Allahabad High Court
Hindustan Petroleum Corporation Ltd. ... vs Ram Bharosey Lal Gupta on 4 July, 2007
Equivalent citations: AIR2007ALL220, AIR 2007 ALLAHABAD 220, 2007 (5) ALJ 789, 2008 (1) AKAR (NOC) 28 (ALL.), 2007 A I H C 3684, (2007) 3 ALL RENTCAS 260, (2007) 69 ALL LR 379
Author: Tarun Agarwala
Bench: Tarun Agarwala
ORDER Tarun Agarwala, J.
1. The plaintiff executed a lease deed dated 1-2-1960 for a period of twenty years in favour of M/s Caltex India Ltd. on a monthly rent of Rs. 50/- for the purpose of erecting a petrol pump. By The Caltex (Ac quisition of Shares of Caltex Oil Refining (India) Limited and of the Undertakings in India of Caltex (India) Limited) Act 1977, being Act No. 17 of 1977, (hereinafter referred to as the Caltex Act), M/s Hindustan Petroleum Corporation Ltd. became the successor in the interest of the original lessee. The plaintiff mortgaged its property on 12-1 1962 to Shri Ram Gopal and since then he was receiving the rent from the lessee and continued to receive the rent till April 1983 when the mortgage was redeemed by the plaintiff and the rights on the land reverted to the plaintiff. It is alleged that the redemption of the mortgage was intimated to the defendant No. 1. It was also alleged that in terms of paragraph No. 3 (d) of the lease deed, the defendant No. 1 did not exercise its option for the renewal of the lease which expired in the year 1980 and, consequently the defendant No. 1 was holding over the premises as a tenant on a month to month basis. It was also alleged that defendant No. 1 had sublet the land in favour of respondent No. 2, and was also in arrears of rent, and therefore, on the aforesaid grounds, the plaintiff issued a notice dated 13-6-1983, determining the tenancy and directing the defendants to vacate the premises upon the expiry of the period of the notice and to hand over vacant possession. Since the defendant failed to vacate the premises, the plaintiff filed a suit for the ejectment of the defendants and for the possession of the land in question. The plaintiff also prayed for the recovery of Rs. 450/- as arrears of rent and damages and also prayed for mesne profit at the rate of Rs. 550/- per month from the defendant from the date of the filing of the suit up to the date of the actual ejectment.
2. The defendants filed their written statement denying the plaint allegations and contended that the lease deed contemplated a provision for the renewal of the lease deed for a period of 20 years and that the defendant had exercised its right of renewal and by giving a notice dated 1-4-1980. This notice was duly received and replied by the plaintiff vide his letter dated 27-5-1980- The defendants therefore contended that since the defendant had exercised their right of renewal as per the lease deed, no cause of action arose for the plaintiff to determine the tenancy and that the action of the defendants in terminating the tenancy was wholly illegal. The defendants further contended that they are not in arrears of rent and that the entire arrears of rent had also been deposited in the Court. The defendants further submitted that their tenancy was protected by the U. P. Act No. 13 of 1972 in view of Section 29-A read with Section 20 of the said Act and consequently the suit for possession was wholly misconceived and that the suit was not maintainable and that the notice under Sections 106 and 111 of the Transfer of Properly Act was defective and bad in law.
3. The trial Court, after framing the issues and, after considering the evidence that was brought on the record, decreed the suit for arrears of rent of Rs. 450/- but held that the plaintiff was not entitled to terminate the tenancy. The trial Court found that the plaintiff was the owner of the land and that the suit was not barred by the U. P. Act No. 13 of 1972, inasmuch as, U. P. Act No. 13 of 1972 was not applicable since only the land was let out and that the Court had the jurisdiction to hear and decide the suit which was maintainable. The trial Court further held that the defendant had given a notice for the renewal of the lease deed, and therefore, had fulfilled the requirement contemplated under Clause 3(d) of the lease deed and that the plaintiff was bound by the terms of the lease deed and was duty bound to renew the lease deed instead of determining the lease. The trial Court found that once the option was exercised by the defendants" the plaintiff had no alternative but to renew the lease. The trial Court further held that even after the expiry of the lease deed, the rent was being received by the plaintiff, and therefore, there was a deemed presumption that the lease had been renewed by the plaintiff.
4. Aggrieved by the judgment of the trial Court, the plaintiff filed an appeal which was allowed and the suit was decreed in toto. The appellate Court held that the provisions of the Transfer of Property Act applied to the parties and that the tenancy had rightly been determined. The appellate Court found that the plaintiff did not agree to renew the lease deed, and therefore, the defendants, after the expiry of the lease deed, became a tenant by sufferance from month to month and that the plaintiff was entitled to determine the tenancy and evict the defendants. The appellate Court found that since the defendants were holding over, the plaintiff was entitled for arrears of rent for the period 1-5-1983 to 27-1-1984, and thereafter, mesne profit at the rate of Rs. 550/- per month.
5. The defendants, being aggrieved by the aforesaid judgment filed the present second appeal before this Court which was admitted on the following questions of law, namely-
(1) whether under the Clause 3(d) of the lease deed executed between Mansa Ram and M/s Caltex India Ltd., the lessor was under a legal obligation to renew the lease term for a further period of 20 years, if the conditions of Clause 3(d) were complied with.
6. Heard Shri Vikas Budhwar, the learned Counsel for the appellant and Sri A. D. Saunders, the learned Counsel for the plaintiff/opposite party.
The learned Counsel for the appellant submitted that in view of the Clause 3(d) of the lease deed read with Section 7(3) of the Caltex Act, there was an automatic renewal of the lease deed for another term of twenty years. Even otherwise, the defendants had exercised their option for the renewal of the lease as per the terms and conditions of the lease deed and upon exercising its option, the plaintiff had no choice but to renew the lease deed.
In support of his submission, the "learned counsel for the appellant has placed reliance upon a decision of the Supreme Court in Bharat Petroleum Corporation Ltd. v. P. Kesavan and Anr. . The learned Counsel for the appellant further submitted that Caltex Act is a special statute which would apply in the present case and that the provision of the Transfer of Property Act, being a general Act, would not apply to the present facts and circumstances of the case. Consequently, the provision of the Transfer of Property Act could not be invoked, and that the notice dated 13-6-1983 determining the lease was invalid, inoperative and void since the field was covered by the Caltex Act. The learned Counsel consequently submitted that the provision of Sections 106, 111 and 116 of the Act was not applicable. The learned Counsel further submitted that even after the expiry of the period of tenancy, the rent was accepted by the plaintiff, and therefore, there was an implied renewal of the lease deed.
7. On the other hand, the learned Counsel for the opposite party submitted that issue No. 2, with regard to the applicability of U. P. Act No. 13 of 1972 was decided against,, the appellant and it was held that the said Act was not applicable, and therefore, it was no longer open to the appellant to challenge this finding in the second appeal. The learned Counsel further submitted that the terms and conditions of the lease deed was violated by the defendants which disentitled them for the renewal of the lease and, consequently the plaintiff had issued a valid notice determining the lease. The learned Counsel submitted that in the circumstances of the case, the issuance of the notice, determining the lease, by invoking the provisions of the Transfer of Property Act, was valid. The learned Counsel for the respondents further submitted that the renewal clause was unfair and unreasonable and that an automatic renewal of the lease was not an absolute bar and that the judgment relied upon by the appellant was wholly distinguishable.
8. In rejoinder, the counsel for the plaintiff submitted that the defendant had not violated any terms or conditions of the lease deed and that there was no default of any rent on or before the date when the application for renewal of the lease was given nor was there any violation of any clause of the lease deed. The learned Counsel reiterated that in view of the provision of Section 7(3) of the Caltex Act read with Clause 3(d) of the lease deed, the plaintiff had no option but to renew the lease deed.
9. In order to decide the aforesaid controversy, it would be appropriate to consider Clause 3(d) of the lease deed and Section 7 of the Caltex Act. Clause 3(d) of the lease deed reads as under:
That the Lessor will on the written request of the Lessee made two calendar months before the expiry of the terms hereby created, and if there shall not at the time of such request be any existing breach or non-observance of any of the covenants on the part of the Lessee hereinbefore contained grant to it a tenancy of the demised premises for a further term of twenty years from the expiration of the said term at the rent of Rs. 50.00 per month and containing the like covenants and provisos as are herein contained, including a clause for renewal for one further term of twenty years at 10% (ten percent) increase in rental and containing the like covenants and proviso as are herein contained so as to give the Lessee in its option two further renewals each of twenty years.
10. Section 7 of the Caltex Act provides as under:
7. Special provisions as to certain rights and interests held by Caltex (India) before the appointed day.- (1) Every right or interest in respect of any property in India (including a right under any lease or under any right of tenancy or any right under any arrangement to secure any premises for any purpose), which Caltex (India) held immediately before the appointed day, shall, notwithstanding anything contained in any other law or in any agreement or instrument relating to such right or interest, vest in, and be held by, the Central Government on and after the appointment day on the same terms and conditions on which Caltex (India) would have held it, if no negotiations had taken place for the acquisition by the Central Government of the undertakings of Caltex (India) in India or, as the case may be, if this Act had not been passed.
(2) If at any time after the 2nd day of February, 1974 (being the date on which the Central Government's policy for acquiring undertakings engaged in the production, marketing or distribution of petroleum products was made known) and before the commencement of this Act, Caltex (India) surrendered or otherwise relinquished any right or interest in respect of any property in India (including a right under any lease or under any right of tenancy or a right under any arrangement to secure any premises for any purpose), then, for the purposes of this Act, notwithstanding anything contained in any other law or in any agreement or instrument relating to such right or interest, the Central Government shall, on and after the appointed day, be entitled to such right or interest on the same terms and conditions on which Caltex (India) would have been entitled to such right or interest if it had not surrendered or otherwise relinquished such right or interest and this Act has not been passed:
Provided that nothing in this sub-section shall apply to any right or interest surrendered or otherwise relinquished by Caltex (India) before the commencement of this Act for sufficient monetary consideration.
(3) On the expiry of the term of any lease, tenancy or arrangement referred to in Sub-section (1) or Sub-section (2), such lease or tenancy or arrangement shall, if so desired by the Central Government, be renewed or continued, so far as may be, on the same terms and conditions on which the lease or tenancy or arrangement was originally granted or entered into.
11. From a perusal of the aforesaid pro "'visions, it is clear that Section 7(3) of the Act as well as Clause 3(d) of the lease deed provides a provision for the renewal of the lease deed. The provision of Section 7 of the Caltex Act is identical to the provision of the Section 5 of the Burmah Shell (Acquisition of Undertakings in India), Act, 1976. The Supreme Court in Bharat Petroleum's case (supra) while interpreting the provision of Section 5(2) of the Burmah Shell Act held that the Burmah Shell, Act, being a special Act prevailed over the provisions of the Transfer of Property Act which was a general statute. The Supreme Court further held that the provision relating to the renewal clause amounted to an automatic renewal and that the lease or tenancy for outlet was required to continue to be kept with the Central Government, having regard to the object of the Act. The Supreme Court held-
11. The said Act is a special statute visa-vis the Transfer of Property Act which is a general statute. By reason of the provisions of the said Act, the right, title and interest of Burmah Shell vested in the Central Government and consequently upon the appellant company. A lease of immovable property is also an asset and/or right in an immovable property. The lease hold right, thus, held by Burmah Shell vested in the appellant. By reason of Sub-section (2) of Section 5 of the Act a right of renewal was created in the appellant in terms whereof in the event of exercise of its option, the existing lease was renewed for a further term on the same terms and conditions. As noticed hereinbefore, Section 11 of the Act provides for a non-obstante clause.
12. As would appear from the preamble of the Transfer of Property Act, the same applies only to transfer by act of parties. A transfer by operation of law is not validated or invalidated by anything contained in the Act. A transfer which takes place by operation of law, therefore, need not meet the requirement of the provisions of the Transfer of Property Act or Indian Registration Act.
13. The said Act is a special statute. Sub-section (2) of the Section 5 thereof mandates that in the event the appellant desires to renew the lease or tenancy, the same would be renewed on the same term and conditions on which the lease or tenancy was held by Burmah Shell immediately prior to the appointed day.
12. And further held-
19 Section 5(2) and Section 7(3) of the -Act are required to be given in purposive meaning, having regard to the object and purport the statute, seeks to achieve. The Central Government by reason of the provisions of the said Act acquired running business undertakings dealing in distribution and marketing of petroleum products. The lease or tenancy for outlets are, therefore, continued to be kept with the Central Government or the Government company, as the case may be, so that no let or hindrance is placed in the matter of distribution of the products from established retails outlets, unless alternate arrangements are made. Having regard to the object of the Act, as noticed hereinbefore, it is difficult to agree with the submission of the learned Counsel for the respondents to the effect that the expression mere desire by the Central Government or the appellant was not enough and they were required to show something more, as for example existence of need for renewal of the lease. The Central Government or the Government Company is a State within the meaning of Article 12 of the Constitution of India. They are required to act fairly. It is not the case of the respondents herein that desire to get the lease renewed was actuated by any malice or ill-will or the same was otherwise unfair and unreasonable. In that view of the matter, it is difficult to construe Section 5(2) of the Act as not laying down a law not contemplating automatic renewal of the lease.
20. The provisions of the Transfer of Property Act have no application in a case where a transfer of property takes place by operation of law.
13. The aforesaid judgment is squarely applicable to the present facts and circumstances of the case. The provision of Section 5(2) of the Burmah Shell Act is identical to the provision of Section 7(3) of the Caltex Act. The Supreme Court has clearly held that a mere desire to renew the lease or tenancy was sufficient. In any case, in the present case, I find that the appellants had also exercised their option and issued a notice dated 1-4-1980 exercising their option for the renewal of the lease for another term of twenty years. This notice was duly received by the plaintiff. Consequently, the plaintiff not only concealed material facts in his plaint but wrongly stated that the defendants did not exercise its option for the renewal of the lease on or before the expiry of the term of the lease. Since the defendant appellants had exercised its option for the renewal of the lease, the plaintiff had no option but to renew the lease for another term unless the defendant had violated any terms and conditions of the lease. In the present case, there was no violation of any terms or conditions of the lease deed on or before the expiry of the period of the lease. Consequently, in the opinion of the Court, the plaintiff was duty bound as per Clause 3(d) of the lease read with Section 7(3) of the Caltex Act to renew the lease for another term of 20 years.
14. Consequently, in view of the aforesaid and in view of the Bharat Petroleum's case, supra, the provisions of the Transfer of the Property Act could not be invoked by the plaintiff. The issuance of a notice under Section 106 of the Transfer of Property Act determining the lease was patently erroneous and without jurisdiction. The lease of the defendants, in the facts and circumstances of the case could not be determined by the plaintiff. The finding of the appellate Court that it was not mandatory upon the plaintiff to renew the lease was patently erroneous and against the provision of Clause 3(d) of the Act read with Section 7(3) of the Caltex Act.
15. In view of the aforesaid, the impugned order of the lower appellate Court cannot be sustained and is quashed. The question of law, as framed by the Court, is answered in the affirmative. The appeal is allowed. However, in the circumstances of the case there shall be no order as to costs.