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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.

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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

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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,"

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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

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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

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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.