A.N.Sen, J. - (1.) The assessee is an engineering concern undertaking structural steel work, manufacture of railway wagons, etc. By an agreement dated April 13, 1961, described as a "lease deed" between the assessee-company as "lessee" and the Angus Company Ltd. as "lessor", the assessee was permitted to take over the Angus Works for the purpose of running it as a heavy engineering workshop. The lease is for a period of 99 years. Under the terms of the agreement, the assessee was required to pay the lessor a sura of Rs. 4 lakhs per annum for 99 years. It is necessary to set out the said agreement in its entirety as the question involved in the present case turns on a true construction of the said document. The said document reads ; "THIS LEASE is made the Thirteenth day of April One thousand nine hundred and sixty-one BETWEEN THE ANGUS COMPANY LIMITED, a company with limited liability incorporated under the Indian Companies Act, 1913, whose registered office is situate at 3, Clive Row, Calcutta (hereinafter called "the Lessor" which expression shall where the context so admits include the person or persons for the time being entitled to the reversion immediately expectant upon the determination of the term hereby created) of the one part and BRAITHWAITE & CO. (INDIA) LIMITED, a company with limited liability incorporated under the Indian Companies Act, 1913, whose registered office is situate at 4, Clive Row, Calcutta (hereinafter called "the Lessee") which expression shall where the context so admits include its successor in interest and assigns) of the other part WITNESSETH as follows : 1. In consideration of the rent hereby reserved and of the covenants, conditions and agreements hereinafter contained and on the part of the Lessee to be paid, observed and performed the Lessor HEREBY DEMISES unto the Lessee ALL THAT piece of land comprising 16.724 acres or thereabouts situated within Hoogly District, West Bengal, which said piece of land with the boundaries thereof is for the purpose of identification only more particularly delineated on the Plan No. 1 annexed hereto and thereon edged with red TOGETHER WITH the yard, workshops, power house, boiler house, bungalows, factories, godowns, canteen and other buildings and structures erected thereon or on some part or parts thereof more particularly described in the First Schedule hereto all as delineated and coloured blue on Plan No. 11 annexed hereto AND TOGETHER ALSO with the immovable machinery and plant and other fixtures and fittings belonging to the Lessor therein or in some part or parts thereof more particularly described in the Second Schedule hereto (all which said premises have heretofore been known as 'The Angus Engineering Works' and excluding the exemption and reservation hereinafter made are hereinafter collectively referred to as 'the demised premises') AND TOGETHER ALSO with all rights, privileges easements and appendages, advantages and appurtenances of whatever nature relating to the demised premises or usually enjoyed in connection therewith AND TOGETHER ALSO with the right in common with the Lessor and all tenants of the Lessor and other persons entitled thereto to pass and repass with or without motor cars, lorries, carriages, carts and vehicles of any description not exceeding 15 tons gross weight over and along the roadways coloured green on the said Plan No. 11 annexed hereto leading from the demised premises to the Grand Trunk Road, EXCEPTING AND RESERVING, unto the Lessor (a) the land and premises within the curtilage of the said Angus Engineering Works more particularly described in the Third Schedule hereto all as delineated and coloured Yellow on Plan No. 11 hereto annexed now held by the Lagan Jute Machinery Company Private Limited under two Leases (hereinafter referred to as 'Lagan's Leases') both dated the twenty-eighth day of March, 1957, made between the Lessor of the one part and the said Lagan Jute Machinery Company Private Limited of the other part for the term of 20 years from the 1st March, 1956, but subject to earlier determination as therein provided and (b) all rights, pertinents and privileges granted under Lagan's Leases including the rights of access as therein defined TO HOLD the same unto the Lessee for the term of 99 years from the first day of February, 1960, YIELDING AND PAYING therefor during the said term free from all deductions an yearly rent of Rs. 4,00,000 (Rupees four lakhs) payable quarterly in advance on the first day of February, May, August and November in each year.
(2.) The Lessee HEREBY COVENANTS with the Lessor as follows : (1) To pay the rent hereby reserved on the day and in manner aforesaid. (2) To pay all existing and future rates, taxes, cesses and all other outgoings and impositions including any increase or increases therein (other than land rent for which the Lessor is liable under the terms of Clause 3(2) hereof) payable in respect of the demised premises either by the owner or occupier thereof. (3) To pay all charges including electricity duty on quantities supplied for electricity consumed in the demised premises whether supplied from the generator situate on the Lessor's adjoining land or from the Calcutta Electric Supply Corporation Limited or otherwise. (4) In the event of the demised premises or any part thereof being damaged or destroyed by fire, explosion, tempest, earthquake, storm, flood, riot, civil commotion, war, act of God or other irresistible force forthwith at its own expense to rebuild or reinstate or replace the demised premises so that the same may be restored to the condition they were in before the destruction or damage took place. (5) Subject to Clause 3(5) hereof throughout the said term at its own cost to keep the exterior arid the interior of the buildings and other structures comprised in the demised premises in good and tenantable repair, reasonable wear and tear always excepted as also the immovable machinery, plant, fittings and fixtures in good working order, repair and condition, but only for so long as such order, repair and condition can be maintained by proper care and maintenance and by actual repair and/or minor replacements PROVIDED ALWAYS that notwithstanding anything to the contrary herein contained the Lessor shall not be entitled to exercise any remedy against the Lessee for breach of this covenant unless the Lessee shall have failed within three months to comply with a notice in writing from the Lessor specifying the want of repair for which the Lessee is liable hereunder and calling upon the Lessee to make good the same. (6) Not to transfer, assign, charge, mortgage, hypothecate, sublet, sell, dispose of or in any way part with the possession of the demised premises or any part thereof or interest therein without the previous written consent of the Lessor (which may be given conditionally or otherwise) which consent the Lessor shall not unreasonably withhold in the case of a respectable and responsible mortgagee, hypothecatee or sub-lessee. PROVIDED ALWAYS that the Lessee notwithstanding anything to the contrary herein contained shall be entitled to mortgage and/or hypothecate the demised premises or any part thereof to its Bankers in the ordinary course of business. (7) To permit the Lessor or its agents or surveyors with or without workman and appliances at all reasonable times in the day time on giving previous notice and making a prior appointment to enter upon the demised premises to, take inventories of the Lessor's fixtures and fittings therein and to view the condition thereof and of all defects, decays and wants of reparation there found and to give three months' notice in writing to the Lessee to repair any defects for which the Lessee shall be liable under the terms of Sub-clause (5) of this clause. (8) Not to store any inflammable or combustible goods or explosive substances in the demised premises except such amount or quantity as may be reasonably required in connection with any business for the time being carried on by the Lessee and not to commit or cause to be committed any act or thing which may cause damage or injury to or prejudicially affect the demised premises. (9) Not to carry on or permit to be carried on in any part of the demised premises any offensive, illegal or unlawful manufacture, trade or business but to use the same for the purposes of any business for the time being carried on by the Lessee. (10) To take all reasonable steps to prevent any encroachment on the demised premises or any part thereof by any person or persons and to give notice to the Lessor of any threatened encroachment. (11) At the expiration or sooner determination of the term hereby created to yield and deliver up to the Lessor vacant possession of the demised premises in good and tenantable repair and all fixtures and fittings therein belonging or to belong to the Lessor reasonable wear and tear always excepted.
(3.) The Lessor HEREBY COVENANTS with the Lessee as follows : (1) That the lessee paying the rent hereby reserved and observing and performing the covenants, conditions and agreements herein contained and on the Lessee's part to be observed and/performed shall and may quietly and peaceably hold and enjoy the demised premises throughout the term hereby created without any interruption by the Lessor or any person or persons lawfully claiming through under or in trust for the Lessor. (2) To pay all land rent now or hereafter to become payable in respect of the demised premises or any part thereof to the superior landlord. (3) At a cost to be agreed and paid by the Lessee to provide at all times a supply of water for the demised premises equivalent to the supply being given immediately prior to the execution of these presents from the existing well situate on the Lessor's adjoining land and in the event of such supply failing for any reason outside the control of the Lessor to use its best endeavours to make available an equivalent alternative supply of water for the demised premises at a cost likewise to be agreed and paid by the Lessee. (4) For so long as the Lessee shall require the same to provide during such period as may be agreed between the parties hereto a supply of electricity to the engineering works or factory portions of the demised premises including godowns and connected buildings or structures from the generator situate on the Lessor's adjoining land and a supply of electricity from any source from which procurable to the residential premises comprised in the demised premises the Lessee paying for all the electricity so supplied and the electricity duty in respect thereof in accordance with Clause 2(3) hereof. (5) To permit the Lessee to pull down and remove such buildings and structures comprised in the demised premises as the Lessee may reasonably require to pull down and remove and further to permit the Lessee to dismantle and remove such machinery, plant, fixtures and fittings comprised of the demised premises as the Lessee may reasonably require to dismantle and remove PROVIDED ALWAYS the Lessee restores or rebuilds such buildings or structures and/or instate other machinery, plant, fixtures and fittings all being of not lesser value and suitable for the type of business then being carried on in the demised premises in replacement thereof or in substitution therefor AND it is hereby agreed and declared that the Lessee shall be entitled to instal machinery, plant, fixtures and fittings in lieu of restoration or rebuilding of buildings or structures and to construct or build buildings and structures in lieu of installation of machinery, plant, fixtures and fittings PROVIDED ALWAYS that the privilege hereby conferred shall only be exercised by the Lessee in such manner and to such extent that the value of the demised premises shall not at any time be less than the value thereof immediately prior to any such installation, restoration or rebuilding as aforesaid and further to permit the Lessee to make such additions to the demised premises or any part or parts thereof or alterations therein so long as such additions or alterations do not adversely affect the character or value of the demised premises and, to erect such new buildings or structures and to instal such new machinery, plant, fixtures and fittings as the Lessee may reasonably require and to permit the Lessee to lay down, remove and relay from time to time pipes for sewage water, gas and electricity mains and to sink wells so long as such sinking does not adversely affect supplies of water from tube-wells already sunk on the Lessor's adjoining lands in the demised premises PROVIDED ALWAYS that the Lessee shall first provide the Lessor with plans and specifications of any such proposed works as aforesaid and the Lessee shall before commencing any such works obtain all necessary licences and sanctions as may be required by law in that behalf. (6) Upon expiration by efflux of time of the term hereby granted to permit the Lessee to dismantle and to remove any new buildings or structures, machinery, plant, fixtures and fittings constructed or installed in or about the demised premises during the currency of this lease PROVIDED ALWAYS that the Lessee shall make good any damage caused to the demised premises or any part or parts thereof occasioned by such dismantling and/or removal so as to leave the demised premises in the same state and condition as the same were in prior to construction and/or installation of the said new buildings or structures, machinery, plant, fixtures and fittings as aforesaid. (7) If the Lessee shall be desirous of continuing the tenancy hereby created for a further term from the expiration of the term hereby granted and of such its desire shall give to the Lessor notice in writing not less than two years before the expiration of the term hereby granted and if there shall not at such time be any existing breach or non-observance of any of the covenants on the part of the Lessee hereinbefore contained then the Lessor will at the expense of the Lessee execute in favour of the Lessee a lease of the demised premises for such further term from the expiration of the term hereby granted as the Lessee shall specify in such notice as aforesaid at a rent which shall be equivalent to five per cent, of the depreciated value of the demised premises but subject always to a minimum rent equivalent to the land rent and other outgoings legally payable by the Lessor as the owner of the demised premises and containing the like or lesser covenants, conditions and agreements as are herein contained. For the purpose of this Sub-clause the expressson "depreciated value" shall mean the value of the demised premises obtained by reference to the going concern valuation thereof made by Messrs. Edwards Son and Bigwood, Surveyors and Valuers, Birmingham, England, and specified in the Fourth Schedule hereto annexed reduced by depreciation annually at the respective rates laid down in the Indian Income-tax Act, 1922, and Rules made thereunder as in force at the date of execution of these presents.;