GADADHAR BHATTA Vs. LALIT KUMAR CHATTERJI

JUDGEMENT

(1.) This appeal arises out of a proceeding for apportionment of compensation awarded under the Land Acquisition Act. The dispute is between the landlords and their tenant, and their rights are regulated by a lease granted on the 23 June 1891, which was subsequently varied by another lease on the 3 January 1893. By the original lease the rent was fixed and was described as not liable to enhancement or reduction. At the same time it was stated that neither the lessee nor his heirs would ever be able to make gift, sell or alienate any portion of the land or to encumber it in any way. The lease further contained an express covenant to the effect that if the land was acquired or required by Government or by the Railway Company or by any other Company or Corporation, the landlord would get the value of the land and all fixtures and structures erected by him, and that the tenant would obtain the value merely of the fixtures and structures erected at his expense, and that no claim or demand by the tenant for the value of the land would be entertained. By the subsequent lease of 1893 the covenant against alienation was modified, and it was provided that the lessee would have the right to make a gift or sale or any other form of alienation. It was expressly provided, however, that all the other conditions of the lease of 1891 would be kept in tact. Now the contingency contemplated by the original lease has happened and the land has been acquired for public purposes. The tenant, however, in contravention of the covenant into which he deliberately entered by the lease of 1891 claims to receive a share of the compensation awarded for the value of the land. His contention is that when in 1893 the interest under the lease was made transferable, the clause about the payment of compensation for the land exclusively to the landlord must be treated to have become inoperative. In support of this extraordinary contention, no authority has been cited, but reliance has been placed upon Section 23 of the Indian Contract Act and upon some observations of the learned Judges of the Allahabad High Court in Mahram Das V/s. Ajudhia 8 A. 452. Section 23 of the Contract Act, however, is obviously of no assistance to the tenant No doubt Section 23 provides that the consideration or object of an agreement is lawful, unless it is forbidden by law, or is of such a nature that it permitted it would defeat the provisions of any law, or is fraudulent, or involves or implies injury to the person or property of another, or the Court regards it as immoral or opposed to public policy. It is not suggested that this particular covenant for payment of compensation money to the landlord alone is forbidden by any law, nor have we been shown how this covenant if permitted to be operative would defeat the provisions of any law. It has not been argued that it is fraudulent; in fact it was deliberately entered into by the tenant and was expressly affirmed in the subsequent lease of 1893. There is no suggestion also that the covenant is either immoral or opposed to public policy. The decision of the Allahabad High Court in the case to which reference has been made, has obviously no application to the circumstances of the present case. There the transaction was by way of sale, and the question arose as to the effect of a covenant against alienation. It was pointed out that a provision against alienation which absolutely debars the person to whom the proprietary rights have passed from exercising these rights, imposes conditions which no Court will recognise or give effect to. Consequently a covenant in a sale-deed the effect of which is to disable the vendee from either alienating or enjoying the interest conveyed to him is contrary to public policy. This principle was recognised by the Legislature in Secs.10 and 11 of the Transfer of Property Act. It is to be observed, however, that even a covenant of that description is expressly regarded as operative if it finds a place in a lease and is for the benefit of the landlord. It may be added that we are not able to discover how this covenant for the payment of the entire purchase money representing the value of the land, to the landlord, is in any way repugnant to the condition under which the leasehold interest was made transferable. It is obvious that there is a distinction between a covenant which is operative during the continuance of the tenancy and a covenant which comes into operation only upon the termination of the tenancy. The effect of the two leases of 1891 and 1893 taken together is that so long as the tenancy continues, the tenant is in a position to alienate his interest. To this is superadded the condition that if the tenancy is terminated by reason of the acquisition of the land for public purposes, the whole amount of the acquisition money becomes payable to the landlord. It has been strenuously contended that if this latter clause were considered operative, the clause by which the right of alienation was conferred would become practically inoperative. We are unable to appreciate the force of this contention. No doubt, as any purchaser would regulate the price by a regard to all the terms and conditions of the lease and in view of the result likely to follow from a possible acquisition of the land, no purchaser would be willing to pay quite as much as he would otherwise have paid as the value of the tenancy. But clearly this does not in any way invalidate the covenant; no authority has been produced against this view. On the other hand, the learned Vakil for the respondent has drawn our attention to the case of In re Morgan and London and North Western Railway Company (1896) 2 Q.B. 469, which indicates that a covenant of the description now in question is perfectly valid and enforceable.

(2.) The result, therefore, is that the decision of the Court below must be affirmed and this appeal dismissed with costs. We assess the hearing fee at three gold mohurs.

(3.) It is conceded that Appeal No. 269 of 1908 will be governed by this judgment. That appeal also is dismissed with costs, three gold mohurs.