Long possession under an acted-upon government arrangement can support rent-free title and bar land revenue assessment.

An invalid but long-acted-upon governmental arrangement for land could still support a limited title where the possessor entered into open, continuous possession for a specified public purpose and made substantial improvements over decades. On those facts, the immunity from rent was treated as an integral incident of that title and as a specific limit on the Government's power to assess under section 8 of the Bombay City Land Revenue Act, 1876. The Court further recognised that the statutory limit could be nil, so total exemption from land revenue was legally possible on the footing of the arrangement and long possession. The Government's assessment claim therefore could not be revived.

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Issues: Whether the respondent Corporation had established a right in limitation of the Government's right to assess the land under section 8 of the Bombay City Land Revenue Act, 1876, so as to secure exemption from land revenue on the footing that the grant was intended to be rent-free and had been acted upon for decades.

Analysis: The majority held that the Government Resolution of 1865, though ineffective as a formal grant or enforceable contract for want of the statutory formalities, evidenced a clear intention to put the Corporation in possession of the land free from rent for market purposes. The Corporation and its predecessor entered into possession under that resolution, spent large sums on the land and buildings, and held the property openly and continuously for more than 70 years. On that footing, the possession was treated as ripening into a limited title to hold the land perpetually free from rent for the stated purpose. The immunity from rent was treated as an integral incident of that title and therefore as a right in limitation of the Government's power to assess. The Court further held that a specific limit under section 8 could be nil, and that the Government could not, on the facts of the case, distinguish between rent and land revenue so as to revive the assessment claim.

Conclusion: The respondent Corporation succeeded in establishing a right in limitation of the Government's right to assess, and the assessment could not be levied.

Final Conclusion: The appeal failed and the decree in favour of the respondent Corporation was maintained.

Ratio Decidendi: Where land is held under an invalid but acted-upon governmental arrangement for a specified public purpose, and the possessor acquires a title by long, uninterrupted possession consistent with that arrangement, the immunity from rent or assessment may constitute a specific limit to assessment within the meaning of section 8 of the Bombay City Land Revenue Act, 1876, including a total exemption where the limit is nil.

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