Part I: Introduction
In 2017, the Supreme Court (‘SC’) allowed the Maharashtra State Government to acquire parts of two prominent buildings in Mumbai – the Reliance Centre in Ballard Estate, and the ‘Express Building’ owned by Express Newspaper at Nariman Point for its ‘Anti-Corruption Bureau, Prohibition and Intelligence Bureau’, and for use by the State Government’s Controller of Rationing, Food and Civil Supplies Department respectively. This came after the Bombay High Court’s decision to quash the acquisition under the Land Acquisition Act, 1894 (‘LAA’) on the grounds that the LAA only allowed for the acquisition of land and not buildings. Given that in both cases, the lands on which the buildings stood were owned by the State Government, more specifically by the Port Trust, the Bombay High Court’s decision was overturned. This essay doesn’t seek to delve into the ratio of the case, and whether a building or a part of it can be acquired when the land on which it stands already belongs to the Government. Rather, it focuses on the ownership arrangement that gave rise to the dispute i.e. dual ownership.
The concept of dual ownership is well recognised in India and is a deviation from the English maxim of “quicquid plantatur solo, solo cedit” i.e. whatever is affixed to soil becomes a part of the soil. Simply, dual ownership allows a piece of land, and a superstructure built on it to be owned by different entities. Despite almost uncontested judicial recognition, there is an acute lack of legal literature exploring the nuances of dual ownership in India. Owing to this, there may be issues in registering both sale and mortgage over superstructures without the underlying land. In the absence of an established position, the validity of such sales and mortgages largely depends on the interpretation of regulations by sub-registrars, leading to inconsistencies. Recognising this vacuum, in Part II, the essay traces the legal origin of dual ownership in India. In Part III, the essay explores the issue of the sale of a superstructure without the land it stands on, and in Part IV – the sale of land without the superstructure on it.
Part II: Legal Justifications
It is pertinent to highlight Sec. 108(h), Transfer of Property Act, 1882 (‘TOPA’), which is premised on the principle of dual ownership and allows lessees to remove all things attached to demised land even after the determination of the lease. The SC in K.A. Dhairyawan v. J.R. Thakur explains the scope of Sec. 108(h), clarifying that the ownership of structures that are built on leased land by the lessee is owned by the lessee and not the lessor, ensuring that the property is left in the same condition in which it was received.[1] It must be noted that Sec. 108 opens with a non-obstante clause, making an exception for contracts or local usage contrary to the provision. Thus, in cases such as the Dhairyawan case, where the lessee had agreed to hand over the superstructures to the lessor without the right to receive compensation contractually, an exception to Sec. 108(h) is allowed by the SC.
While the concept of dual ownership often exists as a subset of the lessor-lessee relationship, this may not always be the case. The term dual ownership in this specific context can be traced back to 1957 when it was used by the Bombay High Court.[2]However, the innate concept was in fact prevalent long before this, prominently discussed by the Privy Council in Narayana Das Khettry v Jatindra Nath Roy Chowwdhary & Ors., where the Privy Council reiterated that the English maxim of quicquid plantatur solo, solo cedit has at the most only limited application in India. The justification for this aberration comes from the fact that the laws or customs of India do not reflect any traces of the existence of an absolute rule that whatever is affixed or built on the soil becomes a part of it and is subjected to the same rights of property as the soil itself.[3] The phrasing in Narayana Das Khettry highlights that the position regarding dual ownership was not yet conclusively solidified. By 1961, however, the SC in Bishan Das & Others v. State of Punjab & Others clearly upheld the principle of dual ownership. Additionally, the Bombay High Court around this time had started employing the term “dual ownership” more consistently post Vinayak Gopal Limaye.
Part III: Transfer of Ownership of a Structure Without the Land it Stands on
The dual ownership arrangement poses two practical questions – the sale of land and the sale of the superstructure. The essay in this section looks at judicial precedents around the sale of a structure built on land, without the land beneath it.
The Patna High Court in Katihar Jute Mills Ltd., v. Calcutta Match Works(1958) directly addresses the question, and answers it in the affirmative. Interestingly, the Madras High Court in Park View Enterprises vs. State Government of Tamil Nadu (1989) also addresses the question but deals with a scenario where the ownership of both the land and the superstructure is vested in the same entity/person. The Court held that the owner has the right to deal with the land and the superstructure separately. The Gujarat High Court too, in Sakarchand Chhaganlal vs. Controller of Estate Duty, Gujarat (1968) explicitly upholds the principle of dual ownership, and goes a step further in Amrutlal J. Trivedi vs. Smitaben B. Sheth (2000). In this case, a piece of land was leased to a party, that built a superstructure, which was sold to the defendant. The case deals with the issue of illegal subletting by the defendant. However, the fact that the lessee sold the superstructure solely, independent of the land validly, implicitly validates the proposition that a superstructure and land can be sold separately. Thus, the principle of dual ownership is recognized, but its application varies across states, leading to potential inconsistencies.
The SC has however, though not in so many words, acknowledged this arrangement through cases like Jagir Singh and Ors. vs. State of Bihar and Ors (1975); however, the case was around the issue of acquisition, not transfer of property. Interestingly, the issue of dual ownership has been discussed in various Government acquisition cases. The status quo remains that acquisition of a building/part thereof without acquiring the underlying land is permissible, most recently clarified in the State of Maharashtra and Ors. vs. Reliance Industries Ltd. and Ors. (2017), as discussed before. While one may argue that the same rationale should apply to sales as well, the same has not been explicitly held by the SC.
Thus, despite the SC’s silence on the issue of the sale of a structure without the land beneath it, given its position on land acquisition, and the position of various HCs, a strong case is made in favour of the SC potentially answering the question in the affirmative. As noted above, this also aligns with SC’s broader jurisprudential approach to property rights, evident through Thakoor Chander v Ramdhone Buttacharjee, and other cases, which broadly held that improvements, including superstructures, do not, by the mere fact of their attachment to the soil, become the property of the owner of the soil.[4]
Part IV: Transfer of Ownership of the Land Parcel Solely, Independent of the Superstructure
While other cases that have already been discussed which validate dual ownership, do find applicability in answering this question, the essay looks into the specific treatment of such cases. The Allahabad HC too, on similar lines, in Ashok Kumar and Ors. Vs. Chief Controlling Revenue Authority and Ors. (2011) deals with a case where solely the land was sold without the structures on it. It must be noted that in this case, however, the seller did not have ownership rights over the structures. This thus raises the obvious question of whether a seller when in ownership of both the land and the superstructure can choose to transfer just the land. While the Allahabad HC fails to address this, the Madras HC in Park View Enterprises vs. State Government of Tamil Nadu (1989) deals with a scenario where the ownership of both the land and the superstructure is vested in the same entity/person. The HC here held that the owner has the right to deal with the land and the superstructure separately.
The SC has made its view on this question clear in the Reliance Industries case, holding clearly that the land upon which the structure is standing need not be acquired for the acquisition of the building, with no explicit distinction drawn between sale and acquisition.
Part V: Conclusion
This vacuum in judicial understanding also gives rise to the issue of inadequate lender protection. In case of mortgage of superstructure, when a borrower defaults, the lender typically forecloses on the mortgage, selling the collateral to recover the outstanding debt. However, without the underlying land as security, the value of the superstructure alone may not suffice to cover the borrower’s debt. Further, a superstructure without land rights often has reduced market appeal. Potential buyers may be unwilling to purchase such a structure, given uncertainty about long-term use and ownership.
While foreign to English Law, the concept of dual ownership is not unique to India. Multiple jurisdictions recognize such rights in different forms. Notably, France recognizes Droit de Superfice i.e. “surface rights”, which allow separate ownership of land and buildings/superstructures that lie on it. In India, while there is abundant judicial precedent to establish the universal application of dual ownership, the specific terms of what constitutes dual ownership differ. Despite getting recognized by the Privy Council decades back, most cases around dual ownership were restricted to the valuation of land and the superstructure for the purposes of stamp duty and other taxes, and the issue of land acquisition by the State. Given the Courts’ failure to directly address this issue in clear terms, the practical question of its recognition by land authorities at the grassroot level becomes a pertinent issue, necessitating clarity on the issue of the rights of stakeholders in a dual ownership arrangement.
This blog is written by Siddhant Shinde, IV Year student at BA LLB (hons.) at MNLU Mumbai.
[1] Vasudeva Nambudripad v Valia Chathu Achan, 24 Mad 47 (FB): 10 Mad LJ 321.
[2] Vinayak Gopal Limaye vs. Laxman Kashinath Athavale 1956
[3] Thakoor Chunder Poramanick v. Ram Dhone Bhuttacharju 6 Suth. W.R. 22
[4] See Thakoor Chunder Poramanick v. Ram Dhone Bhuttacharju 6 Suth. W.R. 22; Dr. K. A. Dhairyawan And Others vs J. R. Thakur And Others, and Narayandas Khettry v Jitendra Nath Roy Chowdhury & Ors.