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RAM MANOHAR LOHIYA

NATIONAL LAW UNIVERSITY

2017-2018
“Meaning of ‘Benefits to Arise Out of Land’ in S.
2(6) RA and S. 3(26) GCA”

SUBMITTED TO: submitted by:

Dr. Manish singh sriya sonkar
Associate professor section ‘b’
Rmlnlu roll no.148
Vth semester

Enrollment no. 150101144

ACKNOWLEDGEMENT
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It feels great pleasure in submitting this project to Dr. Manish Singh, Associate Professor
(Law), Dr. RMLNLU, without whose guidance this project would not have been
completed successfully.

I would like to sincerely thank my seniors, whose suggestions and guidance assisted
me throughout the entire tenure of making the project.

Last but not the least, I would like to express my heartfelt gratitude towards my
parents and friends who guided me and helped me at every possible step.

Sriya Sonkar

Vth Semester

TABLE OF CONTENTS
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1. Introduction

2. Objective

3. Hypothesis

4. Relevant Cases

(i) Anand Behera v State of Orissa (1955) 2 SCR 919

(ii) Shantabai v State of Bombay AIR 1958 SC 532

(iii) Bihar Eastern Gangetic Fishermen Cooperative Society Limited v Sipahi Singh

(1977) 4 SCC 145

(iv) State of Orissa v Titagarh Paper Mills Company Limited AIR 1985 SC 1293

(v) Bibi Sayeeda v State of Bihar (1996) 9 SCC 516

5. Findings

6. Contribution/Conclusion

7. References
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INTRODUCTION

The phrase ‘benefits to arise out of land’ means profits derived from land without having any
substantial control over the land. Benefit arising out of land is also known as ‘profit a
prendre’.

Sec 2(6) of RA says that: “immovable property includes land, buildings, hereditary
allowances, rights to ways, lights, ferries, fisheries or any other benefit to arise out of land,
and things attached to the earth or permanently fastened to anything which is attached to the
earth, but not standing timber, growing crops nor grass.”

Sec 3(26) of GCA says that: “Immovable property shall include land, benefits to arise out of
land, and things attached to the earth, or permanently fastened to anything attached to the
earth.”

The courts have recognised a very limited number of ‘profits a prendre’. There is a numerus
clausus of property entitlements and ‘profits’ are one of the classes of this closed list of
proprietary entitlements. Courts are reluctant to include more rights in this list because
property rights are very durable and creation of a number of entitlements as profits would
make it difficult for the subsequent transferees to keep a check on the prior property
entitlements.
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OBJECTIVE OF STUDY

In my project report, I will discuss five SC cases that talk about this phrase and help us better
understand the meaning of ‘benefits arising out of land’ and as to what all rights are covered
under it or how to construe as to whether a particular right is a benefit arising out of land
through the help of case laws on this point. My oral submissions will basically expand upon
the facts of the cases, the judgement of court and the reasoning behind the judgement. I will
also try to justify my hypothesis in my oral submissions.

HYPOTHESIS

The hypothesis of my project is that in essence each and every right is a benefit arising out of
land since there cannot be any activity in this world that can be done in isolation of land.
Therefore, it is quite unreasonable to make a class of entitlement called ‘benefits’ because in
this way each and every activity would have to be recognised as a proprietary right. A
principle/ doctrine that classifies a certain right as proprietary just because it is already
recognised by court and does not recognise a similar right as proprietary is, according to me,
arbitrary and unreasonable.

RELEVANT CASES

1. Anand Behera v State of Orissa (1955) 2 SCR 919

FACTS: The petitioner had obtained a license to catch and appropriate all fish in specific
sections of the Chilka lake from its proprietor (Raja of Parikud). With the passing of the
Orissa Estates Abolition Act, 1951 ownership of the estate vested in the State of Orissa. State
of Orissa refused to recognize the license of petitioner. Petitioner contended that their
fundamental rights under Art 19(1)(f) and Art 31(1) is being infringed and they also
contended that ‘catching and appropriating fish’ is a transaction relating to sale of future
goods (which is the fish) and hence the Act which is applicable only to immovable property
would not be applicable on him.
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LEGAL PRINCIPLE UPHELD: The court held that the lake is an immovable property and
therefore the petitioner’s right to enter in that estate (which he did not own) and carry away
fish from the lake is a ‘profit a prendre’ and in India it is regarded as a benefit that arises out
of the land and as such is immovable property.

REASONING BEHIND JUDGEMENT: The SC while holding that right to catch and carry
away fish from specific sections of the lake over a specified future period is a license to enter
on the land coupled with a grant to catch and carry away the fish and this grant is a profit-a-
prendre, said that:

“The petitioners claim that the transactions were sales of future goods,
namely of the fish, in these sections of the lake, and that as fish is moveable
property Orissa Act of 1952 is not attracted as that Act is confined to
immoveable property. If this is the basis of their right, then their petition
under Article 32 is misconceived because until any fish is actually caught the
petitioners would not acquire any property in it.”

“If the petitioners’ rights are no more than the right to obtain future goods
under the Sale of Goods Act, then that is a purely personal right arising out of
a contract to which the State of Orissa is not a party and in, any event a
refusal to perform the contract that gives rise to that right may amount to a
breach of contract but cannot be regarded as a breach of any fundamental
right.”

Thus, as the sale of grant to petitioner was oral. However, a right related tangible immovable
property (in this case, the fish), if it is more than Rs 100 needs to be registered (Sec 54 TPA).
As there was no registration in this case therefore no title or interest was passed to the
petitioner.

2. Shantabai v State of Bombay AIR 1958 SC 532

FACTS: Shantabai’s husband had granted her the right to take and appropriate all kinds of
wood from certain forests in his Zamindary through an unregistered document. With the
passing of the Madhya Pradesh Abolition of Proprietary Rights (Estates, Mahals, Alienated
Lands) Act, 1950, all proprietary rights in land vested in the State U/S 3 of this Act and the
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petitioner could no longer cut any wood. She obtained an order U/S 6(2) of the Act from the
Deputy Commissioner and started cutting trees. The Divisional Forest Officer took action
against her and passed an order directing that her name might be cancelled and the cut
materials forfeited. She moved the State Government against this order but to no effect.
Thereafter she applied to this Court under Art. 32 of the Constitution and contended that the
order of Forest Officer infringed her fundamental rights under Arts. 19(i)(f) and 19(1)(g).

LEGAL PRINCIPLE UPHELD: This case basically relates as to what constitutes ‘standing
timber’. However, the SC has in its judgement also talked about the phrase ‘benefit arising
out of land’ and held that right to enter upon land and cut trees is a benefit arising out of land.
The SC has based its decision on this point on the Anand Behera case.

REASONING BEHIND JUDGEMENT:

“In my opinion, the document only confers a right to enter on the lands in
order to cut down certain kinds of trees and carry away the wood.”

“It is not a ‘transfer of a right to enjoy the immoveable property’ itself (s. 105
of the Transfer of Property Act), but a grant of a right to enter upon the land
and take away a part of the produce of the soil from it. In a lease, one enjoys
the property but has no right to take it away. In a profit a prendre one has a
licence to enter on the land, not for the purpose of enjoying it, but for
removing something from it, namely, a part of the produce of the soil.”

“Following the decision in Ananda Behera's case, I would hold that a right to
enter on land for the purpose of cutting and carrying away timber standing on
it is a benefit that arises out of land. There is no difference there between the
English and the Indian law.”

3. Bihar Eastern Gangetic Fishermen Cooperative Society Limited v Sipahi Singh

(1977) 4 SCC 145

FACTS: The fishery rights in the Gangapath Islampur Jalkar which was with the Fishermen
Cooperative Society from 1974 to 1975 for Rs. 150000 was made in favour of the respondent
Sipahi Singh for the period 1975 to 1976 as a result of the public auction at which he offered
the highest bid of Rs. 165000. However, the respondent requested for a remission in the
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amount at which the settlement had been made in his favour, on the ground that he had
suffered a heavy loss during the year 1975-76, due to the unlawful activities of the appellants
and if this was not possible, then in the alternative give him a continuance of fishery rights
for the years 1976-1977 and 1977-1978 so that he could recoup his losses. The Government
agreed to extend the time for his fishery rights in consideration of a deposit of Rs 165000.
However, the government changed its mind later and settled the fishery rights with the
appellant. Sipahi Singh (the respondent) challenged this order by filing a writ petition under
Art 226 of the Constitution.

LEGAL PRINCIPLE UPHELD: The SC affirmed Anand Behera v State of Orissa case.

REASONING BEHIND JUDGEMENT: The SC said that there is no binding and enforceable
contract between the State of Bihar and Sipahi Singh because the requirements for a
government contract to be valid as provided in Art 299 of the Constitution were not complied
with.

“The right to catch and carry away the fish being a 'profit a prendre' i.e. a
profit or benefit arising out of the land, it has to be regarded as immovable
property within the meaning of the Transfer of Property Act, read in the light
of s. 3(26) of the General Clauses Act. If a 'profit a prendre' is tangible
immovable property, its sale has to be by means of a registered instrument in
case its value exceeds Rs. 100/- because, of section 54 of the Transfer of
Property Act. If it is intangible, its sale is required to be effected by, a
registered instrument whatever its value. Therefore, in either of the two
situations, the grant of the 'profit a prendre' has to be by means of a
registered instrument. Accordingly, the transaction of sale of the right to
catch and carry away the fish if not effected by means of a registered
instrument, would pass no title or interest.”

4. State of Orissa v Titagarh Paper Mills Company Limited AIR 1985 SC 1293

FACTS: Section 3B of Orissa Sales Tax Act, 1917 empowered the State Government to
declare goods or class of goods liable to be taxed. The government issued a notification
through which standing trees and bamboos agreed to be severed were liable to be taxed on the
turnover of purchase. Writ petitions were filed by a group of those people who had entered
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into bamboo contracts and timber contracts with the State. The respondent (group of
petitioners who had entered into agreement with the State for the felling, cutting obtaining
and removing bamboos from forest areas ‘for the purpose of converting the bamboo into
paper pulp or for purposes connected with the manufacture of paper or in any connection
incidental therewith’, i.e., bamboo contracts) contended before the High Court that the
subject matter of the bamboo contract was not a sale or purchase of goods but was a lease of
immovable property or was a creation of an interest in immovable property by way of grant
of ‘profit a prendre’ and due to this the royalty payable under the bamboo contracts could not
be made exigible to either sales tax or purchase tax.

LEGAL PRINCIPLE UPHELD: The SC after referring to the terms and conditions of the
bamboo held that “felling, cutting, obtaining and removing bamboos from forest areas for the
manufacture of paper” is a benefit to arise out of land and it would thus be an interest in
immovable property.

REASONING BEHIND JUDGEMENT:

“The Bamboo Contract is not a lease nor is it a grant of an easement to the

respondent company, as it was not a grant of any right for the beneficial
equipment of any of the respondent company. In addition to the right of entry
there are other important rights flowing from the contract. It is a grant of a
profit a prendre which in Indian law is a benefit to arise out of land and thus
creates an interest is immovable property. A profit a prendre is a benefit
arising out of land and in view of section 3(26) of the General Clauses Act, it
is ‘immovable property’ within the meaning of the Transfer of Property Act.”

“Bamboo contract is not a contract of sale of goods. It is a grant of exclusive

right and licence to fell, cut, obtain and remove bamboos. The person giving
the grant the Governor of the State, is referred to as "grantor"; the
consideration payable is "royalty" which is not a term used in legal parlance
for the price of goods sold. It is not an agreement to sell bamboos standing in
the contract area with the accessory licence to enter upon such area for the
purpose of felling and removing bamboos nor is it for a particular felling
season only. It is an agreement for a period ranging from fourteen, thirteen
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and eleven years with the option to renew the contract for further terms of
twelve years.

The payment of royalty has no relation to the actual quantity of bamboos cut
and removed. The respondent company was bound to pay a minimum royalty
and the royalty paid was always in excess of the royalty due on the bamboos
cut in the contract areas.

The Bamboo contract conferred upon the respondent-company a benefit to

arise out of land, namely, the right to cut and remove bamboos which would
grow from the soil coupled with several ancillary rights and was thus a grant
of a profit a prendre. Being a profit a prendre or a benefit to arise out of land
any attempt on the part of the State Government to tax the amounts payable
under the Bamboo Contract would not only be ultra vires the Orissa Act but
also unconstitutional as being beyond the State's taxing power under Entry 54
in List II in the Seventh Schedule to the Constitution of India.”

The SC looked into the substance of the contract by reading into the language of the contract
and held that bamboo contracts are a grant of profits-a-prendre, i.e., benefits arising out of
land.

5. Bibi Sayeeda v State of Bihar (1996) 9 SCC 516

FACTS: Certain municipal plots were transferred to Sayed Imam by his predecessor
Zamindar. He constructed several shops in 4 plots of the land and let them out to diverse
tenants on monthly rentals. The state wanted to acquire these shops under the Bihar Land
Reforms Act. The question raised in this case was about the meaning of the word ‘Bazar’
within Section 4(a) of the Bihar Land Reforms Act 30 of 195 or short the 'Act'. The
appellants (legal representatives of Syed Imam) claimed in the writ petition that the shops are
‘homestead’1 within the meaning of Section 2 (j) of the Bihar Land Reforms Act and these
shops are not bazars. They do not vest in the State and, therefore, they remain to be the
property of the appellants. The High Court repelling the contention held that ‘hats’ or

1
"Homestead" means a dwelling house either used by the proprietor or tenure- holder for the purpose of his own
residence or for the purpose of letting out on rent together with any courtyard, compound, attached garden,
orchard and out-buildings and includes any outbuildings used for purposes connected with agriculture or
horticulture and any tank, library and place of worship appertaining to such dwelling house were treated as a
homestead.
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‘bazars’ are vested in the State. A congregation of buyers and sellers is enough to constitute a
bazaar and the right to hold a bazar is an interest in the land.

LEGAL PRINCIPLE UPHELD: The Supreme Court affirming the decision of the High Court
held that right to hold a bazaar is a benefit arising out of immovable property.

REASONING BEHIND JUDGEMENT:

“...holding a hat or bazar or mela is only a mode of user by the owner of his
land. Just as he can enjoy the land belonging to him in other ways, he can use
it for the purpose of having a concourse of people - buyers and sellers and
others for a hat, or bazar or mela subject, as in the case of other user, to the
requirement of other use. The right to hold mela has always been considered
in this country to be an interest in land, an interest which the owner of the
land can transfer to another along with the land or without the land.”

FINDINGS

In order to determine whether a particular grant is a ‘benefit arising out of the land’ the
Courts have in some cases looked at the substance of the agreement and the terms and
conditions incorporated in the agreement by the parties (as was done in the case of State of
Orissa v Titagurh Paper Mills Ltd.). Some of the other landmark judgements of the SC which
discuss about ‘benefits’ rely on the Anand Behera case (eg: Shantabai v State of Bombay;
Bihar Eastern Gangetic Fishermen Cooperative Society Ltd v Sipahi Singh). So basically,
there is no specific test laid down to classify a grant as a ‘benefit’ which makes it very vague.
Courts have relied on precedents to recognise a right as ‘benefit’ and the classification of this
type of a grant is not based on any sound legal test/principle.
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CONTRIBUTION/ CONCLUSION

The phrase ‘benefits arising out of land’ is a very vague terminology that has been
incorporated in the Registration Act and the General Clauses Act after looking at the English
cases. ‘Benefits’ have no where been defined in any statute nor does any judgement clearly
give an exhaustive list of ‘benefits’. ‘Benefits arising out of land’ should be excluded from
the class of property entitlements in order to ensure uniformity and less vagueness in the law
of property.

Suppose that a person ‘A’ is given a right to extract latex from rubber trees from a parcel of
land which belongs to ‘B’. This right can be a ‘profit’ because ‘A’ is entering in the land of
‘B’ and is extracting latex and taking it away for the purpose of selling it/producing rubber.
So the right of ‘A’ to extract latex is a benefit arising out of land as ‘A’ has no substantial
control over ‘B’s’ land. The relationship between A and B is predominantly through the land
and extracting latex from the land is a right that basically accommodates a piece of land.

The numerous clausus principle recognises only a limited number of pre-existing grants as
‘profits’. The right to extract latex from a piece of land is not a pre-recognised ‘benefit’ but I
see no reason why it cannot be recognised as a ‘benefit arising out of land’ while the right to
extract fishes from a lake is a ‘profit’. Now if I were to present a contradictory situation, I
could argue from the other side that latex, being the produce of rubber tree can be considered
as growing crop and as the S. 2(6) RA specifically mentions that growing crop is not
immovable property so the right to extract latex also would not a property right over
immovable property.

Either the legislators should make their minds clear as to what exactly are ‘benefits arising
out of land’ and provide and exhaustive list of ‘benefits’ in a statute or else this class of
entitlement should be scrapped from the list of proprietary rights rather than recognising any
pre-existing right as a ‘profit’ just because it was recognised as a proprietary right in some
case.
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REFERENCES

Bare Acts:

1. The Transfer of Property Act, 1882.

2. General Clauses Act, 1897

3. Registration Act, 1908

Books:

1. Soli J Sorabjee, Commentaries on the Transfer of Property Act (2nd Edn., Wadhwa &
Co., Nagpur)

2. Mulla, Transfer of Property (7th Edn., N.M. Tripathi Pvt Ltd, Bombay)

3. Dr. Poonam Pradhan Saxena, Property Law (2nd edn., LexisNexis Butterworth
Wadhwa, Nagpur, 2011).

4. Manohar & Chitaley, The Transfer of Property Act (7th edn., vol. 1, All India
Reporter, Nagpur, 2012).

5. Dr. Avtar Singh, Textbook on The Transfer of Property Act (3rd edn., Universal Law
Publishing Co. Ltd., New Delhi, 2012).

Web Sources:

1. http://www.manupatra.com

2. scconline.com