MADAN LAL versus BHAI ANAND SINGH & ORS.

Citation: [1973] 2 S.C.R. 677 · Decided: 12-10-1972 · Supreme Court of India · Bench: A.N. RAY · Disposal: Dismissed

Judgment (excerpt)

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877 
MADAN LAL 
v. 
BHAI ANAND SINGH & ORS. 
October 12, 1972 
[A. N. RAY, D. G. PALEKAR, M. H. BEG ANDS. N. DWIVEDI, JJ.) 
Transfer of Property Act,' s. IOB(q)-East Punjab Urban Rtllt Rtstric· 
tio11 Act 3 of 1949, S.13 (2)-lnttrprttalion of lease-Lessor whtthtr 
entitled to possession of property on tfl;piry of lease by efflw: of tim-
Rent C()fltroller's jurisdiction to evict l<Sstt-Effect of term in ltast dud 
tlla/. ltssor was bounil to pay to Jes3u 50% of mcrket value of fuper-
slru<;turt built by lesset--Lesstt whtthtr entitled to remain in possession 
during period when market value bting dettrmi11td by arbitrators. 
The respondents, loodlord lessors, bad executed a lease on 9-11-1949. 
Under its terms, the lesson had given some land to the lessees for the 
building and renting out of a cinema house for a period of twenty years. 
Clause 6 of the lease laid down that on the expiry of the tenancy the 
@tire sli'ucture built bv the lessees at their cost would become the pro-
perty of the lessor who shall then exercise all the rights of ownership, 
subject to the condition that the lessor shall have to pay 50% of the 
market value of the strut:ture to the lessees. If there was disagreement 
about the market value the !ame would be decided by arbitration. There 
w3! provision for sale of the structure in case the lessors fai:~d to pay 
to the lessees within a fixed period 50% of market value of the structure 
assessed by arbitration, and that the lessees would have the first charge 
on the sale proceeds. On the expiry of the lease, the lessors applied 
under section !3(2) of the East Punjab Urban Rent Restriction Act 3 of 
!949, to the Rent Controller, for the eviction of !lJe former tenant and the 
appellant sub-tenant. 
During the pendency of thJS application the le.,ees 
applied to the Rent Controller under s. 34 of the Indian Arbitration Act, 
for the stay of eviction proceedings Fending the decision of a dispute 
between th.e parties as to who was entitled to possession while the market 
value was being determined by Arbitrators un&.:r <iause 6 of the lease. 
The Rent Controller held, inter •'1ia, that the powers of ejectrnent Ullldcr 
s.13 of the Act, on specified grounds, could not be curtailed even by some 
agreement between the parties and dismissed tbe-->tay application. 
The 
High Court dismissed the lessee's appeal under s. 39 of the Arbitration 
Act, after interpreting the lease deed and holding that clause 6 of the 
deed ·~negatives any right in the lessees to retain possession after 
the 
expiry of the lease." 
In appeal by speeial leave before this court it 
was argued on behalf of the appellant that the High Court had not takien 
into account the fact that the cinema had necessarily to be run by some-
body while the market value of the property was· being ascertaiood by 
resort to arbitration. 
The respondents, inltr alia, relied on s. 108 of 
the Transfer of Property Act which lays down that in the a!Ycnce of a 
contract or usage to the contrary, the lessee is, on the determination of the 
lease, bound to put the lessor "into possession of the property, Dismissing 
the appeal. 
HELD : There is no provision in the lease expressly laying down that 
the right to obtain possession will be postponed, after the expiry of the 
rerm of the ·1ease, until the ascertainmeint of the market value of the 
building bas taken place. On the other hand the clause relied upon by 
the 1 !spondcnts not only lays down that .the super-structure wi)I become 
the property of the leSSOr on the expiry of the period of tenancy, but 
678 
SUPREME COURT REPORTS 
[1973] 2 s.c.R. 
goes oa to specify that the lessor 'shall' then exercise all the rights of 
owncrship including the right to sell the entire property. It is apparent 
that the exercise· of all rights of ownership according to the terms of the 
clause, literally Interpreted, could take place on the expiry of the tenancy 
immediarely. 
The contention that the le,sor's rights were subject to the payment 
of 50% of the market value of the building could not be accepted. If 
this had really been too intention of the parties, there was nothing to 
prevent them from inserting such a term in the deed so as to make that 
intention explicit. The more natural construction of the clause is that 
rights of ownership, induding the right to take possessiO!ll of the building, 
would become vested in the les'or at the expiry of the period of lease, 
and that 50

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