# MADAN LAL v. BHAI ANAND SINGH & ORS

- **Citation:** [1973] 2 S.C.R. 677
- **Court:** Supreme Court of India
- **Decided:** 1972-10-12
- **Bench:** A. N. Ray, D. G. Palekar, M. H. Beg Ands. N. Dwivedi
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/madan-lal-v-bhai-anand-singh-ors-5887
- **Pages:** 7

## Headnote

Transfer of Property Act,' s. IOB(q)-East Punjab Urban Rtllt Rtstric·
tio11 Act 3 of 1949, S.13 (2)-lnttrprttalion of lease-Lessor whtthtr
entitled to possession of property on tfl;piry of lease by efflw: of timRent C()fltroller's jurisdiction to evict l<Sstt-Effect of term in ltast dud
tlla/. ltssor was bounil to pay to Jes3u 50% of mcrket value of fuperslru<;turt built by lesset--Lesstt whtthtr entitled to remain in possession
during period when market value bting dettrmi11td by arbitrators.
The respondents, loodlord lessors, bad executed a lease on 9-11-1949.
Under its terms, the lesson had given some land to the lessees for the
building and renting out of a cinema house for a period of twenty years.
Clause 6 of the lease laid down that on the expiry of the tenancy the
@tire sli'ucture built bv the lessees at their cost would become the property of the lessor who shall then exercise all the rights of ownership,
subject to the condition that the lessor shall have to pay 50% of the
market value of the strut:ture to the lessees. If there was disagreement
about the market value the !ame would be decided by arbitration. There
w3! provision for sale of the structure in case the lessors fai:~d to pay
to the lessees within a fixed period 50% of market value of the structure
assessed by arbitration, and that the lessees would have the first charge
on the sale proceeds. On the expiry of the lease, the lessors applied
under section !3(2) of the East Punjab Urban Rent Restriction Act 3 of
!949, to the Rent Controller, for the eviction of !lJe former tenant and the
appellant sub-tenant.
During the pendency of thJS application the le.,ees
applied to the Rent Controller under s. 34 of the Indian Arbitration Act,
for the stay of eviction proceedings Fending the decision of a dispute
between th.e parties as to who was entitled to possession while the market
value was being determined by Arbitrators un&.:r <iause 6 of the lease.
The Rent Controller held, inter •'1ia, that the powers of ejectrnent Ullldcr
s.13 of the Act, on specified grounds, could not be curtailed even by some
agreement between the parties and dismissed tbe-->tay application.
The
High Court dismissed the lessee's appeal under s. 39 of the Arbitration
Act, after interpreting the lease deed and holding that clause 6 of the
deed ·~negatives any right in the lessees to retain possession after
the
expiry of the lease."
In appeal by speeial leave before this court it
was argued on behalf of the appellant that the High Court had not takien
into account the fact that the cinema had necessarily to be run by somebody while the market value of the property was· being ascertaiood by
resort to arbitration.
The respondents, inltr alia, relied on s. 108 of
the Transfer of Property Act which lays down that in the a!Ycnce of a
contract or usage to the contrary, the lessee is, on the determination of the
lease, bound to put the lessor "into possession of the property, Dismissing
the appeal.
HELD : There is no provision in the lease expressly laying down that
the right to obtain possession will be postponed, after the expiry of the
rerm of the ·1ease, until the ascertainmeint of the market value of the
building bas taken place. On the other hand the clause relied upon by
the 1 !spondcnts not only lays down that .the super-structure wi)I become
the property of the leSSOr on the expiry of the period of tenancy, but
678
SUPREME COURT REPORTS
[1973] 2 s.c.R.
goes oa to specify that the lessor 'shall' then exercise all the rights of
owncrship including the right to sell the entire property. It is apparent
that the exercise· of all rights of ownership according to the terms of the
clause, literally Interpreted, could take place on the expiry of the tenancy
immediarely.
The contention that the le,sor's rights were subject to the payment
of 50% of the market value of the building could not be accepted. If
this had really been too intention of the parties, there was nothing to
prevent them from inser

## Text

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877
MADAN LAL
v.
BHAI ANAND SINGH & ORS.
October 12, 1972
[A. N. RAY, D. G. PALEKAR, M. H. BEG ANDS. N. DWIVEDI, JJ.)
Transfer of Property Act,' s. IOB(q)-East Punjab Urban Rtllt Rtstric·
tio11 Act 3 of 1949, S.13 (2)-lnttrprttalion of lease-Lessor whtthtr
entitled to possession of property on tfl;piry of lease by efflw: of timRent C()fltroller's jurisdiction to evict l<Sstt-Effect of term in ltast dud
tlla/. ltssor was bounil to pay to Jes3u 50% of mcrket value of fuperslru<;turt built by lesset--Lesstt whtthtr entitled to remain in possession
during period when market value bting dettrmi11td by arbitrators.
The respondents, loodlord lessors, bad executed a lease on 9-11-1949.
Under its terms, the lesson had given some land to the lessees for the
building and renting out of a cinema house for a period of twenty years.
Clause 6 of the lease laid down that on the expiry of the tenancy the
@tire sli'ucture built bv the lessees at their cost would become the property of the lessor who shall then exercise all the rights of ownership,
subject to the condition that the lessor shall have to pay 50% of the
market value of the strut:ture to the lessees. If there was disagreement
about the market value the !ame would be decided by arbitration. There
w3! provision for sale of the structure in case the lessors fai:~d to pay
to the lessees within a fixed period 50% of market value of the structure
assessed by arbitration, and that the lessees would have the first charge
on the sale proceeds. On the expiry of the lease, the lessors applied
under section !3(2) of the East Punjab Urban Rent Restriction Act 3 of
!949, to the Rent Controller, for the eviction of !lJe former tenant and the
appellant sub-tenant.
During the pendency of thJS application the le.,ees
applied to the Rent Controller under s. 34 of the Indian Arbitration Act,
for the stay of eviction proceedings Fending the decision of a dispute
between th.e parties as to who was entitled to possession while the market
value was being determined by Arbitrators un&.:r <iause 6 of the lease.
The Rent Controller held, inter •'1ia, that the powers of ejectrnent Ullldcr
s.13 of the Act, on specified grounds, could not be curtailed even by some
agreement between the parties and dismissed tbe-->tay application.
The
High Court dismissed the lessee's appeal under s. 39 of the Arbitration
Act, after interpreting the lease deed and holding that clause 6 of the
deed ·~negatives any right in the lessees to retain possession after
the
expiry of the lease."
In appeal by speeial leave before this court it
was argued on behalf of the appellant that the High Court had not takien
into account the fact that the cinema had necessarily to be run by somebody while the market value of the property was· being ascertaiood by
resort to arbitration.
The respondents, inltr alia, relied on s. 108 of
the Transfer of Property Act which lays down that in the a!Ycnce of a
contract or usage to the contrary, the lessee is, on the determination of the
lease, bound to put the lessor "into possession of the property, Dismissing
the appeal.
HELD : There is no provision in the lease expressly laying down that
the right to obtain possession will be postponed, after the expiry of the
rerm of the ·1ease, until the ascertainmeint of the market value of the
building bas taken place. On the other hand the clause relied upon by
the 1 !spondcnts not only lays down that .the super-structure wi)I become
the property of the leSSOr on the expiry of the period of tenancy, but
678
SUPREME COURT REPORTS
[1973] 2 s.c.R.
goes oa to specify that the lessor 'shall' then exercise all the rights of
owncrship including the right to sell the entire property. It is apparent
that the exercise· of all rights of ownership according to the terms of the
clause, literally Interpreted, could take place on the expiry of the tenancy
immediarely.
The contention that the le,sor's rights were subject to the payment
of 50% of the market value of the building could not be accepted. If
this had really been too intention of the parties, there was nothing to
prevent them from inserting such a term in the deed so as to make that
intention explicit. The more natural construction of the clause is that
rights of ownership, induding the right to take possessiO!ll of the building,
would become vested in the les'or at the expiry of the period of lease,
and that 50% of the market value of the building, which was to be paid
in any case, occame a condition attached to this ownership of the building
w'ien it vested in the lessee.
In view of s.108(q) of the Transfer of
Property Act the burden of proving 'a cjmtract to the contrary' was on
the les,ce; and, son.ething to indicate an agreement to the contrary should
be there on such a matter involving a valuable right, be'fore this burden
could be held to have been discharged.
[680EJ
The Rent Controller was not, strictly ~peaking, concelllled at all with
the question of the a'certainment of the market value. The statutory
power vested in the Rent Controller by s.13 of the Act ls that of giving
or oot giving or conditionally giving a direction for the evictid,n of tlJe
tenant when certain statutory requirements are fulfilled.
Both sides had
pr0<;ccdcd 01 the assumption that the
Rent Controller had jurisdiction
in the proo~edings before him, to order evictio,n. The correctness of
that aS>umption had not heen challenged by the appellant.
[6810]
The judgment of the High Court must accordingly be upheld
<E:thiraju/u Nllidu v. Rangancthan Shelly and Ors., 72 I.A. 72 73,
distinguished.
'
Crv1L APPELLATE JURISDICTION : Civil Appeal No. 57 of
1972.
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Appeal by special leave from the judgment and order dated
October 11, 1971 of the Punjab & Haryana High Court in F.A.
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from Order No. 34 of 1971.
M. C. C/rag/a, S. R. Agarwal ar.d E. C. Agarwala, for the
appellant.
V. M. 1'ark1111de, D. N. Mishra, J. B.
Dadachanii
0. C.
Mathur and Ravinder Narain, for the respondents.
· '
The Judgment of the Court was delivered by
BEG, J.-T!iis appeal by Special Leave has arisen
in the
following circumstances :
The respondents, landlord lessors, had executed a lease on.
9-11-1949. Under iis terms, the lessors, had given some land to
the lessees for the building and renting out of a cinema house
for•a,~riod of twenty years on a rent of Rs. 300/- per month
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MADAN LAL V. ANAND SINGH (Beg, J.)
679
for the first year, and, tltereafter, at Rs. 600/- per month. The
period within which the cinema had to be constructed was also
specified.
Clause 6 of the lease laid down :
"On the expiry of tenancy or the extended period of
(enancy, as aforesaid, the entire structure, built by the
lessees at their own cost becomes the property of lessor,
and shall exercise all the rights oi. ownership and shall
be entitled to sell the entire property, subject to this
condition that lessor shall have oto pay 50% of the market
value of the structure built by the lessees at their ex-
. penses. If the lessor and the lessees fail to assess <the
value of the ~foresaid structure by mutual consent, two
arbitrators will be appointed, nominated by the lessor and
lessees. In case of their difference of opinion an umpire shall be appointed by parties whose award shall be
final.
In case the lessor fail to pay 50% oi. the value
of the structure so assessed wrthin period of six months
of award of the
umpire
or
arbitrators the wh9le
structure shall be sold and out of the sale proc~ ,50 %
of the price of the sirμcture so assessed. by fhe umpire
or arbitrator shall be paid to the lessees. The lessees
shall have the first charge on the sale proceeds.
The lease had expired.
Therefore, the lessors
applied linder
Section 13(2) of the East Punjab Urban Rent Restriction Act 3
of 1949 (hereina~:er referred to as 'the Act)' to the Rent Controller, appointed under the Act, for the eviction of tlte former
tenant and the appellant sub-tenant.
During the pendency of
this application, the lessees applied to the Rent Controller, under
Section 34 of the Indian Arbitration Act, for the stay of eviction
proceedings pending the decision of a dispute bietween the parties
as to who was entitled to possession while the market value was
being determined by Arbitrators under clause 6 set out above.
The Rent Controller held, inter alia, that the powers of ejectment under Section 13 of the Act, on specified grounds, could not
be curtailed even by some agreement between the parties
and
had dismissed the stay application.
The High Court of Punjab
and Haryana dismissed the lessee's appeal under Section 39 of
the Arbitration Act, after interpreting the lease deed and holding
that clause 6 of the deed "negatives nay right in the lessees to
retain possession after he expiry of the lease."
H went on to observe :
,
"It is specifically provided therein that as soon as
the lease expired the lessor would become full owner
of the super-structure which she would have the right
to sell. The rest of the clause provides the method in
which the sum paid to the lesssees was to jje ascertained
680
SUPREME COURT REPORTS
[1973] 2 S.C.R.
or recovered and that method does not include a right
in them to continue to possess either the land or the
super-structure.
What has been made subject to the
payme.nt of the said sum is the exercise by the lessor of
her right to sell the property the delivery of possesion
of which on the expiry of the lease, however, is not stipulated to be postponed till such payment".
The first submission made by Mr. Chagla, learned Counsel
for the appellant, is that the High Court had put an erroneous
and inequitable interpretation on the deed inasmuch as the Court
did not take into account the fact that the Cinema had ne~arily to be run by somebody while the market value of the property
was being ascertained by resort to arbitration.
Hence, it was
a~gued that the lessees' right to continue in possc;:ssion during
what was descrited as an "interregnum" was implicit. The reply
is that no such gap is warranted by the terms of the lease. The
respondents also contended that no specific provision for recovery
of possession in the lease deed need be inserted as Section 108 of
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the Transfer of Property Act provides : "In the absence of a
contract or local usage to the contrary ........ ( q) On the deter-
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mination of the lease, the lessee is bound to put the lessor into
possession of the property". The main question before us, therefore, is wh~her a "contract to the contrary" could be found in
the lease deed itself for postponing delivery of posses9ion, after
the expiry of the lease, on any ground whatsoever.
It is noticeable that there is no provision in the lease express-
! y laying down that the right to obt~in possession will be postponed, after the expiry of the term of the lease until the ascertainment of the market value c.f the building has taken place.
On the other hand, the clause relied upon by the respondents not
only lays down that the super-structure will become the property
of the lessor on the expiry of the period of tenancy, but goes on
to specify that the lessor "shall" then exercise all the rights of
ownership· including the right to sell the entire property.
It is
apparent that the exercise of all rights of ownership, according to
the terms of this clause, literally interpreted, could take place on
the expiry of the period
of
tenancy
immediately.
Learned
Council for the appellant, however, Jays considerable stress on the
subjection of the exercise of these rights of ownership to the liability to pay 50% cf the market value of the l;uilding. He contends that such a condition necessarily means that, until the market
value is actually as<>ertained and paid, the Jessee shall retain possession. If this had really been the intention of the parties, there
was nothing to prevent them from imerting: such a terin in the
deed so as to make that intention explicit. It appears to u9 that
the more natural construction of the clause is that rights of ownership, including the right to take possession of the building, would
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MADAN LAL V. ANAND SINGH (Beg, J.)
681
become vested in the lessor at the expiry of the period of the lease,
and 1.hat 50% of the market value of the building, which was to
be paid in any case, became a condition attached to this ownership
of the building when it vested in the lessee. The lessor was, in
any case, to pay 50% of the market value of the structure, and,
in the event of a sale, the payment of this amount became a first
charge on the proceeds of sale. It is also significant that it is not
mentioned in the deed that a purchaser of the Cinema house, who·
would presumably prefer to obtain possession so as to be able
to run it, could not get possession of it until the market value was
ascertained or fifty per cent of it was paid. Posession of a Cinema
house after the expiry of a building lease involving the passiong of
ownership of the building on such expiry is, after all, an important
matter. In view of Section 108 ( q) of the Transfer of Property
Act the burden of proving "a contract to the contrary" was on
the lessee; and, something to indicate an agreement to the contrary should be there, on such a matter involving a valuable right,
before this burden could be held to have been duly discharged.
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The only matter which could be referred to arbitration was a
·difference between the lessors and the lessees on the market value·
of the building.
The Rent Controller was not, strict'.ly speaking,
concerned at all with the question of ascertainment of the market
value. The statutory power vested in Rent Controller by Section
13 of the Act is that of giving or:not giving or conditionally giving
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a direction for the eviction of the tenant when certain st'atutory
requirements are fulfilled. There was no objection by any party to
the exercise of the jurisdiction of the Controlier to order eviction
in the circumstances of a case in which the tenancy of premises
demised had expired by efflux of time or to the entertainment of
an application under ~tion 34 Arbitration Act. The lessors, by
applying under Section 13 of the Act, had themselves invoked the
jurisdiction of the Controller.
And, the lessees had, by relving
on Section 34 of the Arbitration Act, asked for stay of proceedings
only until the value of the building was ascertained and paid. Both
sides thus proceeded on the assumption that.the Rent Controller
had jurisdiction, in the proceedines before him, to order eviction.
The correctness of that assumption is not challenged by the appellent before us.
~e~rned C::ounsel for the appellant had sought to rely on
Eth1ra1ulu Na1d11 v. Ranganathan Chett.v & Ors. ( 1) which was
also cited before the Hi.gh Court and the Rent Controller.
In
that case there was the following specific term in a lease of a limited duration :
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"The lessee shall always and in any event be entitled
to be paid the price of the superstructure built on the
(I) 72 Indian Appeals 7~. 7).
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SUPREME COURT REPORTS
[1973] 2 s.c.R.
said plot of land before he surrenders possession of the
lar.J either on t!!e expiry of the lease hereby granted or
any· other future lease or at any time. The price shall
be fixed according to the market value of the buildings
as at the time of ascertainment and payment".
The Privy Council had .held that this provision meant that possession was to be surrendered only on payment of the price of the
building. The deed before us would, as 'we have already indicated,
also have contained a similar provision if that had been the intention of the patties.
We find that, in the lease deed under consideration, the conditiqn 'that the lessor will have ·to pay 50%
.of the market value of the building imposes a liability upon the
lessor only to pay the stipulated amount in any event. The use
of the words "shall have to pay", in clause 6 of the deed before
us, could not imply iinything more than a future liability to pay.
But, the .time from which the rights of ownership, including that
.of actual physical poss~sion, became exercisable was immediately
uj>on the expiry of the tenancy itself and not in future when 50%
of the market value was to be ascertained or paid. The case cited
by learned Counsel for the appellant, where the terms of the lease
were very obviously different, could not advance the Jeasee's claim.
We may mention that the High Coμrt had made an observation, in the course of recording its conclusions. which made it
.appear that what was made subject to the paymerit of 50% of the
market value of the building was only the right of the lessor to
sell th<: property.
On a reading the judgment as a whole, it is
evident that all that the High Court meant to convey was that
the rights of ownership were subjected to a liability incurred by
the lessor ·to pay the stipulated sum in any event. Any further
liability to allow the lessee to retain possession until the sum payable was actually ascertained or any other event took place is
not to be found here. The ascertainment of the exact amount of
the liability undertaken was, in our opinion, a separable matter
referrable to arbitration.
No sufficient ground has been made
out for disturbing this interpretati<m of clause 6 of the deed by
the High Court.
Another question .argued by learned Counsel for the appellant
was that the Respondents Lessors had d!emselves placed an interpretation upon the lease deed which ought, even if it does not
affect our interpretation of the deed, to be taken into account by
the Rent Controller before passing an order of eviction in the
'Pending proceedings. The lessors had stated, in their/ application
under Section 13 of the Act : "The petitioners have undertaken
to abide by the terms of the lease agreed to between the parties
relating to the compensation payable by them before getting actual
posses ion of the picture house". No commas separate the term
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MADAN LAL V. ANAND SINGH (Beg, /,)
683'
relating to liability to pay compensation from the right to get
actual possession.
It may be that the application was rather loosely or inaccurately worded. We havei not been shown any undertaking gi·{en
to the Rent Controller, apart from the assertaion quoted above ·
from the. application under Section 13 of the Act. And, no order
of the Controller on any such supposed undertaking has been
placed before us.
The parties; had hotly contested bdore the
Controller as well as the High Court what the exact meaning of
the clause under consideration was.
It could, therefore, not be·
either expected or assumed that the application under Section 13
would contain an acceptance of the very interpretation put forward
on behalf of the lessees and denied by the lessors. The language·
of the alleged undertaking was certainly not so clear and unequivocal as to lead to that inell.capable inference. Moreover,
no
argument seems to have been advanced on the strength of this
alleged undertaking before either the Controller or the'_High Court.
We, therefore, refrain from deciding the quesfio1fwhether-there
was any such undertaking before the Controller which, quite apart
fro.m the contract embodied in the deed, should affect the discretion of the Controller in passing an eviction or!ler. All we need
say here is that the meaning of the term of the lease, interpreted
by us also, is not affected by the alleged undertaking.
For the reasons given above, we dismiss this appeal with costs.
G.C.
Appeal dismissed.