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Judgment
Ramaprasada Rao, J.—The unsuccessful Defendant (The Trustees of Port of Tuticorin Tuticorin-I) in Original Suit No. 9 of 1970 on the file of the Court of the Subordinate Judge of Tuticorin, is the Appellant. The Plaintiff (The Tuticorin Salt and Marine Chemicals Limited Tuticorin-2) filed a suit seeking for a decree for specific performance by the Defendant of a contract of lease in relation to the schedule lands under which the Plaintiff claims that he is entitled to a renewa of the said lease for a period of 25 years from 8th July 1968 a rent of Re. 0.75 per acre subject to the conditions contained in the parent lease Exhibit B-1, dated 10th April 1947. The Plaintiff is engaged in the manufacture of salt. The Defendant is a statutory body governed by the provisions of the Tuticorin Port Trust (Tamil Nadu Act II of 1924) hereinafter referred to as the Act. Vast areas of land, in connection with the administration of the Port Trust, came to be vested with the Defendant and inter alia the suit lands comprising of about 262.80 acres are such items of land duly vested in them. One Mannar Aiyah obtained in lease of such properties early in 1944, but later in 1946, with the consent of the Port Trust of Tuticorin and at the request of the said Mannar Aiyah the lease was assigned in favour of the Plaintiff. This resulted in a fresh lease exhibit B-1, dated 10th May 1947 in favour of the Defendant, the period of demise being between 10th May 1947 and 7th July 1968 and the agreed rent being Re. 0.75 per acre. It is common ground that the Port of Tuticorin, hereinafter referred to as the Port Trust in the course of the working of the lease took over an extent of about 37-50 acres in exercise of their powers both under the contract and under the Act and the result was the extent of the subject matter of the demise was reduced to that extent leaving only 262.80 acres in the possession of the Defendant as lessee under the Port Trust. The Plaintiff''s case is that under Clause 7(4) of Exhibit B-1, the Defendant was under an obligation to renew the lease in favour of the Plaintiff for a further period of 23 years on the same condition and subject to the same covenants enumerated in exhibit B-1. The only contingency under which such a privilege of renewal of the lease gained by the Plaintiff could be avoided was as provided in the lease, that the demised land was required for the purposes of the Tuticorin Port. The Plaintiff having observed and performed its part of the contract, and having invested large sums of money for reclamation of the swampy lands and for laying the salt works, called upon the Defendant under exhibit B-53, dated 27th May 1968 requesting a renewal of the lease as per Clause 7 (6) and purported to send a sum of Rs. 199.50 representing one year''s rent, commencing from the date on which the lease has to be renewed. The Plaintiff was not favoured with a reply. Again, in July 1969, the Plaintiff renewed his request, The Defendant no doubt, returned the amount of Rs. 199.50 sent along with Exhibit B-53, under which the Plaintiff sought for a renewal, but would not grant or negative the request of the Plaintiff for renewal of the lease. Since no reply was received, the Plaintiff continued in possession of the demised property and engaged itself in its normal manufacturing activities and would claim such possession is referable only to the clause for renewal of the lease referred to in exhibit B-1. It expressed itself openly that it was ready and willing to perform its part of the contract and sent the yearly rental advances in July 1968 and July 1969. After a considerable lapse of time, and without even putting the Plaintiff on notice of its intention, the Defendant by its letter exhibit A-1, dated 4th November 1969 called upon the Plaintiff to vacate the schedule lands, as according to them, the same was required for its own purposes. The Plaintiff questioned the bona fides of the Defendant in the matter of the resumption of the lands and made it clear on Merits that the lands which are situate far away from the Port of Tuticorin, could not be reasonably said to be required for the purpose of the said Port. It had to, therefore, reply under exhibit A-2, dated 29th November 1969 questioning the Defendant''s right to call upon the Plaintiff to surrender possession of the demised tand. It further, renewed his request for renewal of the lease. Further correspondence between the Plaintiff and the Defendant resulted in either party reiterating their respective stands. The Plaintiff, therefore, filed the present action for specific performance by the Defendant on the contract to renew the lease in respect of the schedule lands or in the alternative for prospective damages, which may be assessed by the Court consequent upon the Defendant refusal to renew the lease.
The Defendant in its written statement after referring to the events that led to the grant of the demise, which, according to them, is only 263.41 acres of land, admits that under Clause 7 (b) of the lease, there was a provision for renewal, but says that the Plaintiff has lost the privilege to seek for such renewal of the lease. The Defendant''s case is that it was left to the Port Trust to renew the lease after the efflux of the period of the lease. After referring to the fact that the Plaintiff were in occupation of such a vast extent of land, and earning much profits in its concern, but paying only a ridiculously low rent, he would say that the Plaintiff in hi* turn did not perform strictly its obligations and observed the covenants under which they held the demise. The Defendant denies that no money was sent to the Defendant on 22nd July 1968 along with exhibit B-53 or B-21 and equally denies that any such money was offered even in July 1969. The Defendant denies that there was valid request for renewal of the lease and that the possession of the schedule lands by the Plaintiff after 8th July 1968 is not referable to any legal right either under the contract or in law. It characterised the Plaintiff as a trespasser on the suit land, as it was not continuing in possession in lawful authority and that in any event the covenant for renewal itself is not absolute but conditional in that the Defendant should not require it for its own use. As in this case, the Defendant wanted the demised land for its own purposes, the Plaintiff''s claim for renewal is subject to such requirement and, therefore, the suit for specific performance does not lie. The Plaintiff cannot by its own voluntary acts claim the benefits of the doctrine of part performance. The Defendant reiterates that it required the lands bona fide for its own use and the resolution of the Board made in this connection is significant enough. It denies the various allegations made by the Plaintiff attacking the bona fides of the Port Trust and would add that the suit is bad for want of proper notice u/s 117 of the Tuticorin Port Trust Act. Whilst stating that the Plaintiff is not entitled either for decree for specific performance or in the alternative for damages, the Defendant contends that the rent is ridiculously low and even if the Plaintiff is entitled to the privilege of renewal, the Court in its discretion has to refuse specific performance of such renewal of the contract at such a ridiculously low rent for a further period of 25 years.
On the above pleadings, the following issues were framed for trial
Whether lease stands automatically renewed by virtue of Clause 7 (b) of the lease deed for the reasons indicated in the plaint?
Whether under Clause 7(b) of the lease deed Defendant is absolutely bound to renew the lease except when it is required for the purposes of the Port of Tuticorin?
Whether Plaintiff paid the advance rent to the Defendant for the year commencing from 8th July 1968 after the termination of the lease, within the date fixed under the lease if not is he entitled for a renewal of the lease?
Whether Plaintiff paid the rents on 22nd August 1968 and July 1969 to Defendant as alleged by the Plaintiff and whether even if the said payments were true, Plaintiff fulfilled thet the terms of the lease to earn its renewal?
Whether the Defendant''s requirement of the leasehold for its purpose is not bona fide?
Whether the suit is barred u/s 14(2) of the Specific Relief Act?
Whether the contract of renewal is detrimental to Defendant trust and, therefore, unenforceable u/s II of the Indian Trust Act?
Whether the Plaintiff is entitled to the alternative claim for compensation and if so, what is the amount of compensation to be paid?
To what relief, if any, is the Plaintiff entitled ?
Additional Issue:
Whether the Plaintiff is the lessee under the lease deed, dated 10th May 1947 if not is the Plaintiff entitled to the reliefs claimed in the suit?
In an elaborate judgment, the learned Judge, after considering both the oral and documentary evidence granted a decree in favour of the Plaintiff, as prayed for. It is as against this, the Defendant has appealed.
Mr. G. Ramaswamy, the learned Counsel for the Port Trust, would lay sufficient accent on the point that Clause 7(b) of exhibit B-1, even if it projects a valid contract for renewal of the lease, is not an absolute one, but conditioned upon the demised land not being required for any of the purposes of the Port Trust. His case is that the surrounding circumstances and the course of correspondence cannot be a guide to gather the real content of the need of the Port Trust, but it is enough, if the Port Trust at any point of time proclaims that the suit land is required for its own purposes. According to him such a bare assertion without the same being corroborated at least in material particulars would be sufficient. According to Mr. G. Ramaswamy, the Auditors report exhibit A-4, picturised the increasing activities of the Pert Trust and if, therefore, the Defendant expressed under exhibit B-24, dated 11th October 1969 that the lands were required for constructing warehouses and godowns for stacking of cargo passing through the Port on the western side of the link road and for construction of staff quarters, such a communication by itself without further proof is enough for the Defendant to resume the leads on the ground that it bona fide required the suit lands for its own purposes. It is not his case that prior to October 1969, the Port Trust, ever gave out that the suit lands were required for the above purposes. He would also admit that prior to exhibit B-24 the Port Trust was postponing its assent for renewal on the ground that the matter was under active consideration of the Government. Having set out, therefore, the merits on which it legal contention is based, the learned Counsel for the Appellant says that Clause 7(b) is not enforceable, as it is vague within the meaning of Section 29 of the Indian Contract Act, as the material terms and conditions, such as the quantum of rent, etc., were not specifical agreed to, or is capable of ascertainment. His next contention is that the Clause 7(b) refers to a renewal on such terms, which are reasonable and such a contract is not specifically enforceable under law. His alternative plea is that even if such a privilege has been gained by the Plaintiff, it cannot be said that the Plaintiff could mandate the Defendant to renew the lease on the same terms with out a revision as regards the quantum of rent at least. One other contention is that the renewal of lease not being of a present demise and there being no vesting of an equitable estate under it, the new lease has to be sanctioned and granted by the State Government u/s 30, Clause (2) of the Act and the Government not having sanctioned the same, the Plaintiff cannot seek for a specific performance of the same.
Lastly, it is said in that any event, the relief for specific performance being a discretionary relief, the advantage that may arise from the land being resumed by the Port Trust would outweigh the hardship and inconvenience that might be caused to the Plaintiff as a lessee, if it fails to secure a renewal of the lease. Developing the contentions Mr. G. Ramaswamy referred to certain decisions of our Court and the other Courts. But he had to confess that a term under which the quantum of rent alone has been left to a mutual decision of parties might not by itself be a ground to refuse the renewal of a lease, if one such clause is there either especially or by necessary implication and if it was otherwise enforceable.
Mr. V.K. Thiruvenkatachari, appearing for the Plaintiff, laid stress on the fact that in the pleading, there was no specific paragraph to the effect that the renewal clause is void due to its vagueness in letter and content. After referring to the conduct of the Plaintiff, who was anxious and contemporaneously ready and willing to perform its part of the contract after having strictly observed the terms and conditions thereof, before the occurrence of the time for renewal he says that the fixation of rent even under the terms of Clause (b), though a difficult matter, is not an impossible one and having regard to the evidence in this case, the Court-can fix a reasonable rent, which ought to be quid pro quo for the grant of the renewal of the lease in favour of the Plaintiff, He painted out an apparent mistake in the decree, which was drafted by the lower Court, which has provided for further renewal of the lease and would finally urge that a contract providing for a renewal of the lease cannot be equated to a new contract within the meaning of Section 30(2) of the Port Trust Act and the question whether the Government''s approval for the grant of renewal is necessary of not, does not arise for consideration.
It is in the above conspective, we have to refer to the primary available material in the case to find whether the judgment of the lower Court is sustainable and the Plaintiff has a right to seek for specific performance.
It is no doubt true that in the pleadings the Defendant failed to take up the express plea that the term of renewal of the lease is void for vagueness u/s 29 of the Contract Act. The creation of a leasehold interest in immovable property; even if it were to commence in the future, tantamounts to a present demise within the meaning of Section 5 of the Transfer of Property Act. A lease as defined in Section 105 of the Transfer of Property Act, is a transfer of a right to enjoy such property made for a certain time ex-press or implied in consideration of a price paid or promised. In Section 5 of the Transfer of Property Act, a transfer of property, means, an Act by which a living person conveys property in present or in future to one or more other living person. Property, which has not been defined in the Transfer of Property Act has to be understood in its widest and most general legal sense. As ownership of property is the sum total of a bundle of rights held by the owner over such property, the transfer of a right to enjoy such property, which is appurtenant to such ownership and which forms part of such a bundle of rights, can also be the subject matter of transfer of property either in present or in future. If, therefore, the parties contemplated the transfer of a right to enjoy such property by implication, which is expressed in the clause for renewal in a deed of lease, then it would certain be a transfer of property within the meaning of Section 5 of the Transfer of Property Act, though its operation and implementation is postponed to a future date. If this is, therefore, the content of the right which is inhered in a clause for renewal in a parent lease, we are bound to treat this aspect as a legal objection, which springs from the very nature of the contract entered into between the parties. The mere absence of a plea in the written statement may not, in the circumstances, of this case, be sufficient to brush aside Without a treatment, the argument of Mr. G. Ramaswamy that the renewal clause is unenforceable because it is vague and, therefore, void u/s 29 of the Act.
We shall now take up Clause 7 (b) itself to find out whether the submission of the learned Counsel for the Appellant has merit.
Exhibit B-1 is the lease deed, dated 10th April 1947 executed by the Board of Trustees of the Port of Tuticorin in favour of the Tuticorin Salt Refineries Limited, which was later on changed as The Tuticorin Salt and Marine Chemicals Limited, which is the Respondent herein. After tracing the earlier history of the lease in favour of Mr. M. R. Mannar Aiyah and after setting out the extent of the demise as 300-30 acres, the conditions and stipulations under which the lease was granted, were thereafter set out. The period of the lease was to commence from 10th May 1947 and end with 7th of July 1968, this period being the unexpired period of the lease, which was originally granted by Mr. M. R. Mannar Aiyah, the lessee was to use the lands for purpose of construction and working of salt refineries and chemical industries factory. Clause 7, which is an independent clause by itself, relates the consequences of a breach of the covenants and the privilege which the lessee would gain in case there was no such breach. It would be convenient to extract the said clause:
It is hereby expressly agreed and declared by and between the parties that:
(a) Whenever there shall be a breach of any of the covenants, conditions or stipulations herein contained, by the lessee the lessor may at any time thereafter in addition and without prejudice to his other rights and remedies determine this lease by notice in writing addressed to the lessee and may require the lessee to vacate the said lands. If "the lessee does ''not vacate, when so required, the lessor may re-enter on the said lands, demolish any structure on the said lands and sell the materials of any structure demolished to reimburse itself of the cost of demolition. The lessee shall not be entitled to any compensation for such re-entry, demolition or sale.
(b) If the lessee shall have expressed a desire to renew the lease and shall have duly observed and performed, all the terms and conditions hereof, the lessor shall unless the said lands are required for the purpose of the Port of Tuticorin, grant to the lessee a new lease of the said lands by way of renewal for a further period of twenty-five years to commence from the date of expiry hereof. If the lease is not renewed as aforesaid the lessee shall be entitled to remove all the buildings, machinery, plant, installations, works or other structures, erected by the lessee on the said lands, within six months from the date of expiration of this lease without in any way damaging or injuring the said lands and without claiming any compensation.
(c) If any dispute, doubt or question shall arise between the lessor and the lessee touching the constructions, meaning or effect of this deed or any clause thereof or their respective rights and liabilities hereunder the same shall be referred to the arbitration of the Government whose decision shall be final and binding on the parties.
Clause 7 (b) is the clause, which is material for'' our purposes. Under it, the lessee should have expressed a desire to renew the lease after having observed and performed his part under the contract of lease. In such circumstances, the lessor is mote or lets mandated, unless the demised lands were required for purposes of the Port of Tuticorin to grant to the lessee a new lease of the and lands by way of renewal for a further period of 25 years to commence from the date of expiry. This sub-clause also entitled the lessee, in case the lease is not renewed to remove the fixtures including the building, etc., fixed by it on the lands within six months from the date of the expiration of the lease.
We have already seen that in the course of the working of the lease, about 37-50 acres were surrendered by the Respondent as lessees to enable the Appellant to put up a railway track to connect the harbour. In this suit, we are only concerned with the totality of the demised land less 37-50 acres. It is also brought out that about 1,100 acres of land adjacent to the demised property belonging to the Port, were surrendered by the Port for the benefit of the Tuticorin harbour project. In the course of the working of the lease the Port Trust expressed itself in uncanny terms in exhibit B-12 that the salt industry in the region played a significant part in the export trade of the Port of Tuticorin and that it should be preserved and nurtured. It would also categorically say that resumption of the demised land from the Respondent, which has established one of the best salt factories, would result in serious detriment to the salt industry as such. It is in that context, it recommended only a portion of the demised land being resumed for widening the link road, which was already in existence. It hat also recommended in the said letter that if the entirety of the demised lands were resumed, they would have to lie vacant for several years until the industrial development scheme in connection with the Port are drawn up. The Board of the Tuticorin Port Trust had occasion to consider whether the lands were required for purposes of the Port and if they are not required, the administration was of the view that the lease would have to be renewed for another 25 years in case the lessee expressed a desire to renew the lease. That this was its intention is clear from exhibit B-17, dated 19th April 1968. When the Board was apprised of such a position, it did not in so many words note that the lands were required for purposes of the Port Trust of Tuticorin. But on the other hand under exhibit B-18, dated 6th May 1968 it resolved to address the Ministry of Transport, Government of India to know whether the leased lands were needed for the purpose of the major Port of Tuticorin. A letter to that effect was sent by the Port Trust, Tuticorin to the Secretary to Government of Madras, Public Works Department, requesting them to address the Government of India in the above behalf and find out whether the demised lands with the Respondent were needed for purposes of the major port of Turicorin. To this, there was no definite reply except on 28th September 1968 under exhibit B-56, the Government of Madras informed the Port Officer that the matter was under consideration by the Government and that final orders would be communicated after a decision is taken.
Soon after the Port Trust expressed its view that the Respondent-lessee ought not to be lightly disturbed'' from the demised lands. Under exhibit B-53, dated 27th May 1968, the lessee wrote to the Chairman, Tuticorin, Port Trust as follows:
TUTICORIN SALT REFINERIES LIMITED, 283, WEST GREAT COTTON ROAD, TUTICORIN-2.
M.G.S.T.R.C. No. 8532 C.S.T.R.C. No. 6033
Post Box No. 41, Tuticorin. 27th May 1968.
Ref. P2/638/68.
To The Chairman, Tuticorin Port Trust, Tuticorin.
Dear Sir;
(Sub.--Port Trust Lands leased for salt manufacture--Renewal of lease requested.
300 30 acres of Tuticorin Port Trust lands were leased, under an agreement, dated 10th May 1947, to this company, viz., Messrs. Tuticorin Salt Refineries Limited, for manufacture of Common Salt and Bye-products. After relinquishing 34-50 acres for the Tuticorin Harbour Project and three acres for the Industries Department of the Madras State Government, we are in possession 262.80 acres only.
When the lands were originally leased for salt manufacture a part of it was barren land and most of it was marshy, -inundated by tidal waters. With great effort and by spending huge sums of money a Salt Works was constructed in the said lands.
We have been using the leased lands without breach of any of the conditions of the lease agreement. The present lease period expires on 7th July 1968. We desire to renew the lease for a further period of twenty-five years, as provided under Clause 7 (b) of the lease agreement.
In addition to the Port Trust lands leased to us, a contiguous strip of 163.34 acres of Salt Department lands were also taken on lease by this Company and a Single Unit of Salt Production was constructed in both the areas combined.
It is one of the most modern salt works in South India 30,000 tonnes of high quality Common Salt and 3,000 tonnes of Gypsum are produced in this factory.
The salt produced is supplied to Chemical Industries and is exported to Ceylon, beside being supplied for human consumption to various markets in Calcutta, Bihar, Orissa, Assam, etc.
During the year 1957-58, 9,636 tonnes of salt was exported by this Company to Indonesia, earning Rs. 1,86,863 as foreign exchange. In the recent exports to Ceylon, our factory''s contribution is as follows:
Year
Tonnes
Foreign Exchange earned in.
1962
4,904
3,64,816
1963
4,988
2,89,304
1964
2,146
1,19,130
1965
3,539
1,91,106
1966
�.
�.
1967
2,564
1,86,915
18,141
1,86,915
The Company has its own programme for manufacture of Chemicals from the Bitterns. Further, it will be supplying the Bitterns required by the Pilot Plants that are being set up by the Industries Department for the manufacture of Magnesium Carbonate and Potasium Chloride. A big Chemical Complex is going to be developed in this area very shortly.
This public limited company has 180 share holders with a paid-up capital of Rs. 6,32,910.
Up to 31st December 1967, Rs. 13,18,879 has been invested in the Salt Works.
A sum of Rs. 14,52,503 has been paid to Government as '' Cess''. As income tax and other taxes, this Company has paid Rs. 6,36,787.
The Salt Works is providing employment for about 300 persons and is paying over Rs. 1,80,000 annually, as wages, salaries, bonus, etc.
The Port Trust waste lands have been converted into a basine progressive industry with great potentials for development of Chemical Industrial and for export of salt and bye-products.
We, therefore, request you to renew the lease for a further period of twenty-five years with effect from 7th July, 1968.
Thanking you,
Yours faithfully, For Tuticorin Salt Refineries Limited, (Sd.)... Managing Director
The Respondent sought for a renewal of the lease for a further period of 25 years as provided under Clause 7 (b) of exhibit-B-1 Under exhibit B-21, dated 22nd July 1968 the lessees sent a sum of Rs. 199.50 being the advance rent payable for one year from 8th July 1968. The finding of the Court below is that such an advance was sent, that the Respondent has satisfactorily and affirmatively proved beyond doubt that the advance rent due for one year commencing from 8th July 1968 was tendered to the. Appellant on 22nd July 1968, and the advance rent for the year commencing from 8th July 1969 was tendered on 5th July 1969 and that the Port Office Manager evaded to receive the same, as he had not definite instructions in the matter and as the original lease expired by 8th July 1968. That there was such a tender by the lessee is Sot even disputed before us, though a large part of the trail was engaged in finding whether there was any such tender. We, therefore, accept the finding of the lower Court that there was such a tender and that in all other respects, the lessee-Respondent did observe and perform all the conditions of the lease entitling Km to obtain a renewal.
At this stage, it is necessary to consider whether the attitude of the Port Trust late in 1968, and in 1969 whereby it projected a case for the first time that the lands were required-for its own use, is based on any acceptable material and evidence let in by the Port Trust.
Even in the pleading, the Defendant would curso (sic) any that it is not necessary to state in detail the purposes of the Tuticorin Port for which the leasehold land has to be used. Let us consider, however, whether there is any material on record to show that it bona fide required the demised lands for its purposes. We have already referred to the fact that under exhibit B-12, dated 4th August 1966, the Port Trust itself championed the cause of the Plaintiff when it said that the salt industry should be preserved and nurtured and it paid a complement to the Plaintiff factory. Between 1966 and, 1968, nay, even September 1968, there was no whisper that the demised lands were required for the Port purposes. But on the other hand, the Port Trust without any change in its attitude, by its letter to the Government in exhibit B-19 asked them whether they needed the lands for purposes of the major Port of Tuticorin. Thus, till May 1968, the Port Trust did not need the lands. Even after the Plaintiff sought for a renewal of the lease, there is no evidence to show that there was any recognizable spurt of activity by the Port Trust which can prompt it as a reasonable institution to categorically say that the vast extent of about 200 odd acres was required for its purposes. Excepting for filing a plan, which was apparently prepared for purposes of the case, exhibit B-43, the Port Trust has not chosen to let in any oral evidence, as well, or any other acceptable material to show that it required it for its own purposes. It is in these cic(sic) instances Exhibit B-24, dated 11th October 1969 was written by the post Trust. A note is put up under Exhibit B-24 by the Port Officer recommending resumption of the lands for the purpose of constructing warehouses and godowns and stacking of cargo passing through the Port on the western side of the link road and for construction of staff quarters. The subject came up for discussion from time to time before the Board. Even then, we do not find enough data for us to hold that the Port Trust did really require the lands leased, for its purposes. But under exhibit B-27, after several adjournments, the Board of Trustees resolved to resume the lands as required for purposes of the existing Port of Tuticorin and in furtherance of these, the Port Trust writes to the Government under exhibit B-29, dated 3rd November 1969 asking them not to take any further action on its earlier communication under which it requested whether the Government wanted the leased lands for its purposes. As a sequence to the above proceedings, exhibit A-1, dated 4th November 1960 was issued calling upon the Respondent to vacate the lands, as they were required for the purpose of the Port. Under exhibit B-55 a detailed letter is sent wherein the bona fides of the Port Trust was questioned and the Port Trust was put on notice that its action was at plain variance with the Port Trust''s previous conclusions deliberately arrived at, especially with reference to the demised lands. The Port Trust was accused that the demand had a political tinge in it and obliquely motivated and smells communal prejudice. To this, there was no reply. As late as 1970, the Government asked the Tuticorin Port Trust to inform the Plaintiff that the lands are required for Port purposes and therefore, the lease will not be renewed. Apparently, the Government purported to exercise its powers u/s 30 of the Port Trust Act. In the light of these facts, we have no hesitation in accepting the contention of Mr. V.K. Thiruvenkatachari that the late demand of the Port Trust in 1969 under exhibit B-24, expressing their desire to resume lands, after having said a year before that it was not so required for its use, is a circumstance which by necessary implication throws abundant light on the lack of bona fides on the part of the Port Trust. Thiru G. Ramaswamy appearing for the Port Trust was unable to point out to us as to what were the circumstances or events which took place between May 1968 and November 1964 which competed the Port Trust to change its attitude from one end to the other. No witness speaks of any survey having been made or any public requisition for the expansion of the Port, or any inconvenience felt by the Port in the matter of the loading and unloading of the cargo on the western side of the link road, etc: The Port Trust which is a public body, has to place before the Court, such impres, sive material in support of its case that the demised lands ate required for its purposes. But on the other hand, the sudden volte-face in 1969, cannot by itself be taken as so to cut at the root of the rights which have already become vested in the lessee. The application for renewal of the lease in accordance with Clause 7 (b) was made in May 1968. There was no categorical reply to it and not even a suggestion that the renewal was not possible because of the prospective intention of the Port to resume the lands. What prompted the Board to change its mind as between 1966 and 1969 is not known. But one thing appears to be reasonably clear that the bare uncorroborated statement that the lands were required for constructing godowns and staff quarters and for loading and unloading purposes appears to be an after thought and this was only weaved out for purposes of stemming the usual progress of the channel of rights which, by them, became vested in the Plaintiff in the matter of renewal of the lease. We are, therefore, unable to agree with Mr. G. Ramaswamy that by seeking to resume the lands by issuing a notice exhibit B-24, there has been a complete snapping up of the rights to which the. Plaintiff is entitled.
We are, therefore, left with the legal contentions argued at length on either side by Counsel. We shall take them up seriatim-
The first contention is that Clause 7 (b) of exhibit B-1 extracted above is void for uncertainty. No doubt Section 29 of the Indian Contract Act makes all agreements the meaning of which is not certain or capable of being made certain void. The well-known maxim, which affords a key for the understanding of the text of Section 29 of the Indian Contract Act is certum est quod certum reddi potest. This means that that is sufficiently certain which can be made certain. Therefore, the expression capable of being made certain in Section 29 of the Indian Contract Act is elastic. As long as a working rule appears or is implied in an agreement or contract, which would make it certain, then such agreements or contracts should not be avoided. Another maxim which would be opposite for citation is Id certum est quod reddi certum potest. In fact, this Court in Khivraj Chordia and Others Vs. Esso Standard Eastern Inc., expressed itself thus while annotating Section 29 of the Contract Act thus:
It is fundamental that notwithstanding the restrictions and qualifications imposed by operation of technical rules, a liberal construction of written documents is to be made, because of the simplicity of the laity, and with a view to carry out the intention of the parties and uphold the document. It is also well-established that words used in written instruments ought to be made sub-servient not contrary to the intention of the parties. It is necessary, in such circumstances to find the real import of the situation by the use of the prescribed yardstick under the contract itself and render justice to the parties. The well-known maxim is acquam et bonum est lex legum, which means that which is equal and good is the law of laws. It would be the duty of Courts to interpret liberally written instruments with reference to the intention of parties and far from avoiding an instrument should attempt to further the intention of the parties by adopting the instrument and thus doing substantial justice between the parties. Ita seriptum est is the first principle of interpretation of documents. But to this, a necessary corollary is always annexed with a rider compelling parties or Courts, if they are called upon to interpret an instrument, to bear in mind not only the script of the instrument, but also the sententia, that is the intention of the parties, as inhered in the instrument, itself.
In the instant case, it is not difficult to appreciate that Clause 7 (b) is not so uncertain, as it is hesitantly claimed to be. That the demised lands have to be re-granted by way of a renewed new lease for a further period of 25 years to commence from the date of expiry of the lease is so clear. The intention of the parties, was that such a new lease of the lands by way of renewal was to be granted after the expiry of the term. But what is urged is that there is no term fixing the consideration for such renewal and it is in this sense that the contract is void for uncertainty. The fixation of rent, if not specifically agreed between the parties, is not a clause; which is incapable of made certain. In the words of Coutts Trotter, Chief Justice, in the decision in Secretary of State of India in Council v. Volkart Brothers 52 M.L.J. 443.
If all that is left at large is something readily determinable on the materials afforded by the contract, then the Court in not precluded from interfering because something is left open.
The rent, which is the consideration for a lease, is a matter, which is capable of ascertainment even in cases where the lessor and the lessee differ in such fixation of a fair and an equitable rent. The Courts can afford a remedy in such situations where the parties to a lease specifically agreed to a renewal of the same, but left the matter of fixation of rent open. The Courts can interfere and extend its arm to solve the apparent difficulty and fix a fair rent and give effect to the intention of the parties. In fact Mr. G. Ramaswamy could not further his contention, though initially he raised it by asserting that Clause 7 (b) is vague for its uncertainty. He attempted to distinguish the cases where in such situations a reference was made to a clause such as, on such terms, which art reasonable, etc., and would urge that there is not even such a recitation in the clause under consideration and, therefore, it is uncertain. If we accept that the parties agreed to renew the lease for a further specific period, then, the consideration for the least for such immovable property, which is indeed an invaluable price paid or promised either in shape of money or in kind can certainly be found by Courts in case there is a lacuna in the drafting. We have already referred to the principle governing such situations.
Learned Counsel referred to a decision in Surendra Nath Sen v. Dinabandhu Naik 4 I.C. 535 where a Division Bench of the Calcutta High Court held that where in a lease there is a covenant for the renewal of the settlement after the expiry of the present term, but no terms are specified as to the term of years and the amount of rent, the Court was of the view that the covenant is vague and no Court would give effect to them. But the same High Court in later cases held a different view. In Secretary of State for India in Council v. A.H. Forbes 17 I.C. 180 another Division Bench of the Calcutta High Court said that if the option does not state the terms of renewal, the new lease will be for the same period and on the same terms as the original lease, in respect of all the essential conditions thereof, except as to the covenant for renewal itself. They relied for this view on several English decisions. Even so, in Lani Mia v. Md. Easin Mia AIR 1917 Cal. 509 in unequivocal terms the Court expressed the view that a covenant in a lease that upon the expiry of its term the tenant will take a fresh settlement and the landlord will grant him such a settlement, is not inoperative in law on the ground of vagueness and uncertainty. It was also of the view that where there is a covenant for renewal, if the option does not state the terms of renewal, the new lease would be for the same period and on the same terms as the original lease in respect of all the essential conditions thereof, except as to the covenant for renewal itself.
In fact the Supreme Court in Damodhar Tukaram Mangalmurti v. The State of Bombay (1959) S.C.R. 180 had to consider the term in a lease deed wherein the lessee secured an option to renew the lease, but subject to such fair and equitable enhancement of rent as the lessor shall determine. The expression ''fair and equitable'' rent to be fixed by the landlord in case an occasion to renew the lease arises was held to be not void for uncertainty. The Court was of the view that it was open to the lessee to ask the Court to determine what was fair and equitable enhancement. Hill and Redman on the Law of Landlord and Tenant, 15th Edition, at page 169 quoting a decision in Lewis v. Stephenson 67 L.J. Q.B. 296 re-states the position that if the option does not state the terms of renewal, the new lease will be for the same period and on the same terms as the original lease, so far as those terms arise out of the relationship, of landlord and tenant. There is, therefore, abundant authority for the preposition that a term in a lease deed, which confers an entitlement on the lessee to obtain a renewal under certain conditions and if such prescriptions to secure such entitlement are strictly adhered to by the lessee and if he exercises the option in time, and as mandated, the lessor is bound to grant a lease for a further term as agreed to on the same terms and conditions excepting for the renewal of the lease and for the same rent even if such rent has not been expressly fixed under the original contract of lease. But at the same time the arm of the Court can be extended in such cases to fix a fair and equitable rent having regard to the march of tune and the prevailing circumstances, if a dispute arises as regards the fair and equitable rent to be paid by the lessee on such a renewal of the lease. We shall advert to this aspect of the fixation of fair rent for the renewed period of the demise at a later stage,
The second contention of Mr. G. Ramaswamy is that as a portion of the demised premises was surrendered in the course of the working up of the parent lease, the integrity of the demise is lost and, therefore, there cannot be a suit for specific performance, compelling the lessor to renew the lease for the balance portion of the extent of the demise. Reliance is placed upon the decision in Secretary of State for Indiain Council v. Volkart Brothers 52 M.L.J. 443. That was a case in which the lessee during the term of the lease transferred its interest in a portion of the property. On the expiry of the term of the lease, they sued for a declaration that they were entitled to a renewal of the same for 99 years as contemplated in the parent lease, as regards the whole of the property demised by the said lease or alternatively as regards the part retained by them and sought for a decree for specific performance of the covenant for renewal. The Privy Council said that the claim for renewal of the whole was untenable, further the lessees having lost interest in a portion of the property and as the covenant was plainly applicable to "the premises as a whole" and might easily vary if applied to specific portions held under varying conditions and circumstances did not permit renewal of a portion. The learned Law Lords laid accent on the peculiar facts in that case wherein the lessee himself transferred the interest in a portion of the property and brought about the disintegration of the lease. In the case under consideration, the lessee was not responsible for the breaking up of the totality of the lease. The lessee had to surrender 37-50 acres of the demised property, as it was required by the Port Trust authorities for putting up of a railway to connect the harbour. This surrender was by mutual consent and for the benefit of the lessor. In the Privy Council case, the lessee surrendered a part of the demised property to further his own interest. That is not the case here. If this distinction is borne in mind and if we also take into consideration the fact that the lessee was prepared to pay the agreed rent even for the part of the demised property left over, we have to conclude that the parties never intended that the integrity or the wholeness of the lease was ever split so as to result in prejudice to the lessee when an occasion for renewal of the lease arises as per the terms of the parent lease.
21 The next contention of Mr. G. Ramaswamy is that the renewal sought not being a present demise and there being no equitable estate vested in the lessee and as Clause 7 expressly refers to a new lease to be granted, sanction of the Government u/s 30(2) of the Tuticorin Port Trust Act, 1924, is necessary. We must at the outset point out that no such approach was made either in the trail Court or even in the memorandum of grounds of appeal before us. Reliance was placed upon the decision in Mahendra Nath Srimani Vs. Kailash Nath Das and Others, . There, the Calcutta High Court took the view.
The coverant for renewal does not operate as a present demise but is a mere contract, which can only be given effect to in case of refusal to perform it by the lessor, or by enforcing specific performance of the contract by the lessee. These covenants do not form part of the demise, and as the contract of the lease and the covenant for renewal are two separate contracts, the ratification of the lease does not necessarily amount to a ratification of the covenant for renewal.
No doubt the right of renewal is viewed as a privilege granted to the lessee, and, therefore, is said to project a contract as between the parties which can be enforced. The decision of the Calcutta High Court is prima facie against the Appellant in that the aggrieved lessee is entitled to seek for specific performance of the privilege gained by him, which is in the nature of an enforceable right. But what is sought to be urged is that Clause 7 contemplates a new lease and Section 30(2) of the Tuticorin Port Trust Act, according to the learned Counsel envisages the sanction of the State Government every time a lease exceeding 10 years, of immovable property is made. If the purport of the decision of the Calcutta High Court is that a clause for renewal in a parent lease duly approved by the Government, should also be taken as a new lease requiring sanction u/s 30(2) of the Act, we respectfully express our dissent. It is common ground that the original lease was sanctioned by the Government. Clause 7 which contains the renewal clause and which in turn, therefore, vested an enforceable right in the lease deed was one of the clauses, which had the previous approval of the State Government. Under this clause, the lessee is entitled to obtain a further lease as set out in Clause 7 (b). In the circumstances, therefore, it cannot be said that it is a new lease, which is in the contemplation of the parties. Once the previous sanction and approval of the State Government is even to the parent lease, which included a covenant of renewal, then if the lessee has strictly observed the terms of the lease, and if he has gained the privilege by such adherence to the conditions under the lease, then a second sanction of the State Government would not be necessary u/s 30(2) of the Act. In the instant case, the lessee has performed its part of the contract and there is no finding or even a representation before us that it has committed any breach. As the relevant date for consideration of the weight of the entitlement of the lessee to obtain a renewal is the date of termination of the original lease and as on that date, it has strictly observed the covenants on its part, the fact that Section 30(2) of the Act refers to previous sanction, would not compel the lessee in the case before us to await such previous sanction, for it could through a decree of a Civil Court specifically enforce its right to obtain such renewal, which clause for renewal has had the previous approval of the State Government, when the parent lease was entered into. Once in a given situation the lessee by adherence to the terms of the lease obtains an entitlement or a privilege for a renewal of the lease, the lessor cannot withhold their consent capriciously or unreasonably. The argument that a fresh sanction of the Government is necessary in the case of a renewal is against the context of the lessee''s entitlement to get a renewal of the lease as found in the recitals of the lease deed itself. The position could be reconciled only if the lessee''s privilege to obtain the renewal is accepted by a Civil Court, when it is approached for relief. Otherwise it would lead to an anomalous position: The lessee will have a right under the common law to file a suit for specific performance and the lessor can ignore lightly such a vested right by invoking Section 30(2) of the Tuticorin Port Trust Act on the untenable ground that a fresh sanction of the State Government is required. This contention also, therefore, fails.
We have already expressed the view that we are accepting the finding of the Court below that the Plaintiff tendered the rent as pleaded and the opinions of the trial Court on issues 3 and 4 are well-founded.
The last surviving question, which we reserved for consideration is whether the lessee is entitled to a renewal on the same terms and conditions of the parent lease or as to whether this Court is compelled in the circumstances of the case to fix a reason able rent for the grant. We have already seen that Clause 7 (b) makes a reference to a grant of the lease of the lands by way of renewal for a further period of 25 years. It does not recite the quantum of the rent or the manner by which it has to be fixed. Though the Defendant claimed a rent of Rs. 30, it has not furthered its case by letting in evidence in support of the same. The lower Court, having regard to the facts of the case, hinted that Rs. 30 per acre might be taken as the fair and equitable rent for the demised premises. But it left it to the Defendant, to take all possible actions permitted under the law to get the rent at the enhanced rate. The law is settled now that when a lease has to be renewed and the lessee''s privilege under the parent lease to obtain a renewal in a suit for specific performance has become absolute, then the Court in exercise of its equitable jurisdiction can fix a fair and equitable rent notwithstanding the fact the parties did not expressly contract as to the quantum of rent. We have made this position clear in our earlier judgment in Khivraj Chordia and Others Vs. Esso Standard Eastern Inc., .
Mr. V.K. Thiruvenkatachari appearing for the Respondent does not seriously contend that Rs. 30 per acre, having regard to the economics in the case and the surrounding prevailing rests in the locality for similar purposes, is not reasonable. Calculating at this rate and as the same is not disputed, we fix the fair and equitable rent payable by the Respondent to the Appellant at Rs. 7,884 per annum, which rent is payable by the lessee as and from 8th July 1968 and this shall be the rent for the remaining period of the lease.
In the decree of the Court below a mistake has crept in. The lower Court while decreeing the suit for specific performance of the contract of lease of the plaint schedule lands in favour of the Plaintiff for a period of 25 years from 8th July 1968, omitted to note that the renewal clause contained in Clause 7 b could not again be one of the terms of the lease, which is to govern the parties for the above period. We, therefore, modify the decree of the Court below to this extent, namely, that the Plaintiff would be entitled to the decree as prayed for subject, however, to thet condition that the Plaintiff pays for a period of 25 years from 8th July 1968 a rent of Rs. 7,884 per annum throughout the period and subject to all the conditions referred to in the parent lease exhibit B-1 except for the covenant for renewal contained in Clause 7 (b) and the parties herein shall concur in the execution and registration of the relative lease deed according to law. The Respondent shall deposit the rent for the period commencing from 8th July 1968 till 8th July 1975 within three months from this date.
The appeal is partly allowed, but there will be no order as to costs.