Saroj Screens Pvt.
Ltd. Vs. Ghanshyam and others
[Civil Appeal Nos.
3107 - 3108 of 2012 arising out of SLP(C) Nos. 36724-36725 of 2009]
J U D G M E N T
G.S. Singhvi, J.
appeals are directed against judgment dated 16.10.2009 of the Bombay High Court,
Nagpur Bench whereby the writ petitions filed by respondent nos. 1 and 2 were partly
allowed, Resolution dated 28.8.1991passed by Municipal Corporation of the City of
Nagpur (for short, 'the Corporation') for renewal of lease in favour of the
appellant in respect of Plot No.5, Circle No.19/27, Division I, Old Sarai Road,
Geeta Ground Layout, Nagpur as also sanction accorded by the State Government under
Section 70(5) of the City of Nagpur Corporation Act, 1948 (for short, 'the Act')
were quashed and a direction was issued to Civil Judge (Senior Division),
Nagpur to decide Special Civil Suit No. 1135 of 1993 latest by
an application made by Gopaldas Mohta (father of respondent No. 1- Ghanshyam
Mohta and father-in-law of respondent No. 2 - Smt. Kamla Devi),Municipal Committee
of Nagpur (for short, 'the Committee') passed resolution dated 17.3.1944 for
grant of lease to him in respect of the plot described herein above for a
period of 30 years. In furtherance of that resolution, lease deed dated
28.10.1944 was executed in favour of Gopaldas Mohta. The tenure of lease commenced
from 17.3.1944. For the sake of convenient reference, Clauses 6 and 8 of the lease
deed are extracted below:
"6. The lessee
shall upon every assignment of the said land or any part thereof within a
calendar month thereafter deliver to the lessor or to such person as he may
appoint in this behalf a notice of such assignment putting forth the names and description
of the parties thereto and the particulars and effect thereof. 8. The Municipal
Committee i.e. the lessor will have the option to retake structure at end of
the term of 30 years hereby granted by paying the then market value of the
structure or to renew the lease on the revised ground rent, fair and equitable,
for a further term of 30 years or more.
Provided also that
every such renewed lease of the land shall contain such of the covenants
provisions and conditions in these presents contained as shall be applicable
and shall always contain a covenant for further renewal of the lease."3.1 After
about 3 years, Gopaldas Mohta leased out the plot to the appellant for a period
of 27 years (from 28.3.1947 to 16.3.1974). The relevant portions of deed dated
10.9.1947 executed between Gopaldas Mohtaand the appellant read as under:
"THIS DEED OF
LEASE made on the 10th day of September, 1947, between DIWAN BAHADUR Seth
Gopaldas Mohta, resident of Akola (hereinafter called the Lessor) of the ONE
PART, and Messrs Saroj Screens Ltd., Amraoti, a joint stock company with
limited liability, represented by Mr. Anandrao son of Yadararo, Managing
Director, resident of Amraoti, Taluq and District Amraoti, (hereinafter called
the Lessees) of the
SECOND PART. WITNESSETH
AS FOLLOWS: 1. The Lessor holds and is in possession of a plot of land, situated
in the locality popularly known as "The Geeta Ground", in Sitabuldi of
Nagpur city in the Central Provinces and more particularly described in the scheduled
statement herewith below, which he holds under a lease dated 17th March, 1944, granted
by the Municipal Committee Nagpur, and on this plot, the Lessor has constructed
a plinth for construction of a Cinema Theatre, as per plans, sanctioned and
approved by the said Municipal Committee. Over this plot, certain building
materials, such as sand, stones, metal and other iron and wooden material etc.,
belonging to the Lessor, have been collected and are lying.
The Lessor hereby
lessee the said plot including the plinth and above mentioned materials which
have already been delivered into the possession of the Lessees by the Lessor), to
the Lessees, for a period commencing from 28.3.1947 till 16th March, 1974,
which is the entire unexpired period of the Lease which the Lessor holds under
the Municipal Committee, Nagpur. The main lease in favour of the lessor,
contains a clause for renewal under which the lessor shall be entitled to have
the lease renewed in his favour, for a further period on the expiry of the present
This right of the
lessor, is however, retained by the lessor, for his own benefit and the lessees
shall have no claim to the interest thereby created. PROVIDED HOWEVER, if the
lessees acquire the interests of the lessor, as provided in Clause (5) below,
the lessees shall be entitled to all the rights and interest of the lessor under
the said clause for renewal, together with all other interests which the lessor
may have under the lease before mentioned, dated 17th March, 1944 including the
right of renewal, therein mentioned.
5. The lessees shall
have the option to pay to the lessor a sum of Rs. 90,000/- (Rupees Ninety
Thousand only) at any time during the first five years of the lease and to
purchase all the rights of the Lessor under said Head Lease from the Municipal Committee,
Nagpur, together with his rights over the plinth and the material and on this amount
being paid as per this conditions, the lessor shall be bound to execute the
necessary assignment or other assurance in favour of the lessees at the cost
and expenses of the lessees. The lessees shall have also the option to acquire
the said interest from the lessor at any time, on payment of the same price, namely
Rs. 90,000/- only during the last year before the expiry of the lease by afflux
10. On expiry of the
lease in due course, the lessees shall hand over the possession of the premises
leased together with the structures thereon to the lessor who shall thereupon be
entitled to take over the structure after valuing them in the manner hereinbefore
provided. In case, he pays the value of that part of the structure which the
lessees have constructed to the lessees, then the entire structure will
thereafter belong to the lessor. In case, the lessor does not elect to take
over the materials and in case, the lessees fail to exercise the option of
acquiring the leased premises from the lessor as provided, then in that event,
the lessees may remove that part of the structure which he may have constructed
at his cost within reasonable time of two months and on his failure to do so, the
structure shall thereafter belong to the Lessor and the lessees will have no
right to the same or price thereof.
"3.2 In 1959,
there was a partition in the family of Gopaldas Mohta and the plot in question
came to the share of his wife Smt. Gangabai. Sheassigned the same to Parmanand
Kisandas Mundhada of Calcutta by executingdeed dated 12.8.1960. Thereafter, the
name of Parmanand Mundhada was entered in the records of the Committee along
with that of Smt. Gangabai. After 12 years, the appellant sent letter dated 15.1.1973
to Parmanand Mundhada indicating therein that it was ready to pay Rs.90,000/- and
purchase the interest created in favour of Gopaldas Mohta vide lease deed dated
28.10.1944. The appellant also requested Parmanand Mundhada to approach the
Corporation, which had succeeded the Committee, for renewal of the lease after
16.3.1974.3.3 Parmanand Mundhada submitted application dated 7.3.1974 to the Corporation
for renewal of lease for a period of 30 years.
waiting for the Corporation's response, the appellant filed Special Civil Suit No.96
of 1974 against Parmanand Mundhada, Gopaldas Mohta,Gangabai and the Corporation
for the specific performance of agreement dated 10.9.1947 executed by Gopaldas
Mohta. During the pendency of the suit, Parmanand Mundhada died and his legal
representatives were brought onrecord.3.4 The suit filed by the appellant was
decreed by Civil Judge, Senior Division, Nagpur (hereinafter referred to as, 'the
trial Court') vide judgment dated 28.4.1980 but the same was reversed by the High
Court in First Appeal Nos. 95 of 1980 and 96 of 1980 filed by the heirs of Parmanand
Mundhada and respondent No.2 and the Corporation respectively.
The relevant portions
of the High Court's judgment dated 25.7.1991 are extracted below: "20. To
this letter (Exh. 98) a reminder was sent on 15th February 1974 after a gap of
one year. That letter is Exh. 99. That letter is addressed to defendant no. 1 Parmanand
by the Counsel of the plaintiff. It makes an interest reading. It is hence extracted
as a whole. It reads as under:-
Under instructions of
my clients M/s Saroj Screens Pvt. Ltd., I have to invite your attention to
their registered letter dated 15.1.1973 received by your on 19.1.1973. My client
has not received any reply so far.
2. Please let me know
whether you have applied to the Municipal Corporation, Nagpur for renewal of
the lessor whether you want to apply for renewal of the lease. If you have applied,
what is the result of your application.
3. My client has been
ever ready and willing to perform his part of the contract under the Indenture
dated 10.9.1947 with Diwan Bahadur Seth Gopaldas Mohta, by which you are bound.
note that if you do not sent any satisfactory reply within ten days of the
receipt of this letter, my client will take it that you do not want to get the
lease dated 28.10.1944 renewed and to perform your part of the contract and thereby
you have committed breach thereof. In that event my client will be free to take
such steps as he may be advised and in the event of litigation you will be held
liable for costs and consequences. Please take notice.
for M/s. Saroj Screens Pvt. Ltd.
The letter is self
It clearly calls upon
the defendant no. 1 to get the legal renewed and on failure to perform that
part of contract it would result in breach of the contract of his part. Therefore,
the readiness or willingness on the part of the plaintiff was made subject to
renewal of the lease which condition was never agreed upon.
This is more glaring
when we peruse the reliefs claimed in the plaint. In prayer clause (a) the plaintiff
claimed a decree that the defendant no. 1 do obtain from the defendant no. 2 a renewed
lease of the original (Exh. 120) on rent which is fair and equitable, and in
clause (aa) the relief claimed was that on deposit of Rs. 79,000/- in Court the
defendant no. 1 do execute in favour of the plaintiff a deed of transfer of all
rights in the renewed lease granted to him by the defendant no. 2. The
pleadings and the evidence are restricted to the allegations made in the two
letters Exh. 98 and 99 only.
21. Therefore, no
doubt is left in our mind that the plaintiff came forward seeking
implementation of a different contract than the one agreed between the parties.
Apparently the plaintiff had no desire to pay the amount of Rs.90,000/- till
such time the lease is renewed. There was neither readiness or willingness on the
part of the plaintiff to implement the contract. We hence answer the point at issue
in the negative. The learned Court below had completely misdirected itself in
coming to a contrary conclusion not warranted by the facts on record."
3.5 During the pendency
of the suit filed by the appellant, the Corporation passed Resolution No.162
dated 29.10.1975 for renewal of leasein favour of Parmanand Mundhada for a
period of 30 years subject to the condition of payment of ground rent at the
rate of Rs.13,120/- per annum and penalty of Rs.3,000/- for breach of the conditions
embodied in lease deed dated 28.10.1944. The relevant portions of Resolution dated29.10.1975
are reproduced below: "Resolution No. 162: The term of the 30 years lease of
plot no. 5 situated on Geeta Ground, Sitabuldi, where upon Anand Talkies is situate
has expired on 16.3.1974.
The present owner of
that plot viz Shri Parmananddas Kisandas Mundhada, resident of 55/58 Isra Street,
Calcutta, having made an application on 7.3.1974 for renewal or lease for
further 30 years, the house took into consideration the said request. xxx xxx xxx
With regard to the subject under consideration, the Hon'ble Members have made a
request that the House should give information to them regarding the notes made
by way of amendment by the Municipal Commissioner. The Hon'ble Mayor has suggested
that the Municipal Commissioner should clarify about the amended notes.
Accordingly the Hon'ble
Municipal Commissioner made clarification about his notes made on 17.10.1975 in
details. xxx xxx xxx After that discussion, as mentioned in the notes of the Hon'ble
Municipal Commissioner dated 17.10.1975, the House has taken unanimous decision
to renew the lease on other conditions for further 30 years by charging per
year Rs. 13,120/- as ground rent, and the previous lease having committee
breach of two minor conditions, by penalizing him Rs. 1500/- for each breach,
total Rs. 3000/-, as shown in the concerned file.
The term of 30 years
lease of Municipal Plot No. 5 situate in Geeta Ground, Sitabuldi, on which
Anand Talkies is situate, having expire on 16.3.1974 and the present owner of
the plot Parmananddas having his residence at 55/58 Isra Street, Calcutta
having made an application for further renewal of the plot for further 30 years,
as also considering the notes prepared by the Hon'ble Municipal Commissioner dated
17.10.1975 for the case has been renewed for further 30 'sanctioned',
'sanctioned', on the following conditions.
1) Considering the
fact that the present market price in comparison to old price, which is 10
times more, it being proper to enhance the ground rent in ratio by 10 times, it
was suggested that the ground rent of that plot should be fixed at Rs. 13120/-
2) The previous
lessee of the lease deed have committed breach of two conditions, Rs.1500/- for
each breach, total Rs. 3000/-should be recovered by way of fine from him.
3) Other conditions will
be as before."
Mundhada is said to have filed an appeal under Section397(3) read with Section
411 of the Act questioning the decision of the Corporation to increase the
ground rent and to impose penalty. However, the pleadings filed before this Court
do not show whether Parmanand Mundhada and/or his heirs pursued the appeal and
the same was decided by the Competent Authority.
3.7 After the judgment
of the High Court, respondent nos.1 and 2submitted application dated 1.8.1991
to the Commissioner of the Corporation for entering their names in the
municipal records by asserting that the heirs of Parmanand Mundhada had
assigned the leasehold rights of the plot in their favour by registered deeds
dated 2.9.1985 and this fact had been brought to the notice of the Corporation vide
letter dated 23.9.1985.
However, instead of
taking action on the request of respondent nos. 1 and 2, the Corporation passed
Resolution No. 137 dated 28.8.1991 for renewal of lease in favour of the
appellant for a period of 30 years commencing from16.3.1991 subject to the
condition of payment of ground rent at the rate ofRs.20,000/- per annum. That
resolution reads as under: "Resolution No. 137: Since Messrs Saroj Screen Private
Limited has been paying from time to time ground rent of the land and the land
and building thereon are in possession of the Saroj Screen Private Limited,
there should be no objection for mutation of the land in their name. Messrs
Saroj Screen Private Limited, has by written letter guaranteed to pay Rs.
15,000/- per year by way of ground rent of the land.
Therefore, as by way
of resolution dated 29.10.1975, bearing no. 162, the Nagpur Municipal
Corporation has fixed the ground rent at Rs. 13,120/- per year and Rs. 15,000/-
by way of ground rent is being paid, which is more than ground rent of Rs.
13,120/- which is fixed, there will be no kind of financial loss of the
Corporation. M/s Saroj Screen Private Limited had paid the amount of ground rent
of Rs. 2,12,529.60 for the period 16.3.1984 to 25.3.1991. Therefore, the House
has taken into consideration the resolution renewal of lease for 30 years from
16.3.1991 at the ground rent of Rs. 15,000/- per annum and as per resolution
no. 162 dated 29.10.1975 fix the ground rent at Rs. 15,000/- after making recovery
of arrears according to that resolution and recommended for acceptance.
It also proposed that
in stead of ground rent of Rs. 13,120/- in future ground rent of Rs. 20,000/-
should be recovered, which suggestion was made by Hon'ble Member Shri Atalbahadur
Singh. This suggestion was unanimously sanctioned by the voice of
3.8 In furtherance of
the aforesaid resolution, lease deed dated 4.9.1991was executed between the
Commissioner of the Corporation and the appellant.
3.9 Respondent Nos. 1
and 2 challenged the decision of the Corporation to grant lease to the
appellant in Writ Petition No. 1613 of 1992 and prayed that Resolution dated
28.8.1991 may be quashed and a direction be issued for registration of lease deed
in their favour because the heirs ofParmanand Mundhada had assigned leasehold rights
in their favour.
They pleaded that in view
of Resolution dated 29.10.1975 vide which the Corporation renewed lease in
favour of Parmanand Mundhada for a period of30 years, the subsequent resolution
was liable to be declared as nullity, more so, because while deciding First
Appeal Nos. 95 and 96 of 1980, the High Court had found that the appellant was not
ready and willing to perform its part of agreement dated 10.09.1947.
3.10 In the written
statement filed by the appellant, it was pleaded that respondent nos. 1 and 2 do
not have the locus standi to challenge Resolution dated 28.8.1991 because the plot
had been assigned by Smt. Gangabai to Parmanand Mundhada.
It was further
pleaded that the assignment deeds dated 2.9.1985 executed by the heirs of Parmanand
Mundhada had no sanctity in the eyes of law because tenure of the initial lease
granted to Ghanshyam Mohta had ended in 1974. Another plea taken by the appellant
was that Resolution dated 29.10.1975 passed by the Corporation for extending the
term of lease in favour of Parmanand Mundhada had became in fructuous because
he did not pay the enhanced ground rent and penalty.
3.11 In the written
statement filed on behalf of the Corporation, an objection was taken to the
maintainability of the writ petition on the ground that the issues raised
therein are purely contractual and the same cannot be decided by the High Court
under Article 226 of the Constitution. On merits, it was pleaded that assignment
deeds dated 2.9.1985 are not binding on the Corporation because it had not been
apprised about the transfer of leasehold rights by the heirs of Parmanand Mundhada
in favour of respondent nos. 1 and 2.
3.12 At this stage, it
will be appropriate to mention that during the pendency of Writ Petition
No.1613 of 1992, respondent nos.1 and 2 filed Special Civil Suit No.1135 of 1993
for eviction of the appellant, possession of the suit property and recovery of damages
by alleging that Resolution dated 28.8.1991 was illegal and without jurisdiction
and lease deed dated 4.9.1991 executed in favour of the appellant did not create
any rights in its favour.
3.13 After filing the
written statement in Writ Petition No.1613 of 1992,the Corporation passed
Resolution dated 22.7.1996 and cancelled the lease granted to the appellant on
the ground that previous sanction of the State Government had not been obtained
as per the requirement of Section 70(5) of the Act. The appellant questioned
this action of the Corporation in Writ Petition No.1786 of 1996. By an interim
order dated 14.8.1996, the High Court directed that status quo be maintained regarding
possession of the plot. After 1 year and about 8 months, the Corporation sent letter
dated27.4.1998 to the appellant and gave an assurance for restoration of the lease
subject to the condition that it shall have to withdraw the writ petition. Thereupon,
the appellant filed an application dated 6.5.1998with a prayer that it may be
allowed to withdraw the writ petition. The same remained pending till 18.10.2001,
on which date the High Court dismissed Writ Petition No.1786 of 1996 as
3.14 In the
meanwhile, the State Government accorded sanction for grant of lease to the
appellant for a period of 30 years, i.e., from 16.3.1991 to15.3.2021. This was
communicated to the Corporation vide letter dated12.6.2000.
3.15 On coming to
know of the aforesaid decision of the State Government, respondent nos.1 and 2
filed Writ Petition No.3661 of 2001 and prayed that communication dated
12.6.2000 be quashed by contending that during the pendency of Writ Petition
Nos.1613 of 1992 and 1786 of 1996, there was no justification for according sanction
under Section 70(5) of the Act. Another plea taken by respondent nos.1 and 2
was that the decision of the State Government and the Corporation was violative
of Article 14 of the Constitution inasmuch as public property was transferred to
the appellant without conducting auction or inviting tenders so as to enable the
members of public to participate in the process of grant of lease.
3.16 In its reply,
the appellant controverted the allegation of favoritism and pleaded that
respondent nos. 1 and 2 cannot question the sanction accorded by the State
Government under Section 70(5) of the Act because their predecessor had not complied
with the conditions incorporated in Resolution dated 29.10.1975. It was further
pleaded that the sanction accorded by the State Government is not retrospective
and the Corporation is required to execute a new lease which would be effective
from 1991.Another plea taken by the appellant was that respondent nos. 1 and 2 had
not come to the Court with clean hands inasmuch as they have suppressed the fact
that the suit filed by them was pending before the Civil Court.
3.17 The Division Bench
of the High Court overruled the preliminary objections raised by the appellant and
the Corporation to the maintainability of the writ petition by relying upon the
judgments of this Court in D.F.O., South Kheri v. Ram Sanehi Singh (1971) 3 SCC
864 and S.J.S. Enterprises (P) Ltd. v. State of Bihar (2004) 7 SCC 166. The Division
Bench held that when a public authority is said to have acted inviolation of
the statutory provisions, the Court can grant relief to the aggrieved person
and the availability of the alternative remedy does not operate as a bar. The
Division Bench further held that respondent nos. 1and 2 cannot be held guilty
of suppressing the factum of filing suit for eviction because the first writ
petition had been instituted much before filing the suit. While dealing with the
challenge to Resolution dated28.8.1991 and the decision of the State Government
to accord sanction under Section 70(5), the Division Bench opined that during the
subsistence of Resolution dated 29.10.1975, the Corporation could not have granted
lease in favour of the appellant and the State Government had no right to validate
such grant. However, the prayer of respondent nos. 1 and 2 for issue of a
direction to the Corporation to implement Resolution dated29.10.1975 was rejected
on the premise that the issue was pending consideration before the trial Court.
Gagan Sanghi, learned counsel for the appellant argued that the reasons
assigned by the High Court for nullifying the decision taken by the State
Government and the Corporation to grant lease in favour of the appellant are
legally unsustainable and the impugned judgment is liable to be set aside
because Resolution dated 29.10.1975 passed by the Corporation for renewal of
lease in favour of Parmanand Mundhada had not been acted upon.
submitted that respondent nos. 1 and 2 had not produced any evidence before the
High Court to substantiate their assertion that Parmanand Mundhada had filed an
appeal under Section 397(3) read with Section 411 of the Act questioning Resolution
dated 29.10.1975 to the extent of enhancement of ground rent and imposition of penalty
and argued that even if such an appeal had been filed, the same did not entitle
the beneficiary of the resolution to claim renewal of lease without fulfilling the
conditions incorporated therein.
Learned counsel argued
that the Corporation did not commit any illegality by passing Resolution dated28.8.1991
and executing lease deed dated 4.9.1991 in favour of the appellant because
Parmanand Mundhada and his heirs did not come forward for the execution of
lease deed in terms of Resolution dated 29.10.1975. He further argued that
sanction accorded by the State Government under Section70(5) of the Act was
legally correct and the High Court committed an error by nullifying the same on
the specious ground that during the subsistence of Resolution dated 29.10.1975,
the Corporation could not have granted lease to the appellant.
Shekhar Naphade, learned senior counsel appearing for respondent nos. 1 and 2
referred to Clause 8 of lease deed dated 28.10.1944 executed between the
Committee and Gopaldas Mohta and argued that the Corporation, which came to be
constituted under the Act had no option but to renew the lease because the
option available under that clause for resumption of the plot by paying market
value of the structure had not been exercised and Parmanand Mundhada in whose
favour Smt. Gangabai had executed assignment deed dated 12.8.1960 continued to enjoy
the status of lessee.
counsel relied upon Section 116 of the Transfer of Property Act and the
judgment of this Court in Damodhar Tukaram Mangalmurti v. State of Bombay AIR
1959 SC 639 and argued that failure of the Corporation to resume the plot after
paying market value of the structure leads to an irresistible inference that
the Corporation had decided to renew the lease and, as a matter of fact,
Resolution dated 29.10.1975 was passed to that effect.
Shri Naphade laid
considerable emphasis on the fact that in terms of Clause 8 of lease deed dated
28.10.1944, the Corporation could have made fair and equitable revision of the
ground rent and argued that there was no justification for 10 times increase in
the ground rent necessitating filing of an appeal by Parmanand Mundhada.
dealing with the arguments of the learned counsel, we consider it necessary to
make the following observations:
i) Although, the
appellant has not disputed that in the partition, which took place in 1959 in
the family of Gopaldas Mohta, the plot in question came to the share of his
wife Smt. Gangabai and that she had executed assignment deed dated 12.8.1960 in
favour of Parmanand Mundhada, it has not placed on record copies of the
partition deed and assignment deed so as to enable the Court to appreciate the extent
and magnitude of the right acquired by Parmanand Mundhada.
ii) Before the High
Court the appellant and the Corporation pleaded that neither of them had any
knowledge about assignment deeds dated 2.9.1985executed by the heirs of
Parmanand Mundhada in favour of respondent nos. 1and 2 but their denial is
belied by the averments contained in paragraph 3of C.A. No.1246 of 1991 filed
by the appellant in First Appeal No. 95 of1980, which reads as under: "
However, during the pendency
of the present appeal, it is learnt, that the appellants have assigned their
lease hold rights in Plot no.5 in favour of one Shri Ghayanshamdas Mohta and Smt.
Kamla Devi Mohta of Akola under a registered Indenture of Transfer dated 2nd September
1985 and as such the present appellants have no right, title or interest in the
suit property. A communication dated 23.9.1985 received by the respondent no.2
from the said assignees is appended herewith."That apart, what is most
surprising is that neither party has produced copies of assignment deeds dated
the aforesaid handicap, we shall proceed to consider whether the High Court
committed an error by quashing Resolution dated 28.8.1991 passed by the
Corporation and the sanction accorded by the State Government under Section
70(5) of the Act.
reading of lease deed dated 28.10.1944 shows that the Committee had leased out
the plot to Gopaldas Mohta for a period of 30 years commencing from 17.3.1944
with a clear stipulation that at the end of 30years' period it will have an
option to retake the structure by paying the prevailing market value or renew
the lease on revised ground rent for a further term of 30 years by incorporating
the covenants, provisions and conditions contained in deed dated 28.10.1944 with
a stipulation for further renewal of the lease.
By lease deed dated 10.9.1947,
Gopaldas Mohta transferred all the rights and interests vested in him including
the one relating to renewal of the lease to the appellant, who was also given an
option to pay to the lessor, i.e. Gopaldas Mohta a sum of Rs.90,000/-during the
first five years of the lease and purchase all his rights from the Committee.
An option was also given to the appellant to acquire the interest of the lessor
on payment of the same price during the last year before expiry of the lease by
efflux of time.
The appellant did exercise
option for renewal of lease by sending letter dated 15.1.1973 to Parmanand Mundhada
subject to the condition of renewal of lease by the Corporation. After some
time, the appellant filed Special Civil Suit No.96/1974 for specific
performance, which was decreed by the trial Court vide judgment dated
28.4.1980. However, the appellant's joy proved to be short-lived because in the
appeals filed by the heirs of Parmanand Mundhada and respondent No. 2 and the
Corporation, the High Court reversed the judgment of the trial Court and
dismissed the suit by observing that the appellant could not prove its
readiness or willingness to implement the contract.
The appellant did not
challenge the judgment of the High Court by filing a petition under Article 136
of the Constitution. Therefore, the finding recorded by the High Court on the tenability
of the appellant's claim, which was primarily founded on Clause 5 of lease deed
dated 10.9.1947, will be deemed to have become final and the appellant cannot
now rely upon the terms and conditions of lease deed dated 10.9.1947 for
contending that the Corporation was bound to renew the lease in its favour for
a period of 30years.
resolution passed by the Corporation for renewal of lease infavour of the appellant
and the consequential action taken for the execution of lease deed dated
4.9.1991 were ex facie illegal and the High Court did not commit any error by
quashing the same because,
dated 29.10.1975 passed by the Corporation for renewal of lease in favour of
Parmanand Mundhada for a period of 30 years had not been cancelled or rescinded
and during the subsistence of that resolution, neither the Corporation could
have renewed the lease in favour of the appellant for 30 years commencing from
16.3.1991 nor the State Government could have granted sanction under Section 70(5)
of the Act for such renewal.
passing the resolution for renewal of the lease in favour of the appellant for
a period of 30 years, the Corporation did not obtain sanction of the State
Government, which was sine qua non for any such action /decision.
however, appears that by taking advantage of the fact that it continued to have
possession of the plot, the appellant induced the functionaries of the
Corporation to enter into a clandestine compromise for forwarding a proposal to
the State Government to grant post facto sanction for renewal of the lease for 30
years from 16.3.1991 and the latter accorded sanction without realizing that alienation
of any right or interest in a public property in favour of any person without following
a procedure consistent with the doctrine of equality is impermissible.
issue deserves to be considered from another angle. Section 70of the Act which
contains provisions governing the disposal of municipal property or property
vesting in or under the management of the Corporation reads thus: "70. Provisions
governing the disposal of municipal property or property vesting in or under
the management of Corporation.
1. No nazul lands, streets,
public places, drains or irrigation channels shall be sold, leased or otherwise
alienated, save in accordance with such rules as the State Government may make in
2. Subject to the
provisions of sub-section (1), -
a. the Commissioner may,
[in his discretion], grant a lease of any immovable property belonging to the
Corporation including any right of fishing or of gathering and taking fruit,
flowers and the like, of which the premium of rent, as the case may be, does not
exceed [One Lakh] rupees for any period not exceeding twelve months at a time :
[Provided that every such lease granted by the Commissioner other than a lease
of a class in respect of which the Standing Committee has by resolution exempted
the Commissioner from compliance with the requirements of this proviso, shall
be reported by him to the Standing Committee within fifteen days after the same
has been granted;]
b. With the sanction of
the Standing Committee the Commissioner may dispose of by sale or otherwise,
any such right as aforesaid, for any period not exceeding three years at a time
of which the premium or rent or both, as the case may be, for any one year does
not exceed [One lakh] rupees; (c) With the sanction of the Corporation, the Commissioner
may lease, sell or otherwise convey any immoveable property belonging to the
3. The Commissioner may
- [(a)......................] (b) with the sanction of the Standing Committee, dispose
of by sale or otherwise any moveable property belonging to the Corporation: (c)
with the sanction of the Corporation, sell or otherwise convey any moveable property
belonging to the Corporation.
4. The sanction of the
Standing Committee or of the Corporation under sub-section (2) or sub-section
(3) may be given either generally for any class of cases or specifically in any
5. The foregoing
provisions of this section shall apply to every disposal of property belonging
to the Corporation made under, or for the purposes of this Act: Provided that -
(i) no property vesting in the Corporation in a trust shall be leased, sold or
otherwise conveyed in a manner that is likely to affect the trust subject to which
such property is held; (ii) no land exceeding [five lakh] rupees in value shall
be sold, leased or otherwise conveyed without the previous sanction of the State
Government and every sale, lease or other conveyance of property vesting in the
Corporation shall be deemed to be subject to the conditions and limitations
imposed by this Act or by any other enactment for the time being in force.
6. Notwithstanding anything
contained in this section the Commissioner may, with the sanction of the
Corporation and with the approval of the State Government, grant a lease, for a
period not exceeding thirty years, of a land belonging to the Corporation which
is declared as a slum area under the provisions of the Maharashtra Slum Area
(Improvement, Clearance and Redevelopment) Act, 1971 to a co- operative society
of slum dwellers, at such rent, which may be less than the market value of the
premium, rent or other consideration, for the grant of such lease, and subject
to such conditions as the Corporation may impose.
The approval of the
State Government under this sub-section may be given either generally for any
class of such lands or specially in any particular case of such land: Provided
that, the Commissioner may, in like manner renew, from time to time, the lease
for such period and subject to such conditions as the Corporation may determine
exercise of power by the Corporation under the aforesaid section is not hedged
with any particular condition except that in a case like the present one, the alienation
could not have been made without the previous sanction of the State Government,
but in our constitutional scheme compliance of the doctrine of equality enshrined
in Article 14 of the Constitution has to be read as a condition precedent for
exercise of power by the State Government and the Corporation, more so, when it
relates to alienation of public property or any right or interest therein. In this
context, it is necessary to emphasis that the Corporation holds the property as
a trustee of the public and any alienation of such property or any right or
interest therein otherwise than by way of auction or by inviting bids would
amount to breach of that trust.
concept of the 'State' as it was known before the commencement of the
Constitution and as it was understood for about two decades after26.1.1950 has
undergone drastic change in recent years. Today, the State cannot be conceived of
simply as a coercive machinery wielding the thunderbolt of authority. Now the
Government is a regulator and dispenser of special services and provides to the
large public benefits including jobs, contracts, licences, quotas, mineral
rights etc. The law has also recognised changing character of the governmental functions
and need to protect individual interest as well as public interest.
The discretion of the
Government has been held to be not unlimited. The Government cannot give or
withhold largesse in its arbitrary discretion or according to its sweet-will.
The Government cannot now say that it will transfer the property (land etc.) or
will give jobs or enter into contracts or issue permits or licences only in
favour of certain individuals. In V. Punanan Thomas v. State of Kerala AIR 1969
Ker. 81, K.K. Mathew, J. (as he then was) observed: -
is not and should not be as free as an individual in selecting recipients for
its largesse. Whatever its activities, the Government is still the Government and
will be subject to the restraints inherent in its position in a democratic society.
A democratic Government cannot lay down arbitrary and capricious standards for
the choice of persons with whom alone it will deal."
traditional view that the executive is not answerable in the matter of exercise
of prerogative power has long been discarded. Prof. H.W.R. Wade in his work 'Administrative
Law' 6th Edition highlighted distinction between the powers of public
authorities and those of private persons in the following words:- "... The
common theme of all the authorities so far mentioned is that the notion of
absolute or unfettered discretion is rejected.
conferred for public purposes is conferred as it were upon trust, no absolutely
- that is to say, it can validly be used only in the right and proper way which
Parliament when conferring it is presumed to have intended. Although the
Crown's lawyers have argued in numerous cases that unrestricted permissive language
confers unfettered discretion, the truth is that, in a system based on the rule
of law, unfettered governmental discretion is a contradiction in terms.
The whole conception
of unfettered discretion is inappropriate to a public authority, which
possesses powers solely in order that it may use them for the public good. There
is nothing paradoxical in the imposition of such legal limits. It would indeed
be paradoxical if they were not imposed. Nor is this principle an oddity of British
or American law; it is equally prominent in French law. Nor is it a special
restriction which fetters only local authorities: it applies no less to ministers
of the Crown. Nor is it confined to the sphere of administration: it operates wherever
discretion is given for some public purpose, for example where a judge has a
discretion to order jury trial.
It is only where powers
are given for the personal benefit of the person empowered that the discretion
is absolute. Plainly this can have no application in public law. For the same
reasons there should in principle be no such thing as unreviewable
administrative discretion, which should be just as much a contradiction in
terms as unfettered discretion. The question which has to be asked is what is
the scope of judicial review, and in a few special cases the scope for the
review of discretionary decisions may be minimal. It remains axiomatic that all
discretion is capable of abuse, and that legal limits to every power are to be found
Padfield v. Minister of Agriculture, Fishery and Food (1968) A.C.997, the Court
was called upon to decide whether the Minister had the prerogative not to
appoint a Committee to investigate the complaint made bythe members of the Milk
Marketing Board that majority of the Board had fixed milk prices in a way which
was unduly unfavourable to the complainants. While rejecting the theory of
absolute discretion, Lord Reid observed:-
have conferred the discretion with the intention that it should be used to
promote the policy and objects of the Act; the policy and objects of the Act
must be determined by construing the Act as a whole and construction is always
a matter of law for the court. In a matter of this kind it is not possible to
draw a hard and fast line, but if the Minister, by reason of his having misconstrued
the Act or for any other reasons, so uses his discretion as to thwart or run
counter to the policy and objects of the Act, then our law would be very
defective if persons aggrieved were not entitled to the protection of the
Breen v. Amalgamated Engineering Union (1971) 2 QB 175, Lord Denning MR
observed:- "The discretion of a statutory body is never unfettered. It is a
discretion which is to be exercised according to law. That means at least this:
the statutory body must be guided by relevant considerations and not by
irrelevantly. It its decision is influenced by extraneous considerations which
it ought not to have taken into account, then the decision cannot stand. No
matter that the statutory body may have acted in good faith; nevertheless the
decision will be set aside. That is established by Padfield v. Minister of
Agriculture, Fisheries and Food which is a landmark in modern administrative
question whether the State and / or its agency / instrumentality can transfer
the public property or interest in public property in favour of a private
person by negotiations or in a like manner has been considered and answered in
negative in several cases.
In Akhil Bhartiya Upbhokta
Congress v. State of Madhya Pradesh (2011) 5 SCC 29, this Court was called upon
to examine whether the Government of Madhya Pradesh could have allotted 20
acres land to Shri Kushabhau Thakre Memorial Trust under the M.P. Nagar Tatha
Gram Nivesh Adhiniyam, 1973 read with M. P. Nagar Tatha Gram Nivesh Vikasit
Bhoomiyo, Griho, Bhavano Tatha Anya Sanrachanao K Vyayan Niyam, 1975. After
noticing the provision of the Act and the Rules, as also those contained in
M.P. Revenue Book Circular and the judgments of this Court in S. G. Jaisinghani
v. Union of India AIR 1967 SC 1427, Ramana Dayaram Shetty v. International
Airport Authority of India (1979) 3 SCC489, Erusian Equipment and Chemicals
Ltd. v. State of W.B. (1975) 1 SCC70, Kasturi Lal Lakshmi Reddy v. State of
J&K (1980) 4 SCC 1, Common Causev. Union of India (1996) 6 SCC 530,
Shrilekha Vidyarthi v. State of U. P.(1991) 1 SCC 212, LIC v. Consumer
Education & Research Centre (1995) 5 SCC482, New India Public School v.
HUDA (1996) 5 SCC 510, the Court culled out the following propositions:
"What needs to be
emphasised is that the State and/or its agencies/instrumentalities cannot give largesse
to any person according to the sweet will and whims of the political entities
and/or officers of the State. Every action/decision of the State and/or its agencies/instrumentalities
to give largesse or confer benefit must be founded on a sound, transparent,
discernible and well-defined policy, which shall be made known to the public by
publication in the Official Gazette and other recognised modes of publicity and
such policy must be implemented/executed by adopting a non-discriminatory and non-
arbitrary method irrespective of the class or category of persons proposed to
be benefited by the policy.
The distribution of largesse
like allotment of land, grant of quota, permit licence, etc. by the State and
its agencies/instrumentalities should always be done in a fair and equitable
manner and the element of favouritism or nepotism shall not influence the
exercise of discretion, if any, conferred upon the particular functionary or
officer of the State. We may add that there cannot be any policy, much less, a rational
policy of allotting land on the basis of applications made by individuals, bodies,
organisations or institutions dehors an invitation or advertisement by the State
or its agency/instrumentality.
By entertaining applications
made by individuals, organisations or institutions for allotment of land or for
grant of any other type of largesse the State cannot exclude other eligible
persons from lodging competing claim. Any allotment of land or grant of other form
of largesse by the State or its agencies/instrumentalities by treating the exercise
as a private venture is liable to be treated as arbitrary, discriminatory and an
act of favouritism and/or nepotism violating the soul of the equality clause
embodied in Article 14 of the Constitution."
factual matrix of this case shows that before granting 30 years' lease of the
plot in favour of the appellant, the Corporation neither issued any
advertisement nor followed any procedure consistent with the doctrine of equality
so as to enable the members of the public to participate in the process of
alienation of public property. Therefore, the conclusion reached by the High Court,
though for different reasons, that Resolution dated 28.8.1991 and the sanction accorded
by the State Government vide letter dated 12.6.2000 are legally unsustainable does
not call for interference by this Court.
are also convinced that even though the lease granted to Gopaldas Mohta was
renewed in favour of Parmanand Mundhada vide Resolution dated29.10.1975,
respondent Nos.1 and 2 cannot derive any benefit from the said renewal merely
because the Corporation did not cancel or rescind the resolution.
It was neither the
pleaded case of respondent Nos.1 and 2 nor was any material produced by them before
the High Court to show that Parmanand Mundhada had taken any action in
furtherance of Resolution dated29.10.1975 and fresh lease deed was executed in
his favour. The only plea taken by them was that Parmanand Mundhada had filed
an appeal under Section 397(3) read with Section 411 against increase in the ground
rent and the imposition of penalty. However, nothing has been said about the fate
of that appeal.
Mundhada, his heirs or respondent Nos.1 and felt that the disposal of the
appeal has been unduly delayed then they could have filed a writ for issue of a
mandamus directing the appellate authority to decide the appeal within a
specified period but no such step is shown to have been taken by either of them.
Therefore, we are constrained to take the view that Resolution dated 29.10.1975
had become redundant and the same can no longer be relied upon by respondent
Nos.1 and2 for claiming any right or interest in the plot.
ratio of the judgment in Damodhar Tukaram Mangalmurti v. State of Bombay
(supra) which has been relied upon by Shri Naphade has no bearing on this case.
The question which came up for consideration in that case was whether Civil
Court has the jurisdiction to decide the issue of fair and equitable
enhancement of the annual rent. The facts of that case were that the then
Provincial Government of the Central Provinces and Berar, Nagpur devised a scheme
to extend residential accommodation by acquiring agricultural land and making
it available for residential purposes.
The lease granted in
respect of building sites of 10,000 sq. ft. contained a renewal clause with a stipulation
that the lessor can make fair and equitable increase in the amount of annual
rent. At the time of renewal, the lessor increased the annual rent from Rs. 3-8-0
to Rs. 21-14-0 in accordance with Clause III of the indenture of lease. One of the
preliminary issues framed by the Subordinate Judge, Nagpur was whether the Civil
Court has the jurisdiction to decide as to what should be fair and equitable
enhancement in the amount of annual rent.
He ruled in favour of
the plaintiff and his view was confirmed by the lower appellate Court. When the
matter was taken up before the High Court, the Division Bench consisting of the
Chief Justice and Mudholkar, J expressed divergent views. The third Judge to
whom the matter was referred agreed with the learned Chief Justice that the
Civil Court did not have jurisdiction in the matter. By majority of 2:1, this
Court reversed the judgment of the High Court. Speaking for the majority, S. R.
Das, J made the following observations:
that the words" fair and equitable 'must be given their due meaning and
proper effect. The question then asked is - what meaning is to be given to the
words "such ... as the lessor shall determine". It is indeed true that
these words constitute an adjectival clause to the expression "fair and
equitable enhancement", but we consider that the meaning of the adjectival
clause is merely this: the lessor must first determine what it considers to be
fair and equitable enhancement; but if in fact it is not so, it is open to the lessee
to ask the court to determine what is fair and equitable enhancement. We do not
think that on a proper construction of the clause, the intention was to oust
the jurisdiction of the court and make the determination of the enhancement by the
lessor final and binding on the lessee."
the present case, we are not concerned with the question whether the decision
of the Corporation to increase the rent was legally correct and justified
because, as mentioned above, the appeal allegedly filed by Parmanand Mundhada
under Section 397 (3) read with Section 411 of the Act was not pursued to its
logical end and in the writ petitions filed by them, respondent Nos.1 and 2 did
not question ten times increase in the rent payable by the lessee.
argument of Shri Shekhar Naphade, learned senior counsel for respondent Nos.1
and 2 that the Corporation is bound to renew the lease granted to his clients
in terms of Section 116 of the Transfer of Property Act, 1882 because the plot
in question remained in their possession through the appellant also merits
rejection. The reason for this conclusion is that no evidence was produced before
the High Court to show that the appellant was continuing in possession with the
consent of Parmanand Mundhada, his heirs or respondent Nos.1 and 2. Rather, it was
their pleaded case that after expiry of the period specified in lease deed dated10.9.1947,
the appellant did not have any right to continue in possession.
are also of the view that Resolution dated 29.10.1975 though passed in
consonance with Clause 10 of lease dated 28.10.1944, has to satisfy the test of
reasonableness, equality and fairness. Though, the initial lease was granted to
Gopaldas Mohta before coming into force of the Constitution, while considering the
issue of renewal of lease the Corporation was duty bound to take action and decision
strictly inconsonance with the constitutional principles and decision to renew the
lease in favour of Parmanand Mundhada could not have been taken except after
following a procedure consistent with the equality clause, which was not done.
the result, the appeals are dismissed. The appellant shall handover possession
of the plot to the Corporation within a period of three months. After taking
possession of the plot, the Corporation shall alienate the same by sale, lease,
or otherwise by auction or by inviting tenders and after following a procedure
consistent with Article 14 of the Constitution. The Corporation shall pay
market value of the structure, as obtaining on the date of the order of the
High Court to the appellant.
[SUDHANSU JYOTI MUKHOPADHAYA]