India Ltd. & ANR. Vs. Board of Trustees, Port of Calcutta & Ors 
INSC 1789 (7 December 2009)
SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO. 5158 OF
2005 STONE INDIA LTD. & ANR. ....APPELLANT(S) VERSUS BOARD OF TRUSTEES,
PORT OF ORDER SURINDER SINGH NIJJAR, J.
This appeal is directed against the judgment and order dated
5.2.2004 passed by the High Court at Calcutta in MAT No.3993 of 2000. By the
aforesaid judgment the Division Bench has upheld the judgment and order dated
30.8.2000 passed by the learned Single 2 Judge whereby the learned Single Judge
dismissed the writ petition challenging the newly added clause permitting 25%
increase in rent every ten years and the huge amount on account of arrears of
rent claimed by the respondents from the appellants for the plots of land
leased to the appellants.
The appellants are assignees of two separate leases under the
respondents, Calcutta Port Trusts. The leases were granted in respect of the
Plots at Taratola Road.
leases were granted by the respondents in the year 1947 for an initial period
of 30 years. The lease deeds contained identical provisions for two further
renewals of 30 years each, at the option of the lessees. According to the
appellants the renewal clause in both the leases provided that the renewal
would be "at such rate of rent to be fixed by the Commissioners in
accordance with the rates then prevailing for land in the neighbourhood of a 3
similar character and with and subject to the like covenants, conditions and
provisions as are in and by these presents reserved and contained."
According to the appellants at the time of renewal the rent was liable to be
enhanced (taking into account neighbourhood rents), but all other provisions of
the original lease were to be maintained.
The appellants expressed the desire for a renewal of the leases
for another 30 years, which expired on 30.6.1977. The respondents by
communications dated 17.10.1977 and 29.12.1977 offered the appellants, renewal
of the leases of the Plots on similar terms and conditions. However, the
letters contained an identical stipulation as follows:
The renewal will be subject to the following conditions, besides other general
conditions as embodied in the Trustees' standard lease from:-
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 4 (iv) the lease will contain clause
reserving to the Trustees the right to raise the rate of rent every 10 years
during the initial period of the lease and also during the optional period of
the lease upto 25% for the schedule rent prevailing at such time whichever is
At the same time the letters purported to enhance the rent from
the original sum of Rs.2,484.37 to Rs.17,226.40(an increase by 700%). Appellants
protested against the unilateral illegal action of the respondents.
the appellants started to pay the enhanced rent, under protest. The draft lease
deeds which were sent to the appellants on 15.11.1978 were not signed by the
appellants. On 20.1.1983, the respondents purported to notify a schedule of
rent charges specifying the rent to be charged for plots of land in various
localities. By letter dated 23.7.1987, the appellants were informed about the
increase in rent under the lease deeds, upto the schedule rate of rent, under
the clause for enhancement of rent every ten years.
The Notification dated 20.1.1983 and the letter dated 23.7.1987
were challenged by the appellants by way of writ petition under Article 226 of
the Constitution of India. The aforesaid writ petition remained pending in the
High Court till 30.8.2000.
We may notice here the submissions made before the High Court. It
was submitted that the notification dated 20.1.1983 would not be applicable to
the appellants as the rights and obligations of the parties were governed by
the original renewal clause. Hence communication dated 23.7.1987 was arbitrary
and an abuse of discretionary powers. It was claimed that the increase in rent
is arbitrary and violates Article 14 of the Constitution of India. It was also
pleaded that purported increase of rent is whimsical. Therefore, a prayer was
made for recall of the notification dated 20.1.1983 and notification dated
On the other hand, it was pleaded by the respondent-Board of
Trustees, Port of Calcutta that the respondents had the power under Section 49
of the Major Port Trusts Act, 1963, inter alia, to frame scale of rates from
time to time for use of the properties belonging to the respondents- Port Trust
of Calcutta. It was also submitted on behalf of the respondents before the
learned Single Judge that the matter is essentially contractual in nature. The
appellants having voluntarily entered into the lease agreements were bound to
accept the renewal on the stipulated conditions.
The appellants submitted before the learned Single Judge that in
view of the law laid down by the Supreme Court in numerous judgments including
the judgment in the case of Ramana Dayaram Shetty vs. International Airport
Authority of India and Ors., AIR 1979 SC 1628, it was no longer permissible for
the respondents to 7 submit that no writ would lie against the Port Trust in
contractual matters. It would also be against the ratio of the law laid down by
this Court in Jamshed Homusji Wadia vs. Board of Trustees, Port of Mumbai and
another, (2004) 3 SCC 214.
On the other hand counsel for the respondents submitted that the
matter is covered against the appellants by a judgment of the Division Bench of
the Calcutta High Court in The Board of Trustees for the Port of Calcutta &
Anr. vs. Brooke Bond India Ltd. and Anr.(dated 21.08.1997 being matter No.2419
of 1986). According to the respondents the said judgment which also pertains to
the Port of Calcutta had specifically held that the parties are squarely
governed by the explicit terms and conditions in the contract. If it is
provided that at the end of 10 years the landlord would be at liberty to raise
the rent either at the rate of 25% of 8 the rent originally fixed or as per the
schedule of the rent as notified at the relevant time, the action of the Board
would be legally justified. The Division Bench had even gone so far as to say
that even an opportunity of hearing would not be necessary to be given to the
Learned Single Judge, upon consideration of the above submissions,
held that the appellants voluntarily entered into the lease/licences with the
the matter is purely contractual. Therefore, the appellants are not entitled to
seek redress under Article 226 of the Constitution for any breach of the
covenants contained in the lease agreements. It is also held that the Major
Port Trust Act, 1963 is applicable to all major Ports. Sections 48 and 49 of
the Act empower the Port authorities to fix/refix the rate of rent, which has
been duly sanctioned by the Central Government. It is also held that this type
of case comes within the purview of a 9 matter of policy and it should be left
to the authorities and the High Court will not make an investigation into
fixation of rent. The learned Single Judge also held that the enhanced rent is
neither arbitrary nor unreasonable.
findings were upheld by the Division Bench.
These findings have been challenged in this appeal by the
It is submitted before us by Mr. Bhaskar Gupta, learned senior
counsel appearing for the appellants, that both the learned Single Judge as
well as the Division Bench have not adverted to the primary challenge of the
appellants. According to the learned counsel the lease was executed in the year
1947. At that time the Major Port Trust had not been enacted. Therefore, no
reliance could have been placed on any notification issued under Section 49.
Notifications dated 20.1.1983 and the communication dated 23.7.1987 cannot be
made 10 applicable to the appellants. The rights of the appellants qua the
demised lands were given by the lease deeds validly executed between the
parties. The respondents had quite illegally through letters dated 17.10.1977
and 29.12.1977 purported to add an additional clause to the lease deeds
providing for enhancement of rent as contained in clause 5(iv) of the aforesaid
letters. The appellants objected to the arbitrary enhancement through letters
dated 4.11.1977 and 21.1.1978. It is for this reason that draft lease which was
sent for signatures of the appellants on 15.11.1978 was not signed by the
appellants. Even thereafter the Port Trust purported to increase the rent
firstly on 23.7.1987 and secondly on 17.1.1988. The arrears are being claimed
on the basis of illegal enhancement. Learned counsel submitted that the renewal
of the lease at the expiry of 30 years period was automatic. It was a
unilateral act of the appellant and consent of the lessor was wholly
unnecessary. At the time 11 of renewal the respondent-Board was at liberty to
refix the rent as stipulated in the original lease deeds. Learned counsel also
submitted that Clause 5 sub-clause (iv) in the two letters cannot be made
applicable to the appellants. There has to be strict compliance with the
provisions of the lease deeds which do not provide any periodic increase in
rent at the interval of every 10 years.
senior counsel further submitted that the renewal clause in the lease deeds
clearly provides that the lessee shall be entitled to seek renewal for a period
of 30 years. The clause further provides for a further period of 30 years at
such rates of rent to be fixed by the Commissioners. This clause only entitles
the Commissioner to fix the new rent by taking into account the prevailing rate
in the locality. Such fixation has to be for 30 years. There can be no further
revisions at interval of every 10 years. Learned counsel also submitted the
finding of the learned Single Judge that no writ would be 12 maintainable in contractual
matters is against the settled law by the Supreme Court in a catena of
judgments. He has made reference to a number of judgments in support of the
submission that action of the respondents had to conform to the mandate of
Article 14 of the Constitution of India. It could not be arbitrary. According
to him the 20.1.1983 Notification is being made applicable to the appellant
without legal sanction as the rights of appellants are entirely covered under
the lease deeds.
On the other hand, Mr. Parag P. Tripathi, learned Additional
Solicitor General submitted that the appellants have now argued a wholly new
case which was not argued before the High Court. He has submitted that in any
event the writ petition ought to have been dismissed at the threshold only on
the ground of delay and latches. The cause of action, if any, arose to the
appellant in the year 1977 when the letters dated 13 17.10.1977 and 29.12.1977
were sent to them. But the writ petition was not filed till 17th of February,
otherwise, according to him, the 10 years enhancement on 23.7.1987 was pursuant
to the draft lease which had been sent to the appellants on 15.11.1978. He has
sought to justify the action of the respondents. According to him the
enhancement in rent after a period of every 10 years was necessary to put the
appellants lease hold rights at par with other lease holders of the property
belonging to the Port Trust. Since, other lease holders are paying lease rental
at the schedule rate as fixed under various Notifications issued by the Port
Trust the increase in the rent was necessary to bring the appellants at par
with the schedule rates.
the action of the respondents is reasonable and can be justified even under
Article 14 of the Constitution of India. The lease rent has been fixed by the
Commissioner in terms of clause 13 of the lease 14 deeds which provide as
Any statutory powers hereafter conferred upon the Commissioners shall apply to
the premises and shall be deemed to be incorporated in these presents."
to Mr. Tripathi by virtue of the aforesaid clause the various notifications
issued by the Port Trust enhancing the rent periodically are deemed to be
incorporated in the lease deeds. Therefore, the proviso relied upon by the
appellants containing the original renewal clause has to be read along with
clause 13. This would necessarily lead to a conclusion that the Notification
dated 20.1.1983 would be applicable to the appellant. In fact, the land
belonging to the appellants find mention at Serial Nos.16 and 17 of the
schedule attached to the Notification. Therefore, the writ petition had been
rightly dismissed by the learned Single Judge.
Division Bench upheld the findings recorded by the 15 learned Single Judge. Therefore,
the order in appeal did not call for any interference.
The learned Single Judge seems to have dismissed the writ
petitions for three reasons, viz :- 1) The matter is purely contractual in
in view of the law laid down by this Court in the case of Radhakrishna Aggarwal
v. State of Bihar, ATP 1977 SC 1496 and also in Bareilly Development Authority
v. Ajai Pal Singh 1989 (2) SCC 116, no relief could be granted under Article
226 of the Constitution.
Port Authorities are empowered to fix and enhance the rent under Sections 48
and 49 of the Major Port Trust Act, 1963.
rent is to be fixed is a policy decision.
otherwise the Court will not interfere in the absence of proven mala fides.
Division Bench simply upheld the aforesaid findings of the learned Single
Upon consideration of the entire matter, we are of the opinion
that issues which were not agitated before the High Court either before the
learned Single Judge or 16 before the Division Bench are sought to be agitated
in this Court for the first time. In the peculiar facts and circumstances of
this case, it would be in the interest of justice to remand the matter back to
the learned Single Judge of the High Court to re-determine the controversy
between the parties after giving due opportunity to the parties to place on
record any further material in support of their respective submissions. In view
of the above the appeal is allowed. The judgments of the learned Single Judge
dated 30.8.2000 and Division Bench dated 5.2.2004 are set aside. The matter is
remanded back to the learned Single Judge of the High Court for a fresh
decision on merits.
At this stage we are informed by Mr. Bhaskar Gupta that the
respondents have started eviction proceedings against the appellants due to the
expiry of lease and non-payment of the enhanced rent. In our opinion, it would
be inappropriate to grant any stay in those 17 proceedings. However, the
appellants are at liberty to make necessary application before the appropriate
court for appropriate relief in the second writ petition. The application if
any made, shall be decided on merit. We may also notice here that as an interim
measure by the order dated 5.8.2005 this Court had directed that pending
disposal of the appeal, the appellants will pay to the respondents a sum of
Rs.50,000/- and deposit a sum of Rs.50,000/- per month towards the rent without
prejudice to the contentions of either party. The aforesaid amount has been
deposited regularly with the Registry of this Court. We permit the respondents
to withdraw the aforesaid amount. The respondents have also been in receipt of
Rs.50,000/- per month which was directed to be paid by the appellant during the
pendency of the appeal. However, in view of the remand and in view of the huge
amount in arrears (though according to Mr. Gupta, there are no arrears) we
direct that the appellants shall pay at least a sum of Rs. 2 lakhs per month
during the pendency of the proceedings before the High Court 18 subject to any
further revision that may be made by the High Court, in any future orders.
With the aforesaid observations, the matter is remanded back to
the learned Single Judge for deciding the writ petition on merits. We request
the learned Single Judge of the High Court to decide the writ petition finally
within a period of six months from the date of receipt of a copy of this order.
........................................J (TARUN CHATTERJEE)
.........................................J (SURINDER SINGH
DECEMBER 07, 2009.