T. Parthasarathy Chetty vs K. Shyamalamba by Agent, P. Lakshminarayanan

S. Ramachandra Iyer, C.J.—This Civil Revision Petition raises an important question relating to the right of a sub-tenant of land who had put

up a superstructure thereon, to purchase the interest of his lessor, namely, the head tenant of the original owner under the provisions of Section 9

the Madras City Tenants Protection Act which will be referred to hereafter as the Act. The Courts below have expressed divergent views on that

question. The land which forms the subject-matter of these proceedings forms part of larger area, which belongs to one Thanikesam Pillai. He

granted a lease in the year 1937 of the entire area to one Mahommad Ismail for a period of 99 years with an option in the tenant to obtain renewal

of the same for a like period. The respondent is a transferee from the tenant. She parcelled out the land and granted sub-leases of portions thereof

to the several persons, one of them being the petitioner. He after having taken the sub-lease from the former, put up a building thereon in the year

1947 and has been in enjoyment of the same since then.

However, the respondent by her notice dated 27th January, 1961, purported to terminate the sub-lease granted by her to the petitioner and

called upon the latter to deliver vacant possession. This was followed by proceedings u/s 41 of the Presidency Towns Small Cause Courts Act for

ejectment of the petitioner, who countered the respondent''s move by filing an application u/s 9 of the Act calling upon the latter to convey the

leasehold interest possessed by her in his favour. The learned trial Judge allowed the application filed by the petitioner; but on appeal that order

was set aside. Hence the present Civil Revision Petition.

The land in question is situate in Muthialpet area within the limits of the Madras City. The petitioner put up the superstructure on the property in

the year 1947 who, if the other conditions imposed by the Act were satisfied would be entitled to the benefits thereunder.

No relief, however, is claimed against the owner of the property who is not even a party to these proceedings: the relief claimed is restricted to

the conveyance of such interest as the tenant possesses in the land. In other words the interest which the sub-tenant seeks to purchase u/s 9 of the

Act, is the leasehold interest possessed by the tenant by virtue of the lease granted by Thanikesam Pillai in the year 1937.

Section 3 of the Act entitled every tenant of the land to be paid as compensation at the time of eviction the value of any building erected by him

or by his predecessor in interest. Section 9 gives a further right to the tenant by way of an option to purchase the land leased out to him. Any tenant

who is entitled to compensation u/s 3 and against whom a suit in ejectment has been instituted, may within the time specified in the section apply to

the Court for an order that the landlord shall be directed to sell for a price to be fixed by the Court, the whole or part of the extent of the land

specified in his application. The rights created by these two sections exist only in respect of tenancies granted prior to the commencement of the

Amending Act of 1955.

There will be no difficulty in working out the rights granted under the Act between a landlord who is the owner of the property and his tenant

who obtained a lease from him and put up a superstructure thereon. But where the tenant of a land has merely sub-let it without himself putting up

any superstructure on it, but the sub-tenant put up a superstructure thereon, a question will arise whether the latter will have the right to recover

compensation for the building put up by him in case he is sought to be evicted and have the option to purchase the land. There can be little doubt

that those rights will not be available to a sub tenant as against the original owner of the property, namely the landlord. This has been put beyond

doubt by the revised definition of the term ""tenant"" introduced by the Amending Act XIII of 1960 (who alone would be entitled to claim the rights

referred to above).

That says;

tenant"" in relation to any land means,

(1) 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 lands after the determination of the tenancy agreement

and

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

It will, thus be plain that as against the original landlord, the owner of the property, the sub-tenant of a land will not be entitled to enforce rights to

compensation for any superstructure that he might have put upon the land or call upon him to convey the land.

But the question in the present case, is, whether this will be so even in regard to his own landlord, namely, the head-tenant. The answer to that

question will depend on the true construction of Sections 3 and 9 of the Act in the light of the definition of the term ""tenant"" referred to above. As

we said. Section 3 entitled any tenant who had put up a building on the land leased out to him, at the time of his eviction to get from his landlord

compensation. The question then is can sub-tenant of the land be regarded as tenant within the meaning of the Act vis-a-vis the head-tenant. If that

be so, will he be entitled to the relief under the Act as against the head-lessor, i.e., the owner of the property. From the terms of the definition of

the word ""tenant"" set out above, it will be clear that a person liable to pay rent in respect of land, under a tenancy agreement express or implied

would be a tenant. A sub-tenant is certainly under a contractual agreement to pay rent to the head-tenant, that is his lessor. The question then is

whether the property for which he pays rent, could be regarded as land. The definition of the term ""land"" in section a (2) is not very helpful to solve

that problem as it is merely negative in form and states that land does not include buildings. But the explanation to Section 9 defines the term ""land

as used in that section. That says:

Land means the interest of the landlord in the land and all other interests which he can convey under any power and includes also the full interest

which a trustee can convey under the power possessed by him to convey trust property when necessity exists for the same or the alienation of the

property is for the benefit of the estate or trust.

From the foregoing, it would follow that any interest, in the land possessed by a person will be land within the meaning of the section. Now turning

to the definition of landlord, in Section 2(3), what the term really means is "" any person owning any land and includes every person entitled to

collect the rent of the whole or any portion of the land "" ...(rest of the definition omitted as not necessary for the present purpose). If, therefore, the

word ""land"" can be regarded as embracing even an interest in a land, a person owning such interest will be a landlord if he has let out such interest

to another for rent. In other words a lessee would be a landlord within the meaning of the definition if his leasehold interest can be regarded as

interest in land and if under an agreement with his sub-tenant, he is entitled to collect rent in respect of the right granted to him.

We shall now consider whether a lease of immovable property will amount to transfer of an interest to the lessee. A lease of immovable

property is a transfer for consideration of a right to enjoy it for a certain time or in perpetuity. It postulates the existence of contract between the

lessor and the lessee and also a transfer of interest in the land, namely, the right to enjoy it, although that transfer will not be equivalent to transfer of

ownership either in the whole or part of the property.

Referring to the characteristic feature of lease, Lord Shaw in Rajakumar Thakur Giridhari Singh v. Megh Lal Pandey (1917) L.R. 44 IndAp

216 : 33 M.L.J. 687 : ILR 45 Cal. 87 (P.C.) observes:

It must be borne in mind also that the essential characteristics of a lease is that the subject is one which is occupied and enjoyed and the corpus of

which does not in the nature of things and by reason of the user, disappear.

Section 108(c) and (j) of the Transfer of Property Act recognise that a lessee has an interest in the property leased out to him; the former provision

creates a statutory covenant on the part of the lessor with the lessee that the latter can hold the property for the duration of the lease so long as he

performs his part of the contract without interruption by any person; the latter clause confers a right on the lessee to transfer either absolutely or by

way of mortgage or sub-lease his interest in the property. These provisions are, no doubt, subject to a contract or local usage to the contrary. But

they proceed on the assumption that what the lessee obtains under a lease of immovable property is not a mere transfer of right to occupy, but an

interest in the property demised, there being thus both privity of contract as well as of estate. Unless, there is a contract or local usage to the

contrary, the right of enjoyment given to a lessee on account of a lease can be assigned or sub-let.

Where there is an assignment or lease, the lessor not being a party to the con"" tract or arrangement, there can only be a privity of estate

between him and the assignee; that is because of the interest in land which the lessee has. In the case of a sub-lease, however, there will neither be

privity of contact nor privity of estate. In Wood fall''s Landlord and Tenant (Vo. 1, 26th Edn.) dealing with the general right to sub-let the learned

author says (at page 870):

As a sub-lease is a demise by a lessee (or his assignee) for a less term than he himself has every lessee, however short his term may be, and even a

tenant from year to year may make a sub-lease unless and except, where which frequently happens, he is restrained by the contract of tenancy

from subletting or restricted in his power of sub-letting by a requirement, whether absolute or qualified, that the consent of the landlord must first be

obtained. Even then the sub-lease is effective to vest an estate but defensible by exercise of the lessor''s right to re-entry.

But the sub-lessee will not be affected by any voluntary surrender of the lease by the lessee (whom we can call as the mesne lessor). Under the

English law a sublease demised for a whole term of the lease will amount to an assignment of the lease itself but the law in this country is different.

In Hunsraj v. Bijay Lal (1929) 58 M.L.J. 293 : L.R. 57 LA. 110 : ILR 57 Cal. 1176 (P.C.), it was held that an under-lease for the entire residue

of the under-lessor''s term operated in the absence of a contract to the contrary as an under-lease and did not as under the English law constitute

an assignment of the lease.

The result of the foregoing discussion is that so long as there is no prohibition by the superior lessor against sub-letting, his tenant will be

entitled to sub-let the property and thereby create an interest in it in favour of his sub-tenant; but such a sub-tenant will be a tenant only so far as

his own lessor is concerned : he will have neither privity of contract nor an estate so far as the superior lessor is concerned. As the interest which

the mesne lessor possesses in the land demised to him, is an interest in immovable property, it will be land within the Explanation to Section 9 of

the Act. The sub-tenant being his tenant, he must be held entitled so far as the mesne lessor is concerned to all the rights declared to him by the

Act. It is, however, unnecessary to repeat that these rights will not be available as against the superior lessor.

In S.M. Ranganatha Naicker Vs. B. Govindaswamy Naidu and Another, , Subrahmanyam, J., held that the interest of a lessee of a plot of

land, would be interest in land capable of transfer within the meaning of the Explanation to Section 9(2) of the Madras City Tenants'' Protection

Act and that, therefore, the leasehold interest in a lessee could be directed to be conveyed under the provisions of that section if his own tenant,

namely, the sub-tenant required him to do so.

But Mr. Sivaramakrishnaiah appearing for the respondent has contended that the above proposition cannot be regarded as good law after the

amendment of the term ""tenant"" in Section 2(4) of the Act which expressly excludes from its ambit, a sub-tenant. It is argued that the Legislature,

when it re-cast the definition under Act XIII of 1960, must be presumed to have the decision aforesaid before it and that with a view to counteract

its effect it proceeded to expressly exclude a subtenant from claiming the benefits of the Act. We have already indicated that the exclusion of the

sub-tenant from the concept of the definition of the word ""tenant"" must be regarded in relation to the actual lessor. There can be no sub-tenant

except under the tenant. That specific exclusion was necessary because of the wide terms in which Sub-clause (1) in that provision has been

couched. That does not mean that the sub-tenant of a land cannot be regarded as a tenant of a subordinate interest in land sven as against his own

lessor, viz., the mesne lessor. To hold otherwise would entail a limited operation of the benefits of provisions of Section 9. The Explanation to that

section to which we made reference earlier definitely contemplates that land would includes any interest in the land. We have earlier pointed out

that the leasehold interest is interest in the land. If really the Legsilature had intended to exclude the entire category of sub-tenants from claiming the

benefits of the Act even as against their own lessors, it would have amended the provisions-of the Explanation to Section 9 also.

It is next contended that if the sub-tenant were permitted to purchase the right of the mesne lessor u/s 9 the Act, it will indirectly permit him to

obtain what the Act expressly denied him. The argument is put thus : under the Act a sub-tenant can in no event obtain compensation for any

building put up by him on the land or compel the superior lessor or the owner of the land to sell it to him. If the sub-tenant were allowed to enforce

his rights u/s 9 as against the mesne lessor, he will thereby get assgined in his favour all the rights of the mesne lessor and he can thereafter compel

the superior lessor to convey the property to him. We are unable to find any substance in this argument. It is conceded that if instead of granting a

sub-lease, the lessee assigns his leasehold right, such an assignee would be entitled to enforce the rights conferred on the lessee under the Act as

against the landlord. Now the effect of conveyance u/s 9 of the Lessee''s interest in favour of the sub-lessee will only amount to making a sub-

lessee an assignee of the lessee. If the former type of assignee can enforce rights as against his landlord, we are able to see how a lessee who

obtained an assignment by virtue of a statute could be placed in a different position. But for obtaining relief against the head-lessor, mere

assignment of the lease will not be sufficient there may be other difficulties in the way of a sub-tenant in enforcing such rights as against the original

lessor for it might be argued that the superstructure on the property had not been put up by the tenant, the sub-tenant where he put up the building

not being a tenant. It is, however, unnecessary to pursue that matter for the purpose of the present case. It is sufficient to say that the sub-lessee

before us does not want and indeed cannot pursue any rights as against the superior lessor. What all, he now seeks is to enforce the rights secured

to him under the Act as against the mesne lessor from whom under an agreement be obtained a sub-lease.

That a sub-lessee can obtain rights granted to a tenant under a statute qua mesne lessor has been recognised by us in interpreting another

enactment, namely, the Madras Cultivating Tenants Protection Act, 1955. In Kathaperumal Padayachi Vs. Muthiah Odayar, a person took on

lease a certain area of land from its owner and later sub-let a part of it to another. The sub-lessee was held entitled to the protection afforded by

the Act as against his lessor, namely, the chief-tenant although he could not have had any rights as against the head-lessor there being neither privity

of estate nor privity of contract between the head-lessor and the sub-lessee. It was observed that the chief-tenant, generally speaking, stood in the

same relationship to the subtenant as the owner landlord stood towards the former.

Mr. Sivaramakrishniah however, argues that this view, if accepted, would lead to inconvenient and anomalous results. In this connection he

cited the example of a tenant holding over creating a sub-lease and if that sub-lessee were allowed to obtain the rights of his lessor, namely, the

tenant holding over. He said it will merely be a case of an illusory transfer, for he could be evicted by the superior lessor within no time. This

argument ignores the fact that a tenant at sufferance cannot grant or create a sub-lease.

Further we do not see how that problem can at all arise under the provisions of the Madras City Tenants Protection Act. The Act gives

protection only to tenants as defined therein who had put up buildings on the land leased out to them before coming into force of the Act. There is

thus no scope for a tenant at sufferance who had not put up a building to sub-lease it. We are, of the opinion that the leasehold interest owned by a

person on a land would be interest possessed in the land by that person within the meaning of the Explanation to Section 9 and if that person had

granted a sub-lease of the land, that is to say, had created a lease of his leasehold right, he will be in the position of the landlord so far as the sub-

lease in the right of enjoyment for the duration of the lease in his favour could be directed to be transferred under the provisions of Section 9 of the

Act. The Civil Revision Petitions, therefore, succeeds and is allowed. There will be no order as to costs.