Land Laws Project.docx

Land to society is a free gift of nature. Society has not incurred any cost to obtain the land. Further, since land is not producible by man, its supply is absolutely inelastic, although its productivity can be increased by various improvements such as clearing, draining, introduction of irrigation facilities etc. These improvements are made by the efforts of man and therefore constitute capital goods. As the quantity of land available for use is scarce relative to demand, a price must be paid for its use. This price for the use of land, or what is commonly called land rent, is obtained by those people in the society in whom the ownership of land is vested. Since these private owners of land have not incurred any real cost to bring land into existence, the rent which they obtain is a surplus payment to them. The whole of the earnings of land i.e., land rent (excluding, of course, the return on capital investment in the form of improvements made on land by the owners) are surplus, since land is there in any case and does not require any costs or human efforts to be made to bring it into existence. Thus, the term rent which was originally employed for the price paid for the use of land came to be used for the surplus earnings of any factor of produc-tion in excess of the cost incurred to obtain its service. Since the land in its entirety to the whole society, being free gift of nature, does not require any cost to be paid in order to make it available to the society for use in production, the whole earnings of land are regarded as surplus. Rent as a payment to the landlord for hiring or use of land by the tenant and the concept of economic rent as surplus over transfer earnings which applies to all factors of production are altogether different concepts and therefore should not be confused with each other. Modern economists generally call payment for hiring of land as land rent and surplus over transfer earnings of the factors as economic rent. Marshall extended the concept of rent to cover the earnings (net of depreciation and interest charges) of fixed capital equipment like machinery in the short run. In common parlance, rent is defined as “a usually fixed periodical return made by a tenant or occupant of property to the owner for the possession and use thereof; especially an agreed sum paid at fixed intervals by a tenant to the landlord1.”

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Merriam Webster Dictionary, https://www.merriam-webster.com/dictionary/rent visited on 2nd Oct, 2017.

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“Economic rent is an excess payment made to or for a factor of production over the amount required by the property owner to proceed with the deal2.” The word ‘rent’ is derived from the French word Rente, which means “payment due; profit; income3.”

India as a country earns the most from the primary sector, i.e., agriculture and its allied activities. It is post-independence that the secondary and tertiary sectors witnessed a boom in job opportunities and employment. However, India faces severe discrepancy when it comes to land distribution, ownership and income. Most of the farmers either own a small holding or work on another’s land. Some, who can afford to, take a land holding on rent and cultivate. Similarly, in the state of Punjab, people hire land on rent for a specific purpose and period. For smooth transition of land from the landowner to the tenant and back, to avoid loopholes and unnecessary delay; the legislators framed the ‘Punjab Tenancy Act, 1887’. The present Act has been amended several times to suit the needs of the dynamic society and economic system. It administers any land that comes under the Punjab government. For years, the issue of tenant-rights was a major concern for the legislators. The officers who dealt with cases related to Punjab tenancy laws had no legal authority or precedent to recognise or refuse the rights of a tenant. They were unable to exclude favouritism and treat some class of men different as compare to others. In the year 1868 an enactment was passed which afforded relief to thousands of agriculturists who otherwise had been placed at the mercy of greedy proprietors. These proprietors enhanced value of land improving their income and reduced all the tenants to mere tenant-at-will. The landlords had the arbitrary power of will and pleasure to evict the tenant whenever it suited their purpose. The lines on which this Act proceeds, Is to give a fixed occupation of land to certain classes of tenants who are entitled to such consideration with reference to the customs and the laws of the country. At the same time laws were made to secure the landlord an enhanced rent under certain conditions and the right to inject a tenant if the court allows. However, the subsidiary provisions of the 1868 Act were found to be defective and therefore to provide for certain acknowledged cases as well as to supply other omissions of the original, document a new 2

Economic Rent, Investopedia, http://www.investopedia.com/terms/e/economicrent.asp visited on 2nd Oct, 2017. 3 Online Etymology Dictionary, http://www.etymonline.com/index.php?term=rent visited on 2nd Oct, 2017.

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legislation was passed in 1887. The new laws are not exhaustive on the law of landlord and tenant in Punjab. The old legislation stated in clear words that it was being enacted with a view to define and amend the law relating to certain matter connected with the tenancy of land in Punjab. The new legislation of 1887 was enacted to amend the law relating to the tenancy of land in Punjab the general principles of law of landlord and tenant still in force. The act has been enacted to regulate the relationship of landlord and tenant and is mostly based on the customary law of the land. Section 4 of the act lays down certain important definitions – (1) “land” means land which is not occupied as the site of any building in a town or village and is occupied or has been let for agricultural purposes or for purposes subservient to agriculture, or for pasture, and includes the sites of buildings and other structures on such land; (2) “pay” with its grammatical variations and cognate expression, includes, when used with reference to rent, “deliver” and “render”, with their grammatical variations and cognate expressions; (3) “rent” means whatever is payable to a landlord in money, kind or service by a tenant on account of the use or occupation of land held by him; (4) “arrears of rent” means rent which remains unpaid after the date on which it becomes payable; (5) “tenant” means a person who holds land under another person, and is, or but for a special contract would be, liable to pay rent for that land to that other person; but it does not include(a)

an inferior landowner; or

(b) a mortgagee of the rights of a landowner, or (c)

a person to whom a holding has been transferred, or an estate or holding has

been let in farm, under the Punjab Land-revenue Act, 18871, for the recovery of an arrears of land-revenue or of a sum recoverable as such an arrears ; or (d)

a person who takes from the Government a lease of unoccupied land for the

purpose of subletting it; (6) “landlord” means a person under whom a tenant holds land, and to whom the tenant is, or but for a special contract would be, liable to pay rent for that land; (7) “tenant” and “landlord” include the predecessors and successors in interest of a tenant and landlord, respectively; 3

(8) “tenancy” means a parcel of land held by a tenant of a landlord under one lease or one set of conditions;

Section 5 to section 11 deal with the right of occupancy of the tenant. Right of occupancy is the right of tenancy on the land for its possession by the tenant which was not previously owned by the tenant. The first class of tenant include every tenant who on 1st November, 1887 had for more than two generations in the male line of descent To a grandfather a grand uncle and for a period not less than 20 years has been occupying land without paying rent beyond the land revenue, rates or cesses grandfather a grand uncle and for a period not less than 20 years has been occupying land without paying rent beyond the land revenue, rates or ceases. In this regard, the tenant in occupation on 1st November, 1887 shelf on the first generation, his father the second generation and his grandfather the third generation. The second class of tenant includes – (i)

A person who once owned the land, and has ceased to own the land for any reason except 1. Forfeiture by the Government, and 2. Voluntary act. However, he continues to occupy the said land and has to prove the same.

(ii)

A person who can establish his right of occupancy that he was settled in village as a cultivator where the land is situated. He can also prove his settlement by founder of the village and cultivation in that village. He was associated with the founder, during the initial stages of foundation in development of the village. The settlement must have been completed on or before 1st October, 1868. He has to also prove that he was settled with founder and payment of rent was less than the rate of Land Revenue and Cesses of that certain land.

(iii)

Another proof of occupancy rights that tenant had continuous occupancy till thirty years. His payment of the rent was not greater than of the amount of the Land Revenue of the certain land.

(iv)

A person who has been the Jagirdar of the estate or part of the estate for equal to or more than 20 years.

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The tenants of third class would include – (i)

A person who can prove that he was recorded as tenant in Record-of-Rights (ROR) before October 21, 1868. Provincial Government had sanctioned this right. He must also prove continuous occupancy of such land.

(ii)

A person who has exchanged his land or portion of land under the same landlord shall not affect his status of occupancy and he shall remain occupancy tenant.

A person may establish his right of occupancy of the grounds other than specified under Tenancy Act. His claim may be based upon the comparison with other land. If the rights were acquired after 15 years’ occupancy in other adjacent village, he may also claim right on that base. There may be customary rules and promise of landlord that he not ejects tenant. Trespasser can claim occupancy right against another occupancy tenants. If there is barrier between law and custom, then custom shall prevail. Some of the customary occupancy tenants are – (i)

Adhlapi custom and Taraddakdar – it is prevalent in South-western Punjab. According to this, a man who digs a well on another man’s land with is permission becomes the proprietor of half of the land which he commands. If he holds possession for 50 or more years, and during that period cleared the waste or incurred expenses for improvement of such land, he is entitled to occupancy rights.

(ii)

Lathband – a kind of tenant who has raised dams on a water body surrounded by land and brought the land around it under construction.

(iii)

Basika Opahu – it is prevalent in Kangra district. Under this, a tenant is induced to settle down on someone else’s land and build a farmhouse and live there. He is entitled to occupancy rights.

(iv)

Morni Tenure Hills Tracts.

(v)

Sirsa – Butimars.

However, mere lapse of time as provided in the Act would not entitle a person to have occupancy rights. Similarly, joint owners will not have the same rights by the virtue of being joint owners. 5

Section 12 – Respective rights of landlord and tenant to produce: Both landlord and tenant have certain rights as follows: (i)

First charge: Rent which payable for the time is being is the first charge on produce. Arrears of the rent are not taken into consideration. Tenant cannot deprive his landlord from rent by selling the produce. Rent is deduct-able from the sale proceed.

(ii)

Rights of cultivation: A tenant has right to tend (manage), cut, and harvest the produce. Landlord cannot interfere in his act of cultivation.

(iii)

Possession of produce: Tenant has exclusive right of possession of all the produce except where rent is taken by division of produce.

Rent by division of produce: Landlord and tenant have certain entitlements over produce where rent is payable on its division: (i)

Exclusive possession till division: It is entitlement of the tenant to hold produce until it is divided.

(ii)

Presence of landlord: It is entitlement of landlord to keep himself present at the time of division of produce. He also may take part in division.

(iii)

Possession of share: Landlord may carry away his own share after the completion of division without any interference.

Section 13 – Commutation of rent: Rent can be paid in many ways such as: (i)

Division: Division of produce pays it.

(ii)

Fixed rate: It keeps in view of nature of corps grown. It includes also fixed amount.

(iii)

Area: Recognized measure of area is another way of rent’s payment.

(iv)

In gross: Rent can be taken in gross on the tenancy.

(v)

Partly: Rent also can be taken partly of above methods.

Consent: Consent of both landlord and tenant are compulsory for any transaction.

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Maximum rate of rent: No in any circumstances rate of rent shall be more than 43% of total produce. Exception: There is an exception in this rule. If any tenant holds any land on more favourable conditions at the time of enforcement of law, he shall continue to do so and this Act shall note affect him. Payment of government dues: Government dues shall be applicable at the same ratio in which they share the produce. If landlord takes 60% produce as rent, landlord shall be liable to pay Land Revenue 60% and tenant shall pay 40% of Land Revenue. Exception: There is another exception to this rule. If tenant has been paying revenue at lesser rate, he shall not pay more. There is another exception to this rule. If share of tenant in produce increases than 60%, he shall pay additional amount of Land Revenue according to his share in produce, which now has been increased. Settlement of dispute: If any dispute arises between landlord and tenant in respect of rent payable by latter to former, it shall be referred to Revenue Court for settlement. Extinction of occupancy tenancy: After the enactment u/s 114 of The Punjab Tenancy Act, no person shall become occupancy tenant. Not only present occupancy has been abandoned but also the door for future occupancy tenancy has been closed. Status of existing laws: Any enactment of present law, contract, decree of Court, order of Court, or other authority have been superseded by the new enactment. Law relating to extinction: Present or existent occupancy tenancy has been extinguished. Now no fresh occupancy tenancy shall be created in any way. Present occupancy tenants shall be made landowners with or without making compensation, whatever government shall decide. Law relating to property other than private: As it is clear from the contents of S. 114 of the Act that only private property is liable to extinct occupancy tenancy without allowing afresh occupancy but there is exception to this rule as to the property of government and evacuee. Where there, occupancy tenancy is existed on the said land not only it shall continue to exist

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but also afresh occupancy tenancy can be acquired. Law does not affect the tenancy existed on the property other than private. Section 39 – Grounds of ejectment of occupancy tenant: As a general rule, occupancy tenant cannot be ejected without any proper reason. Law provides certain reasons, which governs the ejectment of occupancy tenant. A tenant is liable to be ejected on the following grounds: (i)

Inconsistent use of land: Land is given for a specific use. It may include cultivation or animal husbandry. If tenant has used land for the purpose, which was not allowed to use, he can be ejected from his occupancy tenancy.

For example, land is given for the purpose of cultivation and tenant has used it for the construction of tank. This is an act inconsistent with the purpose for which it was let out. This is, that’s why, land becomes unfit for a specific use and law gives protection to its owner in order to keep land fit for specific use. (ii)

Failure in cultivation for payment of rent in kind: There may agreement for the payment of rent in kind other than of cash. Tenant is supposed to cultivate the land in the manner of customs in that locality in which land situates. If tenant fails to cultivate his land in the specific manner without any sufficient cause, he loses his right to continue occupancy tenancy. He is liable to eject from such land.

(iii)

By decree of Court: Where tenant commits default in payment of rent, landlord reserves right to invoke at the door of Court. Court after hearing the case may pass a decree against tenant. Tenant is liable to satisfy the decree of Court, i.e., he has to pay rent including all arrears. If he remains fail to satisfy decree of Court, he shall be liable for ejectment.

Section 40 – Grounds of ejectment of tenant for a fixed term: Tenant for a fixed term is a tenant whose term of tenancy exceeds from one year. He becomes tenant in result of contract with his landlord. Apart from contract with landlord, also decree or order of competent authority may create tenancy for a fixed term exceeding one year. He can be ejected from his tenancy on the following grounds: (i)

Expiry of contract: As it is clear from its nomenclature that this is a tenancy for a specific period provided in a contract. As soon as this fixed period expires, tenancy automatically expires. 8

For example, a contract provides tenancy for five years. As the last day of fifth year passes, tenancy of fixed term automatically expires. There may be other reasons of his ejectment before expiry of fixed term. He may be ejected from his tenancy, on following grounds, before expiry of a fixed term. (ii)

Inconsistent use of land: Land is given for a specific use. It may include cultivation or animal husbandry. If tenant has used land for the purpose, which was not allowed to use, he can be ejected from his occupancy tenancy.

For example, land is given for the purpose of cultivation and tenant has used it for the construction of tank. This is an act inconsistent with the purpose for which it was let out. This is, that’s why, land becomes unfit for a specific use and law gives protection to its owner in order to keep land fit for specific use. (iii)

Failure in cultivation to payment in kind: There may agreement for the payment of rent in kind other than of cash. Tenant is supposed to cultivate the land in the manner of customs in that locality in which land situates. If tenant fails to cultivate his land in the specific manner without any sufficient cause, he loses his right to continue tenancy for a fixed term. He is liable to eject from such land.

(iv)

Under provisions of contract, decree, or order: This is wide enough provision of law which covers various aspects of ejectment. Tenant can be ejected on any reason, which is justified.

For example, tenants have mortgaged land in violation of contract or he fails to pay arrears under any decree of Court or he fails to comply with the order of competent authority without any justification. He is liable to be ejected from his tenancy.

Section 41 – Ejectment of tenant from year to year: A tenant who is neither occupancy tenant nor a tenant of a fixed term is tenant year to year. Such tenant can be ejected in following cases:

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(i)

Expiry of contract: As it is clear from its nomenclature that this is a tenancy for a specific period provided in a contract. As soon as this fixed period expires, tenancy automatically expires.

For example, a contract provides tenancy for one year. As the last day of first year passes, tenancy of fixed term automatically expires. (ii)

By notice: Landlord may get extinguished tenancy of year to year before expiry of period. He requires giving notice to Revenue Officer for such intention. If Revenue Officer satisfies that there is sufficient reason of his ejectment and it shall not cause any objection on the part of tenant, may order for the ejectment of a tenant of year to year.

Section 42 – Restriction on ejectment: Where law protects the interest of landlord there law takes into consideration the interest of tenant also. Protection of tenant is as important as the protection of landlord is. Law has imposed two restrictions on the ejectment of tenants. These are as follows: (i)

Decree for arrears of rent: Mere non-payment of rent or arrears is not sufficient cause for his ejectment. If Court satisfies then may issue decree for ejectment but if he pays rent or rent including arrears, he cannot be ejected from his tenancy. It means satisfaction decree in relation with rent, payment or rent saves his tenancy.

(ii)

Absence of rights of tenancy: Where tenant has not right of occupancy tenancy right or has not right for year to year tenancy, he can be ejected. But if subsequently he acquires such right, he cannot be ejected.

Deposit of rent in Court: There may be certain cases in which tenant is obliged to deposit rent in Court rather than payment to landlord. There are only two cases in which tenant may deposit rent in cash to Court: (i)

Refusal of receipt of rent: When landlord refuses to receive rent in cash or refuses to acknowledge the rent so payable, tenant may deposit rent to Court. Refusal of landlord may include making out a case of arrears of rent against the tenant. It is sufficient cause on the part of tenant for the deposit of rent in Court.

(ii)

Doubt of entitled person: There may be situation whereby tenant may doubt, as to who is the person entitled to receive the rent. This situation may arise in the cases where several landlords hold land under joint ownership or where there is dispute 10

between mortgager and mortgagee, as to who shall receive rent. This is sufficient cause and ground for the applicant to deposit rent to Court.

Cash: It is notable point here that rent must be only in the form of cash. Payment of rent in kind is not subject to deposit in Court. Court is only competent to receive cash and not kind. Effects of deposit rent: Rent so deposited in Court has certain effects. They may be mentioned as such: (i)

Discharge of an obligation: Tenant is responsible to pay rent to his landlord. As he deposits rent in Court after refusal of landlord, it is deemed that he has discharged his duty to pay rent to his landlord in respect of rent due. Deposit in Court discharges him from any liability

(ii)

Notice of Revenue Officer: As soon as Revenue Officer receives the deposit, he issues the notice of such receipt to the person entitled or having such interest. It is upto Revenue Officer that who are interested or entitled persons for the receipt of rent.

(iii)

Payment of rent: After the issuance of notice, Revenue Officer pays rent to the person to whom he thinks entitled to receive amount.

(iv)

Retention of deposit: If there is any case pending in competent Court regarding such

payment, Revenue Officer shall retain the deposit until the decision of

component Court. As soon as Court decides about the entitled person, Revenue Officer pays deposit to him. (v)

Privilege of Revenue Officer: Here Revenue Officer has qualified privilege. No person can institute suit against Revenue Officer as to his act under law regarding the receipt of deposit and notice to possible claimants.

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BIBLIOGRAPHY

1. Online sources Merriam Webster Dictionary, https://www.merriam-webster.com/dictionary/rent Economic Rent, Investopedia, http://www.investopedia.com/terms/e/economicrent.asp Online Etymology Dictionary, http://www.etymonline.com/index.php?term=rent 2. Book Chowdhary Harshali, Punjab & Haryana Land Laws, Central Law Publications, First ed., 117-164.

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