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Judgment
Sadasivam, J.—These Civil Revision Petitions have been directed by the learned Chief Justice to be posted before this Division Bench as
they involve two questions of law of some importance, namely, whether Section 3 of the Government Grants Act of 1895 (originally called the
Crown Grants Act) prevails over the provisions of the Madras City Tenants Protection Act, III of 1922, and whether the State of Madras is
bound by the provisions of the Madras City Tenants Protection Act, unless this is expressly stated to that effect in the Act.
These Civil Revision proceedings arise out of petitions filed by four timber merchants carrying on business in Basin Bridge Road, Madras, for
fixation of fair rent u/s 7 (a) of the Madras City Tenants Protection Act, 1922. It is an undisputed fact that the lands on which the timber depots are
kept belong to the State of Madras and they have been leased out by the Corporation to the several timber merchants. The Government allowed
the Corporation to lease their lands in the Basin Bridge Road to timber merchants, subject to their approval, on the condition that 50 per cent. of
the rent realised should be paid over by the Corporation to the Government. The rents collected from the timber merchants were increased from
time to time, and finally, at the beginning of 1953, the timber merchants were informed that the lease would be renewed only on condition of their
paying a rent of Rs. 50 per ground, though the Standing Committee of the Corporation itself had suggested only Rs. 35 per ground. Oosman
Hajee & Co. and M/s. S. N. Vijayaraghavachariar succeeded in the Courts below in invoking their jurisdiction for fixation of fair rent and the State
has preferred C.R.P. Nos. 1565 and 1799 of 1963. But in the other two revision petitions filed by M/s. Sudarsanam Iyengar & Sons, the Courts
below took the opposite view that the provisions of the City Tenants Protection Act cannot be invoked for fixation of fair rent, in respect of the
lands owned by the Government.
It was urged on behalf of the State, in the Courts below that the Corporation of Madras acted only as the agent of the Government in leasing the
lands. In the appeals preferred by M/s. Sudarsanam Iyengar & Sons to the City Civil Judge, Madras, there is a specific finding that'' the position
which the Corporation occupies is only that of an agent, subject to the control of the Government with regard to the acceptance of the terms of the
lease ''. Even in the appeals preferred by the State of Madras against Oosman Hajee & Co., and M/s. Vijayaraghavachariar, the appellate Court
has found in the penultimate paragraph of its judgment that '' all that the Government Order provides is that the Corporation was entitled as the ''
agent of the State of Madras to lease the properties in question on terms approved by the Collector'', and it is in this view, the learned Principal
City Civil Judge has considered the scope and effect of Section 3 of the Government Grants Act. Thus the finding of the lower appellate Court in
all these cases that the Corporation acted as the agent of the Government in leasing the lands of the Government to the timber merchants is justified
on the evidence on record and it correctly represents the jural relationship between the parties.
The common law of England is that the Bang''s prerogative is illustrated by the rule that the Sovereign is not necessarily bound by statute law
which binds the subject. This is further reinforced by the rule that the King is not bound by a. statute unless he is expressly named or unless he is
bound by necessary implication or unless, the statute being for the public good, it would be absurd to exclude the King from it. It was pointed out
in Director of Rationing and Distribution Vs. The Corporation of Calcutta and Others, , that this was the law applicable to India also until the
advent of the Constitution. It has been held in the above decision that the rule of interpretation of statutes that the State is not bound by a statute,
unless it is so provided in express terms, or by necessary implication, is still good law. This was relied on and followed in State of West Bengal Vs.
Union of India, , State of Punjab Vs. Okara Grain Buyers Syndicate Ltd. and Others, , and Sri Venkata Seetaramanjaneya Rice and Oil Mills and
Others Vs. State of Andhra Pradesh etc., . But in Superintendent and Legal Remembrancer, State of West Bengal Vs. Corporation of Calcutta, ,
the above decision in Director of Rationing and Distribution Vs. The Corporation of Calcutta and Others, , was overruled and the minority view of
Wanchoo, J., in that decision was approved. It has been held in that decision that the rule of construction that the King is not bound by a statute
unless he is expressly named or brought in by necessary implication, which was accepted by the Privy Council in interpreting statutes vis-a-vis the
Crown is inconsistent with and incongruous in the present set up and that in the context of modern notions of the functions of a Welfare State, there
is no sufficient reason to justify any distinction in the application of the rule of interpretation of statutes and that the general Act applies to citizens as
well as to State unless it expressly or by necessary implication excepts the State from its operation. It is pointed out in that decision that the State
can make an Act, if it chooses, providing for its exemption from its operation and that though the State is not expressly exempted from the
operation of an Act, under certain circumstances, such an exemption may necessarily be implied. This decision was followed in ,the later Supreme
Court decision in Union of India (UOI) Vs. Jubbi and Dunia, etc., , where it has been held that "" a statute applies to State as much as it does to a
citizen unless it expressly or by necessary implication exempts the State from its operation "".
The Madras City Tenants Protection Act, as it originally stood, was applicable to the tenants in the City of Madras and there is provision in the
Act as amended by Madras Act XIX of 1955, to extend it to other municipal towns and specified villages within five miles from the City of
Madras, or municipal towns, by Government notification. In 1960, a proviso was added to Section 1 (3) of the Act exempting the tenancies of
lands owned by the Corporation of Madras in the City of Madras and certain other public bodies, such as the Municipal Council, Panchayat
Union, District Board and the Board of Trustees constituted under the Madras City Improvements Trust Act. But there is no such exemption in the
case of lands owned by the ''Government.
The decision of Ramakrishnan, J., in M. Murugesan v. The Collector of Madras and two others Writ Petition No. 45 of 1961, throws some
light on this aspect of the case. It related to proceedings taken by the Government under the Land Encroachment Act to evict dwellers of huts
mainly occupied by employees in the harbour in the locality called Kanniappa Nagar Colony, in pursuance of a scheme to provide an alternative
space for their occupation, as the Government land was required for the purpose of the Port Trust to extend the Harbour. The hut dwellers of
Kanniappa Nagar Colony relied on the acts of the Corporation and the Government as showing that their occupation of the huts was authorised
and claimed the benefit of the provisions contained in the City Tenants Protection Act. The fact that when the proviso to Section 1 (3) of the Act
was added in 1960 no attempt was made to give any similar protection to Government land, was relied on to show that the City Tenants
Protection Act could not be invoked in respect of Government lands. The learned Judge has observed that the reason for the amendment was to
extend the benefit which the Crown enjoyed not only by virtue of the common law principle of saving Crown lands from the operation of the
statute, but also by reason of the specific provisions of the Government Grants Act, 1895, to the lands of the Corporation and certain other
authorities. It is true that in so far as this decision relies on Director of Rationing and Distribution Vs. The Corporation of Calcutta and Others, .,
the authority has been shaken by the subsequent decisions referred to above. But the interpretation of Sections 2 and 3 of the Government Grants
Act, 1895 given in that case supports the contention of the learned Government Pleader.
The decision in these petitions depends on a proper construction of Section 3 of the Government Grants Act. If the terms of the grant by the
Government by way of leases of their lands through the Corporation are to take effect according to their tenor by virtue of Section 3 of the
Government Grants Act, notwithstanding any law, statute, or enactment to the contrary, the City Tenants Protection Act cannot be invoked by the
tenants for the fixation of fair rent. The Preamble of the Government Grants Act gives an indication as to the scope and purview of the Act and it
can be looked into to correctly understand the provisions of the Act. The Government Grants Act was passed not only to settle the doubts which
had arisen as to the effect of the Transfer of Property Act, 1882, but also to remove any doubts with regard to the power of the Government to
impose limitations and restrictions upon grants and other transfers of lands made by it, or under its authority. Section 2 of the Government Grants
Act deals with exemptions as regards the Crown grants from the provisions of the Transfer of Property Act, 1882, and thus it gives effect to the
first object mentioned in the Preamble. Section 3 of the Act provides that Crown grants should take effect according to their tenor, notwithstanding
any law to the contrary. There is no need for any such provisions if the law referred to in Section 3 is only the Transfer of Property Act. In The
Secretary of State for India in Council Vs. Mahaboob Sir Frazvant Sri Raja Parthasarathy Appa Rao Savai Aswarao Bahadur Zamindar Garu and
Others, , it is observed that "" looking at the Preamble and considering the purpose of the Act it cannot be doubted that the Act was rather
declaratory in its nature than enabling or enacting "", that it had to be enacted so says the Preamble, because doubts had arisen as to the extent and
operation of the Transfer of Property Act, 1882 and that "" taking the terms of the Grown Grants Act, the inference seems to be irresistible that
prior to the Transfer of Property Act there was no doubt whatever as to the power of the Crown to make a transfer of property in any terms, or
under any of the conditions whatsoever "".
Haji Mohamad Nasurdin Khan Bhadur v. Egambara Mudaly (1907) 2 M.L.T. 55, relates to a case where the Crown made a grant of a village
for the maintanance of a tomb. It was held in that decision that having regard to Section 3 of the Crown Grants Act, the validity of the grant could
not be questioned on the ground that it created an estate not recognised by the Mohamedan Law. In Kallingal Moosa Kutti v. The Secretary of
State (1920) 37 M.L.J. 332 : ILR 43 Mad. 65, a Bench of this Court has held that under Sections 2 and 3 of the Crown Grants Act, the
Government has power to impose restrictions in a lease made by it--a power which is not affected by the provisions of the Malabar Compensation
for Tenants'' Improvements Act. In Ullattuthedi Choyi Vs. The Secretary of State for India in Council, , the above decision has been followed and
it has been held that "" where under the terms of a lease granted by the Crown the lessee agrees to surrender the demised property on six months''
notice, he cannot resist a suit in ejectment by the Crown after the requisite notice, on the ground that he must be paid the value of his improvements
under the Malabar Compensation for Tenants'' Improvements Act"". In S. Murugesa Gramani Vs. The Province of Madras, , it has been held that
the Crown Grants Act prevails over the City Tenants Protection Act and that being so, the terms of the grant of lease given by the Government to
the appellant in that case have to be enforced.
There are decisions of other High Courts also with regard to the interpretation of Section 3 of the Government Grants Act to the same effect. In
Gaya Prasad Vs. Secy. of State, , it has been held that in respect of a Crown grant the Crown is not bound by any of the sections of the Tenancy
Act, or the Transfer of Property Act or the Contract Act and that regard must be had by the Courts to the terms of the grant. This decision throws
light on the construction of Section 3 of the Crown Grants Act. The appellant in that case had purchased the property originally owned by the
Government from the grantee and contrary to the terms of the grant made by the Government, he put up a construction after obtaining a licence
from the municipality. It was urged that the municipality acted as the agent of the Government and that the Government was bound by the Act of
the municipality and reliance was placed on Section 188 of the Contract Act. It was held that the section of the Contract Act on which the
appellant relied had no binding effect on the Government for the simple reason that it could not override Section 3 of the Crown Grants Act. In
The State of Andhra Pradesh Vs. Gathala Abhishekam and Others, , it has been held that the effect of Section 3 of the Government Grants Act is
that when a grant has been made by the Government, it is not, with reference to that grant, bound by any of the sections; of either the Tenancy Act,
or the Transfer of Property Act, or the Contract Act, or any other law for the time being in force and it, therefore, follows that any grant made has
to be construed in accordance with the tenor of the grant and the grant will certainly be regulated in accordance with such tenor.
We shall proceed to consider whether the decision of the Judicial Committee in Thakur Jagannath Baksh Singh v. The United Provinces
(1946) 2 M.L.J. 29 : L.R. 73 IndAp 123 >(1946) F.C.R. 111 : (1946) F.L.J. 88, which has been referred to with approval in The Collector of
Bombay Vs. Nusserwanji Rattanji Mistri and Others, , has taken away the authority of the above decisions. The relevant passage in the decision of
the Privy Council at page 34 is as follows:
Their Lordships ought to refer in passing to the Crown Grants Act, 1895 of which Section 3 was relied on by the appellant. That section runs:
All provisions, restrictions, conditions and limitations over contained in any such grant or transfer as aforesaid (i.e., one made by the Crown) shall
be valid and take effect according to their tenor, any rule of law, statute or enactment of the Legislature to the contrary notwithstanding.
These general words cannot be read in their apparent generality. The whole Act was intended to settle doubts which had arisen as to the effect of
the Transfer of Property Act, 1882, and must be read with reference to the general context and could not be construed to extend to the relations
between a Sanad holder and his tenants. Still less could they be construed to limit the statutory competence of the Provincial Legislature under the
Constitution Act.
It is clear from the above passage that their Lordships of the Privy Council ''in passing'' referred to Section 3 of the Crown Grants Act. Their
observations should be read in the light of the decision in that case. The appellant in that case put forward a claim that the U.P. Tenancy Act,
1939, is ultra vires of the Provincial Legislature. He claimed that the Act created rights and interests in land in favour of persons other than the
grantee contrary to the Sanad granted by the Crown in favour of his predecessor-in-title and thus derogated from the terms of the Crown grant
because it modified or curtailed the rights conferred by the Crown. Thus the real question involved in that case was about the competence of the
Legislature to enact laws which would affect a Crown grant. In Azizus Subhan Vs. Union of India (UOI) and Others, , it has been held that Section
3 of the Crown Grants Act has no overriding effect on Section 3 of the West Bengal Estates Acquisition Act and that a competent Legislature can
legislate so as to vary the effect of a Crown grant and that Section 3 of the Crown Grants Act cannot limit the statutory competence of a State
Legislature to legislate on a subject assigned to it by the Constitution. The principle is illustrated by the Zamindar Abolition Act and similar
legislation.
The Privy Council referred to the first part of the Preamble that it was intended to settle doubts which had arisen as to the effect of the Transfer
of Property Act and stated that the general words of Section 3 could not be read in their apparent generality and must be read with reference to
the general context and could not be construed to extend to the relations between a Sanad holder and his tenants. Thus as between the
Government and the grantee, the terms of the grant would prevail notwithstanding any other law to the contrary. It is true, as pointed out in the said
Privy Council decision, and the Calcutta decision just referred to that Section 3 of the Government Grants Act cannot be construed to limit the
statutory competence of the Provincial Legislature under the Constitution Act. Thus a Legislature can by express words, or by necessary
implication, take away the effect of Section 3 of the Government Grants Act while enacting a particular legislation. But for Section 3 of the
Government Grants Act, the Madras City Tenants Protection Act would apply to tenancies in respect of Government lands. The express provision
contained in Section 3 of the Government Grants Act, taken along with the absence of any provision in the Madras City Tenants Protection Act
extending the Act to Government lands, either expressly or by necessary implication, can only lead to one inference, namely, that the provisions of
the Madras City Tenants Protection Act cannot be invoked contrary to the terms of the Government grants.
It is true in the decision in The Collector of Bombay Vs. Nusserwanji Rattanji Mistri and Others, , the relevant passage of the Privy Council
decision construing Section 3 has been quoted with approval. But we have already explained the scope of the decision in the Privy Council case.
The respondent in the above Supreme Court case claimed immunity from assessment by virtue of a transfer made by the Government in favour of
his predecessor-in-title. The lands were originally acquired by the Government for the purpose of the B.B. and C.I. Railway under the provisions
of the Land Acquisition Act and as they were no longer required for the purpose of the railway, they were sold by the Governor-General to the
predecessor-in-title of the respondent. The contention in that case was that as the grant is of a freehold estate without any reservation, it must, to
take effect according to its tenor, be construed as granting exemption from assessment to revenue. It is held in that decision that Section 3 of the
Crown Grants Act must be construed in the light of the Preamble and so construed, it cannot have any bearing on the rights of the parties. It is
further pointed out in that case that the section only enacts that "" all provisions, restrictions, conditions and limitations over "" in any grant or transfer
shall be valid and take effect according to their tenor and that what is relied on is not any '' provision, restriction, condition or limitation over '' in the
relevant document Exhibit '' A '' which according to its tenor entitles the respondent to hold the lands rent-free, but the absolute character of the
interest conveyed under Exhibit '' A '' and therefore, Section 3 does not in terms apply. The deed in that case conveyed the lands to the purchasers
absolutely '' with all rights, easements and appurtenances whatsoever,'' to be held '' for ever'' as in the case of conveyances of land in fee simple. It
did not however recite that they are to be held revenue-free. Thus the observations of the Privy Council in Thakur Jagannath Baksh Singh v. The
United Provinces (1946) 2 M.L.J. 29 : (1946) F.C.R. 111 : (1946) F.L.J. 88 : L.R. 73 IndAp 123, cited with approval in the Supreme Court
decision, cannot be taken as throwing any doubt on the correctness of the decision of this Court and the other Courts as regards the scope of
Section 3 of the Government Grants Act.
The terms of Section 3 of the Government Grants Act can certainly be relied on as specifically exempting Government grants from the
operation of the Madras City Tenants Protection Act in the absence of any provision, either express or implied, extending the Act to Government
grants. We are inclined to agree with the view of Ramakrishnan, J., in M. Murugesan v. The Collector of Madras and two others W.P. No. 45 of
1961, that in view of Section 3 of the Government Grants Act, the local Legislature did not deem it necessary to include Government grants while
amending the Act by introducing the proviso to Section 1 (3) of the Act giving exemption to lands of the Corporation and certain other public
bodies.
The learned Government Pleader brought to our notice the unreported decision of Natesan, J., in Mallanna Gounder v. Muthuswami Gounder
and Anr. S.A. No. 482 of 1964, where a different view of Section 3 of the Government taken in deciding whether the State can claim immunity
and exemption from the provisions of the Madras Cultivating Tenant Protection Act in respect of agricultural lands of the Government by virtue of
Section 3 of the Government Grants agricultural Act. In the case before the learned Judge, a lessee of agriculture land government Grants sought to
rely upon the provisions of the Madras Cultivating Act land from Govern-section Act and the State met by putting forward a claim to immunity and
exemption from the provisions of that Act, by reason of the Government Grants Act. The learned Judge held, firstly, that the plaintiff''s in the suit
would be a cultivating tenant within the meaning of the Madras Cultivating tenant the Act should apply, he could not be evicted from his holding.
The State was undoubtedly the landlord and but for the claim to immunity by reason of the Government Grants Act, Section 3 of the Madras
Cultivating Tenants Protection act would afford protection to the tenant against eviction. The learned Judge examined the provisions of the
Government Grants Act. He referred to the decisions already cited by us earlier in this judgment He cited the observation to the Privy Council in
Thakur Jagannath Baksh Singh v. The United Provinces (1946) F.C.R. in : (1946) F.L.J. 88 : L.R. 73 IndAp 123 : (1946) 2 M.L.J. 29 that the
generality"" and the observations of the Supreme Court in The Collector of Bombay Vs. Nusserwanji Rattanji Mistri and Others, . The learned
Judge construed the observation that the general words in Section 3 cannot be read in their apparent generality to mean that the scope of Section 3
of that Act was limited. It seems to us that the observations both of the they were made. In the Privy Council decision the validity of the Provinces
which Tenancy Act, as enacted by the Provincial Legislature .United Provinces as it affected the rights conferred upon a grantee under a Sannad.
The contention then was that since under the terms of the grant it was open to sannad. The contention to deal with the land and the tenancy as he
liked, the impunged to the sannad- holder far as it interfered with his right to deal with his tenants in anyimpunged legislation , in so to the terms of
the grant. The Judicial Committee pointed out that any way was contrary power could not be attacked and the Statute regulating the relations that
the legislative landlord and the tenant, though it might affect or diminish the rights between the landlord possessed earlier, did not in any way run
contrary to Section 3 of the Government Grants Act. By making a grant of that description, the legislature did not deprive itself of any power to
legislate within the scope of its authority, and the contention that by reason of the sannad, the pre-existing relations between the sannad-holder and
his tenants could not be interfered with by legislation of this kind was repelled, and it is in that context. Nor do the observations of the Supreme
Court in the next case referred to above lead to a different conclusion. After quoting the passage from the Supreme Court decision, Natesan, J.
proceeded to say that ""the Government Grants Act thus being unavailable, the State sought to stand on the archaic prerogative and immunity of the
Crown from the operation of the statutes..."" and proceeded to consider whether under the general law the Crown was not bound by any statute,
unless the statute expressly or by clear implication so bound it. We are unable to subscribe to the view taken by our learned brother that the
Government Grants Act became ''unavailable'' solely by reason of the observations of the Privy Council and the Supreme Court. We have already
pointed out that under the law as it stands at present, the State is bound by any legislation, unless it is expressly or by necessary implication
excluded from the operation of that statutes in relation to certain matters covered by that piece of legislation. In effect, the view of Natesan, J.,
would appear to be that the two decision, that of the Privy Council and of the Supreme Court, have virtually destroyed the basis of the
Government Grants Act, and that in so far as transactions dealt with by that Act are concerned, the Government by reason of the provisions
contained in that Act cannot claim immunity from the operation of any other statute. We are unable to agree in the view taken by our learned
brother that the earlier decisions of this Court in S. Murugesa Gramani Vs. The Province of Madras, , Ullattuthedi Choyi Vs. The Secretary of
State for India in Council, and Kallingal Moosa Kutty v. The Secretary of Stale for India I.L.R.(1920) Mad. 65 : 37 M.L.J. 332, may not be good
law after the decisions of the Judicial Committee and the Supreme Court cited above. Neither expressly nor by necessary implication does the
Government Grants Act either stand repealed or has fallen into obsolescence. We hold that it is open to the State to put forward successfully the
contention that the express stipulation found in the terms of the grant, such as that of the lessee should surrender possession after the expiry of the
term of demise etc. can take effect, notwithstanding the provisions of the Madras Cultivating Tenants Protection Act. It is also our view that it is
not necessary for the Madras City Tenants Protection Act to contain any provision excluding the State from its operation, for such an exclusion
from the operation of any particular enactment may be found in a different enactment covering the same field. In so far as the Madras City Tenants
Protection Act provides for the control over the eviction of cultivating tenants, though the relevant section excluding its operation in the case of
lands belonging to certain specified bodies are concerned does not expressly refer to the exclusion of lands belonging to the State, the Government
Grants Act confers that exclusion.
We therefore find that Section 3 of the Government Grants Act prevails in the instant cases and the State is therefore not bound by the
provisions of the City Tenants Protection Act. It should follow that the fair rent petitions filed by the respondents in C.R.P. Nos. 1565 and 1799 of
1963 and the petitioners in C.R.P. Nos. 962 of 1965 and 1297 of 1966 in the City Civil Court are not maintainable against the landlord, the State.
They are accordingly dismissed, but in the circumstances, there will be no order as to costs.