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PETITIONER: COLLECTOR OF BOMBAY

       Vs.

RESPONDENT: MUNICIPAL CORPORATION OF THE CITY OF BOMBAY AND OTHERS.

DATE OF JUDGMENT: 05/10/1951

BENCH: DAS, SUDHI RANJAN BENCH: DAS, SUDHI RANJAN KANIA, HIRALAL J. (CJ) SASTRI, M. PATANJALI AIYAR, N. CHANDRASEKHARA BOSE, VIVIAN

CITATION:  1951 AIR  469            1952 SCR   43  CITATOR INFO :  D          1955 SC 298  (22)  RF         1968 SC 718  (22)  F          1970 SC1778  (16)  D          1971 SC2399  (8)  R          1979 SC 621  (21,24)  RF         1980 SC1285  (11)  RF         1981 SC1937  (31)  F          1985 SC 941  (4)

ACT:     Bombay City Land Revenue Act (II of 1876), s. 8--Resolu- tion  of  Government granting land to  Corporation  free  of rent--Statutory  formalities not complied  with--Corporation in  possession for over 70 years and erecting costly  struc- tures--Assessment  to  land  revenue   --Legality--Equitable estoppel--Part-performance--Acquisition  of right to  exemp- tion from assessment--Prerogative of Crown.

HEADNOTE:     In 1865, the Government of Bombay called upon the prede- cessor in title of the Corporation of Bombay to remove  some markets from a certain site and vacate it, and on the appli- cation  of  the then Municipal Commissioner  the  Government passed  a resolution approving and authorising the grant  of another  site  to the Municipality.  The  resolution  stated further  that "the Government do not consider that any  rent should  be charged to the Municipality as the  markets  will be,  like  other public buildings, for the  benefit  of  the whole  community."   The Corporation gave up  the  sites  on which the old markets were situated and spent a sum of  over 17 lacs in erecting and maintaining markets on the new site. In 1940 the Collector of Bombay, overruling the objection of the  Corporation,  assessed the new site under s. 8  of  the Bombay City Land Revenue Act to land revenue rising from Rs. 7,500 to Rs. 30,000 in 50 years.  The Corporation sued for a declaration that the order of assessment was ultra vires and that  it  was  entitled to hold the land  for  ever  without payment  of any assessment.  The High Court of  Bombay  held applying  the  principle  of Ramsden v.  Dyson(1)  that  the

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Government had lost its right to assess the land in question by reason of the equity arising on the facts of the case  in favour of the Corporation and there was thus a limitation on the right of the Government to assess under s. 8 of the said Act:     Held per KANIA C.J., DAS, CHANDRASEKHARA AIYAR and BOsE JJ. (PATANJALI SASTRI J. dissenting)--that the  Govern- ment was not, under the circumstances of the case,  entitled to assess land revenue on the land in question.    Per  KANIA  C.J., DAS and Bose JJ.--Though there  was  no effectual grant by the Government passing title in the  land to  the  Corporation by reason of  non-compliance  with  the statutory formalities, yet, inasmuch as the Corporation  had never-the-less taken possession of the land in terms of  the Government  resolution  and  continued  in  such  possession openly,  uninterruptedly and as of right for over 70  years, the Corporation had acquired the (1) (1866)L.R. 1 H.L. 129. 44 limited title it had been prescribing for during the period, that  is  to say, the right to hold the land  in  perpetuity free of rent, but only for the purposes of a market and  for no other purposes. The right acquired included as part of it an  immunity from payment of rent which constituted a  right in limitation of the Government’s right to assess in  excess of  the  specific  limit established and  preserved  by  the Government  Resolution  within the meaning of s.  8  of  the Bombay  City Land Revenue Act (II of 1876) there  being  for the  purposes of this case no distinction between  rent  and revenue.  Per CHANDRASEKHARA AIYAR J.--If the Resolution  of 1865 can be read as meaning that the grant was of  rent-free land  the  case would come strictly within the  doctrine  of estoppel  enunciated in s. 115 of the Indian  Evidence  Act. Even  otherwise,  if there was merely the holding out  of  a promise  that  no  rent will be charged in  the  future  the Government must be deemed to have bound themselves to fulfil it.  The right to levy assessment is a prerogative right  of the Government and it is hard to conceive of a ease where it could be said to be lost by adverse possession.  A court  of equity must prevent the perpetration of a legal fraud.     PATANJALI  SASTRI J. (contra)--The principle of  Ramsden v.  Dyson  cannot  prevail  against  statutory  requirements regarding disposition of property or making of contracts  by Government.  No  question  of  estoppel  by   representation arises,  as  the Government made no representation  of  fact which it now seeks to deny. Nor can any case of estoppel  by acquiescence  be rounded on the facts of the case  as  there was  no  lying by and letting another run into a  trap.   No right of exemption has been established either on the  basis of express or implied contract or on the basis of  equitable principles of part-performance or estoppel by  acquiescence. The  right  to levy land revenue is no part of  the  Govern- ment’s right to property but a prerogative of the Crown  and adverse possession of the land could not destroy the Crown’s prerogative to impose assessment on the land.

JUDGMENT:     CIVIL  APPELLATE  JURISDICTION: Civil Appeal No.  44  of 1950.   Appeal from a judgment and decree of the High  Court of Bombay (Sen and Dixit JJ.) dated 21st February, 1947,  in First Appeal No. 64 of 1943.     C.K.  Daphtary,  Solicitor-General (S. B.  Jutbar,  with him) for the appellant.

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   N.C.  Chatterjee (N. K. Gamadia, with him) for  the  re- spondents.     1951. October 5. The Judgment of Kania CJ., Das and Bose JJ.  was read by Das J. Patanjali Sastri and  Chandrasekhara Aiyar JJ. delivered separate Judgments. 45     DAS  J.--This is an appeal from the judgment of a  Bench of  the Bombay High Court (Sen and Dixit JJ.)  delivered  on February 2, 1947, in an appeal filed under section 18 of the Bombay City Land Revenue Act 11 of 1876 against the judgment of  the  Revenue Judge at Bombay delivered  on  October  27, 1942,  in  a suit filed by the  respondents,  the  Municipal Corporation  of  the City of Bombay, and  Madusudan  Damodar Bhat,  the then Municipal Commissioner for the City of  Bom- bay, against the Collector of Bombay.     There is no substantial dispute as to the facts  leading up  to this litigation and they may be shortly  stated.   In 1865, the Government of Bombay, having decided to  construct an  Eastern Boulevard, called upon the Corporation  of  Jus- tices  of the Peace for the City of Bombay, the  predecessor in title of the respondent Corporation,  to remove its  then existing  fish and vegetable markets from the site  required for  the construction of the Boulevard.  The then  Municipal Commissioner  Mr.  Arthur Crawford, after whom  the  present municipal  market was named, applied for the site set  aside for the exhibition buildings on the Esplanades for the  pur- pose  of  constructing new markets as the  existing  markets could  not be removed until new markets had  been  provided. On December 5, 1865, the Architectural Improvement Committee informed  the  Government that it had no  objection  to  the proposed  she measuring about 7 acres being "rented  to  the Municipal  Commissioner"  and  suggested  that  "the  annual charge of one pie per square yard be levied in consideration of the expense of filling in the ground."  Computed at  this rate,  the  annual rental would have amounted to  about  Rs. 176.   On December 19, 1865, the Government passed the  fol- lowing resolution :--     "(1)  Government approve of the site and  authorise  its grant.     (2)  The  plans should be submitted  for  approval;  but Government do not consider any rent should be charged to the Municipality  as  the  markets will be,  like  other  public buildings, for the benefit of the whole community." 46      Pursuant  to  the aforesaid Resolution,  possession  of the  site  was  made  over to  the  then  Municipal  Commis- sioner, but no formal grant was executed as required      by Statute  22 & 23 Vic. C. 41.  It has nowhere  been      con- tended  that even if the statutory formalities  had     been complied  with the grant upon the terms mentioned    in  the Resolution  would  nevertheless have been invalid  being  in excess  of the powers of the Government. The Municipal  Com- missioner had the site filled up and leveled at the  expense of the Corporation.  The plans were approved by the  Govern- ment  and the market buildings were erected by the  Corpora- tion at considerable expense. The respondent Corporation was incorporated in 1888 as the successor of the Corporation  of the  Justices  of the Peace for the City of  Bombay  and  it continued in possession of the land and the buildings  with- out  paying  any  rent to the Government  according  to  the Government  Resolution  of 1865.  Indeed, it is  pleaded  in paragraph 7 of the plaint and it is not denied in the  writ- ten  statement that acting upon the said grant contained  in the Resolution and the terms contained therein the  respond- ent Corporation and its predecessor spent considerable  sums

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of money in building and improving the market and have  been in possession of the land and the buildings thereon for over 70 years in accordance with the terms of the Resolution  and that no land revenue or rent had been paid to the Government ever  since  the  grant was made.  It is  in  evidence  that besides  giving up the sites on which the old  markets   had been  situate,  a total sum of Rs. 17,65,980-12-1  has  been spent by the Corporation up to March 31,1940, in filling  up and leveling the site and erecting. and maintaining the  new market  buildings  on this site. In 1911, a portion  of  the market site was acquired by the Government for the  widening of  the  Palton Road.  Upon the Collector  of  Bombay  being called upon to put in ,his claim, if any, to any part of the compensation money awarded by the Land Acquisition  Officer, the  Superintendent,, City Survey, on behalf of the  Collec- tor, replied that Government had no claim in respect of  the said land.  The respondent 47 Corporation, therefore,  received  the whole of the  compen- sation  money and it continued in possession of the rest  of the  land and the buildings thereon without payment  of  any rent.  On March 18, 1938, the appellant Collector of  Bombay informed  the respondent Municipal Commissioner that it  was proposed to assess the land occupied by the Crawford  Market under  section 8 of the Bombay City Land Revenue Act  II  of 1876  and asked for certain information to enable him to  do so.  In his reply, the Municipal Commissioner wrote  to  say that the site of the market had been given to the Municipal- ity  as a gift for the construction of the market and  that, therefore.  the  question of assessment did not  arise.  The appellant Collector of Bombay having insisted that in  spite of the Government Resolution of 1865 the Government had  the right  to assess the site, the Mayor of Bombay on March  23, 1939, wrote a letter to the Government stating, inter  alia, as follows :--     "The Corporation have been advised that there can be  no doubt  that  it was the intention of Government  to  make  a permanent  grant of the land to the Municipality, and,  fur- ther,  that it was also the intention that  permanent  grant should  be free from rent and from assessment to land  reve- nue.   I am to point out that the word ’rent’ was.  used  in official  documents with the greatest frequency with  refer- ence to the land revenue leviable by the East India  Company and  later  by Government in the City of Bombay and  in  the Presidency.  It is, therefore, clear that it was the  inten- tion  of Government in 1865 that this grant should  be  free from  any form of rent or assessment. The  Corporation  were put  into possession for a period of over 70  years,  during which period the land has without interruption been  devoted to  the  purpose for which the grant was  made.   Throughout this  long period there has been no suggestion from  Govern- ment that the grant was other than a permanent one, free  of revenue,  or  that the terms of the grant were  in  any  way subject to revision," 48     The above  contentions  were  repudiated by the  Govern- ment  in  its letter of January 1, 1940,  in  the  following terms:-     " As regards the contention that the land has been  held by the Municipality uninterruptedly for over 70 years  with- out  any  suggestion from Government that it was  liable  to assessment,  I am to state the right to levy the  assessment is the prerogative of the Crown and a mere non-user of  this prerogative  cannot  destroy it.  Besides,  conditions  have considerably altered since the land was originally  allotted

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to  the  Municipality without charging any  ground  rent  or assessment; the Municipality has been recovering substantial rents by letting out stalls in the market and should now  be in  a  position  to pay the assessment.  Under  the  circum- stances,  the levy of assessment in this case can no  longer be foregone or postponed."     On  January 31, 1940, the appellant  Collector  assessed the land under section 8 of the Bombay Act II of 1876 with a guarantee of 50 years as under :--     "Assessment  Rs. 7,500 per annum for the first 10  years from 1st April, 1940.     Assessment Rs. 15,000 per annum for the next 10 years.     Assessment  Rs.  30,000 per annum for the  remaining  30 years."     The  assessment  was to begin to run from  I  st  April, 1940, and the first payment of the assessment was to  become due  on  1st April, 1941.  The present  suit  was  thereupon filed  in the Court of the Revenue Judge in accordance  with the  provisions of the Bombay City Land Revenue  Act,  1876, for the following reliefs, inter alia :---     "(a)  that it may be declared that there is a  right  on the  part of the plaintiff Corporation in limitation of  the right  of  Government to assess the said land and  that  the plaintiff Corporation is entitled to hold the said land  for ever without payment of any assessment and that the  Govern- ment has no right to assess the said premises, 49 (b)  That the said assessment may be declared  ultra  vires, invalid and may be ordered to be set aside."     By  his  judgment dated October 27,  1942,  the  learned Revenue  Judge dismissed the suit with costs.  The  Corpora- tion  appealed to the High Court. Before the High Court,  as before  us, two of the learned Revenue  Judge’s  conclusions were not challenged. namely, (1) that the Government Resolu- tion  of 1865 was-bad in law either as a grant or even as  a contract and could not by itself operate to give any  inter- est in the land to the respondent Corporation because of the non-compliance with the formalities required to be  observed by  Statute 22 & 23 Vic. C. 41 in the matter of  disposition of  all real and personal estate vested in the  Crown  under Statute 21 & 22 Vic. C. 106, and (2) that the Crown’s  right to  levy assessment on property was a prerogative  right  to which the ordinary presumption that rights to property which had  not  been asserted or exercised for a  long  period  of years  had been granted away did not apply-  What was  urged before and accepted by the High Court was that the right  of the  Government to levy any assessment on the land in  ques- tion had been lost and could not be asserted or exercised by the Government by reason of the equity arising on the  facts and  circumstances of the case in favour of  the  respondent Corporation on the principle established by the decision  in Ramsden v. Dyson(1) which was adopted by Jenkins C.J. in The Municipal Corporation of the City of Bombay v. The Secretary of State(2) and which equity was, on the authorities,  bind- ing  on  the Crown. After dealing with the cases  of  Dadoba Janardhan  v. The Collector of Bombay(3) and Jethabhoy  Rut- tonsey v. The Collector of Bombay(4) the High Court observed :--     "We  think, on a reading of the language of the  Govern- ment  Resolution  dated  the 19th December,  1865,  that  we should  be justified in holding (within the meaning  of  the rule in Ramsden v. Dyson) that an expectation was created or encouraged by the landlord (1)  (1866) L.R. 1 H.L. 129.      (3) (1901) I.L.R. 25  Bom. 714.

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(2) (1905) I.L.R. 29 Bom. 580.    (4) (1901) I.L.R. 25  Bom. 752.               7 50 that  the  Municipality was to get possession  of  the  land rent-free  and that the latter took possession of  the  land with the consent of the landlord, and upon such expectation, with the knowledge of the landlord and without objection  by him, laid out money upon the land."     According to the High Court the rule of equity enunciat- ed  in Ramsden v. Dyson (supra) was not, as pointed  out  by Jenkins C.J. in Municipal Corporation of the City of  Bombay v. The Secretary of State (supra), dependent on the validity of  the  disposition and could be asserted  even  where  the statutory  formalities  relating to the disposition  of  the property had not been observed and performed, and that  this equity  constituted  a right on the part of  the  respondent Corporation in limitation of the right of the Government  in consequence  of a specific limit to assessment  having  been established  and preserved within the  meaning of section  8 of  the  Act II of 1876 so as to disentitle  the  Government from  assessing the land in question. The High Court  relied on the decision in Kamalavahooji Maharaj v. The Collector of Bombay(1)  in  support of their view that section 8  of  the Bombay  Act II of 1876 would apply even where  the  specific limit  was nil. In the result, the High Court  reversed  the decision  of the learned Revenue Judge, allowed  the  appeal and  passed a decree declaring the rights of the  respondent Corporation and awarding to it the costs in both Courts. The Collector  of Bombay appealed to the Federal Court  and  the appeal has now come up for hearing before us.     There  has been considerable discussion before us as  to the  precise  scope and effect of the  principle  of  equity enunciated  in Ramsden v. Dyson (supra), as to whether  such principle  should  be extended to the facts of  the  present case,  whether the facts ’of this case attract the  applica- tion of the equity established in Ramsden v. Dyson (supra)or attract  the equity established in Maddison v. Alderson  (2) and Walsh v. Lonsdale(3) and finally as to whether, in  view of the decision  (1)  (1937) 39 Bom. L.R. 1046.         (3) (1882)  L.R.  21 Ch. D. 9.  (2) (1883) L.R. 8 App. Cas. 417. 51 of the Privy Council in Ariff v. Jadunath(1), the equity  in Ramsden v. Dyson (supra) can prevail against the requirement of  formalities laid down in the Victorian Statute  referred to  above any more than the equity in Maddison  v.  Alderson (supra)can  do against the requirements of the  Transfer  of Property  Act  and  whether the decision  in  The  Municipal Corporation  of  the  City of Bombay  v.  The  Secretary  of State(2) requires reconsideration in the light of the  deci- sion in Ariff’s case (supra). In the view we have taken,  it is not necessary to go into, and to express any opinion  on, any of these questions, for this appeal can, in our opinion, be disposed of on a narrower and shorter ground.     The  Government claims to assess the lands in  terms  of section 8 of the Bombay Act II of 1876 which runs thus :--     "8.  It shall be the duty of the Collector,  subject  to the orders of the Provincial Government, to fix and to  levy the assessment for land revenue.     Where  there  is no right on the part  of  the  superior holder in limitation of the right of the Provincial  Govern- ment to assess, the assessment shall be fixed at the discre- tion of the Collector subject to the control of the  Provin-

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cial Government.     When there is a right on the part of the superior holder in limitation of the right of the Provincial Government,  in consequence  of a specific limit to assessment  having  been established  and preserved, the assessment shall not  exceed such specific limit."     The  sole question for our consideration is whether,  on the  facts  of  this case, the  respondent  Corporation  has succeeded in establishing in itself a right in limitation of the  right  of the Government to assess the land  in  conse- quence of a specific limit to assessment having been  estab- lished and preserved.  There is no dispute that by reason of the  non-compliance with the statutory formalities the  Gov- ernment Resolution of 1865 is not an effectual grant passing title  in the land to the respondent Corporation and is  not also an enforceable (1)  (1931) L.R. 58 I.A. 91.       (2) (1905)I.L.R. 29  Bom. 580. 52 contract.  On  the other hand, there is no doubt as  to  the existence  of an intention on the part of the Government  to make  and on the part of the Corporation to take a grant  of the  land  in terms of the Resolution of 1865  including  an undertaking by the Government not to charge any rent.   Both parties acted on the basis of that Resolution and the prede- cessor  in  title of the respondent  Corporation  went  into possession  of the land in question pursuant to the  Govern- ment Resolution of 1865 and, acting upon the said Resolution and the terms contained therein, the respondent  Corporation and  its  predecessor in title spent  considerable  sums  of money in leveling the site and erecting and maintaining  the market buildings and have been in possession of the land for over  70  years.  What, in the circumstances was  the  legal position  of the respondent Corporation and its  predecessor in title in relation to the land in question ? They were  in possession  of the land to which they had no legal title  at all.  Therefore, the position of the respondent  Corporation and its predecessor in title was that of a person having  no legal title but nevertheless holding possession of the  land under  color of an invalid grant of the land  in  perpetuity and  free from rent for the purpose of a market.  Such  pos- session not being referable to any legal title it was  prima facie adverse to the legal title of the Government as  owner of the land from the very moment the predecessor in title of the respondent Corporation took possession of the land under the invalid grant.  This possession has continued openly, as of  right  and  uninterruptedly for over 70  years  and  the respondent Corporation has acquired the limited title it and its predecessor in title had been prescribing for during all this  period, that is to say, the right to hold the land  in perpetuity  free  from rent but only for the purposes  of  a market  in terms of the Government Resolution of 1865.   The immunity  from the liability to pay rent is just as much  an integral  part  or an inseverable incident of the  title  so acquired  as  is  the obligation to hold the  land  for  the purposes  of a market and for no other purpose. There is  no question 53     of acquisition by adverse possession of the Government’s prerogative  right to levy assessment. What  the  respondent Corporation has acquired is the legal right to hold the land in  perpetuity  free  of rent for the  specific  purpose  of erecting  and  maintaining a market upon the  terms  of  the Government  Resolution as if a legal grant had been made  to it.  The  right thus acquired includes, as part  of  it,  an

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immunity from payment of rent which must necessarily consti- tute  a  right in limitation of the  Government’s  right  to assess  in  excess  of the specific  limit  established  and preserved by the Government Resolution within the meaning of section  8  of the Bombay Act II of 1876.  It  is  true,  as pointed out by the Privy Council in Karnalavahooji   Maharaj v. Collector of Bombay (supra) that the words of the section would appear to apply rather to the case of a limitation  on the right to assess than to the case of a complete exemption from assessment  but  such a construction would not  protect the cases of total exemption which, as conceded in that very case, did in fact exist and were recognised and protected by virtue  of  the words of section 8 of the Bombay Act  II  of 1876. It has not been suggested before us that there are  no cases  of total exemption or that those cases are  protected by  any provision of law other than that of this  very  sec- tion.  There  is, therefore, no escape from  the  conclusion arrived at by the High Court, with which we concur, that the words of section 8 would apply to a case where total  exemp- tion  from assessment was granted. In other words,  specific limit may be nil for the purposes of section 8 of the Act.     It  was sought to be argued that even if the  Government be precluded from enhancing the "rent" in view of the  terms of  the  Government Resolution, it cannot be  held  to  have disentitled  itself  from its prerogative  right  to  assess "land revenue". This contention is sought to be rounded on a distinction between "rent" and" land revenue".  This conten- tion,  however, was not raised in the written statement  and was  not  made the subjectmatter of any issue on  which  the parties  went  to  trial and was never  put  forward  before either of the Courts 54 below.   Indeed, in the letter of the Mayor of Bombay  dated March  22,  1939, to which reference has been made,  it  was clearly  alleged that the word "rent" was used  in  official documents  with the greatest frequency   with  reference  to the  land  revenue leviable by the East  India  Company  and later  by  the Government in the City of Bombay and  in  the Presidency."   In the Government’s reply dated  January  24, 1940, also quoted above this assertion was never  repudiated or denied.  In the premises, the appellant cannot be permit- ted  at this stage to raise this contention rounded  on  the supposed  distinction,  if  any, between  "rent"  and  "land revenue" and for the purpose of this case we must proceed on the basis that the word "rent" in the Government  Resolution of 1865 was synonymous with or included" land revenue."      In  our opinion, for reasons stated above,  the  actual decision  of  the  High Court was correct  and  this  appeal should be dismissed with costs, and we order accordingly.      PATANJALI  SASTRI j.--I am of opinion that this  appeal should  be  allowed and I will briefly indicate  my  reasons without  recapitulating  the  facts which  have  been  fully stated  in the judgment of my learned brother  Das  which  I have had the advantage of reading.      The  appeal concerns a claim by the Provincial  Govern- ment  of Bombay to charge land revenue on a plot of land  on which the predecessors of the respondent Municipality erect- ed the buildings  known  as the Crawford Market in the  City of  Bombay.  It is common ground that the land  in  question would  be assessable to land revenue under section 8 of  the Bombay  City  Land Revenue Act (No. II of 1876)  unless  the respondent  established "a right in limitation of the  right of  the Provincial Government in consequence of  a  specific limit   to   assessment   having   been   established    and preserved",  in which case, the assessment must  not  exceed

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such  specific limit.  It has been held, and it is  not  now disputed, that the words quoted above cover 55 a  right of total exemption from assessment,  the  "specific limit" in such a case being nil (see Goswamini Shri  Kamala- vahooji  v.  Collector of Bombay (1).   The  only  question, therefore, is whether the respondent has established a right to such exemption.     The  resolution of  the Government dated  19th December, 1865,  authorising the grant of the land without  "any  rent being charged to the Municipality as the market will be like other buildings for the benefit     of the whole  community" did  not  by  itself purport to pass title to  the  land  in question or to confer on the Municipality a right to  exemp- tion from land revenue. Admittedly no formal instrument  was executed  either  granting  the land or  exempting  it  from assessment. Nor could the resolution be regarded as a  valid disposition  of property or an enforceable contract  not  to charge  revenue on the land, as it did not comply  with  the requirements  of  the statute 22& 23 Vic. C. 41  which  pre- scribed certain formalities to be observed for such transac- tions.  As pointed out by Jenkins C.J. in Municipal Corpora- tion of the City of Bombay v. The Secretary of State (2) all land in British India having been vested in the Crown by  21 &  22 Vic. C. 106, the Governor-in-Council in  Bombay  could not  dispose of property or enter into a contract on  behalf of  the  Crown except in exercise of the power  bestowed  on them  for  the purpose under 22 & 23 Vic. C.  41,  and  that power  could be exercised only by observing the  formalities prescribed by that statute.  The learned Judges of the  High Court,  while recognising this difficulty in the way of  the respondent  establishing  a legal right  to  exemption  from assessment, held that the conduct of the Provincial  Govern- ment in allowing and, indeed, encouraging the respondent  to erect the buildings at great cost on the faith of the  prom- ise  not to charge land revenue contained in the  Resolution of  19th  December, 1865, precluded the  respondent  on  the equitable  principle  recognised in Ramsden  v.  Dyson  from assessing the land in question, and that this  (1)  L.R.  64 I.A. 334.                 (3) (1866)  L.R.  1 H.L. 129.   (2) (1905) I.L.R. 29 Bom. 580. 56 equity  was  a  "right" in limitation of the  right  of  the Provincial Government to assess.     I  am unable to share that view.  There is, in my  opin- ion,  no room here for the application of the  principle  of Ramsden  v. Dyson(1).  That decision has been  explained  by the  Privy Council in Ariff v. Jadunath(2) as based  on  the equitable  doctrine of part performance which,  their  Lord- ships  held, could not be applied so as to nullify  the  ex- press provisions of the Transfer of Property Act relating to the creation of leases. They observed :-     Whether  an  English equitable doctrine should,  in  any case,  be  applied so as to modify the effect of  an  Indian statute may well be doubted;  but that an English  equitable doctrine,  affecting  the provisions of an  English  statute relating  to  the right to sue upon a  contract,  should  be applied,  by analogy, to such a statute as the  Transfer  of Property Act and with such a result as to create without any writing  an  interest  which the statute says  can  only  be created  by  means of a registered  instrument,  appears  to their Lordships, in the absence of some binding authority to that effect, to be impossible."     After quoting the well-known passage in the judgment  of

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Lord Kingsdown, their Lordships commented thus :--     "It will be noticed that Lord Kingsdown is dealing  with the  case  of express verbal contract  or  something  ’which amounts  to  the same thing.’ He nowhere puts  the  case  of estoppel; the word is not mentioned.  He would appear to  be dealing simply with the equitable doctrine of part  perform- ance.  His reference to Gregory v. Mighall  [(1811) 18  Ves. 3281 confirms this view, for that case was simply an earlier instance  of the application of the doctrine.  Even if  Lord Kingsdown’s language was intended to cover something  beyond the  equitable doctrine of part performance in  relation  to the Statute of Frauds, and was intended to refer to  circum- stances in which a court of equity will enforce (1)  (1866) L.R. 1 H.L. 129.             (2)  (1931)58  I.A. 91. 57 a  title to land against the person who at law is the  owner thereof,  the title must, nevertheless, in their  Lordships’ view,  be based either upon contract express or implied,  or upon some statement of fact grounding an estoppel."     In  the  later decision in Mian Pir Bux  v.  Sardar  Ma- horned(1) their Lordships reiterated the same view and  held that  English equitable doctrines did not afford in India  a valid defence to an action in ejectment based on title.     After  these decisions of the Privy Council  elucidating the  principles underlying Ramsden v. Dyson(2) and  Maddison v.  Alderson(3),  it  seems to me clear that  they  have  no application  to the facts of the present case. They  can  no more prevail against the statutory provisions regarding  the disposition  of property or the making of contracts by  Gov- ernment  than  against  the provisions of  the  Transfer  of Property Act requiring registered instruments for  effecting certain classes of transactions.  No question of estoppel by representation arises, for the Government made no  represen- tation of fact which it now seeks to deny.  Nor can any case of  estoppel by acquiescence be rounded on the facts of  the case.   Both parties knew the facts and neither was  misled. There  was no lying by and letting another run into  a  trap [per Cotton L.J. in Russell v. Watts(4)]. The conduct of the parties was referable to the express agreement evidenced  by the Government Resolution of 19th December, 1865, to make  a grant  of  the land free of rent (which,  in  such  context, means and includes revenue). No question, therefore, of  any implied contract could arise. Unfortunately for the respond- ent,  the express agreement was unenforceable owing to  non- observance  of the prescribed statutory formalities,  though it was acted upon by both sides.  No question arises here as to  the respondent’s title to the land which apparently  has been  perfected  by lapse of time. But it is clear  that  no right of exemption has been established either on the  basis of express or implied  (1)  (1878)  6 I.A. 388.                (3) (1883)  8  App. Cas. 467.  (2)  (1866) L.R. 1 H.L. 129.          (4) (1884) 25 Ch.  D. 559.        8 58 contract or on the basis of the equitable principles of part performance or estoppel by acquiescence.     It  was next contended that, on the analogy of the  line of  cases holding that a limited interest in land  could  be acquired by adverse possession for over the statutory  peri- od,  the respondent’s   possession of the  land  in  dispute without  payment  of  any quit rent or revenue for  over  70 years to the     knowledge of the. Government perfected  its

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title  to  hold  the land free from liability  to  pay  land revenue.  It is difficult to appreciate the argument so  far as the claim to exemption is concerned. There is no question here of acquisition of a limited interest in land by adverse possession.  The respondent was asserting full ownership and a  right  of exemption from assessment  and  the  Government agreed  with that view as shown by their letter  dated  26th June, 1921, to the Land Acquisition Officer for the City  of Bombay  wherein  they stated that "no  Government  claim  in respect of the land under acquisition (a portion of the land here in question) in the above mentioned case is made as the land  vests  in  the Municipality."  Be it  noted  that  the Government made no claim even to a portion of the  compensa- tion  on  the basis of any right of resumption  reserved  to them,  the Resolution of 1865 having made no such   reserva- tion.   The position then was that throughout the period  of adverse  possession,  the respondent  Municipality  regarded itself and was regarded by the Government as absolute  owner of  the  land with the additional right  of  exemption  from assessment to land revenue with the result that the  Govern- ment’s  "right  to such property" (the  subject  of  adverse possession)  was  "extinguished"  under section  28  of  the Limitation  Act.  But the right to levy land revenue was  no part  of  the Government’s right to the property.  It  is  a prerogative right of the Crown which was placed’ on a statu- tory  basis under the Bombay City Land Revenue Act of  1876, and  could  be exercised in respect of a land only.  on  the footing that it belonged to another, the "superior  holder", for, the claim to levy assessment itself implies a  recogni- tion of ownership in 59 another.   It  is, therefore, difficult to see  how  adverse possession  of  the  land could entitle  the  respondent  to exemption from assessment of land revenue.     It was said that the Government having intended to grant the  land on the terms that it was to be held free  of  quit rent  or revenue and the respondent having held the land  on such terms claiming it to be exempt from assessment, a title to  hold  it  on those terms was perfected  by  the  adverse possession,  the  covenant  for  exemption  from  assessment forming  part and parcel of the title. In other  words,  the respondent should be placed in the same position as if   the Government had made a valid revenue free grant. The argument is,  to  my mind, fallacious.  If the Government  had  given effect to their expressed intention by executing an  instru- ment in writing observing the due formalities, the  respond- ent  would,  no  doubt, have secured a valid  title  to  the property  with  a  contract binding the  Government  not  to charge revenue, supported as it was by consideration.   But, as  already stated, the Government’s promise not  to  charge land  revenue was unenforceable from the inception, and  the respondent’s adverse possession of the land, though accompa- nied by a claim to exemption from revenue, could not destroy the  Crown’s prerogative right to impose assessment  on  the land. A somewhat analogous question arose in Goswamini  Shri Kamala  Vahooji v. Collector of Bombay(1).   The  Government admitted  that  no  land revenue had ever  been  charged  in respect  of  the land which was enjoyed by the  holders  for more  than a century without payment of revenue and  it  was urged  that in virtue of such a long enjoyment a lost  grant of  the land on the terms that it should be held  free  from liability  to pay revenue must be presumed.  Rejecting  that contention, their Lordships observed :--     "The appellant submits that in the circumstances a  lost grant should be presumed, and that this lost grant should be

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presumed to have contained an exemption from land revenue or a ’right in limitation of the right (1) (1937) 64 I.A. 334. 60 of  Government to assess the property.  The law may  presume the  existence  of a grant which has been lost where  it  is sought  to disturb a person in the enjoyment of right  which he and his predecessors have immemorially enjoyed, but it is a  different thing to seek to presume that the Crown has  by some lost grant deprived ’itself of the prerogative power to tax the property of its subjects, and their Lordships are of opinion that this plea is untenable."  (italics mine).     The  decision  shows that exemption from   land  revenue does  not form part and parcel of the title to land  but  is collateral to it.  If a presumed lost grant could not  cover it neither could title by adverse possession.     I would allow the appeal but make no order as to costs.     CHANDRASEKHARA AIYAR J.--I had the advantage of  reading the  judgment  prepared by my learned brother;  Mr.  Justice Das,  and  1 agree in the conclusion he has reached;  but  i wish to add a few words of my own on some of the points that have been discussed during the course of the hearing.     In  the first place, there can be little doubt that  the word   "rent"  in paragraph 2 of the  Government  Resolution of   the 19th  December.  1865, means "assessment ".  It  is true that this word  is used generally in cases of  landlord and tenant, but when it is remembered that here the  Govern- ment was parting with the land vested in the Crown in favour of  the  Municipal Corporation of Bombay, it can  safely  be assumed  or presumed that they were thinking not  merely  of their rights as landlord but also of their prerogative right as well.  That the land was going to be used for the  build- ing  of markets for the benefit of the whole community  and, therefore,  should not be charged with rent is a  considera- tion more relevant and appropriate to the prerogative  right to  assess than to a right to collect rent in respect  of  a transaction of lease. Moreover, it is well-known that  when- ever we speak of 61 a  rent-free  grant of an inam by the  Government,  what  is meant is land revenue or assessment.     The  Resolution in question authorized the grant of  the site.   There is apparently no grant in writing,  conforming to  the  formalities prescribed by the law  then  in  force. Part of the site was wanted for the erection of stables  and the  question  of title to that portion was  considered  and decided  in The Municipal Corporation of the City of  Bombay v.  The Secretary of State for India in Council  (1),  where the  Government  gave the Municipality notice  to  quit  and brought a suit for rent on the alleged determination of  the tenancy.  It is part of the same transaction with  which  we are  concerned  now, and it seems to me that  there  was  no valid grant.  The grant having been authorized, the Corpora- tion  went  into possession and it is not denied  that  they have built the Crawford Market at enormous cost.  Though the grant was invalid, the Corporation has now acquired a  title by adverse possession to the site; this, however, is not the case with reference to the stable site covered by the afore- said Bombay decision.  There the question was brought before the Court, well within the 60 years’ period.     The  Crawford Market site has been in the possession  of the Municipal Corporation for over 60 years under an invalid grant,  a term of which was that no rent should be  charged. We  are not concerned now with any question of ejectment  or determination of tenancy. Could it be said that the right to

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levy assessment on the land, enjoyed without any payment  of any kind so far, was lost by adverse possession ?  I find it difficult  to  give an affirmative answer.  Before  a  right could be said to be acquired or lost by adverse  possession, it must have been the subject of possession by a man without title as against the person with the rightful title.   Right to levy assessment is a prerogative right of the  Government and it is hard to conceive of a case where it could be  said to be lost by adverse possession. True, there can be adverse possession of a limited (1) (1904) I.L.R. 29 Bom. 580. 62 right like that of a mortgagee or a lessee or even a  perma- nent tenant, but still a right must have been enjoyed by the possessor  adversely to the claim of the true owner.  It  is unnecessary to go into the wider question whether the denial of  the right to levy assessment and possession of  property coupled with this denial for over a period of 60 years  will negative  that right; it is sufficient to say that no  right to  levy  assessment  was exercised in the  case  before  us before March, 1938, and the denial was only afterwards.     This,  however, does not determine  the  case in  favour of  the appellant, as there is a question of equity to  con- sider and on which the appellant failed in the court  below. In  fact, it is the crucial point for  determination.   When the Architectural  Improvement Committee proposed to levy  a nominal  rent,  the Government stated that no rent  need  be charged, as the markets to be built were for the benefit  of the whole community.  This was a representation made by  the Government when the site was given and possession was taken. How  far  this representation was taken  into  consideration when  the Corporation of Bombay took possession of the  site under  the  grant is not necessary to be considered  at  any great length. It is just possible that they would have taken the  site  even  with the nominal rent, but  it  is  equally possible that had they known that the rent was in the nature of assessment and liable to enhancement from time to time or periodically,  they  would have insisted on getting  a  site free from assessment in consideration of the sites they gave up  for  forming  the  eastern  Boulevard.  The   allegation in.paragraph  7 of the plaint that the Corporation acted  on the  faith of the terms contained in the grant has not  been denied by the Government.    The accident that the grant was invalid does not wipe out the existence of the representation of the fact that it  was acted  upon by the Corporation.  Even if the suit  had  been brought  within 60 years for ejectment and  the  Corporation had no answer to such a claim, the right to levy  assessment might have conceivably stood on a different footing.  In any event, 63 there can be no doubt that it would have been competent  for a  Court of equity to give compensation for the  expenditure and  protect the possession in the meantime. Lord  Kingsdown refers to this aspect of the matter in Ramsden v. Dyson (1). In  the present case, the Corporation stands on much  firmer ground.   They have acquired a title to the land  which  the Government  cannot upset or challenge.  This acquisition  of title  is  as  a result of the law of  limitation.   It  has nothing  to do with any conduct on the part of the  Corpora- tion  which can be said to have rendered the  representation about  non-liability  to assessment of no  legal  effect  or consequence.  The invalidity of the grant does not  lead  to the obliteration of the representation.     Can  the  Government be now allowed to go  back  on  the

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representation, and ,if we do so, would it not amount to our countenancing the perpetration of what can be  compendiously described  as legal fraud which a court of equity must  pre- vent  being   committed?  If the resolution can be  read  as meaning that the grant was of rent-free land, the case would come strictly within the doctrine of estoppel enunciated  in section 115 of the Indian Evidence Act. But even  otherwise, that  is, if there was merely the holding out of  a  promise that  no rent will be charged in the future, the  Government must  be  deemed in the circumstances of this case  to  have bound  themselves  to fulfil it.  Whether it is  the  equity recognised in Ramsden’s case(1), or it is some other form of equity, is not of much importance. Courts must do justice by the  promotion of honesty and good faith, as far as it  lies in  their power.  As pointed out by Jenkins C.J.  in  Dadoba Janardhan’s  case  (2),  a  different  conclusion  would  be "opposed to what is reasonable, to what is probable, and  to what is fair."     I  am  of  the opinion that the decision  of  the  Privy Council  in Ariff v. Jadunath (3) is not applicable  to  the facts before us, as the doctrine of part performance (1) (1866) L.R. 1 H.L. 129. (2) Dadoba Janardan v.    The.  Collector of Bombay   (1901) I.L.R,.  25 Born. 714. (3) (1931) 58 I.A. 91. 64 is  not  being  invoked here as in that case,  to  clothe  a person  with  title which he cannot acquire  except  by  the pursuit of or in conformity with certain legal forms.  Here, as pointed out already, the Corporation became the full  and absolute owner of the site on the lapse of SO years from the date of the grant.       Appeal dismissed. Agent for the appellant: P.A. Mehta. Agent for the respondent: R.A. GoDind.