# IUTKARINI SABB~, JABALPUR v. THE CORPORA.TION OF THE CITY OF JABALPUR & C>THERS

- **Citation:** [1973] 1 S.C.R. 493
- **Court:** Supreme Court of India
- **Decided:** 1972-05-03
- **Case number:** Civil Appeals Nos. 702 and 703 of 1967
- **Bench:** K. S. Hegde, A. N. Grover
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/iutkarini-sabb-jabalpur-v-the-corpora-tion-of-the-city-of-jabalpur-c-thers-5684
- **Pages:** 7

## Headnote

Land Acqu@ion Act
IS9A--Apportlonmen~ of
compensatiqn-
,. Unauthorised 'lease by M uniclpal Corporation to local Col!eg<-'Ler.ire
deed containrng renewal clause-Since lease is ineffectiμe renewal clause
cannot he taken into consideratio~ for purpose of apportionment-Quantum of compe>!Jation-This Court will not interfere when lower couri•
have taken all factors into consideration.
The Municipal Corporation of Jabalpur pu'rporated to grant a leave
of certain land to the appellant Sabha. According to the document the
period cf kasc was 30 years.
The appellant was entitled on the expiry_
of tl>o lt,,,;c to have the same renewed on such terms and conditions as
might be agreed between the parties.
The
appellant made a cl)llege
hostel on the aforesaid land and had also used
the attache<I groomd as
playground for students.
A portion of the said lapd was sought to be
acquired by the State Government under the Land Acquisition Act, 1894
for constructing the Home Science College.
The Collector of JabbQlpur
by his award dated July 18, 1955 dealt with the claims filed by the
appellant and the Municipal Corporation and as"""""d the compen.;ation
at As. -/8/- per sq. ft.
Apportionment was mare between the appellant
and the Corporation on the footing that the at)pellant was not merely a
tenant at will as contenc!ed by the Corporation but was a lessee for the
terms mentioned in le.,e. The appellant and the Corporation made applications for reference under s. 18(1) of the Act.
The Additional District
Judge
held
that the
price should
bo As.
-/10/-
per
sq
ft.
and that the app,ellant and the
Municipal Corporation were
entit!OO
to
equal
compensation. The Corpora.lion
and the appellant
filed
appeals to the High Court.
The
decision of the Addi. District Judge
fixing the price of the land As. -/! 01 - per
sq,
ft was
·affirmed.
As regards the dispute regarding apportionment the High Court held
that the lease deed having been exempted by the Administrator during
the time wher. the Corporation stood superseded was ineffective to convey
the leasehold interest to the appellant.
However, the appellant was paying the rent "'hich had been accepted for a long time by the Corporation.
The're was thus a tenancy by necessary implication.
The High
Court
furt!ler held that the lease was to continue for the period of 30 years
mentioned in the deed but there was no valid contract for renewal of
lease because the clause relating to that was vague and uncertain.
The
"'pportionrmnt was made on acturial basis between the appellant and the
G
Corporation in the ratio of 1038: 962.
In .appeal before the C'?'"1 Ifie
questions relating to quantum of compensation and the
aworti<1nment
between th< appellant and the Corporation fell for consideration.
H
HELD : (1) No lease could be spelt out of ~. deed dated August
31, l 940
for
a
period
of 30 years
containing
the
renewnl
clause.
If the
officer who
executed the
lease deed
had ne
power to lease out the property in question the grant of the lease was
wholly null and v<>id. , It is true that by the acceptance . of ren~ from
the appellant the relationship of }Mdlord 11nc! tenant came mto ex1stell!"'•
But that did not show that a lease deed for a periDd of 30 years with
a renewal clause had come into existence. [497EJ
Since the lease deed was ineffective the lease could be under the provisions of section I 06 of the Transfer of Property. Act, only from month
494
SUPREME COURT REPORTS
[1973] l S.C.R.
to month because the immovable property had not been Jeas,,d out for
A
agricultural or manufacturing purpose in which case it would have been
from year to year. The;:efore the contention that the· renewal clause
was effective and should have been taken. into consiooration. whue making the apportionment between the appellant and the Corporation could
,not be accepted.
(The question wiYother the High Court was right in
holding that the period of lease was 30 years was not gone into beoause
the Corporation had fjled no appeal against ihat p

## Text

B
c
D
E
F
493
IUTKARINI SABB~, JABALPUR
-
v.
THE CORPORA.TION OF THE CITY OF JABALPUR &
C>THERS
May 3, 1972
[K. S. HEGDE AND A. N. GROVER, JJ.J
Land Acqu@ion Act
IS9A--Apportlonmen~ of
compensatiqn-
,. Unauthorised 'lease by M uniclpal Corporation to local Col!eg<-'Ler.ire
deed containrng renewal clause-Since lease is ineffectiμe renewal clause
cannot he taken into consideratio~ for purpose of apportionment-Quantum of compe>!Jation-This Court will not interfere when lower couri•
have taken all factors into consideration.
The Municipal Corporation of Jabalpur pu'rporated to grant a leave
of certain land to the appellant Sabha. According to the document the
period cf kasc was 30 years.
The appellant was entitled on the expiry_
of tl>o lt,,,;c to have the same renewed on such terms and conditions as
might be agreed between the parties.
The
appellant made a cl)llege
hostel on the aforesaid land and had also used
the attache<I groomd as
playground for students.
A portion of the said lapd was sought to be
acquired by the State Government under the Land Acquisition Act, 1894
for constructing the Home Science College.
The Collector of JabbQlpur
by his award dated July 18, 1955 dealt with the claims filed by the
appellant and the Municipal Corporation and as"""""d the compen.;ation
at As. -/8/- per sq. ft.
Apportionment was mare between the appellant
and the Corporation on the footing that the at)pellant was not merely a
tenant at will as contenc!ed by the Corporation but was a lessee for the
terms mentioned in le.,e. The appellant and the Corporation made applications for reference under s. 18(1) of the Act.
The Additional District
Judge
held
that the
price should
bo As.
-/10/-
per
sq
ft.
and that the app,ellant and the
Municipal Corporation were
entit!OO
to
equal
compensation. The Corpora.lion
and the appellant
filed
appeals to the High Court.
The
decision of the Addi. District Judge
fixing the price of the land As. -/! 01 - per
sq,
ft was
·affirmed.
As regards the dispute regarding apportionment the High Court held
that the lease deed having been exempted by the Administrator during
the time wher. the Corporation stood superseded was ineffective to convey
the leasehold interest to the appellant.
However, the appellant was paying the rent "'hich had been accepted for a long time by the Corporation.
The're was thus a tenancy by necessary implication.
The High
Court
furt!ler held that the lease was to continue for the period of 30 years
mentioned in the deed but there was no valid contract for renewal of
lease because the clause relating to that was vague and uncertain.
The
"'pportionrmnt was made on acturial basis between the appellant and the
G
Corporation in the ratio of 1038: 962.
In .appeal before the C'?'"1 Ifie
questions relating to quantum of compensation and the
aworti<1nment
between th< appellant and the Corporation fell for consideration.
H
HELD : (1) No lease could be spelt out of ~. deed dated August
31, l 940
for
a
period
of 30 years
containing
the
renewnl
clause.
If the
officer who
executed the
lease deed
had ne
power to lease out the property in question the grant of the lease was
wholly null and v<>id. , It is true that by the acceptance . of ren~ from
the appellant the relationship of }Mdlord 11nc! tenant came mto ex1stell!"'•
But that did not show that a lease deed for a periDd of 30 years with
a renewal clause had come into existence. [497EJ
Since the lease deed was ineffective the lease could be under the provisions of section I 06 of the Transfer of Property. Act, only from month
494
SUPREME COURT REPORTS
[1973] l S.C.R.
to month because the immovable property had not been Jeas,,d out for
A
agricultural or manufacturing purpose in which case it would have been
from year to year. The;:efore the contention that the· renewal clause
was effective and should have been taken. into consiooration. whue making the apportionment between the appellant and the Corporation could
,not be accepted.
(The question wiYother the High Court was right in
holding that the period of lease was 30 years was not gone into beoause
the Corporation had fjled no appeal against ihat portion of the decision.
8
.
[497Hl
Dagdu/al v. Municipal Committee, Burhar, (19'60) M.P.L.J. 627 and
H. V. Ranan v. G. N. Gopai & Ors. A.l.R. 1961 Mys. 29, leferred to.'
<il The value which was fixed by the Addi.
District Judge and the
High Court wa. fixed by re_ference to sales of plots of comparable nature.
There was no doubt that the High Court had taken all the factors into
consideration while a~essing the value '3.nd there was no reason. to interfere in this regard. [499A.Cl
C
Raja Vyigheria Narayana Gajapatiraju
v..
The Re\.·enue Divisional
Officer Vi.zagapatam, 66 I.A. 104, referred to.
CIVIL APPELLATE JURISDICTION: Civil Appeals Nos. 702 and
703 of 1967.
Appeals from the judgment and order dated September 28,
1960 of. the Madhya Pradesh High Court in Misc. First Appeals
Nos. 12 and 16 of 1958.
M. C. Chag/,a, Rameshwar Nath and Swaranjit Ahuja, for the
appellant (in both the appeals) .
S. T. Desai and D. N. Mukherjee, for respondent No. 1 (in
both the appeals) .
D
I. N. Shroff, for respondents Nos. 2 and 3 (in C.A. No. 703 of.
E
1967) and respondent No. 2 (in C.A. No. 702 of 1967).
The Judgment of the Court was delivered by
Grover, J. These api)eals which have been brought by certificates from a cominon judgment of the Madhya Pradesh High
Court arise out of certain acquisition proceedings.
The facts may be stated. Plots Nos. 670, 671 and 735 situate
in Madan Mahal Extension area, Jabalpur were acquired by the
State Government under the Land Acquisition Act l 894, hereinafter called the 'Act', for constructing the Home Science C""ege.
In the present appeals we are concerned mainly with Plot No. 670.
On August 31, 1940, a deed of lease had been executed on behalt
of the Municipal. Corporation granting a lease free of premium
to the Hitkarini Sabha, Jabalpur, which is the appellant before us.
The laese was in respect of 10 Acres of land comprising Plot
No. 670 and another strip of land measuring 0.621 Acres as.described in the deed and delineated in the plan annexed thereto.
The period of the lease was 30 years and the purpose for which
the land was to be used was for locating and running the Hitkarini
City College. Amongst other terms and conditions the appellant
was to pay a yearly rent of Rs . .SI - for 10 acres and Re. 11 - for
the other strip of land besides payine and discharging all rates and
taites etc. The appellant, on the expiry of the lease, was entitled
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HITKARJNI SABHA v. JABALPUR CORPN. (Grover, 1.)
495
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to-have the same renewed on slich terms a!ld conditions as might
be agreed between the parties. The appellant had built a college ·
hostel o.n the aforesaid land and had also wed the attached ground
as playground for students.
The Collector of Jabalpur, by his award dated July 18, 1955
dealt with the claims filed by the appellant and the Municipal C\)r·
B poration and after disposing of certain preliminary objections he
assessed the compensation for the lands in all the three plots at
As. 018/- per sq. ft. According to the CoUector the appellant was
not merely a lessee or tenant-at-will as contended by the Corporation but was a lessee for the term mentioned in the lease-deed
dated August 31, 1940, the lease having been made for a specific
C
purpose, i.e. for locating and. running a City College. As regards
Plot No. 670 the apportionment was made between the appellant
and the Corporation.
The appellant and the Corporation were dissatisfied with the
award of the Collector.
Applications for reference were made
under s. 18 ( 1) of the Act. The Additional District Judge held
D
that the price should be 10 As. per sq. ft.
and that the appellant
and the Municipal Corporation were entitled to equal compensation
for plot No. 670. The Corporation and the appellant filed appeals
to the High Court. The decision of the Additional District Judge
fixing the price of the land at As. 0/81 - per sq. ft. was affirmed.
As regards the dispute regarding apportionment the High Court
E
held, following a decision of a Division Bench 0f the same court
in Dagdulal v. Municipal Committee, Burhdr('), that the lease
deed having been executed by the Administrator during the time
when the Corporation stood superseded was ineffective to convey
the lease hold interest to the appellant. However, the appellant
had been paying rent at the stipulated rate which had been acF
cepted for a long time by the Corporation. It amounted, therefore,
to the creation of a tenancy by necessary implication and the relationship of landlord ~nd tenant came into existence. On the
character of tenancy, whether it should be deemed to be from year
to year or whether it should be on terms contained in the leasedeed, the High Court held that the tenancy cQntinued on the terms
contained in the lease deed.
The High Court then proceeded to
G say:-
H
"The lease
deed in
this case was
executed on
31-8-1940 and was for a period of thirty years. It was,
therefore to remain in force for 15 yearo mere after the
date of acquisition. There is a renewal clause which has
been already quoted above.
The lessee is entitled for
renewal "on such terms and conditions as may \JP. agreed
lo between the parties". It appears to us that the clause
(!) 1960 M. P. L. J. 627
496
IUPkEM.I OOUllT llEl"61lTS
[1973] I 8.C.R.
is uncertain and vague and does not fonn a valid contract for renewal of the lease. Nonnally in a covenant
for renewal tmre is an expn!SS agreement that the lease
would be continued on the same terms and conditions
subject to a reservation that the rent may be enhanced
under certain circumstances. In the instant case, all the
terms and cortditiorts have been left to the agreement of
parties which may not take place at all.
Although a
renewal is contemplated, no terms on which it can be
granted have been fixed between the parties.
Under
section 29 of the Indian Contract Act such a contract
cannot be enforced.
It has been held in Ramaswami
v. Rajagopala (I.L.R. 11 Mad. 200) that a lease whereby a tenant agreed to pay whatever rent the Landlord
might fix was void for uncertainty".
The apportionment was made on acturial basis between the appellant and the Corporation in the ratio of 1038 : 962.
Before us two matters have been sought to be raised.
One
one relates to the quantum of compensation awarded by the learned
Additional District Judge and the other to the apportionment between the appellant and the Corporation. We shall first deal with
apportionment. It has been argued that since the High Court had
held that the tenancy continued on the terms contained in the
lease deed benefit should have been given of the renewal clause
also.
The High Court had taken the view that that clause was
uncertain and vague and did not form a valid contract for the r11newal of the lease. Our attention has been invited to a judgment
of the Mysore High Court in H. V. R«jan v.
C. N.Gopal &
Others.(!)
There the relevant portion of the renewal clause was
"lessee shall have the option of five years but subject only to such
terms and conditions as may be mutually agreed upon". It was
observed that ordinarily the renewal clause in a lease deed was an
important term of the agreement and the courts would be reluctant
to ignore that clause on the ground that it was vague unless on a
reasonable construction no meaning could be attached to it. An
agreement to renew the· lease, wihout more, must be deemed to
be an agreement to renew as per the original terms. Even if the
renewal provided was dependent on the agreement between the
parties the clause merely provided for an agreement on reasonable
terms. If the parties could not agree as to those terms the courts
could step in.
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In our judgment it is altogether unnecessary to decide the true
H
scope and effect of the renewal clause contained in the deed executed on August 31, 1940. At the titne the lease was executed
(1) A.I.R. 1961 Mys. 29.
•
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HITKUINI SABHA v. JAJM.LPUA (:(J,APN, (Grover,/.)
4W7
there used to be a Municipal Committee in Jabalpur. Apparently
it became a Corporation later. The Committee was supe11Cded
S0111Ctimes prior to August 31, 1940 and T. Chhatra Singh Officer·
in-Charge of the Committee, Jabalpur as also Secretary of the
Municipal Committee had signed the lease on behalf of that Com·
mittee.
In the decision of the i\1adhya Pradesh High Court in
Dagdulal's(1) case the view had been expressed that so long as
M unicpal Committee Wlll\ not recocstituted the ownership of the
property stood transferred by operation of law to the State Government and therefore the Admnistrator had no power whatsoever to
sell the property which had vested in the Government. The Additional District Judge had observed that the lease deed had been
executed in pursuance of a resolution which had already been
passed by the Municipal Committee. The High Court, however,
found on the evidence produced before the Additional District
Judge that the final resolution passed by the Municipal Committee
was only for the grant of a license and not a 1ease to the appellant.
The deed of lease, therefore, was held to be ineffective for conveying any lease-hold interest to it. But still the High Court held
that the tenancy was to last for a period of thirty years.
We are wholly unable to comprehend how any lease could be
spelt out of the deed dated August 31, 1940 for a period of 30
years containing the renewal clause which has already been men·
tioned. If the officer who executed the lease deed had no power
to lease out the property in question the grant of the lease was
wholly null and void. It is true that by acceptance of the rent
from the appellant the relationship of landlord and tenant came
into existence between the parties but Mr. Chagla for the appellant
has not been able to show how a lease for a period of 30 years
together with a renewal clause could be held to have been created
or to have come into existence. It may be mentioned that we are
not concerned with the period of 30 years which has already been
taken into consideration by the High Court because no appeal
has been filed on that point by the Corporation. The only matter
which requires determination is whether the .High Court, while
deciding the question of apportionment, should have given due
affect to the renewal clause. In our opinion the High Court .could
not have done so. If .the so called deed of lease dated August 31,
1940 was wholly ineffective and void for the purpose of demising
the land for a period of 30 years one could only look at the provisions of the Transfer of Property Act for determining the tem1
for which the tenW'.ij;y cami< into existence. Under s. 106 of that
Act the tenancy, in the present case, could be only from month
to month because the immovable property had not been leased out
(1) (1960) M.P.L,J. 627.
498
SUPREME COURT REPORTS
[l 973] l S.C.R.
fot !lgricuhural or manufacturing purpose in w~ch case the lease
would have been from year to year. We are titerefo: c unable to
accede to the contention that the renewal clause in the lease deed
dated August 31, 1940 was effective and should ha\ e been taken
into consideration while making the apportionment between the
appellant and the Corporation.
The next question relating to quantum can · be disposed of
shortly.
The sole criticism of Mr. Chagla is that the potential
value of the plot in question was not taken into consideration.
It is true, as pointed out in Raja Vyrigherla Marayana Gajapatiraju
v. The Revenue Divisional Officer Vizagapatam( 1) that where the
land to be valued possesses some unusual or unique features as
regards its position or its potentialities the court determining the
market value will have to ascertain as best as it can from the
materials before it what a willing vendor n'i,ght reasonably expect
to obtain from a willing purchaser for the land in that particular
position and with those particular potentialities.
It has been
urged that Plot No. 670 had a special situation or position in view
of its size, locality, nearness to business centre and the Madan
Mahal Station. But the value which was fixed by the Additional
District Judge and the High Court was fixed by reference to sales
of plots of comparable
nature.
The following portion of the
judgment of the High Court shows how the matter was dealt with :
"We may observe that the two witnesses relied upon
by the appellants purchased small plots at the rate 1>f
Re. 1/- per sq. ft.
As the map of the Wright Town
Madan Mahal Extension area produced by the Corpor.1tion before us shows, these plots are in a fully developed lay out having roads and drains round about. We
had asked the Corporation to calculate how much area
out of the acquired sites would be required to be left open
for roads and drains and they have calculated that about
70,000 sq. ft. would have to be left open for this purpose. Obviously, therefore, it is only the remaining plot
which would have value as
building sites.
Besides
leaving so much area open, costs will have to be incurred
in developing the roads and drains for which the Corporation has estimated the cost to be Rs. 8,5001-. Considering all these factors and also calculating the built up
area in the lay outs surroundings the acquired land, we
find that it is only eighty per cent of the land which can
be sold as building site.
On these calculations if the average price of the plots
sold in the locality is taken to be -/12/- per sq. ft. the
o: 66 I.A. 104.
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A.
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HITKARINI SABHA v. JABALPUR CORPN. (Grover, J.)
499
overall price of the acquired land without roads and
drains would work out to a li.ttleless than -19/-per sq. ft.
To put the matter in a dilj'erent way, the value of -110/-
per sq. ft. found by the' Additional Judge worild work
out to a little over -/ 121- per sq. ft., if only the area
which could be built upon is considered saleable as
building site. We, therefore, find that the price at -/10/-
per sq. ft. allowed by the Additional District judge is
not unreasonable; if anything it errs on the generous
side''.
We have ;:o manner of doubt that the, High C-:>urt had taken all
the factors into consideration while assessing the value.
In the result the appeals fail and are dismissed.
There will be
no order as to costs.
G.C.
Appeals dismissed.