite class of tenants. However, the Supreme Court held that the preamble could not be used to restrict the clear and unambiguous language of the operative provisions of the Act. The court emphasized that the language used in Sections 3 and 9 was clear and admitted no doubt as to the meaning intended.

Conclusion:
The Supreme Court allowed the appeal, setting aside the judgment of the Division Bench and restoring the judgment of Anantanarayanan J. The court held that the tenants had a right under Section 9 of the Act to purchase the leased land despite the covenant not to build and the breach of it by them. The covenant could not be used to interpret Sections 3 or 9 in a manner that would limit the tenants' statutory rights. The appellants were awarded costs in the Supreme Court and the Division Court.