Gujarat High Court
Jayantibhai Chelabhai Prajapati vs Sardar Sarovar Narmada Nigam Limited on 6 August, 2014
Author: Ks Jhaveri
Bench: Ks Jhaveri, A.G.Uraizee
C/SCA/4753/2011 ORDER
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
SPECIAL CIVIL APPLICATION NO. 4753 of 2011
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JAYANTIBHAI CHELABHAI PRAJAPATI....Petitioner(s)
Versus
SARDAR SAROVAR NARMADA NIGAM LIMITED....Respondent(s)
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Appearance:
MR KS NANAVATI, SR. ADVOCATE WITH MR. NANDISH Y. CHUDGAR FOR
NANAVATI ASSOCIATES, ADVOCATE for the Petitioner(s) No. 1
MR HS MUNSHAW, ADVOCATE for the Respondent(s) No. 1
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CORAM: HONOURABLE MR.JUSTICE KS JHAVERI
and
HONOURABLE MR.JUSTICE A.G.URAIZEE
Date : 06/08/2014
ORAL ORDER
(PER : HONOURABLE MR.JUSTICE KS JHAVERI)
1. The matter was moved way back in the month of April 2011 and it has been listed for not less than 95 times and it has not been admitted yet. The ordersheet discloses a long history of adjournments at the instance of the petitioner. Earlier Benches hearing the matter have also made observations about the reluctance of the petitioner to proceed with the matter. However, today, finally, the matter is heard.
2. The petitioner herein has called in question the decision of respondentSardar Sarovar Narmada Nigam Limited dated Page 1 of 18 C/SCA/4753/2011 ORDER 25.03.2011 whereby, the Lease Deed dated 14.07.2008 executed by and between the petitioner and respondent came to be terminated and the amount of premium of Rs.1.00 Crore along and advance rent paid by the petitioner was forfeited.
3. The facts in a nutshell are that on 07.09.2006 the respondent published an Advertisement inviting bids from public for leasing out different plots of land near Narmada Main Canal Highway, Ahmedabad for a period of 30 years. The petitioner herein submitted its tender bid, which was accepted by the respondent, vide its letter dated 27.12.2006, for a plot of land ad measuring 12,500 sq. metres situated at Mouje : Karai Taluka, District :
Gandhinagar. The acceptance of the bid of the petitioner was subject to the fulfillment of the terms and conditions specified in the letter dated 27.12.2006. It required that the petitioner had to make payment of premium amount of Rs.1.00 Crore upfront and also monthly rental of three years in advance.
4. It appears that the petitioner deposited the premium amount of Rs.1.00 Crore on 27.02.2007 and therefore, on 14.07.2008, the Lease Deed came to be executed by and between the petitioner and the respondent. On the same day, i.e. on 14.07.2008, the petitioner also paid advance monthly rental for three years.
5. The petitioner addressed communication dated 18.08.2010 to the respondent intimating them that it has initiated the process for obtaining approvals from the Ahmedabad Urban Development Authority for developing a club in the name of "Akruti Club" and Page 2 of 18 C/SCA/4753/2011 ORDER that once the approval from AUDA is obtained, it would obtain necessary approval from the respondent. Vide another communication dated 30.08.2010 addressed to the respondent, the petitioner specified the activities, which it intends to develop on the leased land.
6. However, vide letter dated 01.09.2010, the respondent informed the petitioner that the activities specified by the petitioner are different than the object for which the tender bids were invited. Therefore, on 24.09.2010, the respondent issued a legal notice to the petitioner seeking explanation for breach of the terms and conditions of Lease Deed. The petitioner gave its reply vide letter dated 04.12.2010. After hearing the petitioner on 02.02.2011, the respondent passed the impugned order dated 25.03.2011 whereby, the Lease Deed dated 14.07.2008 executed by and between the petitioner and respondent came to be terminated and the amount of premium of Rs.1.00 Crore along and advance rent paid by the petitioner was forfeited. The petitioner was also informed that possession of the leased land stood restored to the respondent. Being aggrieved by the above action of the respondent, the present petition has been filed.
7. Mr. K.S. Nanavati, learned Senior Counsel appearing with Mr. Nandish Chudgar learned counsel for the petitioner, submitted that the petitioner always intended to carry out development work on the leased land, which is evident from the fact that the petitioner has already invested a huge amount of approximately Rs. 3.00 Crores in its efforts of executing the lease deed. It was submitted Page 3 of 18 C/SCA/4753/2011 ORDER that delay in executing the lease deed was on account of reasons beyond the control of the petitioner. The petitioner had received possession of the leased land only on 04.07.2009 though the lease deed was executed way back on 14.07.2008. There was also delay in making the site fit for development and in getting approvals by the appropriate authorities. Therefore, the respondent ought not to have terminated the lease deed and forfeited the amount of deposit of the petitioner.
7.1 Learned Senior Counsel Mr. Nanavati further submitted that the petitioner had not committed any breach of the conditions of lease deed, as alleged by the respondent. It is submitted that the conditions that are alleged to have been breached by the petitioner are not mandatory in nature but, are directory and since the project pertained to development work, the respondent ought not to have terminated the lease deed especially when the petitioner has made substantial investment for the project.
7.2 Learned Senior Counsel Mr. Nanavati submitted that the petitioner is a 'lessee' while the respondent is a 'lessor' and the relationship between the petitioner and respondent is governed by the provisions of The Transfer of Properties Act. Being a 'State' within the meaning of Article 12 of the Constitution, the 'lessor' can evict the 'lessee' only in accordance with law and the 'lessee' cannot be forcibly dispossessed. Therefore, the action of the respondent is violative of Article 14 and 19 of the Constitution of India.
7.3 Learned Senior Counsel Mr. Nanavati lastly submitted that Page 4 of 18 C/SCA/4753/2011 ORDER resumption of property on the ground of breach of condition of lease / licence can be resorted to only as a last resort. It is submitted that the petitioner had applied for being relieved against the forfeiture and for extension of time to complete the construction and in such case, the respondent ought not to have evicted the petitioner without even considering the request for extension of time. Hence, the impugned action of the respondent is illegal and arbitrary.
8. Learned Senior Counsel for the petitioner has placed reliance upon an unreported decision of the coordinate Bench of this Court rendered in Special Civil Application No. 6549 of 2011 decided on 15.07.2013 and more particularly, on the observations made in para3, which reads thus;
"3. It is settled position of law that howsoever grave may be the cause the respondent could not have dispossessed the petitioner by any method which is not known and acceptable to law.
The learned senior advocate for the petitioner submitted that there are various judgments of the Honble the Apex Court, but of those judgments the learned senior advocate for the petitioner selected one judgment to bring home the point and that is the judgment of the Honble the Apex Court in the matter of State of U.P. and others Vs. Maharaja Dharmander Prasad Singh, etc., reported in A.I.R. 1989 SC
997. The learned senior advocate for the petitioner submitted that possibly there could not be a better expression for putting his point through than the words in which the case was presented before the Honble the Apex Court by Shri Sorabjee which is discussed by the Honble the Apex Court in the Page 5 of 18 C/SCA/4753/2011 ORDER following para:
15. Sri Sorabji submitted that great hardship and injustice would be occasioned to the respondents if the State Government on the selfassumed and selfassessed validity of its own action of cancellation of the lease, attempts at and succeeds in, a resumption of possession extrajudicially by physical force. Sri Sorabjee referred to the notice dated 19.11.1985 in which the Government, according to Sri Sorabjee, had left noone in doubt as to its intentions of resorting to an extrajudicial resumption of possession. Sri Sorabjee referred to paras 3.10 and 4 of the order dated 19.11.1985.
A lessor, with the best of title, has no right to resume possession extrajudicially by use of force, from a lessee, even after the expiry or earlier termination of the lease by forfeiture or otherwise. The use of the expression 'reentry' in the leasedeed does not authorize extrajudicial methods to resume possession. Under law, the possession of a lessee, even after the expiry or its earlier termination is juridical possession and forcible dispossession is prohibited; a lessee cannot be dispossessed otherwise than in due course of law. In the present case, the fact that the lessor is the State does not place it in any higher or better position. On the contrary, it is under an additional inhibition stemming from the requirement that all actions of Government and Governmental authorities should have a 'legal pedigree'. In Bishandas v. State of Punjab, (1962) 2 SCR 69 : (AIR 1961 SC 1570), this Court said (at pp. 1574 and 1575 of AIR):
"We must, therefore, repel the argument based on the contention that the petitioners were trespassers and could be removed by an executive order. The argument is not only specious but highly dangerous by reason of its implications and impact on law and order.
Before we part with this case, we feel it our duty Page 6 of 18 C/SCA/4753/2011 ORDER to say that the executive action taken in this case by the State and its officers is destructive of the basis principle of the rule of law. (emphasis supplied)"
Therefore, there is no question in the present case of the Government thinking of appropriating to itself an extrajudicial right of reentry. Possession can be resumed by Government only in a manner known to or recognized by law. It cannot resume possession otherwise than in accordance with law. Government is accordingly, prohibited from taking possession otherwise than in due course of law. (emphasis supplied) The learned senior advocate for the petitioner submitted that the case on hand is on a better footing, because in the case before the Hon'ble the Apex Court there was a term used re entry, but in our case, clause (13) of the lease deed only provided that, Notwithstanding and without prejudice to the clause above of this lease deed, in the event of default, breach or noncompliance of any of the terms and conditions of this lease deed, the lessor may by notice in writing and after providing opportunity of hearing, terminate this lease and forfeit the whole of rent as well as premium paid.
The learned senior advocate for the petitioner submitted that the lease deed does not provide for reentry like it was provided in the document before the Hon'ble the Apex Court. The learned senior advocate for the petitioner submitted that let there be no misunderstanding that in the event in the lease deed on hand if there was provision of reentry that would have authorized the Government to take possession by any method, which is not known to law and recognized by law. The learned senior advocate for the petitioner submitted that the Hon'ble the Apex Court in that very judgement in the very next para made it clear that, the moment the question of dispossession by extrajudicial means is decided the High Court must restrain itself from examining the merits of the Page 7 of 18 C/SCA/4753/2011 ORDER matter. The learned senior advocate for the petitioner submitted that he is conscious of the fact that in a matter like this where rights of the parties are accruing from lease deed the civil court is the right forum for determination of rights of the parties, but he reiterated that he is agitating only and the only question of dispossession by resorting to extrajudicial means which are neither known to law nor recognized by law. In this regard para 16 is also reproduced hereunder for ready perusal:
16. In the result, the appeals of the State of Uttar Pradesh (SLPs 4761 and 4762 of 1987) and of the LDA (SLPs 18298 and 11498 of 1987) directed against the common judgment dated 8.12.1986 in so far as it pertains to W.P. 6819 of 1985 and W.P. 367 of 1986 are allowed and the said two writ petitions are dismissed, leaving the question of the legality and validity of the purported cancellation of the lease and the defence of the lessees open to be urged in appropriate legal proceedings, whenever and wherever Government proceeds to initiate action in accordance with law for resumption of possession on the basis of the alleged cancellation or forfeiture of the lease. Any developmental work that may be made by the lessees or at their instance would, of course, be at their own risk and shall be subject to the result of such proceedings."
8.1 Mr. Nanavati has placed reliance upon a reported decision of the Apex Court in the case of Teri Oat Estates (P) Ltd. v. U.T., Chandigarh and others, (2004) 2 SCC 130. In that case, the lessee defaulted / delayed in payment of installments of premium, interest thereon and ground rent in terms of the letter of allotment but the default / delay was not found to be willful or dishonest but occasioned due to a situation beyond his control and the entire amount due was, ultimately, cleared by him. It was held that resort to the drastic power of resumption and forfeiture would amount to Page 8 of 18 C/SCA/4753/2011 ORDER a disproportionate action.
8.2 Mr. Nanavati has also placed reliance upon a reported decision of the Apex Court in the case of Managing Director, Haryana State Industrial Development Corporation and others v. Hari Om Enterprises and another, (2009) 16 SCC 208 wherein, it has been held that when two remedies to enforce a contract are available, the power should be exercised in reasonable manner, so construed that a harsher remedy may not be ordinarily resorted to and that the power of resumption and forfeiture should be taken recourse to as a last resort.
8.3 Reliance is also placed on a reported decision of the Apex Court in the case of Shimnit Utsch India Private Limited and Another v. West Bengal Transport Infrastructure Development Corporation Limited and Others, (2010) 6 SCC 303, wherein, it has been held that government policy can be changed with changing circumstances and only on ground of change, a policy is not vitiated. The Government has discretion to adopt a different policy, alter or change its policy to serve public interest and make it more effective but change in policy must be in conformity with Wednesbury reasonableness and free from arbitrariness, irrationality, bias and malice.
9. Mr. H.S. Munshaw learned counsel for the respondent submitted that the petitioner was in clear breach of the terms and conditions of lease deed. It is submitted that the petitioner had to get the plans and layouts sanctioned within a period of six months Page 9 of 18 C/SCA/4753/2011 ORDER from the date of execution of lease deed and was also required to put up construction of superstructure for tourism project within a period of two years. However, the petitioner had failed on both the counts and thereby, was in clear breach of the terms and conditions of lease deed.
9.1 Learned counsel Mr. Munshaw further submitted that the petitioner had not furnished the bank guarantee within the stipulated period in spite of several reminders. Moreover, the project proposed to be set up by the petitioner cannot be termed as a "tourism project" since the petitioner was proposing to develop a "club" and that to without obtaining prior approval or permission of the respondent. It is, therefore, submitted that since the petitioner was in clear breach of the terms and conditions of lease deed, the respondent had no other option but, to terminate the lease deed and to forfeit the amount of deposit.
10. We have heard learned counsel for both the sides and have perused the documents on record. On 07.09.2006 the respondent invited Tenders from interested parties for allotting plots of land on lease for a period of 30 years with the sole object of developing tourism. The petitioner submitted his offer for the land in question and being the highest bidder, his offer was accepted by the respondent. Lease Deed was executed by and between the petitioner and respondent on 14.07.2008. The land in question was given on lease to the petitioner for developing it for tourism purpose and not for any other purpose since it was situated in the vicinity of the Main Canal of the dam constructed on River Page 10 of 18 C/SCA/4753/2011 ORDER Narmada.
11. Before proceeding further, a reference to the relevant terms and conditions of Lease Deed would be apposite, of which the petitioner is alleged to have committed breach of;
"3. The Lessee for itself and its successors and to the intent that the obligations may continue throughout the terms hereby created, covenant with the Lessor and its successors as follows;
(a) to (e) ....
(f) To use the said demised premises only for the purpose of promoting and developing tourism and related activities and also for such business of its holding / subsidiary / associate companies only and for no other purpose or business.
(g) to (h) ....
(i) Within a period of 6 months from the date of signing of leasedeed agreement, obtain the requisite permissions and approvals relating to the development plans as specified in the project and shall within a period of 2 (two) years thereafter erect and complete construction upon the leased land with the requisite and proper facilities, amenities and other conveniences in accordance with the sanctioned Page 11 of 18 C/SCA/4753/2011 ORDER building plan to the entire satisfaction of the lessor."
12. The conditions of the lease deed are clear and unambiguous. Condition 3(f) provides that lessee has to use the leased land only for the purpose of promoting and developing tourism and related activities and not for any other purpose or business.
12.1 In the present case, the pamphlet regarding the project proposed to be developed by the petitioner, which is placed on record vide AnnexureJ, shows that the project is named "Akruti Club". The land was leased to the petitioner with the specific condition that it was to be developed for tourism and not for constructing a Club. The word 'Club' as defined in the Oxford Dictionary means "a heavy stick with a thick end or a stick used in a game or a playingcard of a suit denoted by a black trefoil or an association of persons united by a common interest, usually, meeting periodically for a shared activity (tennis club; yacht club) or an organization or premises offering members social amenities, meals and temporary residence, etc. or an organization offering subscribers certain benefits (book club)".
12.2 As we understand, the term 'Club' means an association of persons united by a common interest or a premise offering its members social amenities, meaning thereby, that the facilities provided at the premise are limited to its members only and not to the general public. Any individual who wants to enjoy the facilities provided in the premise, can do so after becoming a member Page 12 of 18 C/SCA/4753/2011 ORDER thereof and of course, at a cost. It was never the object of the respondent to get the land developed for the benefit of a select few individuals but, for the public at large. If the allotment on lease was for commercial purpose with profit motive, then it would not have been in the vicinity of the Main Canal but, would have been at a distinct place away from the Main Canal. We believe that the intent of the respondent was to get the area developed for tourism purpose and not for any profitmaking purpose. By proposing to construct a 'Club' over the leased land, the petitioner has committed breach of condition 3(f) of the Lease Deed.
13. The Advertisement in question also provided that the bidder had to furnish bank guarantee of Rs.2.00 Lacs upfront, i.e. before execution of the Lease Deed. Pursuant to the acceptance of bid of the petitioner, by letter dated 12.04.2007 of the respondent, the petitioner was instructed to furnish bank guarantee of Rs.2.00 Lacs. However, the same was not supplied. Therefore, another letter dated 21.04.2008 was addressed to the petitioner instructing to furnish the bank guarantee but, still it was not furnished. However, on 14.07.2008 the Lease Deed came to be executed on assurance given by the petitioner that the same would be furnished sooner rather than later.
13.1 Again, two letters dated 24.01.2008 and 12.09.2008 were addressed to the petitioner instructing him to comply with the condition of furnishing bank guarantee. Thereafter, fresh reminders vide letters dated 30.12.2008 and 22.01.2009 were sent to the petitioner. Ultimately, on 29.06.2009 i.e. after a period of more Page 13 of 18 C/SCA/4753/2011 ORDER than two years, the petitioner furnished the bank guarantee as required and therefore, possession of the land was handed over on 04.07.2009.
14. It may be noted that though the Bid of the petitioner was accepted way back on 27.12.2006, the petitioner has fulfilled the requisite conditions as late as on 29.06.2009. The respondent gave ample opportunities to the petitioner to furnish the required bank guarantee and it took a period of more than 26 months for the petitioner to furnish the required bank guarantee. This fact makes it clear that handing over of possession of land was delayed on account of nonfurnishing of bank guarantee by the petitioner and not on account of any lapse on the part of the respondent.
15. Further, the petitioner was also sent letters dated 12.09.2008, 27.10.2008, 23.12.2008 and 03.07.2009 for submission of approved plans and layouts. However, no such details were provided by the petitioner. Thus, the petitioner was in clear breach of condition 3(i) of the Lease Deed as well.
15.1 According to the terms and conditions of Lease Deed, the petitioner was required to develop the land in question within the stipulated time limit. Within a period of six months from the date of signing the Lease Deed, the petitioner was required to obtain requisite permissions and approvals relating to the development plans as specified in the project and to complete the construction work within a period of two years with requisite and appropriate facilities according to the sanctioned plan. The sole object behind Page 14 of 18 C/SCA/4753/2011 ORDER such allotment on lease was to see that tourism activity / development takes place in the area without any delay. Though the Lease Deed was signed way back on 14.07.2008 and a period of more than two years had passed, no development work or tourism activity, as required under the terms and conditions of Lease Deed, had been initiated by the petitioner and in fact, the land in question had remained as it was, which marred the purpose of development of tourism.
16. At this juncture, we may refer to Clause 13 of the terms and conditions of Lease Deed, which reads as under;
"13. Notwithstanding and without prejudice to the clause above of this lease deed, in the event of default, breach or non compliance of any of the terms and conditions of this lease deed, the lessor may by notice in writing and after providing opportunity of hearing, terminate this lease and forfeit the whole of rent as well as premium paid."
16.1 In compliance of the above condition, the petitioner was served with a legal notice on 24.09.2010 calling upon him to represent his case for appropriate decision by the competent authority. It was the case of the petitioner that he had not received the said legal notice issued by the respondent. Therefore, vide letter dated 12.11.2010, a copy of the legal notice was provided to the petitioner. The petitioner replied to the legal notice vide its letter / reply dated 04.12.2010. The petitioner was, thereafter, called for hearing on 02.02.2011 and was asked to submit his written Page 15 of 18 C/SCA/4753/2011 ORDER submissions, which was duly supplied. The petitioner remained present on the date so fixed and was heard by the competent authority and after arriving at a subjective satisfaction, the competent authority passed the impugned order. Thus, before terminating the Lease Deed, proper opportunity was afforded to the petitioner, as provided in clause13 of the terms and conditions of Lease Deed. It is not even the case of the petitioner that proper opportunity was not given to him before terminating the Lease Deed.
17. Considering the above aspects of the case and when it was found that the petitioner was in clear breach of the terms and conditions of Lease Deed, the respondent had no other option but, to terminate the Lease Deed. The petitioner was alloted the land in question for developing tourism activity in the larger public interest and not for setting up a Club for the use of a select individuals and their families with profit motive. By proposing to set up a Club, the petitioner has moved away from the very object for which the lease was granted by the respondentNigam.
18. In Dina Nath v. State of Uttar Pradesh and others reported in (2010) 15 SCC 218, the Apex Court held that Courts cannot be a silent spectator in matters of public interest and that it is bound to perform its constitutional duty for ensuring that public property is not frittered away by unscrupulous elements in the power corridors and that acts of grabbing public land are property enquired into and appropriate remedial action is taken. Admittedly, the land in question was leased for developing tourism in the area, which is Page 16 of 18 C/SCA/4753/2011 ORDER situated in the vicinity of the Main Canal. By proposing to developing a Club, the very object of the lease was being frustrated. Therefore, in the larger public interest, the Court is bound to ensure that public property is not put to use for purposes other than those for which it is meant for.
19. The decision rendered in Teri Oats case and Managing Director, Haryana State Industrial Development Corporation's case (supra) would not apply to the case on hand since the petitioner herein has committed breach of the very object for which the land was leased apart from committing breach of other mandatory terms and conditions of Lease Deed. In the abovereferred cases, the lessee had committed breach of the terms of letter of allotment whereas, in this case, the petitioner had committed breach of the very object as also other conditions of lease. Had the breach been technical, then the decisions relied upon by the petitioner would have been helpful to him but, considering the fact that the breach committed by the petitioner goes to the root of the matter, it is not feasible to permit the petitioner to continue with the Lease Deed and the respondent was completely justified in terminating the same.
20. It would be relevant to state that as per the prevailing market rate, the value of the land in question would be approximately Rs.12.50 Crores. During the course of arguments, the Court placed a compromise suggestion to the learned counsel for the petitioner to settle the dispute by accepting refund of 50% of the forfeited amount. After consulting the petitioner, who was present in the Page 17 of 18 C/SCA/4753/2011 ORDER Court, learned senior counsel informed the Court that the petitioner was not agreeable to any such compromise suggestion.
21. It may be noted that the matter was filed in April 2011 and it has not been admitted so for, though it has been listed for 95 times. The petitioner has been successful in lingering the matter on one ground or the other.
22. Considering the overall facts and circumstances of the case, we are of the opinion that the respondent has not committed any illegality or impropriety while terminating the lease deed and forfeiting the amount of premium and advance rent. Hence, we find no reasons to entertain this petition. Consequently, the petition is dismissed with costs quantified at Rs.25,000/. Notice is discharged.
(K.S.JHAVERI, J.) (A.G.URAIZEE,J) Pravin/* Page 18 of 18