- (1.) This appeal by Special Leave has arisen in the following circumstances : The respondents, landlord lessors, had executed a lease on 9-11-1949. Under its terms, the lessor had given some land to the lessees for the building and renting out of a Cinema house for a period of twenty years on a rent of Rs. 300/- per month for the first year, and, thereafter, at Rs. 600/- per month. The period within which the Cinema had to be constructed was also specified. Clause 6 of the lease laid down : "On the expiry of tenancy or the extended period of tenancy, as aforesaid, the entire structure, built by the lessees at their own cost becomes the property of lessor, and shall exercise all the rights of ownership and shall be entitled to sell the entire property, subject to this condition that lessor shall have to pay 50% of the market value of the structure built by the lessees at their expenses. If the lessor and the lessees fail to assess the value of the aforesaid structure by mutual consent, two arbitrators will be appointed, nominated by the lessor and the lessees. In case of their difference of opinion an umpire shall be appointed by parties whose award shall be final. In case the lessor fails to pay 50% of the value of the structure so assessed within period of six months of award of the umpire or arbitrators the whole structure shall be sold and out of the sale proceed 50% of the price of the structure so assessed by the umpire or arbitrators shall be paid to the lessees. The lessees shall have the first charge on the sale proceeds". The lease had expired. Therefore, the lessor applied under Section 13 (2) of the East Punjab Urban Rent Restriction Act 3 of 1949 (hereinafter referred to as 'the Act'), to the Rent Controller, appointed under the Act, for the eviction of the former tenant and the appellant sub-tenant. During the pendency of this application, the lessees applied to the Rent Controller, under Section 34 of the Indian Arbitration Act, for the stay of eviction proceedings pending the decision of a dispute between the parties as to who was entitled to possession while the market value was being determined by Arbitrators under Clause 6 set out above. The Rent Controller held, inter alia, that the powers of ejectment under Section 13 of the Act, on specified grounds, could not be curtailed even by some agreement between the parties and had dismissed the stay application. The High Court of Punjab and Haryana dismissed the lessees' appeal under Section 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". It went on to observe : "It is specifically provided therein that as soon as the lease expired the lessor would become full owner of the super-structure which she would have the right to sell. The rest of the clause provides the method in which the sum paid to the lessees was to be ascertained or recovered and that method does not include a right in them to continue to possess either the land or the super-structure. What has been made subject to the payment of the said sum is the exercise by the lessor of her right to sell the property the delivery of possession of which on the expiry of the lease, however, is not stipulated to be postponed till such payment."
(2.) The first submission made by Mr. Chagla, learned Counsel for the appellant, is that the High Court had put an erroneous and inequitable interpretation on the deed inasmuch as the Court did not take into account the fact that the Cinema had necessarily to be run by somebody while the market value of the property was being ascertained by resort to arbitration. Hence, it was argued that the lessees' right to continue in possession during what was described as an "interregnum" was implicit. The reply is that no such gap is warranted by the terms of the lease. The respondents also contended that no specific provision for recovery of possession in the lease deed need be inserted as S. 108 of the Transfer of Property Act provides : "In the absence of a contract or local usage to the contrary................ (q) on the determination of the lease, the lessee is bound to put the lessor into possession of the property". The main question before us, therefore, is whether a "contract to the contrary" could be found in the lease deed itself for postponing delivery of possession, after the expiry of the lease, on any ground whatsoever.
(3.) It is noticeable that there is no provision in the lease expressly laying down that the right to obtain possession will be postponed, after the expiry of the term of the lease, until the ascertainment of the market value of the building has taken place. On the other hand, the clause relied upon by the respondent not only lays down that the super-structure will become the property of the lessor on the expiry of the period of tenancy, but goes on to specify that the lessor "shall" then exercise all the rights of ownership including the right to sell the entire property. It is apparent that the exercise of all rights of ownership, according to the terms of this clause, literally interpreted, could take place on the expiry of the period of tenancy immediately. Learned Counsel for the appellant, however, lays considerable stress on the subjection of the exercise of these rights of ownership to the liability to pay 50% of the market value of the building. He contends that such a condition necessarily means that, until the market value is actually ascertained and paid, the lessee shall retain possession. If this had really been the 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. It appears to us that the more natural construction of the clause is that rights of ownership, including the right to take possession of the building, would become vested in the lessor at the expiry of the period of the lease, and that 50% of the market value of the building, which was to be paid in any case, became a condition attached to this ownership of the building when it vested in the lease. The Lessor was, in any case, to pay 50% of the market value of the structure, and, in the event of a sale, the payment of this amount became a first charge on the proceeds of sale. It is also significant that it is not mentioned in the deed that a purchaser of the Cinema house, who would presumably prefer to obtain possession so as to be able to run it, could not get possession of it until the market value was ascertained or fifty per cent. of it was paid. Possession of a Cinema house after the expiry of a building lease involving the passing of ownership of the building on such expiry is, after all, an important matter. In view of Section 108 (q) of the Transfer of Property Act the burden of proving "a contract to the contrary" was on the lessee; and, something to indicate an agreement to the contrary should be there, on such a matter involving a valuable right before this burden could be held to have been duly discharged.;