REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 2870 OF 2007

BHARAT PETROLEUM CORPORATION LIMITED ... APPELLANT(S)

VERSUS

R. CHANDRAMOULEESWARAN AND OTHERS ... RESPONDENT(S)

W I T H

CIVIL APPEAL NO.761 OF  2020 (ARISING OUT OF SPECIAL LEAVE PETITION (CIVIL) NO. 2645 OF 2010)

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CIVIL APPEAL NO.765 OF 2020 (ARISING OUT OF SPECIAL LEAVE PETITION (CIVIL) NO. 34955 OF 2011)

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CIVIL APPEAL NOS.770-771 OF 2020 (ARISING OUT OF SPECIAL LEAVE PETITION (CIVIL) NOS.29712-713 OF 2013)

CIVIL APPEAL NO.772 OF 2020 (ARISING OUT OF SPECIAL LEAVE PETITION (CIVIL) NO. 7165 OF 2016)

Civil Appeal No. 2870 of 2007 and Others Page 1 of 30

CIVIL APPEAL NO.773 OF 2020 (ARISING OUT OF SPECIAL LEAVE PETITION (CIVIL) NO. 3842 OF 2017)

CIVIL APPEAL NO.774 OF 2020 (ARISING OUT OF SPECIAL LEAVE PETITION (CIVIL) NO. 32286 OF 2017)

A N D

CIVIL APPEAL NO.775-776 OF 2020 (ARISING OUT OF SPECIAL LEAVE PETITION (CIVIL) NOS.18342-343 OF 2018)

J U D G M E N T

SANJIV KHANNA, J.

Leave granted in the special leave petitions.

2. The above-captioned appeals  filed  by  the three oil  companies,

namely,  Bharat  Petroleum  Corporation  Limited,  Indian  Oil

Corporation Limited and Hindustan Petroleum Corporation Limited

(hereinafter  referred  to  as  ‘the  appellant’),  raise  an  identical

question of law relating to the right of a tenant, in terms of Section

9 of  the Madras City  Tenants’ Protection Act,  1921 (hereinafter

referred to as the ‘Act’), to an order whereby the landlords could

be directed to sell the leasehold land in whole or in part at the

price fixed by the court.  

3. Briefly, the appellant had under different written registered lease

deeds with the landlords taken land on long-term lease and had

thereupon  constructed  petrol  pumps  that  were  given  to  and

Civil Appeal No. 2870 of 2007 and Others Page 2 of 30

operated  by  the  dealers  appointed  by  the  appellant  under  the

dealership agreements. In some cases the leases were renewed

on  nationalisation  of  companies  in  terms  of  Burmah  Shell

(Acquisition  of  Undertakings  in  India)  Act,  1976,  Caltex

(Acquisition of Shares of Caltex Oil Refining (India) Limited and of

the Undertakings in India of Caltex (India) Limited) Act, 1977, and

Esso (Acquisition of Undertakings in India) Act, 1974. However, it

is an accepted position that the term or duration of the leases,

even where leases were renewed, has expired in all cases.  

4. The landlords, who are the contesting respondents before us, had

or have filed suits for ejectment for recovery of possession of the

land. The appellant had filed applications purportedly in exercise

of their  right  under Section 9 of  the Act  for  transfer/sale of  the

leasehold land in whole or in part at the price fixed by the court.

By different impugned judgments, some of which have arisen from

the  remand  order  dated  3rd December  2009  passed  by  the

Division Bench of this Court, the Madras High Court has rejected

the applications filed by the appellant, either affirming or reversing

the findings of the trial court or the lower appellate court.  

5. Preamble of the Act as originally enacted in 1921 had stated:

“An Act to give protection to certain classes of tenants in the City of Madras.

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WHEREAS it is necessary to give protection to tenants who  in  many  parts  of  the  City  of  Madras  have constructed buildings on others’ lands in the hope that they would not be evicted so long as they pay a fair rent for the land and  

WHEREAS the sanction of the Governor-General has been  obtained  under  section  80-A  (3)  of  the Government of India Act”

The Objects and Reasons of the Act read as under:

“In many parts of the City of Madras, dwelling houses and  other  buildings  have,  from  time  to  time,  been erected by tenants on lands belonging to others, in the full expectation that subject to payment of a fair ground rent,  they  would  be  left  in  undisturbed  possession, notwithstanding the absence of any specific contract as to the duration of the lease or the terms on which the buildings were to be leased.  Recently, attempts made on steps taken to evict a large number of such tenants have  shown  that  such  expectations  are  likely  to  be defeated.  The tenants, if they are evicted, can at the best  remove  the  superstructure,  which  can  only  be done by pulling down the buildings.  As a result of such wholesale destruction, congested parts of the City will become more  congested  to  the  serious  detriment  of public  health.   In  these circumstances,  it  is  just  and reasonable  that  the  landlords  when  they  evict  the tenants should pay for and take the buildings.  There may, however, be cases where the landlord is unwilling to eject a tenant if he can get a fair rent for the land. The Act provides for the payment of compensation to the tenant  in case of  ejectment  for  the value of  any building which may have been erected by him or his predecessors-in-interest.   It  also  provides  for  the settlement of fair rent at the instance of the landlord or tenant.  Provision is also made to enable the tenant to purchase the land in his occupation subject to certain conditions.”

The  Act  as  enacted  in  1921  was  to  give  protection  to  a

certain class of tenants in the city of Madras who had before the

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enactment of  the Act,  and not after the enactment, constructed

structures  on  the  leasehold  lands  in  the  city  of  Madras.  The

objects and reasons refer to a peculiar situation prevailing in the

city  of  Madras  where  dwelling houses and  other  buildings had

been erected by the tenants on land taken on lease in expectation

and belief that their possession would not be disturbed, subject to

payment of fair-ground rent to the landlords. The agreements with

the landlords, reasons record, would be silent on duration of the

lease and the terms on which the buildings were to be leased.

Reasons further state that recently, that is before the enactment in

1921, attempts and steps had been initiated by the landlords to

evict  large  number  of  such  tenants,  thereby  the  general

expectations of  the tenants  were likely  to  be defeated as they

were  liable  to  be  evicted.  Therefore,  the  Act  was  enacted  to

prevent  wholesale  destruction  of  the  buildings/superstructures

which were required to be pulled down by the tenants on eviction.

This  would  have  caused  serious  detriment  to  public  health  as

buildings were to be demolished in the congested parts of the city.

In  these circumstances,  it  was reasonable  and proper  that  the

tenants should be asked to pay fair market price of the land to the

landlords  and  become owners  of  the  land.  As  some  landlords

would not be interested in ejectment of a tenant, the Act provided

for enhancement of rent in such cases so that the landlord would

Civil Appeal No. 2870 of 2007 and Others Page 5 of 30

get fair market rent.  The Act dealt with payment of compensation

of the value of the building by the landlord in case the tenant did

not want to purchase or pay fair market value of the land.

6. The Act has undergone a paradigm shift in terms of its reach and

ambit by extending protection to leases and constructions made

post-1921 and extension to areas other than the ones recognised

in the original enactment as well as by enhancing and modifying

the  terms  of  protection available  to  the  tenants.  These

amendments  particularly  vide  the  Madras  Act  No.  19  of  1955,

Tamil Nadu Act No. 13 of 1960, Tamil Nadu Act No. 4 of 1972 and

Tamil  Nadu  Act  No.  24  of  1973  which  have  been  hereinafter

referred to as the Amendment Act, 1955; Amendment Act, 1960;

Amendment  Act,  1972 and Amendment  Act,  1973,  respectively,

shall  be  expounded  to  the  extent  necessary  for  the  present

decision. To avoid prolixity, we have avoided quoting and referring

to the history of the legislation and the changes made thereto.

7. By the Amendment Act, 1955, the Act was extended to ‘municipal

towns and adjoining areas in the State of Madras’1.  By the Tamil

Nadu Adaptation of Laws Order, 1969 as amended by the Tamil

Nadu Adaptation of Laws (Second Amendment) Order, 1969, the

expression  ‘State of  Tamil  Nadu’  was substituted for  the words 1  This was further amended by the Madras City Tenants’ Protection (Amendment) act, 1979 whereby

the words “municipal towns” were substituted by the words “municipal towns and townships”.  

Civil Appeal No. 2870 of 2007 and Others Page 6 of 30

‘State of Madras’.  The Amendment Act, 1972 had also amended

the Preamble by deleting the words ‘in the hope that they would

not be evicted’. The Preamble as it stands now reads as under:  

“An Act to give protection to certain classes of tenants in municipal towns and townships and adjoining areas in the State of Tamil Nadu.  

WHEREAS, it is necessary to give protection against eviction  to  tenants,  who  in  municipal  towns  and townships  and  adjoining  areas  in  the  State  of  Tamil Nadu  have  constructed  buildings  on  others’  land  so long as they pay a fair rent for the land;”

With the amendments, the Act was extended to be applied

even  to  leases  of  land  executed  post  the  enactment  and

enforcement of the Act in 1921. However, the Act even post the

amendments  applies  only  to  those  leases  of  land  on  which

building was constructed by the tenant prior to the date specified

and not post the date specified.

8. We  would  begin  our  interpretation  by  referring  to  in  brief  the

scheme of the Act which postulates and grants certain rights that

may  be  exercised  by  the  tenant  facing  eviction  proceedings.

Under  Section  3  of  the  Act,  the  tenant  is  entitled  to  be  paid

compensation equivalent to the value of the building, which he or

any of his predecessors in interest or any person not in occupation

at the time of ejectment who derived title from either of them, had

erected and for which compensation has not been already paid.

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The  tenant  is  also  entitled  to  the  value  of  the  trees  and  any

improvements  which  may  have  been  planted/made  by  him.

Section  9  of  the  Act  grants  the  tenant,  who  is  entitled  to

compensation  under  Section  3  and  against  whom  a  suit  for

ejectment has been instituted or proceeding under Section 41 of

the Presidency Small Cause Courts Act, 1882 (Central Act XV of

1882) taken by the landlord, to apply for an order directing the

landlord to sell for a price to be fixed by the court, in whole or in

part, the extent of land specified in the application. Under clause

(b) to Section 9(1), the court shall decide the minimum extent of

the land which is necessary for the convenient enjoyment by the

tenant and accordingly fix the price for the land either as prayed

by the applicant or as determined by the court, whichever is less.

9. Section  12  protects  the  rights  of  a  tenant  against  eviction,

notwithstanding the contract entered into by a tenant. However,

prior  to  its  amendment  vide  the  Amendment  Act,  1972,  the

override and paramountcy of the Act was not applicable to written

registered leases of land that had stipulations as to the ‘erection of

buildings’. Section 12 as originally enacted had stated:

“12. Effect of contracts made by tenants. – Nothing in any contract made by a tenant shall  take away or limit  his  rights  under  this  Act  provided  that  nothing herein contained shall affect any stipulations made by the tenant  in  writing  registered as  to  the erection  of

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buildings, in so far as they relate to buildings erected after the date of the contract.”

Thus, the proviso to Section 12 had given primacy to the

written  registered  document  with  a  covenant  as  to  ‘erection  of

buildings’ after the date of the agreement. Parties are ad idem that

the effect of the proviso was to effectively deny the tenants the

statutory right to purchase land under Section 9 or enforce other

rights under the Act where the written registered agreement had a

stipulation relating to ‘erection of buildings’ by the tenant, in which

event parties would be bound by the terms of the agreement and

the Transfer of Property Act, 1882, and the Act, that is the Madras

City Tenants’ Protection Act, 1921, would not apply. The proviso to

Section 12 viz., the words ‘provided that nothing herein contained

shall  affect  any  stipulations  made  by  the  tenant  in  writing

registered as to the erection of buildings insofar as they relate to

buildings erected after the date of the contract’ were deleted vide

Section 3 of the Amendment Act, 1972 which reads:

“3. Amendment of Section 12, Tamil Nadu Act III of 1922.─  In section 12 of the principal Act, the portion commencing with the words “provided that” and ending with the words “date of the contract” shall be, and shall be deemed always to have been, omitted.”

Section 3 of the Amendment Act, 1972 postulates that the

deleted words shall be always deemed to have been omitted and

did  not  form  part  of  the  statute.  A  deeming  provision  with

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retrospective effect was thus enacted. We are not dealing with the

constitutional  validity  of  the  amendment  made  and,  therefore,

would not comment upon this aspect.  

10. In  N. Vajrapani Naidu v.  New Theatres Carnatic Talkies Ltd.,

Coimbatore,2 the Constitution Bench of five judges had upheld

validity of the Act, as it existed before the amendments vide the

Amendment Acts of 1972 and 1973, after referring to Section 12

which had then vide the proviso excluded the  written registered

lease deeds with the stipulation as to ‘erection of buildings’ from

application of the Act,  to observe that the Act applies only to a

limited class of land, that is, land granted on lease for construction

of buildings before the date with effect from which the Act  was

extended to the town or village. The purpose and objective behind

the  enactment  was to  give  protection  to  the  tenants  who had,

notwithstanding the usual covenant relating to the determination of

tenancies, obtained land on lease in the hope that as long as they

pay  and  continue  to  pay  fair  rent,  they  would  not  be  evicted.

However,  the  changed  circumstances  as  a  result  of  the  war

leading to appreciation in land values and increase in rents had

put such tenants to great inconvenience and harassment as they

were  faced  with  actions  of  ejectment  involving  dismantling  of

properties constructed by them and eviction. Upholding the Act, as 2  (1964) 6 SCR 1015

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it  then  existed,  the  Constitution  Bench  observed  that  the

protection and rights granted under the Act become effective only

when  the  landlord  seeks  to  obtain,  in  breach  of  mutual

understanding, benefit of unearned increase in the land values by

instituting  a  suit  for  ejectment.  The  Act  was  manifestly  in  the

interest of general public to effectuate the mutual understanding

between the landlords and the tenants as to the duration of the

tenancies, and to conserve the existing buildings so constructed.

Section 9 did not do much to deprive the landlord of his property

or  to  acquire  his  rights  as  it  was  to  give  effect  to  the  real

agreement  between the landlord  and the tenant  consequent  to

which the tenant was induced to construct a building on the plot let

out to him. The restriction would be in the interest of the general

public and, therefore, the Act did not offend the right to property

under Article 19(1)(f) of the Constitution of India. Referring to the

amendments vide the Amendment Act, 1960, it was observed that

the court can direct sale only of minimum area of land necessary

for  convenient  enjoyment  by the tenant  of  the property/building

built by him and the price to be paid was the average market value

of three years immediately preceding the date of the order. In this

decision,  the  majority  had  differed  from  the  minority  on  the

meaning of the expression ‘erection of buildings’ in the context of

written registered lease deed in question, with the majority holding

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that the tenant was not covered by the proviso as the clauses of

the  written  registered  lease  deed  did  not  relate  to  ‘erection  of

buildings’. The expression ‘erection of buildings’ in the proviso to

Section 12 was subsequently interpreted in Haridas Girdhardas

and  Others  v. Varadaraja  Pillai  and  Another3.  However,  we

need  not  go  into  the  said  aspect  and  interpretation  of  the

expression  ‘erection  of  buildings’ because this  question  neither

arises in the present appeals nor is raised and argued before us.

11. We would now reproduce clause (4) to Section 2 of the Act which

defines  the  expression  ‘tenant’ as  amended from time to  time.

Originally Section 2(4) of the Act read as under:

“4.  ‘tenant’ means  tenant  of  land  liable  to  pay rent  on it,  and every  other  person deriving title from him, and includes persons who continue in possession after the termination of the tenancy.”

By the Amendment Act, 1960 which came into force on 27 th

July  1960,  the  definition  of  ‘tenant’ was  substituted  to  read  as

under:

“4. ‘Tenant’ in relation to any land –  

(i) means a person liable to pay rent in respect of such land, under a tenancy agreement express or implied, and

(ii) includes─

(a)  any  such  person  as  is  referred to  in  sub- clause (i) who continues in possession of the land

3  (1971) 2 SCC 601

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after the determination of the tenancy agreement, and  

(b) the heirs of any such person as is referred to in sub-clause (i) or sub-clause (ii)(a), but does not include a sub-tenant or his heirs.”

The Amendment Act, 1973, while retaining sub-clause (ii)(a)

had added a new sub-clause (b) in Section 2(4)(ii).  The earlier

sub-clause  (b)  inserted  vide  the  Amendment  Act,  1960  was

transposed  as  sub-clause  (c).  Post  the  amendment  vide  the

Amendment Act, 1973, clause (4) to Section 2 defining the term

‘tenant’ would read as under:

“(4) ‘Tenant’ in relation to any land –  

(i)  means a person liable to pay rent in respect of such land, under a tenancy agreement express or implied, and

(ii) includes –  

(a)  any  such  person  as  is  referred  to  in  sub- clause (i) who continues in possession of the land after the determination of the tenancy agreement,

(b)  any person who was a tenant  in  respect  of such land under a tenancy agreement  to which this  Act  is  applicable  under  sub-section  (3)  of Section 1 and who or any of his predecessors in interest  had  erected  any  building  on  such  land and who continues in actual physical possession of such land and building, notwithstanding thatꟷ

(1)  such  person  was  not  entitled  to  the  rights under this Act by reason of the proviso to Section 12 of this Act as it stood before the date of the publication of the Madras City Tenants’ Protection (Amendment)  Act,  1972  (Tamil  Nadu  Act  4  of 1972), or  

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(2)  a  decree  for  declaration  or  a  decree  or  an order for possession or for similar relief has been passed against  such person on the ground that the proviso to Section 12 of this Act as it stood before the date of the publication of the Madras City Tenants’ Protection (Amendment) Act, 1972 (Tamil  Nadu  Act  4  of  1972)  disentitled  such person for claiming the rights under this Act, and

(c) the heirs of any such person as is referred to in sub-clause (i) or sub-clause (ii)(a) or (ii)(b),

but does not include a sub-tenant or his heirs;”

Section 2 of the Amendment Act, 1973 which brought in the

amendment  in  Section  2(4)  gave  retrospective  effect  to  the

amendments from the date of enforcement of the Act, that is, 21st

February 1922.  For clarity, we would like to reproduce Section 2

of the Amendment Act, 1973 which reads as under:

“2. Amendment of section 2, Tamil Nadu Act III of  1922.─  For  sub-clause  (ii)  of  clause  (4)  of section 2 of the Madras City Tenants’ Protection Act, 1921 (Tamil Nadu Act III of 1922) (hereinafter referred to as the principal Act), the following sub- clause shall  be and shall  be deemed always to have been substituted […]”

12. A Division Bench of this Court vide order dated 3rd December 2009

in C.A. No. 5903 of 2006 titled  Bharat Petroleum Corporation

Ltd. v. Nirmala and Another and other connected matters while

interpreting  sub-clause  (b)  to  Section  2(4)(ii)  has  held  that  the

expression ‘actual physical possession of land and building’ would

mean and require the tenant to be in actual physical possession.

The provisions would not be applicable if the tenant is not in actual

Civil Appeal No. 2870 of 2007 and Others Page 14 of 30

physical  possession  and  has  given  the  premises  on  lease  or

licence basis to a third party.  The Court, however, did not give

any finding on the question whether such benefit is available to

the appellant under Section 2(4)(i) or Section 2(4)(ii)(a). We are

reproducing  the  relevant  portion  of  the  order  which  reads  as

under:  

“7. As regards sub-clause (b) of Section 2(4), we do not agree with the contention of Mr. Nariman. On a plain  reading of  sub-clause (b)  we notice that  it  uses  the  words  "actual  physical possession".  Had  the  word  ’possession’  alone been used in  clause (b),  as  has  been done in clause  (a),  the  legal  position  may  have  been different.  However,  the  words  ‘actual  physical possession’ are strong and emphatic. That means that the factual state of affairs has to be seen, not the legal or deemed state of affairs. There is no doubt  that  the  appellant  had  handed  over possession  to  his  licensee/agent  who  was  in actual physical possession of the suit  premises. When a Statute uses strong and emphatic words, we cannot twist or give a strained interpretation to the said words. The literal rule of interpretation is the first rule of interpretation which means that if the meaning of a Statute is plain and clear then it should  not  be  given  a  twisted  or  strained meaning. We will be giving a strained and artificial interpretation  to  the  words  ‘actual  physical possession’  if  we  say  that  the  appellant  is deemed to be in actual physical possession. We cannot give such an interpretation to sub-clause (b)  of  Section  2(4)  of  the  Act  particularly  since clause (a)  only  uses the word ‘possession’ and not ‘actual physical possession’. Hence, we reject the  contention  of  Mr.  R.F.  Nariman,  learned counsel appearing for the appellant and hold that the  appellant  was  not  in  actual  physical possession.  

Civil Appeal No. 2870 of 2007 and Others Page 15 of 30

8. The Preamble of the Act makes it clear that the Act  applies  where superstructure is  constructed on  the  land,  which  is  leased.  Hence,  the submission that clause (a) applies when there is no  superstructure  erected  on  the  vacant  land which was leased is not correct. In fact, the Act was meant to give some protection to leased land on  which  the  tenant  constructed  some superstructure.

9. As regards the submission of Mr. Nariman that the  appellant  is  entitled  to  the  benefit  of  sub- clause (a) of Section 2(4) of the Act, it  appears that this aspect has not been considered by the High Court. In our opinion, the High Court should have considered whether the appellant is entitled to the benefit of Section 2(4)(i) and sub-clause (a) of Section 2(4)(ii) of the Act.  

10.  We are not expressing any final  opinion on the question whether the appellant is entitled to the benefit of Section 2(4)(i) and 2(4)(ii)(a) of the Act as in our opinion it was incumbent upon the High Court to have recorded a finding on the said issue.  Therefore,  we  set  aside  the  impugned judgment and order of the High Court and remand the matter back to the Division Bench of the High Court to record a finding on the question whether the appellant is entitled to the benefit of Section 2(4)(i) and sub-clause (a) of Section 2(4)(ii) of the Act. Needless to mention, that the Division Bench of the High Court shall decide the said question in accordance  with  law  and  uninfluenced  by  any observation made by us in this order except the finding  that  the  appellant  is  not  covered  by subclause (b) of Section 2(4) of the Act. We make it clear that we are not expressing any opinion of our own on the other issue. We hope and trust that  the  Division  Bench  of  the  High  Court  will dispose of the case expeditiously and preferably within a period of six months from the date a copy of this order is produced before it.   

xx xx xx

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12. We are further of the opinion that where the lessee is in actual physical possession of the land over which he has made construction then he is entitled to an additional benefit given by Section 9(1)(a) (ii) of the Act. However, if the lessee who has made construction on the land let out to him but  was  not  subsequently  in  possession  of  the same,  as  is  the  case  of  the  appellants  in  the present  cases,  then  he  is  not  entitled  to  the benefit  of  Section  9(1)(a)(ii)  though he  may  be entitled to the benefit of Section 9 (1)(a)(i). These are the questions on which the Division Bench of the High Court will record a finding.

13.  Therefore,  we  set  aside  the  impugned judgments  and  orders  of  the  High  Court  and remand the matter back to the Division Bench of the High Court to record a finding on the question whether the appellant is covered by Section 2(4) (i) and sub-clause (a) of Section 2(4)(ii) of the Act and  is  entitled  to  the  benefit  of  Section  9(1). Needless to mention, the Division Bench of  the High  Court  shall  decide  the  said  question  in accordance  with  law  and  uninfluenced  by  any observation made by us in this order except our finding about clause (b) of Section 2(4). We make it clear that we are not expressing any opinion of our own on other issues. We hope and trust that the Division Bench of the High Court will dispose of these cases expeditiously and preferably within a period of six months from the date a copy of this order is produced before it.”

Thus,  while  interpreting  sub-clause  (b)  to  Section  2(4)(ii),

this Court has held that the expression ‘actual physical possession

of land and building’ would mean and require the tenant to be in

actual  possession and the sub-clause(b) would not  apply if  the

tenant has sub-let the building or has given the premises on leave

and licence basis. The aforesaid decision would operate as  res

Civil Appeal No. 2870 of 2007 and Others Page 17 of 30

judicata  in the case of the appellant and the landlords who were

parties  to  the decision.   In  other  cases,  it  would  operate  as a

binding precedent under Article 141 of the Constitution.

13. Before we go on to examine the challenge raised by the appellant,

it is apparent that the Act essentially protects the rights of three

categories of tenants as enlisted under Section 2(4) of the Act,

viz.,  those  covered  under  sub-clauses  (i)  and  (ii)(a)  who  have

always been protected under the provisions of  the Act;  and by

addition of  clause (b)  with retrospective effect  the tenants  who

were originally disallowed the benefits on account of the proviso to

Section 12 of the Act; and lastly as per sub-clause (c), heirs of the

tenants  covered  under  the  aforesaid  categories,  but  not  sub-

tenants and heirs of sub-tenants. By excluding sub-tenants and

their heirs, the legislature has made it clear that sub-tenants would

not  be  entitled  to  benefits  and  rights  conferred  under  the  Act

including  right  to  purchase  the  land  under  Section  9  or

compensation payable for the construction etc. under Sections 3

and 44 of the Act.  Sub-tenants or the heirs of sub-tenants are not

4  “4. Disposal of suits for ejectment. – (1) In a suit for ejectment against a tenant in which the landlord succeeds, the Court shall ascertain the amount of compensation, if any, payable under Section 3 and the decree in the suit shall declare the amount so found due and direct that, on payment by the landlord into Court, within three months from the date of the decree, of the amount so found due, the tenant shall put the landlord into possession of the land with the building and trees thereon. (2) In an application under Section 41 of the Presidency Small Cause Courts Act, 1882 (Central Act XV of 1882), in which the landlord succeeds, the Court shall ascertain the amount of compensation payable under Section 3 and shall pass an interim order declaring the amount so found due and stating that,  on payment by the landlord into Court within three months of the date of the said interim order of the amount so found due, the landlord shall be entitled to the order contemplated by

Civil Appeal No. 2870 of 2007 and Others Page 18 of 30

‘tenants’ and hence in their case the question of possession or

actual physical possession is immaterial.  

14. The  Amendment  Acts  of  1972  and  1973  were  wide  and  far

reaching, beyond the object and purpose of the Act as originally

enacted. Moreover, several amendments to Sections 2(4), 9 and

12  of  the  Act  were  with  retrospective  effect.  We have  already

referred  to  the  deletion  of  the  proviso  in  Section  12  with

retrospective  effect.  The  consequence of  the  deletion  was that

written  registered  leases  for  land  with  stipulation  relating  to

‘erection of buildings’ would no longer enjoy primacy and would be

governed  by  the  provisions  of  the  Act  as  applicable.  In  other

words, statutory mandate of Sections 3, 4 and 9 of the Act would

apply  notwithstanding  the  terms of  the  written  registered  lease

deed  relating  to  the  ‘erection  of  buildings’  by  the  tenant  and

Section 108(h)5 of the Transfer of Property Act. As the proviso to

Section 12 stood deleted, the distinction carved out in terms of

Section 43 of the Presidency Small Cause Courts Act, 1882 (Central Act XV of 1882). (3) In in such suit or application, the Court finds that any sum of money is due by the tenant to the landlord for rent or otherwise in respect of the tenancy, the Court shall set off such sum against the sum found due under sub-section (1) or sub-section (2), as the case may be, and shall pass a decree or interim order declaring as the amount payable to the tenant on ejectment, the amount, if any, remaining due to him after such set off. (4) If the amount found due is not paid into Court within three months from the date of the decree under sub-section (1) or of the interim order under sub-section (2), or if no application is made under Section 6, the suit or application, as the case may be, shall stand dismissed, and the landlord shall not be entitled to institute a fresh suit for ejectment, or present a fresh application for recovery of possession for a period of five years from the date of such dismissal.”

5  “108. Rights and liabilities of lessor and lessee.—  [...] (h) the lessee may 1 [even after the determination of the lease] remove, at any time 2 [whilst he is in possession of the property leased but not afterwards,] all things which he has attached to the earth: provided he leaves the property in the state in which he received it:”

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Section  12  between  written  registered  lease  agreements  with

specific  stipulations  relating  to  ‘erection  of  buildings’ and  other

lease  agreements,  ceased  to  be  applicable  with  retrospective

effect and the landlords and tenants with written registered leases

were  at  par  with  those  holding  oral  tenancies  or  unregistered

leases  of  land  or  written  registered  tenancies  without  any

stipulation  with  regard  to  ‘erection  of  building’  on  the  land.

Pertinently,  even  before  the  deletion  of  the  words/proviso  to

Section 12 of the Act, the tenants, as defined by Section 2(4)(i)

and (ii)(a) were entitled to protection and benefit of Sections 3, 4

and 9 of the Act.  The amendments made vide the Amendment

Acts of 1972 and 1973 did not, in any manner, dilute or withdraw

the benefit or the protection granted to the tenants not covered by

the proviso to Section 12 of the Act. The amendments vide the

Amendments Acts of 1972 and 1973 were not to dilute the rights

of the already protected tenants, but to expand the Act’s protection

and scope to the tenants who were denied the benefit of the Act

vide the proviso to Section 12 of the Act.  

15. The amendments and modifications made by the Amendment Acts

of 1972 and 1973 whereby sub-clause (b) to Section 2(4)(ii) was

added with  retrospective  effect,  the  proviso  to  Section  12  was

deleted with retrospective effect and the amendments to Section 9

Civil Appeal No. 2870 of 2007 and Others Page 20 of 30

were made with retrospective effect,  have to be read holistically

and in entirety, for it  is a well-known canon of construction that

every section of a statute is to be construed with reference to the

context and other sections of the statute, so as, as far as possible,

to make a consistent  enactment of the whole statute.6 By these

amendments,  the tenants excluded from the benefit/privilege of

the Act  vide the proviso to Section 12 were brought within the

ambit  of  the protection and rights given under the Act  but  with

different conditions and stipulations. In other words, sub-clause (ii)

(b) to section 2(4) is restricted and applies to only those tenants

who were covered by the proviso to Section 12 and not those

tenants who were already entitled to protection and rights under

the Act. This is clear from the latter portion of sub-clause (ii)(b) to

Section 2(4) of the Act which refers to the proviso to Section 12

and also a decree for declaration or possession or similar relief

passed against the person on the ground that proviso to Section

12 had disentitled such persons from claiming rights under the

Act. The amendment made by adding sub-clause (b) to Section

2(4)(ii) vide the Amendment Act, 1973 was not to dilute or impose

new  conditions  on  the  tenants  who  were  otherwise  entitled  to

protection as tenants under Section 2(4)(i) or to Section 2(4)(ii)(a)

of the Act read with Sections 3, 4 and 9 of the Act. This also flows 6  Raghbir Singh Gill v. Gurcharan Singh Tohra and Others 1980 SCR (3)1302 quoting  R v.

Board of Trade, [1965] 1 Q.B. 603.

Civil Appeal No. 2870 of 2007 and Others Page 21 of 30

from the legislature using the word  ‘continues in possession’ in

sub-clause (ii)(a) to Section 2(4), whereas the words used in sub-

clause (ii)(b)  are  ‘continues in  actual  physical  possession’.  The

legislature deliberately has used different words in sub-clauses (ii)

(a) and (ii)(b). The enactment of sub-clause (ii)(b) has to be read

with other amendments made vide the Amendment Acts of 1972

and 1973 and would accordingly apply to those tenants who were

brought under the umbrella and protection of the Act by deleting

the proviso to Section 12. Therefore, sub-clause (ii)(b) to Section

2(4)  would  apply  to  tenants  who were  covered  by  the  deleted

proviso to Section 12, whereas sub-clause (ii)(a) to Section 2(4)

would apply to tenants who had taken land on lease without any

written registered instrument relating to the ‘erection of buildings’.  

16. No doubt, sub-clause (ii)(a) to Section 2(4) refers to land, and the

words  ‘land’  and  ‘building’  have  been  separately  defined  vide

clauses (2) and (1) to Section 2 respectively, with the postulate

that land does not include building, however we are not inclined to

hold that the distinction between sub-clauses (ii)(a) and (ii)(b) to

Section 2(4) is based upon whether a tenant had constructed a

building in which case sub-clause (ii)(b) would apply and not sub-

clause (ii)(a). In other words, we are not in agreement with the

contention that  where the tenant of  a land has not  constructed

Civil Appeal No. 2870 of 2007 and Others Page 22 of 30

building, sub-clause (ii)(a) would apply and where a tenant of land

has  constructed  a  building,  sub-clause  (ii)(b)  would  apply.  The

reason is obvious. The Act as per the objects and purposes was

enacted and enforced to grant certain rights to tenants who had

acquired leases of land and had thereupon constructed a building

with the implied understanding that they would not be evicted as

long as they paid the fair rent. The tenants covered by sub-clause

(ii)(a) were protected under the Act even before the enactment of

sub-clause (b) to section 2(4)(ii) of the Act vide the Amendment

Act, 1973. The Act as originally enacted with Section 2(4) defining

the term ‘tenant’ before its amendment vide the Amendment Act,

1973 would apply to all the tenants who had acquired leasehold

land and thereafter constructed a building, except the tenants who

had entered into written registered contracts with terms relating to

‘erection of buildings’ who were covered by the deleted proviso to

Section 12.  

17. Decision of the Constitution Bench of six judges in Swami Motor

Transports (P) Ltd. And Another v. Sri Sankaraswamigal Mutt

and Another7 on which reliance was placed by the counsel for the

appellant, though relating to the Act, relates to the challenge to the

Amendment  Act,  1960  by  which  non-residential  buildings

constructed  on  the  leasehold  land  in  the  municipal towns  of 7  1963 Supp (1) SCR 282

Civil Appeal No. 2870 of 2007 and Others Page 23 of 30

Tanjore  were  excluded and denied the  benefit  of  the Act.  This

judgment upheld constitutional validity predicated on the principle

of  classification  under  Article  14  and  also the right  to  property

under Article 19(1)(f)  read with Article 31(1) of the Constitution.

Even  in  respect  of  pending  ejectment  proceedings,  it  was

observed  that  the  law  in  India  does  not  recognise  equitable

estates. Further, the statutory right to purchase land is, or confers,

no interest or right  in the property but only a right to purchase

land. In the view of this Court, a statutory right to apply for the

purchase of the land is a non-proprietary right. On the question of

equitable  estates,  it  was  observed  that  Section  9  of  the  Act

confers only a right in respect of the land owned by the landlord

and not in the superstructure which was owned by the tenant. The

right of the tenant on the superstructure is neither taken away nor

affected under Section 9 of the Act or the amendment made vide

the Amendment  Act,  1960.  Even earlier,  this  Court  in  Dr.  K.A.

Dhairyawan  and  Others  v. J.R.  Thakur  and  Others8,  after

referring to several decisions of the Privy Council, had held that

there was no absolute rule of law that whatever is affixed or built

on the soil  becomes a part of  it,  and is subjected to the same

rights of a property as the soil itself. We do not in India apply the

doctrine of English law as to buildings viz. that they should belong

8  1959 SCR 799

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to the owner of the land. Where clause (h) of Section 108 of the

Transfer of Property Act would apply, the lessee can remove all

the structures and the buildings erected on the demised land while

he is in possession of the property but not afterwards, meaning

thereby the ownership of the building is with the lessee and not

with the lessor. At the same time, nothing prevents the lessee from

contracting to hand over the building or the structure erected on

the land constructed by him without receiving compensation.

18. In  P.  Ananthakrishnan  Nair  and  Another  v. Dr  G.

Ramakrishnan  and  Another,9 a  Division  Bench  of  this  Court

interpreting Section 2(4) and Section 9 of the Act had held that as

per the mandate of Sections 3, 4 and 5, post the 1972 and 1973

amendments,  it  is  mandatory  for  the  court  to  first  decide  the

minimum  extent  of  land  “which  may  be  necessary  for the

convenient  enjoyment by the tenant”.  The words in italics were

emphasised by the Division Bench to observe that the court may,

on facts of a particular case, come to a conclusion that the tenant

may not require any portion of the land and in that event it may

reject the application and decree the suit for ejectment and direct

the landlord to pay compensation to the tenant. Section 9 confers

a privilege on the tenant and not a vested right, but the privilege

9  (1987) 2 SCC 429

Civil Appeal No. 2870 of 2007 and Others Page 25 of 30

granted by the statute is equitable in nature. Elucidating further, it

was observed:

“11.  […]The  enquiry  presupposes  that  the  tenant making the application has been in the occupation of the  land  and  the  superstructure  wherein  he  may  be either  residing  or  carrying  on  business,  and  on  his eviction  he  would  be  adversely  affected.  The  policy underlying Section 9 of the Act, is directed to safeguard the eviction of those tenants who may have constructed superstructure on the demised land, so that they may continue to occupy the same for the purposes of their residence or business.”

In the said case, an eviction decree was passed observing

that the tenant had in the small portion of the land kept account

books of the business and rest of the land and structure standing

thereon had been in occupation of sub-tenants since 1964.

19. In S.R. Radhakrishnan and Others v. Neelamegam10, this Court

had again interpreted Section 2(4) and 9 of the Act after referring

to the dictum in  P. Ananthakrishnan (supra) elucidating that the

policy  underlying  Section  9  is  to  safeguard  eviction  of  those

tenants who may have constructed superstructure on the demised

land,  so  that  they  may  continue  to  occupy  the  same  for  the

purpose of residence or business. Thus, the tenant not in actual

possession  of  most  of  the  demised  premises  in

P.Ananthakrishnan  (supra)  had suffered a  decree for  eviction.

Therefore, it was held in P. Ananthakrishnan (supra) that it will be

10 (2003) 10 SCC 705

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unreasonable to direct the landlord to sell the land to the tenant. In

the said case, application under Section 9 filed by the legal heir of

the tenant was dismissed observing that admittedly he was not in

possession  of  the  demised  premises  and  had ceased to  be  a

tenant.

20. The  counsel  for  the  appellant  had  made  a  valiant  attempt  to

distinguish the said decisions as P. Ananthakrishnan (supra) was

a  case  of  sub-letting  and  in  S.R.  Radhakrishnan (supra),  the

court had relied upon the reply of the defendant No.1 stating that

he had nothing to do with the property as defendant Nos. 2 and 3

were in possession thereof. It is correct that P. Ananthakrishnan

(supra)  was  a  case  of  sub-letting  which  means  parting  of

possession by the tenant  to  the sub-tenant.  However,  the said

case records observations as to the object and purpose behind

Section  9  and  the  tenants  whose  interests  were  sought  to  be

protected.  In  S.R.  Radhakrishnan (supra),  the  land  had  been

given  on  lease  to  the  father  of  the  defendant  No.  1  who  had

thereafter in terms of lease made constructions for setting up and

running  a  printing  press,  in  which  business  he  had  taken  his

younger brothers, defendant Nos. 2 and 3, possibly as partners.

Thereafter, he had executed a deed in favour of defendant Nos. 2

and 3  relinquishing  his  business  of  the  printing  press.  For  the

Civil Appeal No. 2870 of 2007 and Others Page 27 of 30

same reasons, we would hold that the observations made relating

to the interpretation of Sections 2(4) and 9 are relevant even if we

hold that the ratios are not applicable as the facts are not identical.

21. In view of the aforesaid discussion, we hold as under:

(I) Sub-clauses (i) and (ii)(a) to clause (4) of Section 2 of the

Act  apply  to  all  tenants  who  had  entered  into  oral  or

unregistered  written  agreements or  registered  written

agreements without any stipulation with regard to ‘erection

of buildings’ for taking land on lease, and had subsequently

constructed  buildings.   Such  tenants  would  be entitled  to

protection  of  the  Act  provided  the  tenant  satisfies  the

conditions mentioned in sub-clauses (i) or (ii)(a) to clause (4)

of Section 2 of the Act.

(II) Paragraph 1 of sub-clause (ii)(b) to clause (4) of Section 2 of

the Act applies to tenants who are not entitled to the rights

under the Act by reason of the proviso to Section 12 which

stood deleted vide the Amendment Act, 1972. Paragraph 2

of the said sub-clause applies to cases where a decree of

declaration or decree or an order of possession or similar

relief has been passed against a tenant on the ground that

the  proviso  to  Section  12,  which  was  omitted  by  the

Amendment Act, 1972, disentitles the tenant from claiming

Civil Appeal No. 2870 of 2007 and Others Page 28 of 30

rights under the Act. Accordingly, sub-clause (b) to Section

2(4)(ii)  would  apply  only  to  tenancies  which  were  earlier

excluded from the protection under the Act vide the proviso

to Section 12 which stands deleted with retrospective effect

vide the Amending Act, 1972.11  

(III) Sub-clause (ii)(c) to clause (4) of Section 2 states that heirs

of a tenant referred to in sub-clause (i) or sub-clauses (ii)(a)

or (ii)(b) would be entitled to benefit of the Act.  However, it

expressly excludes a sub-tenant or heirs of the sub-tenant.

22. Recording the aforesaid position, we dismiss the present appeals

by  the  appellant,  that  is,  the  three  petroleum  companies,  and

uphold the orders passed by the High Court  that  the appellant

tenants would not be entitled to the benefit and rights under the

Act unless they are in actual physical possession of the building

constructed by them.  In other words, in case the appellants have

let out or sub-let the building or given it to third parties, including

dealers or licensees, they would not be entitled to protection and

benefit under the Act.

11 Paragraph 2 in sub-clause (ii)(b) to clause (4) of Section 2 of the Act, has been interpreted in different judgments by the Madras High Court, including the decision in Haridas Girdhardas and Others v. M. Varadaraja Pillai and Another [(1976) 89 Madras Law Weekly 1)]. Pertinently, in the aforementioned case,  the Madras High Court  dealt  with the applicability  of  sub-section (3A) to Section 9 of the Act which stipulates the reopening or reviewing of a decree or order passed, in terms of the deleted proviso to Section 12 of the Act, against the interests of the tenant, that is, those who are covered under paragraph 2 of sub-clause (ii)(b) to Section 2(4) of the Act. We are not required to examine the true impact and effect of the said paragraph 2 or sub-section (3A) to Section 9 of the Act as they are not relevant for the present decision. On this aspect, we make no comment.  

Civil Appeal No. 2870 of 2007 and Others Page 29 of 30

In the facts of the case, there would be no order as to costs.

......................................J. (N.V. RAMANA)

......................................J. (SANJIV KHANNA)

......................................J. (KRISHNA MURARI)

NEW DELHI; JANUARY 28, 2020.

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