# Union v. Delhi ImprovetlUnt T ru.rt

- **Citation:** [1957] 1 S.C.R. 1
- **Court:** Supreme Court of India
- **Decided:** 1957
- **Case number:** Civil Appeal No. 32 of 1955
- **Bench:** JAGANNAoHA1As, B. P. SrNHA, }Afer Imam
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/union-v-delhi-improvetlunt-t-ru-rt-1334
- **Pages:** 20

## Headnote

Ejectment-Market constructed by Improvement Trust on Government land with Government money-Whether market Government
premises-Whether lessee of market protected from ejectment-Connotation of the word'vest'-Delhi and Ajmer Rent Control Act, (XXXVIII
-0f 1952), s. 3(a)-U. P. Town Improvement Act, (U. P. Act V/ll of
1919) as extended to Delhi, s. 54A(2).
Under an agreement the Government placed certain lands
belonging to it at the disposal of the Improvement Trust for the
<:onstruction of a market. The Trust constructed the market with
funds advanced by the Government by way
of loan at interest.
Under the agreement the Trust had to pay a certain fixed sum by
way of revenue on the property; the income from the market had
to be applied to the payment of interest on the money advanced
by Government, and to the payment of expenses for the management of the market and the surplus had to be placed at the disposal
of Government to be spent according to its directions.
The lessee
of the market from the Trust filed a suit for a declaration that it
was protected from ejectment by the provisions of the_ Delhi and
Ajmer Rent Control Act. It was contended by the lessee that the
market was the property of the Trust to which the Act applied. It
was further contended by the lessee relying upon the language of
~. 54A(2) of the U. P. Town Improvement Act, that the market
vested in the Trust for otherwise it could not upon transfer by
the Trust vest in the Chief Commissioner as provided by this
section.
Held, that upon a proper construction of the
l~rms of the
agreement between the Trust and the Government, the Trust was
in the position of a statutory agem of the Government and that
the market was Government premises to which the provisions of
the Delhi and Ajmer Rent Control Act were not applicable by
virtue of s. 3(a) thereof, and consequently the lessee was liable to
ejectment upon termination of the period of the lease.
The word 'vest' has not got a fixed connotation, meaning in all
cases that the property j5 owned by the person or authority in
whom it vests.
It may vest in title, or it may vest in possession
_.
<>r it may v~t in a limited sense.
November6
Fruit & Vegetab/1 Merchants
Union
v.
Delhi ImprovetlUnt T ru.rt
2
SUPREME COURT REPORTS
[19571
C1vIL
APPELLATE
JuRISDICTION :
Civil
Appeal
No. 32 of 1955.
Appeal from the judgment and decree dated May 5,.
1954, of the High .Court of Punjab at Chandigarh in
Regular First Appeal No. 115 of 1953 arising out of
the decree dated June 6, 1953, of the Court of the
Subordinate Judge, 1st Class, Delhi, in Suit No. 26 of
1953.
Dewan Chaman Lal and Ratan Lal Chawla, for the
appellant.
M. C. Setalvad Attorney-General for India, Porur
A. Mehta and R.H. Dhebar, for the respondent.
1956. November 6. The Judgment of the Court
was delivered by
SINHA J .-The main question for determination in
this appeal from the concurrent decisions of the courts
below is whether the Delhi and Ajmer Rent Control
Act, XXXVIII of 1952 (which hereinafter will be
referred to as the Control Act) is applicable to the
1premises in question. The courts below have come to
the conclusion that in view of the provisions of section
3(a) of the Control Act the market called the New Fruit
and Vegetable Market, Subzimandi, under the administration the respondent, the Delhi Improvement Trust,
(which hereinafter will be referred to as the Trust) is
Government property to which the provisions of the
Act are not attracted. This appeal has . been brought
to this Court on a certificate granted by the High Court
of Judicature of the State of Punjab that the case
involved a substantial question of law as to the legal
statuts of the respondent vis-a-vis the Government.
The sequence of events leading up to the institution
of the suit by the appellant
"The Fruit and Vegetable
Merchants Union, Subzimandi" a registered body under
the Indian Trade Unions Act, giving rise to this appeal
may shortly be stated as follows :
By an agreement dated March 31, 19

## Text

_Characters 0–39,997 of 44,943. This is a partial read: ask again with offset=39997 for what follows._

,\
THE SUPREME COURT REPORTS
--------------------·------
FRUIT AND VEGETABLE MERCHANTS UNION
ti.
DELHI IMPROVEMENT TRUST
(JAGANNAoHA1As, B. P. SrNHA and }AFER IMAM, JJ.)
Ejectment-Market constructed by Improvement Trust on Government land with Government money-Whether market Government
premises-Whether lessee of market protected from ejectment-Connotation of the word'vest'-Delhi and Ajmer Rent Control Act, (XXXVIII
-0f 1952), s. 3(a)-U. P. Town Improvement Act, (U. P. Act V/ll of
1919) as extended to Delhi, s. 54A(2).
Under an agreement the Government placed certain lands
belonging to it at the disposal of the Improvement Trust for the
<:onstruction of a market. The Trust constructed the market with
funds advanced by the Government by way
of loan at interest.
Under the agreement the Trust had to pay a certain fixed sum by
way of revenue on the property; the income from the market had
to be applied to the payment of interest on the money advanced
by Government, and to the payment of expenses for the management of the market and the surplus had to be placed at the disposal
of Government to be spent according to its directions.
The lessee
of the market from the Trust filed a suit for a declaration that it
was protected from ejectment by the provisions of the_ Delhi and
Ajmer Rent Control Act. It was contended by the lessee that the
market was the property of the Trust to which the Act applied. It
was further contended by the lessee relying upon the language of
~. 54A(2) of the U. P. Town Improvement Act, that the market
vested in the Trust for otherwise it could not upon transfer by
the Trust vest in the Chief Commissioner as provided by this
section.
Held, that upon a proper construction of the
l~rms of the
agreement between the Trust and the Government, the Trust was
in the position of a statutory agem of the Government and that
the market was Government premises to which the provisions of
the Delhi and Ajmer Rent Control Act were not applicable by
virtue of s. 3(a) thereof, and consequently the lessee was liable to
ejectment upon termination of the period of the lease.
The word 'vest' has not got a fixed connotation, meaning in all
cases that the property j5 owned by the person or authority in
whom it vests.
It may vest in title, or it may vest in possession
_.
<>r it may v~t in a limited sense.
November6
Fruit & Vegetab/1 Merchants
Union
v.
Delhi ImprovetlUnt T ru.rt
2
SUPREME COURT REPORTS
[19571
C1vIL
APPELLATE
JuRISDICTION :
Civil
Appeal
No. 32 of 1955.
Appeal from the judgment and decree dated May 5,.
1954, of the High .Court of Punjab at Chandigarh in
Regular First Appeal No. 115 of 1953 arising out of
the decree dated June 6, 1953, of the Court of the
Subordinate Judge, 1st Class, Delhi, in Suit No. 26 of
1953.
Dewan Chaman Lal and Ratan Lal Chawla, for the
appellant.
M. C. Setalvad Attorney-General for India, Porur
A. Mehta and R.H. Dhebar, for the respondent.
1956. November 6. The Judgment of the Court
was delivered by
SINHA J .-The main question for determination in
this appeal from the concurrent decisions of the courts
below is whether the Delhi and Ajmer Rent Control
Act, XXXVIII of 1952 (which hereinafter will be
referred to as the Control Act) is applicable to the
1premises in question. The courts below have come to
the conclusion that in view of the provisions of section
3(a) of the Control Act the market called the New Fruit
and Vegetable Market, Subzimandi, under the administration the respondent, the Delhi Improvement Trust,
(which hereinafter will be referred to as the Trust) is
Government property to which the provisions of the
Act are not attracted. This appeal has . been brought
to this Court on a certificate granted by the High Court
of Judicature of the State of Punjab that the case
involved a substantial question of law as to the legal
statuts of the respondent vis-a-vis the Government.
The sequence of events leading up to the institution
of the suit by the appellant
"The Fruit and Vegetable
Merchants Union, Subzimandi" a registered body under
the Indian Trade Unions Act, giving rise to this appeal
may shortly be stated as follows :
By an agreement dated March 31, 1937, (Exhibit D-5)
between the Secretary of State for India in Council
and the Delhi Improvement Trust, which will have to
be set out in detail hereinafter and the construction oi:
S.C.R.
SUPREME COURT REPORTS
3
which is the main point in controversy between the
parties, a certain area of the land admittedly belonging
to Government was placed at the disposal of he Trust
for the "orderly expansion of Delhi under the supervision of a single authority."
The said property was
compendiously called "the Nazul Estate."
By a letter
dated May 1/2, 1939 (not exhibited but filed in the
High Court at the appellate stage) the Chairman of the
Trust forwarded a copy of the resolution No. 551 dated
April 24, 1939, (Exhibit D-15) to the Chief Commissioner
of Delhi. The resolution sets out the scheme for the
construction of the new Subzimandi Fruit Market on a
gross area of 10:87 acres including certain lands which
till then did not vest in the Trust. The Chairman
asked for administrative sanction of the Government
of India to place the additional area at the disposal of
the Trust on the same terms as those applicable to the
Nazul Estate
aforesaid
held
under the agreement,
Ex. D-5. The resolution aforesaid sets out the object
and history of the scheme. It contains the categorical
statement that "Government is the owner of all the
land included in the scheme. The· position according
to the revenue records is given in the statement on the
next page."
The scheme then sets out in great detail
the
several
structures to be constructed and
the
profit and loss figures.
Under the heading "Computation of
revenue
surplus"
occur the following
significant statements very much relied upon by the
appellant :-
"The revenue surplus of Rs. 4,530/- is made up as
follows; and is based on the recommendation that the
Trust shall own and maintain the market."
Under the heading "Future Jurisdiction" the following significanJ: passage occurs :-
"At this stage, if the suggestion is accepted that
the Trust should own and run the market at least until
it is firmly established, and in view of the fact that
Government are the sole owners of the land, no
difficulty is anticipated due to divided territorial jurisdiction of the two local authorities and no change is
proposed."
Fruit & Vegetable Merchants
Union
v.
Delhi Improvement Trust
Sinha·].
Fruit & Vtgetablt Merchants
Union
v.
Dtlhi lmprovtmmt Trust
Sinha].
4
SUPREME COURT REPORTS
[19S7J
The letter enclosing the resolution of the Trust as
aforesaid contains a summary of the scheme, a portion
of which is as follows :
"An estimated capital expenditure of Rs. 4.·73 lakhs
is involved. On this capital expenditure there will be a
capital deficit of Rs. 4·20 lakhs and a recurring revenue
surplus of Rs. 4,530. This financial
result assumes
ownership and management of the market by the Trust,
and takes into account all charges on maintenance and
day-to-day management which would
otherwise fall
to a local body. The scheme involves no acquisition of
land, but assumes transfer free of charge of an area of
10·87 acres of Government land, all of which except for
1,510 square yards, falls within the limits of the Civil
Lines Notified Area Committee."
(Underlined by us).
In answer to this communication from the Trust, the
Chief Commissioner sent the letter
(Ex. D-8)
dated
May 13, 1939, sanctioning under s. 22-A of the Trust
Law the scheme of the "New Fruit and Vegetable
Market"
as
proposed
in
the
resolution
aforesaid
at a cost not exceeding Rs. 4,73,186. The sanction is
in terms made subject to the remarks (1) that "the
whole of the land required for the construction of the
new market is the property of the Government'', and
(2) that "the trust will administer the new market on
its completion." It will thus appear that it was clearly
understood that the land on which the market was to
be construct~d would continue to be the property of
the Government in modification of the proposal made
by the Trust as aforesaid, the Trust only being vested
with the power to administer the new market.
,
On receipt of the letter aforesaid of the Chief Commissioner, the Chairman of the Trust requested the
former to obtain the orders of the Government of India
to place the additional land' required for the market at
the disposal of the Trust under s. 54-A of the United
Provinces
Town
Improvement Act,
VIII of
1919,
(which will hereinafter be referred to as the Improvement Act) as extended to the Province of Delhi, "on
the same terms applicable to other Nazul Estate held
under the agreement between the Trust and the Government of
India"
(Ex. D-7). · By his letter
dated
...
•
•
S.C.R .
SQPREME COURT REPORTS
5
August 10, 1939, (Ex. D-6) the Chief Commissioner forwarded the orders dated June 21, 1939, of the Government of India agreeing to the proposal aforesaid of the
Trust placing. the additional area at the disposal of the
Trust on the original terms aforesaid.
This is the
genesis of
the New Fruit and Vegetable Market,
Subzimandi, which hereinafter will be referred to as
the Market, for a period of six years with effect from
May 25, 1942, at an annual rent of Rs. 35,000 rising
every year by Rs. 2,000 to Rs. 45,000 in respect of the
sixth year of the lease.
In anticipation of the termination of the lease period aforesaid the Trust advertised
the auction of the market for a fresh settlement. That
occasioned the suit for an injunction by the plaintiff
against the Trust in the Court of the Senior Subordinate
Judge of Delhi, instituted on March 18, 1948. The Court
granted the plaintiff an interim injunction restraining
the defendant from putting the market to auction.
The said ex parte order of injunction was contested by
the Trust with the result that the trial Court dissolved
that injunction. The plaintiff carried an appeal to the
High Court of Punjab at Simla. During the pendency
of the appeal a settlement was arrived at between the
parties and the plaintiff's offer
of
Rs.
1,50,000 as
annual rent of. the market on the expiry of the lease
was accepted by the Trust. This settlement is evidenced
by the resolution of the Trust dated February 24, 1949
(Ex. D-13). In pursuance of that settlement a fresh
lease was executed. By the indenture (Ex. D-4) dated
April 22, 1949, the plaintiff was granted a fresh lease
for the period May 25, 1948, to March 31,
1950, at an
annual rent of Rs. 1,50,000. One of the terms of the
lease, which is a registered document, was-
"That the lessee ·shall on expiry of the lease or on
its determination by the lessor, vacate
the premises
and deliver its peaceful possession to the lessor. If the
lessee fails to do so, he shall be liable to pay double
the rent as liquidated damages for the unauthorised
period of occupation till such time as he vacates it or
he is ejected by process of law."
Paragraph 22 of the indenture aforesaid contains
the following important admission :-
Fruit & Vegetabk Merchants
Union
v.
Delhi Improvement Trust
Sinha].
Fruit & Veg~
tabk Mtrchants
Union
v.
Delhi fmprove·
ment Trust
Sinha].
6
SUPREME COURT REPORTS
[1957]
"that both the lessor and lessee agree that the
premises in dispute are owned by the Government and
the provisions of the Delhi Ajmer Merwara Rent
Control Act (1947) do not apply to the same."
The effect of this admission
is also one of the
controversies between the
parties and shall have to
be adverted to later.
It appears that during the pendency of the second
lease
aforesaid, negotiations had started between the
parties for extension of the period of the lease. The
plaintiff made an offer of a fresh lease for a further
period of live years at an annual rent of rupees two
lakhs.
But
the
Trust
by
its
resolution
dated
May 25, 1950,
(Ex. D-12)
agreed only to extend the
period
by
two
years
"on the
existing conditions,
subject to enhancement of rent to Rs. 2 lakhs per
year." The plaintiff's case in the plaint is that these
onerous terms successively enhancing the rent to Rs. 2
lakhs per year were agreed to by it as it had no other
alternative in view of the plaintiff's need. The plaintiff
has been paying the enhanced rent of Rs. 2 lakhs per
year in view of the resolution aforesaid of the Trust
but has all the same started proceedings under s. 8
of the Control Act, for fixation of standard rent in
respect of the market. The Trust got an advertisement
inserted in the Hindustan Times, New Delhi, dated
March 5, 1953, inviting tenders for the lease of the
market for a period of three years from April 1, 1953.
The plaintiff's case in the plaint is that the tenancy in
favour of the plaintiff still subsisted and had not been
terminated in accordance
with law. That was
the
cause of action for the plaintiff to institute the present
suit on March 9, 1953. The plaintiff's prayer in the
plaint is that a decree for a permanent injunction may
be passed
in favour of the plaintiff restraining
the
defendant from evicting the plaintiff from the market.
The suit was contested by the Trust on the allegations
that the market had been constructed on Nazul land
under the authority of the Delhi State Government
with Government funds, that the market was Government property and was only being managed by the
defendant on behalf of
the
Government,
that
tiie
S.C.R.
'SUPREME COURT REPORTS
7
·Control Act by virtue of s. 3 (a) thereof was not applicable to the premises in question and that therefore
the plaintiff was liable to be ejected as the term of its
lease had expired. Reliance was also placed on behalf
of the defendant on the provisions of the Government
Premises (Eviction) Act, XXVII of 1950, read with the
Requisitioning an<l Acquisition of Immovable Property
Act, XXX of 1952.
On those pleadings a number of issues were joined
between the parties of which the most important is
issue No. 1-
"Whether the property in 'dispute belongs to the
Government within the meaning of s. 3 (a) of the Rent
Control Act, 1952 ?"
Bo•h the courts below have answered that issue in
the
affirmative,
that
is to
say,
in favour of the
defendant. The plaintiff prayed for and obtained the
necessary certificate from the High Court that the case
involved
substantial
questions
of law
as
to
the
interpretation of the relevant statute and the agreement (Ex. D-5) between the Government of India and
the Delhi Improvement Trust. Hence this appeal.
It has been contended on behalf of the appellant
that on a true construction of the provisions, particularly s. 54A of the Improvement Act as applied to
the Province of Delhi and the agreement
(Ex. D-5)
between the Government of India and the Trust, as
also of the correspondence that passed
between the
Chief Commissioner of Delhi and the Trust, the land
on which the market was constructed and the structure
itself belonged to the Trust and that therefore the
provisions of the Control Act were applicable to the
tenancy created by the Trust in favour of the plaintiff;
and that being so, the plaintiff could not be ejected by
the defendant on the expiry of the term or the extended
term of the lease. On the other hand, it has been argued
on behalf of the defendant-respondent that the Trust is
the statutory agent of the Government and
has to
function in accordance with the provisions of the
statute aforesai<l, namely, the Improvement Act. The
agency was created under the provisions of s. 54A(l)
-FroiJ & Veutabk Merchants
Union
v.
Delhi lmfwovernmt Trust
Sinha J.
1956
Fruit & V tgttoble Merchants
Union
v.
Del/Ji
Improv~
menl Tnut
Si""4J.
8
SUPREME COURT REPORTS
[1957}
of the Improvement Act, the terms of the agreement
being incorporated in the indenture, Ex. D-5,
dated
March 31, 1937. The argument further
is
that in
accordance with the scheme as embodied in the agreement the Government was to hand over to its agent,
the
Trust,
Government
property
which
vests
in
possession .of the agent who has to manage and develop
the property with funds
made available to it by
Government. Proper accounts have to be
kept by
the Trust of the monies thus advanced by Government
in a separate account. The Trust has also to pay a
certain fixed sum by way of revenue on the property
placed at its disposal. The income from the property
in the hands of the Trust has to be applied to payment
of interest on money advanced by Government at a
soecified rate, as also to expenses for the management
and improvement of the property and any surplus left
over out of the income of the property in the hands of
the Trust after meeting all the. outgoings has to be
placed at the disposal of Government to be
spent
according to its directions. Thus the case of the respondent is that no legal title was created in favour of
the Trust and the land, as also the structures constructed by the Trust with the monies thus advanced by
Government are the property of the Government. The
Trust as the statutory agent has only to manage and
develop
the property
in
accordance with schemes
sanctioned
by
Government.
Consequently,
it
was
argued that the market in question belongs to Government and is not £;overned by the Control Act.
The question as to in whom the title to the market
in question vests may be discussed in two parts, ( 1) title
to the land on which the market is situate, and (2) title
to the buildings admittedly constructed by the Trust.
Adverting first to the question of title in respect of the
land, it is com111on ground that before it was placed at
the disposal of the Trust it was Government property ..
The question, therefore, naturally arises whether either
by the provisions of section 54-A relied upon by both
the parties in this connection, or by virtue of the terms
of the indenture aforesaid or by the combined operation of the two, title to the land has become vested in
..
(
S.C.R.
SUPREME COURT REPORTS
9
the Trust. The appellant contends it is so vested. The
respondent contests this proposition and contends that
there are no words in the statute or in the agreement
which either separately or _together can be said to have
transferred the pre.:.existing title of the Government to
the Trust. It is pointed out on behalf of the respondent that section 54-A only authorises Government to
place the land in question "at the disposal of the
Trust" which has to hold it in accordance with the
terms agreed upon between them,
as evidenced by
the indenture Ex .. D-5. Let us examine those terms.
The agreement provides, inter alia, that with a view
to the orderly expansion of Delhi under the supervision
of a single authoi:ity the Government agreed to place
at its disposal "the Nazul Estate" (described in Schedule I), with effect from April 1, 1937. One of the
conditions stipulated was that the "Trust shall hold
and manage . the said Nazul Estate on behalf of the
Government." These words cannot be construed as
transferring title to the Nazul Estate from Government
to the· Trust. They amount to constituting the Trust
as an agent of the Government to hold possession of
the property and to manage the same for the purpose
for which the Trust had been created. The Trust is
enjoined to use its best endeavours for the improvement and
developm~nt of the said Nazul Estate in
accordance with the provisions of the Improvement
Act, "provided that no expenditure shall be incurred
upon the purchase of land to be added to the said
Nazul Estate unless the proposal to make the purchase
has been specifically
included
in an Improvement
Scheme sanctioned under section 42 of the said Act."
Particular reliance was placed on behalf of the appellant on the following terms in the indenture to show
that the title to the Nazul Estate vested in
the
Trust:
"The Trust may sell or lease any land included in
the said Nazul Estate in pursuance of tbi: provisions
of an Improvement Scheme sanctioned undtt section
42 of the said Act .
•
•
•
1956
Fruit & v.,...
ta6k Merchants
Unioii
v.
·Delhi lmpro,,,_.
,,,.,,, 7 nut
SinhaJ.
Fruit & Vege·
.;table Marchants
Union
v.
-Delhi Improve·
ment Trust
Sinha].
10
SUPREME COURT REPORTS
[1957]
The Trust may, otherwise than in pursuance of an
. Improvement Scherqe sanctioned under section 42 of
the said Act, sell any land included in the said Nazul
Estate."
In order to appreciate the true legal position it is
necessary here to examine some of the provisions of the
Improvement
Act
bearing
on this aspect
of the
case. Section 22-A occurring in Chap. III-A vests the
Trust with the power to undertake any works and
mcur
any
expenditure
for
the
improvement
or
development of the area to which the Act may have
been extended. Section 23 in Chap. IV sets out in
detail what is meant by "An Improvement Scheme."
It lays down that the acquisition 'by purchase, exchange or otherwise of any property necessary for or
affected by the execution of the scheme, the construction or reconstruction of buildings, the sale, letting or
exchange of any property comprised in the scheme and
doing of all incidental acts necessary for the execution
of the scheme may be undertaken by the Trust. Section
24 sets out the different types of improvement schemes
including a general improvement scheme, a re-building
scheme, a re-housing scheme, a development scheme
etc., and the sections following s. 24 lay down in detail
the scope of the different types of improvement schemes
enumerated in s. 24. Section 42 requires the Chief Commissioner to announce an improvement scheme sanctioned by him by notification and thereupon the Trust
embarks upon the execution of the scheme. Then comes
Chap. V dealing with the powers and duties of the
Trust when a scheme has been sanctioned.
In this
chapter occur ss. 45 to 48 which provide for the vesting of certain properties in the Trust. Section 45 lays
down the conditions and the procedure according to
which any
building, street,
square
or other land
vested in the Municipality or Notified Area Committee
may become vested in a Trust. Similarly, s.
46 deals
with the vesting in the Trust of properties like a street
<>r a square as are not vested in a Municipality or
Notified Area Committee. These sections, as also ss. 47
and 48 make provision for compensation and for
.empowering the Trust to deal with such property
..
_,_
S.C.R.
SUPREME COURT REPORTS
11
vested in it. The vesting of such property is only for
the purpose of executing any improvement
scheme
which it has undertaken and not with a view to clothing it with \;Omplete title. As will presently appear,
the term "vesting" has a variety of meaning which has
to be gathered from the context in which it has
been used. It may mean full ownership, or only
possession for a particular purpose, or clothing
the
authority with power to deal with the property as the
agent . of another person or authority.
Coming back to the terms of the indenture with
reference to the power of the Trust to sell or lease any
land included in the Nazul Estate, certain conditions
are laid down for the exercise of the aforesaid power
to transfer. The Trust is empowered to sell any land
included in the Nazul Estate on its own authority only
in cases where the sale is for full market value and
which does not exceed Rs. 25,0CXJ/-.
In other cases the
transaction· has to be sanctioned either by the Chief
Commissioner or by Government and in every case the
forms of. conveyances and leases by the Trust have to
be approved by Government. It would thus appear
that the power to transfer by way of sale, lease or
otherwise, vested in the Trust is not an unlimited or an
unqualified power but a power circumscribed by such
conditions as the Government or the Chief Commissioner, as the case ·may be, thought fit to impose. The
imposition of those conditions is not consistent with the
title to the property vesting absolutely in the Trust.
On the other hand, the imposition of those conditions
is more consistent with the proposition contended for
by the learned Attorney-General on behalf of the respondent that the Trust was only constituted a statutory agent on behalf of the Government in accordance
with the provisions of the Improvement Act and the
terms of the indenture, Ex. D-5. It is noteworthv that
there are no provisions either in the Improveme~t Act
or in the indenture, Ex. D-5, to the effect that the title
to the Nazul Estate vested in the Trust. It must,
therefore, be held that no grounds have been made out
for holding that title to the land on which the market
stands was conveyed by Government to the '!:rust.
1956
Fruit & Vege-·
tabl1 Merchants.
Union
v.
Delhi Improvemmt Trust
Sinha].
Sin[i4].
12
SUPREME COURT REPORTS
[1957]
We turn now to the question whether apart from
tide to the land, title to the building standing upon
the land is vesteo in the Trust. In order to examine
the contentions raised on behalf of the appellant it is
nece~y to set out the remaining portion of the terms
of the indenture aforesaid. The Trust was to assume
full liability for all expenditure to be incurred upon
works of improvement and to arrange for the completion of those works to the satisfaction of Government.
The Trust is also enjoined to maintain in accordance
with the statutory
rules
separate accounts of
all
revenue realised from, and all expenditure incurred
upon, the said Nazul Estate and to pay to Government
the sum of Rs. 2 lakhs being the equivalent of the net
annual revenue in respect thereof subject to certain
'Conditions, not material to this case. Then follows the
most important clause in these terms :-
"Any surplus funds in the Nazul Development
Account remaining at the end of each financial year
when the said sum has been paid shall be put at the
disposal of Government and shall be applied until
further orders of Government to the further improvement and development of the· said Nazul Estate and/ or
to the repayment of loans made to the Trust as
Government may direct."
Government on its part undertook to finance either
in part or in whole such schemes as may be agreed
between the parties and · also
to advance loans at
interest equal to Government rates for the time being
for loans to Local Authorities. It was in pursuance of
the terms aforesaid that the scheme of the building of
the market in question was put through at an estimated cost of a little less than five lakhs of rupees.
It is dear upon the terms of the agreement shortly
set out above that the market was constructed by the
Trust on Government land with Government funds
advanced by Way of loan at interest. On those facts
what is the legal position of the Trust vis-a-vis the
Government in respect of the ownership of the property?
It is important, therefore, to determine
the
true nature of the initial
relati9nship
between
the
Government and the Trust. The learned counsel for
--
·-
S'.C.R.
SUPREME COURT REPORTS
13
the appellant conceded that that relationship could not
be described in terms of ordinary legal import, that is
to say, in terms of mortgagor and mortgagee, or lessor
and lessee, or licensor and licensee. He contended that
it was a peculiar relationship which could not be defined in exact legal phraseology, but all the same, that
the Trust was the owner of the market, especially in
view of the fact that, as admitted by the defendant's
counsel at the trial, the Trust had repaid the entire
amount of five lakhs odd advanced by Government for
the construction of the market. This result, .it was
further contended, follows from the terms of s. 54-A of
the Improvement Act. The Attorney"General appearing on behalf of the respondent also strongly relied
upon the terms of that section for his contention that
the relationship between the Trust and the Government was that of agent and principal. It is therefore
necessary to examine closely the provisions of that
section which is in these terms :-
" (I) The Government may, upon such terms as
may be agreed upon between the Government and the
Trust, place at the disposal of the Trust any properties, or any funds or ·dues, of the Government and
thereupon the Trust shall hold or realise such properties, funds and dues in accordance with such terms.
(2) If any immovable property, held by the Trust
under sub-s. (1) is required by the Government for
administrative purposes, the Trust shall transfer the
same to the Chief Commissioner upon payment of all
costs incurred by the Tl'USt in acquiring, reclaiming or
developing the same, together with interest thereon at
such rate as may be fixed by the Chief Commissioner
calculated from the day on which this Act comes into
force or from the date on which. such costs were incurred, whichever is the later.
The transfer of any such immovable property shall
be notified in the gazette and . such property shall
thereupon vest in the Chief Commissioner from the
date of the notification."
The section quoted above finds place in Chap. VA,
headed "Government Property Held by Trust". It is
1956
Fruil & Yetr
table Mmhanls
Union
v.
D11/ii lm/frOWmmt T nut
Sinha].
Fru~ · Vege~
table l ~erchants
Union
v.
Delhi Improvement Trust
Sinha J.
14
SUPREME COURT REPORTS
[1957J
manifest upon a reading of the entire section that there·
are no express words of conveyance whereby title is
transferred by Government to the Trust either absolutely or upon certain conditions.
As applied to
the
present case, sub.s. (1) only provides that the Government would place the
property in question at the
disposal of the Trust which shall hold the same in
accordance with the terms as may be agreed between
them, that is to say, in accordance with the terms of
the agreement aforesaid, (Ex. D-5). Placing the property "at the disposal of the Trust" does not signify
that Government had divested itself of its title to the
property and transferred the same to the Trust. Clause
12 of the agreement
(Ex. D-5)
to the effect that
"Government may at any time on giving six months'
notice terminate this agreement" clearly indicates that
the Government had created this agency not on a
permanent basis but as a convenient mode of having
its schemes of improvement implemented by a single
agency with wide powers of management and expenditure of funds placed at its disposal, either by way of
income from the property or by way of advance from
Government funds. Sub-s. (1), therefore, does not in
express terms or by necessary implication confer any
title on the Trust in respect of the market. The Trust
onlv holds the market and realises the income therefrom
which is disbursed in accordance with the terms of the
agreement and the rules framed by the Chief Commissioner in exercise of the powers conferred on him by
cl. (e) of sub-s. (1) of s. 72. Our attention was .called
to some of those statutory rules, particularly rule 2J,
36, 38 and 156 read along with the forms and the
Appendix. It is not necessary to discuss those rules in
detail because on a consideration of those rules we arc
satisfie)i that they are more consistent with the Trust
being a statutory agent of the Government, which has
to maintain separate accounts in respect of nazul pt<>·
perty.
Any reappropriation from nazul to non-nazul
or vice-t1ersa could not be made by the Trust without
the prior sanction of
the Chief Commissioner.
The
method of keeping accounts in respect of the nazul
estate would show that the Trust had to function u
-·
(
S.C.R.
SUPREME COURT REPORTS
15
the statutory agent of the Government in the matter
of the administration of the Trust funds with particular reference to the nazul estate with which we are
immediately concerned. But it has been argued on
behalf of the appellant that sub-s. (2) of s. 54A quoted
above postulates that the Trust is the owner of the
·property, otherwise the sub-section would not speak of
the Trust having to transfer immovable property held
by it to the Chief Commissioner in certain contingencies, upon payment of all costs incurred by the Trust
in acquiring, reclaiming or developing that property
together with interest calculated in the way set out in
that sub-section. It should be noted in this connection
that what the Government was required to pay was not
the market value of the property but only the cost
incurred by the Trust. That · provision apparently was
made
for the
purpose
of accounting between the
different
branches
of the Trust activities. If title
really vested in the Trust, it would be entitled to
receive from Government the price of the property and
not merely required to be reimbursed in respect of the
actual expenditure on the scheme. Particular reliance
was placed upon the words "and such property shall
thereupon vest in the Chief Commissioner." It was
argued that unless the property previously vested in
the Trust it could not upon the transfer contemplated
by sub-s_. (2) vest in -the Chief Commissioner. This argument
assumes
that
the
word
"vest"
necessarily
signifies that title to the property resides in the Trust.
But the word "vest" has several meanings with reference to the context in which it is used. In this
connection reference may be made to the following
observations
of
Lord Cranworth
in Richardson v.
Robertson( 1 ) :
" ... The word 'vest' is a word, at least o~ ambiguous
import. Prima f acie 'vesting'
in
possession
is the
more natural meaning. The expressions 'investiture'
-'Clothing'-and whatever else be
the
explanation
as to the origin of the word, point prima facie rather
to the enjoyment than to the obtaining of a right. But
(1) (186~) 6 L.T. 75 at p. 78.
2-75 S. C'. India/59.
1956
Fniil 61 Ytplult Mtrclumls
.lhiori
Ya
Dtllli JmJMer
Mtnt r""'
Sinha].
1!156
Fruit & Vegttabk Mwchanls
u.;.,,
.•.
Delhi Imprwtffltfll Tnut
Sinha]-
16
SUPREME COURT REPORTS
{1957]
I am willing to accede to the argument that was pressed at the bar, that by long usage 'vesting' ordinarily
means the having obtained an absolute and indefeasible
right, as contra-distinguished from the not having so
obtained it. But it cannot be disputed that the word
'vesting' may mean, and often does mean, that which
is its primary etymological signification, namely, vest-
•
•
•
H
mg m possess10n.
Similarly with reference to the provisions of a local
Act (5 Geo. 4, c. !xiv), it was held that the word "vest"
did not convey a freehold title but only a right in the
nature of an easement. The following words of Wiles, J.
in Hinde v. Charlton(' ) are relevant :-
'\ ....... there is a whole series of authorities in
which words, which in terms vested the freehold in
persons appointed to perform some public duties, such
as canal companies and boards of health, have been
held satisfied by giving to such persons the control over
the soil which was necessary to the carrying out the
objects of the Act without giving them the freehold."
In the case of Coverdale v. Charlton('), the Court
of Appeal on a consideration of the provisions of the
Public Health Act, 1875 (38 and 39 Viet. c. 55) with
particular reference to s. 149, has made the following
observations at p. 116 :-
"What then is the meaning of the word 'vest' in
this section?
The legislature might have
used
the
expression 'transferred' or 'conveyed', but they have
used the word 'vest'. The meaning I should like to
put upon it is, that the street vests. in the local board
qua street; not that any soil or any right to the soil or
surface vests, but that it vests qua street."
Referring to the provisions of s. 134 of the Lunacy
Act, 1890 (53 & 54 Viet. c. 5) in the case of In re Brown
(a lunatic) ( 3) it has been laid down by Lindley, L.J.,
that the word "vested" in that section included the
right to obtain and deal with; without being actual
owner of the lunatic's personal estate.
(J) (1866-67) C.P. Cas°' 104 at I 16.
(2) (187 -79) 4Q.B.D. 104.
( 3) (1895) 2 Ch. 666.
I
•
--·
S.C.R.
sbPREME COURT REPORTS
17
Iri the case of Finchley Electric Light Company v.
Finchley Urban District Council(1 ), adverting to the
provisions of s. 149 of the Public Health Act, 1875,
(supra) Romer, L.J., has made the following observations at pp. 443 and 444 :-
"Now, that section has received by this time an
.authoritative interpretation by a long series of cases.
It was not by that section intended to vest in the
urban · authority what I may call the full rights in fee
over the street, as if that street was owned by an
ordinary owner in fee having the fullest rights both as
to the soil ·below and as to the air above. It is settled
that the section in question was only intended to vest
in the urban authority so much of the actual soil of the
street as might be necessary for the control, protection,
.and maintenance of the street as a highway for public
use. For that proposition it is sufficient to refer to
what was said by Lord Halsbury, L. C., and by Lord
Herscheil in Tunbridge Wells Corporation v. Baird(9 )
" ............ That section has nothing to do with title;
it is not considering a question of title. No matter
what the title . is of the person who owns the street,
the section is only considering how much of the street
shall vest in the urban authority .... "
That the word "vest" is a word of variable import
is shown by provisions of Indian statutes also. For
example, s. 56 of the Provincial Insolvency Act (V of
1920) empowers the court at the time of the making
of the order of adjudication or thereafter to appoint a
receiver for the property of the insolvent and further
provides that "such property shall thereupon vest in
the receiver." The property vests in the receiver for
the purpose of administering the estate of the insolvent
for the payment of his debts after realising his assets.
The property of the insolvent vests in the receiver not
for all purposes but only for the purpose of the
Insolvency Act and the receiver has no interest of his
own in the property. On the other hand, ss. 16 and
17 of the Land Acquisition Act (Act I of 1894), provide
that the property so acquired, upon the happening of
(•) f1go3] I Ch. 437.
M [18g6] A.C. 434·
Fruit & VeJ! ..
table M,,.chants
Union
v.
Delhi Improvement Trust
Sinha] •
ig!lti
Fruit 61 V tgetoblr Merc/witJ
Union
v.
Delhi /mftra,,,..
"""'·rs;.,,. J.
18
SUPREME COURT REPORTS
[1957J
certain events, shall "vest absolutely in the Government free
from
all encumbrances".
In the
cases
contemplated by ss. 16 and 17 the property acquired
becomes
the
property of Government without any
conditions or limitations either as to title or possession.
The legislature has made it clear that the vesting of
the property is not for any limited purpose or limited
duration. · It would thus appear that the word "vest"
has not got a fixed connotation, meaning in all cases
that the' property is owned by the person or the authc>-
rity in whom it vests. It may vest in title, or it may
vest in possession, or it may vest in a limited sense, as
indicated in the context in which it may have been
used in a partiw lar piece of legislation. The provisions
of the Improvement Act, particularly ss. 45 to 49 and
54 and 54A when they speak of a certain building or
street or square or other land vesting in a municipality
or other local body or in a trust, do not necessarily
mean that ownership has passed to any of them.
The question of the ownership of the structure built
upon Government land by the Trust may be looked at
from another point of view. We have already held that
the Trust was in the position of a statutory agent of
Government and had erected the structure with money
belonging to Governmert but advanced at interest to
the Trust. In such a situation the structure also would
be the property of Government, though for the time
being it may be at the disposal of the Trust for the
purpose of managing it efficiently as a statutory body.
Simply because
the Trust erected the structure in
question and latc:r on paid up the amount advanced by
Government for the purpose would not necessarily lead
to the legal inference that the structure was the prc>-
perty of the Trust. In this connection reference may be
made to the decision of this Court in Bhatia Co-operative
Housing Society Ltd. v. D. C. Patel(' )..