Delhi District Court
Surjit Singh vs New Delhi Municipal Council on 21 October, 2008
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IN THE COURT OF DR.SUDHIR KUMAR JAIN, ADDITIONAL DISTRICT
JUDGE, DELHI.
Suit No: 175/2004
Date of Institution: 12.05.1999
Date of Decision: 21.10.2008
Surjit Singh,
90,Palika Bazar,
Connaught Place,
New Delhi. ... Plaintiff
Versus
New Delhi Municipal Council,
Palika Kendra,
New Delhi. ... Defendant
APPEARANCES:
FOR THE PLAINTIFF: Sh. Neeraj Malhotra, Advocate
FOR THE DEFENDANT: S/Shri P.M.Bhatt and Nikhil Aggarwal,
Advocates.
SUIT FOR DECLARATION OF PERPETUAL INJUNCTION
JUDGMENT
This judgment shall decide a suit for declaration and permanent injunction filed by Surjit Singh (hereinafter referred to as "plaintiff") against the New Delhi Municipal Council (hereinafter 2 referred to as "defendant").
2. The Central Government in the year 1976 had decided to built Palika Bazar Complex on the land granted to the predeceesor -in- interest of the defendant by the L&DO. The Central Government exercising its power under the Punjab Municipal Act, 1911 has framed a policy and terms and conditions for the allotment of shops thereof. The Deputy Secretary, Government of India, informed the decision and gave directions to the Deputy Secretary (LSG) Delhi Administration vide letter dated 27.04.1978 and thereafter the directions were given to the President, NDMC vide letter dated 27.04.1978 bearing No. F4/42/74/LSG/6102. The Palika Bazar Complex was built with an objective to settle the occupants of stalls situated at Panchkuin Road, Janpath, Tibetan Market and Yusuf Sarai Market. The defendant has decided to rehabilitate and resettle the persons who were running their business in said stalls at the above mentioned place. The defendant to achieve this objective has passed a Resolution No. 22 dated 10.11.1978. The remaining shops were decided to be allotted on licence basis by floating Tender.
3. In the backdrop of above facts, the plaintiff has pleaded that 3 the shop bearing no. 90, Palika Bazar, Connaught Place, New Delhi (hereinafter referred to as "shop in question") was allotted to Tejpal Singh in the year 1978; the plaintiff was inducted as a partner with Tejpal Singh vide Partnership Deed dated 05.10.1979; the partnership was dissolved vide Dissolution Deed dated 29.11.1979 and plaintiff had occupied the shop in question to the exclusion of Tejpal Singh; the plaintiff has continued to pay rent to the defendant @ Rs.3725/-per month; the plaintiff has applied for the regularization/transfer of the shop in question in his name vide application dated 24.11.1988 in pursuant to Resolutions no. 74 dated 17.02.1987 and no. 39A dated 05.11.1985; the plaintiff has stepped into the shoes of erstwhile allottee Tejpal Singh and continued to be governed by the terms and conditions which were applicable to Tejpal Singh; an agreement dated 11.01.1989 was executed between the defendant and the plaintiff for a period of five years w.e.f. 04.12.1988 at a monthly licence fee of Rs.4,970/-; as per clause 1 of the agreement dated 11.01.1989, the licence shall be for a period of five years from 04.12.1988 and thereafter will be renewable subject to increase in the rate of licence fee by 10% and on the terms and conditions as may be laid down by the licensor; the plaintiff after the 4 expiry of five years i.e. in the month of December, 1993 has exercised his right of renewal and started to pay rent to the defendant at an enhanced rate of Rs.6,000/- w.e.f. December, 1993 onwards which was accepted by the defendant under the head of "damage"; no fresh Deed was entered into between the parties at that time; the defendant in the month of December, 1996 had started to issue bills on the basis of enhanced rate of 30% over the last paid rent amounting to Rs.6,461/-; the plaintiff has started to pay the said fee under protest as the defendant has threatened to forcibly dispossess the plaintiff from the shop in question; the defendant again in the month of December, 1998 raised a bill at the enhanced rate of 30% over the last paid rent which was paid by the plaintiff under protest; an interest of lessee has been created in the shop in question in favour of the plaintiff which is appearing from the surrounding circumstances and other documents as such, plaintiff has become a lessee in respect of the shop in question; the defendant has never passed any legal Resolution changing the terms and conditions stipulated in the Resolution no.22; the defendant is estopped by its conduct from imposing any fresh conditions in contravention of Resolution no.22; the tenancy of the plaintiff would 5 stand renewed with 10% enhancement of rent over the last paid rent and renewal was in perpetuity. The plaintiff filed the suit and made the following prayers:--
a) pass a decree of declaration in favour of the plaintiff and against the defendant declaring that the plaintiff is a Lessee in perpetuity in respect of Shop No. 90, Palika Bazar, New Delhi;
b) pass a decree of declaration in favour of the plaintiff and against the defendant declaring that the shop is being held by the plaintiff by virtue of a grant made in favour of the plaintiff under the provisions of the Governments Grants Act;
c) pass a decree of declaration in favour of the plaintiff and against the defendant, declaring that the defendant cannot recover rent from the plaintiff in excess of 10% over the last paid rent, as stipulated in the Agreement dated 27.01.1979 entered into between the parties in respect of the said shop no. 90, Palika Bazar, New Delhi;
d) pass a decree of declaration in favour of the plaintiff and against the defendant, restraining the defendants, their employees, servants, representatives etc. from cutting of the electricity of the shop in occupation of the plaintiff i.e. 90, Palika Bazar, New Delhi;
e) pass a decree of declaration in favour of the plaintiff and against the defendant, restraining the defendants, their employees, servants, representatives etc. from cancelling the allotment of dispossessing the plaintiff or its agents from Shop No. 90, Palika Bazar, New Delhi without due process of law; and
f) pass such other or further orders as this Hon'ble Court may deem fit and proper in the facts and circumstances of the present case.6
4. The defendant has filed the written statement. The defendant has alleged that the suit is barred u/s 385 of the New Delhi Municipal Council Act, 1994 (hereinafter referred to as "the Act"); no notice has been served upon the defendant prior to the filing of the suit as per Section 385 of the Act; the shop in question was allotted to Tejpal Singh on licence basis and subsequently licence was granted in favour of the plaintiff; the plaintiff was never introduced in the shop in question as a lessee as pleaded; the defendant has retained the over all control of the entire shops situated in Palika Bazar Market and is responsible for day to day maintenance, repairs, entry and exit, security and the watch and ward thereof; the shop in question was allotted to the plaintiff on the terms and conditions as mentioned in the Deed of licence executed between the parties; the plaintiff has become the unauthorized occupant; the plaintiff has made the payment at enhanced rate by 10% over the last paid rent which was accepted by the defendant without prejudice and under protest under the head "damages". The defendant has controverted other allegations of the plaintiff.
5. The plaintiff has filed replication wherein reasserted and reaffirmed the previous stand.
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6. The following issues were framed vide order dated 15.03.2004: --
(1)Whether the present suit is barred for want of service of requisite notice U/s 385 of NDMC Act, 1994? OPD.
(2)Whether the plaintiff is a lessee or a licensee in respect of suit shop? OP Parties.
(3)Whether the plaintiff is an unauthorized occupant in respect of suit shop for non-compliance of the terms of renewal of lease/licence by him as alleged in para 16 of the WS and if so, what is its effect? OPD.
(4)Whether the defendant can not recover rent/licence fee from the plaintiff in excess of 10% over the last paid rent in terms of agreement between the parties dated 11.01.1989? (5)Whether the plaintiff is entitled to relief claimed by him in the present suit? OPP.
(6)Relief.
7. The plaintiff has examined himself and tendered his affidavit which is Ex.P1. The plaintiff has referred the documents which are Ex.PW1/1 to Ex.PW1/14.
The defendant has examined Nem Singh, Assistant Director, NDMC as DW1 who tendered his affidavit which is Ex.D1.
8. Sh. Neeraj Malhotra, Advocate for the plaintiff and Sh.Nikhil Aggarwal, Advocate, proxy counsel for Sh.S.S.Mittal, Advocate for the defendant heard. Written submissions placed on record by the plaintiff 8 perused. Record perused. Issuewise findings are as under.
9. Issue No.1 Whether the present suit is barred for want of service of requisite notice U/s 385 of NDMC Act, 1994? OPD.
Section 385 of the Act deals with the notice to be given of the suits. It provides that no suit shall be instituted against the Council in respect of any act done, or purported to have been done in pursuance of the Act until the expiration of two months after notice in writing has been given. Sub-section 3 further provides that nothing in sub-section (1) shall be deemed to apply to a suit in which the only relief claimed in an injunction of which the object would be defeated by the giving of the notice or postponement of the institution of the suit.
10. The plaintiff has claimed the relief against the defendant from cutting off of the electricity from the shop in question and also from dispossessing the plaintiff from the shop in question without due process of law. The plaintiff in the plaint has clearly stated that the defendant has threatened to disconnect the electric supply and also to dispossess the plaintiff from the shop in question in case enhanced fee by 30% over the last paid fee is not paid by the plaintiff. The plaintiff has claimed the urgent relief in the suit. The purpose of relief would have been frustrated 9 if the notice was given by the plaintiff to the defendant as per Section 385 of the Act. The suit is not barred u/s 385 of the Act. Issue no.1 is decided in favour of the plaintiff and against the defendant.
11. Issue No.2 Whether the plaintiff is a lessee or a licensee in respect of suit shop? OP Parties.
The defendant has floated the Tender form for licensing of the shop in underground shopping centre, Connaught Place, New Delhi. The terms and conditions of the allotment were also mentioned therein. The defendant has allotted the shop in question to Tejpal Singh. The plaintiff has entered into the Partnership Deed dated 05.07.1979 with Tejpal Singh and the said partnership was dissolved by Deed of Dissolution dated 29.11.1979. The plaintiff vide application dated 24.11.1988 has applied for the transfer of shop in question in his favour. The defendant has transferred/regularized the shop in question in favour of the plaintiff. A Deed of licence dated 11.01.1989 Ex.PW1/4 for a period with effect from 04.12.1988 was executed between the plaintiff and the defendant. The defendant was to pay monthly licence fee @ Rs.4,970/-.
12. The plaintiff has pleaded that although the word " licence" has 10 been used frequently in the licence Deed but actual intention of the parties is to create lease in favour of the plaintiff in respect of the shop in question. The plaintiff in para 15 of the plaint has mentioned that the intention of the parties was to create an interest in favour of the plaintiff by way of Lease which is evident from the surrounding circumstances and various documents referred and relied upon by the plaintiff. The plaintiff has stated that initial period of lease was for five years and renewable subject to enhancement of rent by 10%; fixed amount of rent was agreed to be paid; exclusive possession of the shop in question was with the plaintiff; the plaintiff has been opening and closing the shop and the keys of the shop always remained in the custody of the plaintiff; the defendant has no right to enter into the shop or interfere in it except for the purposes of inspection; the power and telephone connection has been installed in the name of the plaintiff; the shop is registered under the Shop and Establishment Act; the plaintiff is also permitted to sublet and to assign the shop in question to any other third party vide Resolution No. 39A dated 05.11.1985; the defendant does not have any right over the nature of goods sold by the plaintiff.
The plaintiff in the light of above facts has claimed that the 11 plaintiff is a lessee rather than a licensor in respect of the shop in question. The counsel for the plaintiff in written submission as well as by oral argument has laid much emphasis that a Lease was created in favour of the plaintiff. The counsel has referred many documents as mentioned in the written submissions.
13. The defendant has alleged that the Lease was never created in favour of the plaintiff as pleaded rather the shop in question was allotted in favour of the plaintiff on licence basis. The defendant has alleged that the over all control of the shops situated at Palika Bazar Market has remained with the defendant as the defendant is responsible for day to day care, maintenance, repairs, entry and exit, security etc. The intention of the defendant was to create licence not a lease as the over all control and domain of the shop always vested with the defendant.
14. The 'lease' is defined u/s 105 of the Transfer of Property Act, 1882. It provides that:--
Section 105:--A lease of immovable property is a transfer of a right to enjoy such property, made for a certain time, express or implied, or in perpetuity, in consideration of a price paid or promised, or of money, a share of crops, service or 12 any other thing of value, to be rendered periodically or on specified occasions to the transferor by the transferee, who accepts the transfer on such terms.
The fundamental conception of a lease is that it is the separation of the right of possession from ownership. A lease is that form of encumbrance, which consists in a right to the possession, and use of property owned by some other person. It is the outcome of the rightful separation of ownership and possession. The term lease imports a transfer of an interest to enjoy the property. One of the essential conditions of a lease is that the tenant should have the right of exclusive possession of the land. A lease is therefore a transfer of an interest in land. The interest transferred is called the leasehold interest. The lessor parts with his right to enjoy the property during the term of the lease and it follows from it that the lessee gets that right to the exclusion of lessor.
15. Section 52 of the Indian Easement Act defines a license as follows:--
Section 52:--When one person grants to another, or to a definite number of other persons, a right to do, or continue to do, in or upon the immovable property of the grantor, something which would, in the absence of such right, be unlawful, and such right does not amount to an easement or an interest in the property, the right 13 is called a license.
The definition of 'lease' envisages the transfer of a right to enjoy the property. The definition of a 'license' consistently excludes from its pale any transaction which otherwise, amounts to or involves a transfer in the property a right to enjoy it. The right of lease in the very nature is appurtenant to the property. On the other hand, the grant only of the right to use the premises without being entitled to exclusive possession thereof operates as a license. A dispensation of license properly passes no interest, nor alters or transfers property in anything, but only makes an action lawful which without it had been unlawful. But if the effect of the instrument is to give the holder an exclusive right of occupation of the land, though subject to certain reservations or to a restriction of the purposes for which it may be used, it is in law a demise of the land itself and is a lease.
16. In Associated Hotels of India Ltd. V R.N.Kapoor, AIR 1959 SC 1262, the Supreme Court of India has differentiated between the lease and license as under:--
There is marked distinction between a lease and a license. S.105 of the Transfer of Property Act defines a lease of immovable property as a transfer of a right to enjoy such property made for a certain time in 14 consideration for a price paid or promised. Under S.108 of the said Act, the lessee is entitled to be put in possession of the property. A lease is therefore a transfer of an interest in land. The interest transferred is called the lease hold interest. The lessor parts with his right to enjoy the property during the term of the lease and it follows from it that the lessee gets that right to the exclusion of the lessor. Whereas S.52 of the Indian Easement Act defines a license thus:
"Where one person grants to another, or a definite number of other persons, a right to do or continue to do, in or upon the immovable property of the grantor, something which would, in the absence of such right, be unlawful and such right does not amount to an easement or an interest in the property, the right is called a licensee."
Under the aforesaid section, if a document drives only a right to use the property in a particular way or under certain terms which remains in possession and control of the owner thereof, it will be license. The legal possession,therefore, continues to be with the owner of the property, but the licensee is permitted to make use of the premises for a particular purpose. But for the permission, his occupation would be unlawful. It does not create in his favour any estate or interest in the property.
There is therefore clear distinction between the two concepts. The dividing line is clear though sometimes it becomes very thin or even blurred. At one time it was thought that the test of exclusive possession was infallible and if a person was given exclusive possession of a premises, it would conclusively establish that he was a lessee. But there was a change and the recent trend of judicial opinion is reflected. In Errington V Errington, 1952-I All E R 149, wherein Lord Denning reviewing the case law on the subject summarizes the result of his 15 discussion thus at p. 155.
" The result of all these cases is that, although a person who is let into exclusive possession is, 'prima facie', to be considered to be tenant, nevertheless he will not be held to be so if the circumstances negative any intention to create a tenancy.
The Court of Appeal again in Cobb V Lane 1952-I, ALL ER 1199, considered the legal position and laid down that the intention of the parties was the real test for ascertaining the character of a document. At p.1201, Somervell L.J.stated:
".....................the solution that would seem to have been found is, as one would expect, that it must depend on the intention of the parties."
Denning L.J. said much to the same effect at p.1202.
"The question in all these cases is one of intention: Did the circumstances and the conduct of the parties shwo that all that was intended was that the occupier should have a personal privilege with no interest in the land?
The following propositions may, therefore, be taken as well-established" (1) To ascertain whether a document creates a licensor lease, the substance of the documents must be preferred to the form; (2) the real test is the intention of the parties--whether they intended to create a lease or a license; (3) if the document creates an interest in the property, it is a lease; but, if it only permits another to make use of the property, of which the legal possession continues with the owner, it is a license; and (4) if under the document a party gets exclusive possession of the property, 'prima facie', he is considered to be a 16 tenant; but circumstances may be established which negative the intention to create a lease.
17. The said distinction was reiterated in Delta International V Shyam Sundar Ganeriwalla and another, AIR 1999 SC, 2607. It was held as under:
The intention of the parties is to be gathered from the documents itself: Mainly, intention is to be gathered from the meaning and the words used in the document except where it is alleged and proved that document is a camouflage. If the terms of the document evidencing the agreement between the parties are not clear, the surrounding circumstances and the conduct of the parties have also to be borne in mind of ascertaining the real relationship between the parties.
18. The Deed of licence dated 11.01.1989 Ex.PW1/4 executed between the parties is perused. The Deed of licence prescribed certain rights and duties in favour of the licensee i.e. the plaintiff and certain rights and duties in favour of the licensor i.e. the defendant. Clause 6 prohibits licensee to permit allotted premises or any part thereof to be used by any other person for any purpose whatsoever, without prior consent in writing of the licensor. Clause 7 provides that licensee shall make use of the premises for the allotted business purposes only and shall not cause any obstruction or encroachment in the verandah 17 compound lane. Clause 8 prohibits cooking, manufacturing or preparation of any food in or outside the shop. Clause 9 prohibits licensee to keep any animal or conveyance in or outside the shop. Clause 10 cast a duty on the licensee to fulfill and diligently comply with all the directions given or special ordered by the defendant from time to time. Clause 12 prohibits the licensee to transfer, assign or part with the licenced premises or any part thereof permanently or temporarily to anybody else. Clause 13 cast a duty on the licensee not to use the licenced premises for any purpose except for the purpose for which it is has been licenced.
19. In contrast to the duties of the licensee as mentioned hereinabove, clause 16 of the Deed of licence Ex.PW1/4 vest over all control and supervision of the premises in the licensor with the right to inspect the whole or part of the licenced premises as would be necessary. Clause 19 permits licensor to maintain common areas. Clause 23 provides that air-conditioning which is to be maintained by the defendant shall not be available on weekly holidays and national holidays. Clause 24 bound the licensee to abide by all the provisions of P.M.Act , bye-laws made thereunder from time to time and also other 18 rules and regulations. Clause 26 further provides allotment of the shop in favour of the licensee is temporarily and on the licence basis which as per clause 27 is revokable at the will of the licensor. Clause 27 further provides that licence does not create or vest any interest in favour of the the licensee in respect of licenced premises.
20. The bare perusal of licence Deed clearly reflects that ultimate control remained with the defendant as a licensor and not with the plaintiff as a licensee. The plaintiff is restrained from creating any interest in favour of third party and the defendant has also prescribed certain conditions to carry the business by the plaintiff. It is also provided that in case of violation of terms and conditions of the licence deed, licence is liable to be cancelled. The plaintiff without the permission of the defendant cannot display the advertisement Board. The plaintiff is also not permitted to change nature of business without prior permission of the defendant. Although the exclusive possession of the shop in question was given to the plaintiff but it does not bar or preclude the defendant to re-enter the shop in case of certain conditions. The exclusive possession of the shop was given to the plaintiff only to enable him to run his business without any interference but it does not mean 19 that a lease was created in respect of the shop in question in favour of the plaintiff vide licence deed Ex.PW1/4 or other Deeds of licence executed prior to it. Even otherwise, it is also clear from the caption from Tender form that the tenders were invited for licensing of the shop situated in underground shopping centre i.e.Palika Bazar, New Delhi. The intention of the defendant was never to create a Lease in favour of the plaintiff as pleaded . The over all control of the entire shopping complex including day to day maintenance, care, entry, exit, security etc. vest with the defendant. The argument as referred in the written submissions by the counsel for the plaintiff and the authorities relied upon by the counsel for the plaintiff are considered but there is no evidence to establish that at any point of time, defendant has ever intended to create Lease in favour of the plaintiff. There exist relationship of licensor and licensee between the parties in respect of the shop in question. Issue no.2 is decided in favour of the defendant and against the plaintiff.
21. Issues No. 3 and 4
Whether the plaintiff is an unauthorized occupant in respect of suit shop for non-compliance of the terms of renewal of lease/licence by him as alleged in para 16 of the WS and if so, what is its effect? OPD.
20Whether the defendant can not recover rent/licence fee from the plaintiff in excess of 10% over the last paid rent in terms of agreement between the parties dated 11.01.1989?
Both the issues shall be decided by common findings as common facts and law are required to be analysed in deciding both the issues. The defendant has floated Tender form for licensing of the shop situated in underground shopping centre, Palika Bazar, Connaught Place, New Delhi. The defendant has passed the Resolution no.22 dated 10.11.1978 for allotment of shop in underground shopping centre and copy of Resolution no. 22 is Ex.PW1/1. The Resolution No. 22 dated 10.11.1978 also accompanied a draft of licence. Clause 1 of the terms and conditions is reproduced as under:--
The shop/stall/premises shall be licensed for a period of five years on "AS IS WHERE IS" basis and thereafter the license shall be renewable subject to increase in the license fee by 10% and on the terms and conditions as may be laid down by the Committee.
22. The clause 2 of the draft Deed of Licence annexed with the Tender Form is reproduced as under:--
That the licensee shall be for a period of five years from 27.01.1979 and thereafter will be renewable 21 subject to increase in the rate of licence fee by 10% and on the terms and conditions as may be laid down by the licensor.
23. The shop in question was transferred/regularized in the name of the plaintiff vide application dated 24.11.1988. The Deed of licence Ex.PW1/4 for the period of five years from 04.12.1988 at a monthly licence fee of Rs.4970/- was also executed. The clause 1 of the Deed of Licence Ex.PW1/4 is reproduced as under:--
That the licence shall be for a period of five years from 04.12.1988 and thereafter may be renewable subject to increase in the license fee by 10% and on the terms and conditions as may be laid down by the licensor.
24. The bare perusal of relevant clauses of the Tender Form, Resolution No. 22 dated 10.11.1978 Ex.PW1/1, Licence Deed Ex.PW1/4 executed between the defendant and the plaintiff reflects that the licence may be renewed subject to the increase in the licence fee by 10% on the terms and conditions as may be laid down by the licensor. The relevant clauses can be split into two parts (i) the renewal of the licence was subject to increase in the licence fee by 10%; and (ii) on the terms and conditions as may be laid down by the licensor at the time of execution of fresh Deed of licence. The licence fee was increased by 10% and no 22 fresh terms and conditions were laid down by the licensor i.e. the defendant. The terms and conditions for grant of licence in favour of the plaintiff in respect of the shop in question are mentioned in the Deed of licence itself. It is pertinent to mention here that after the execution of Deed of licence Ex.PW1/4 for the period w.e.f. 04.12.1988, no fresh Deed of licence was ever executed between the parties. The defendant in the month of December, 1996 had threatened the plaintiff to disconnect the electricity. The plaintiff has started to pay the licence fee enhanced by 30% without prejudice to his right of enhancement by 10%.
25. Copy of the Resolution No. 49 dated 12.09.1991 is perused. Sub-Committee has considered the necessity for revising rate of enhancement of licence fee on renewal of licence of Municipal Shops/Stalls etc. which has been felt since long due to increased cost on maintenance, expenditure incurred on sanitation and in providing civic amenities have increased manifold. The Sub-Committee has recommended upward revision of licence fee at the time of renewal of licence after every five years at the rates as mentioned in Annexure A. The perusal of Annexure A reveals that enhancement by 30% over the last paid rent was recommended in case of shops situated in Palika 23 Bazar. The defendant has also laid much emphasis on clause 24 of the Deed of licence executed between the parties which cast a duty on the licensee to abide by all provisions of Act and other bye-rules and regulations. Clause 24 reads as under:--
That the licensee shall be bound to abide by all the provisions of P.M.Act, the bye-laws made thereunder from time to time existing or hereafter made and such other central, local laws and rules and regulations existing herein or to be enacted or introduced hereafter.
26. The defendant has relied on Resolution No. 49 dated 12.09.1991 to justify upward revision of the licence fee by 30%.
27. Society in the twentieth century has become exceedingly complex and governmental functions have multiplied. The change in the scope and character of government from negative to positive, that is from laissez faire to the public service state, has resulted in the concentration of considerable power in the hands of the executive branch of government. The emergence of social welfare concept has affected the democracies very profoundly. It has led to state activism. There has occurred a phenomenal increase in the area of state operation; it has taken over a number of functions which were previously left to private enterprise. A modern welfare state entails the conferment 24 of discretionary powers on the administration to effectuate wide socio- economic goals. In any area of socio-economic regulation, discretionary power over valuable interests is perhaps inevitable. The theory that the legislature must delineate the policies and that administrators must have no discretion except to apply the legislature policies has to yield to the stark reality that legislatures cannot possibly anticipate and provide for all situations. The legislature often bestows more or less unqualified or uncontrolled discretion on the executive. Discretion is a tool for individualisation of justice.
28. Generally 'discretion' means the power to make a choice between alternative courses of action without reference to any predetermined criterion, no matter how fanciful that choice may be. But the term 'discretion' when qualified by the word 'administrative' has somewhat different overtones. 'Discretion' in this sense means choosing from amongst the various available alternatives but with reference to the rules of reason and justice and not according to personal whims. Such exercise is not to be arbitrary, vague and fanciful. The best definition of administrative discretion is given by Professor Freund. In Administrative Powers over Persons and Property (1928), he said: 25
When we speak of administrative discretion, we mean that a determination may be reached, in part at last, upon the basis of consideration not entirely susceptible of proof or disproof. . . . It may be practically convenient to say that discretion includes the case in which the ascertainment of fact is legitimately left to administration determination.
In Sharp v. Wakefield, (1891) AC 173 at 179, Lord Halsbury observed:
[D] iscretion means when it is said that something is to be done within the discretion of the authorities that something is to be done according to the rules of reason and justice, not according to private opinion... according to law and not humour. It is to be, not arbitrary, vague and fanciful, but legal and regular. And it must exercised within the limit to which an honest man competent to the discharge of his office ought to confine himself. . . .
29. Discretion does put the citizen much more at the mercy of the administrator, especially if the latter is not required to tell the citizen the reason why he exercised his discretion in the way he did. Discretion also opens the way for inconsistent decisions, and demands a much higher level of care and attention on the part of the administrator exercising it; discretions are expensive of time and money. If complete and absolute 26 freedom is given to administrative body in exercise of discretion, it will lead to arbitrary exercise of power. If the exercise of discretion is not checked properly, then there is a danger that administrative bodies commit excesses and degenerate into arbitrary bodies, and such a development would be inimical to a democratic constitution and the concept of rule of law. Prof. Wade differentiated between powers of public authorities with those of private persons. He said in [Sir William Wade and Chiristopher Forsyth, Administrative Law, 391-92 (1994)] :
The powers of public authorities are therefore essentially different from those of private persons. A man making his will may, subject to any rights of his dependents, dispose of his property just as he may wish. He may act out of malice or a spirit of revenge, but in law this does not affect his exercise of his power. In the same way, a private person has an absolute power to allow whom he likes to use his land, evict a tenant, regardless of his motive. That is unfettered discretion. But a public authority may do none of these things unless it acts reasonably and in good faith and upon lawful and relevant grounds of public interest.
It therefore becomes necessary to confine structure and check discretion in order to uphold the principle of rule of law in administration.
30. The judiciary has over the years evolved rules for controlling and structuring the exercise of discretionary power. The discretionary 27 power conferred upon public authorities is not absolute, even within its apparent boundaries, but is subject to general legal limitations. Lord Reid in Pad Field v. Minister of Agriculture, Fisheries and Food, [1968] AC 997 to 1030 observed as under:--
Parliament must 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 court. In a matter of t his 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 reason, 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 court.
In Breeen v. Amalgamated Engineering Union, [1971] 2 QB at 175 at 190, Lord Denning MR said:
The discretion of the 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 irrelevant. If 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 decision will be set aside.28
31. In absence of judicial power to control administrative authorities, there is a danger that they may commit excesses and degenerate into arbitrary bodies. Thus judicial review is an important weapon to control arbitrary exercise of discretion by an authority. The purpose of judicial review is to ensure that the individual is given fair treatment by the authority to which he has been subjected. The judicial review creats general confidence in the people upon exercise of discretion by an authority. Judicial review is designed to prevent the excess and abuse of power by public authorities and favouritism as well. In case of Chief Constable of the North Wales Police v. Evans, (1982) 3 All ER 141 at 144, it was said :
"The purpose of judicial review is to ensure that the individual receives fair treatment, reaches on a matter which it is authorised or enjoined by law to decide for itself a conclusion which is correct in the eyes of the court."
In Council of Civil Service Unions v. Minister for the Civil Service (1984) 3 WLR 1174, the House of Lords reiterated broader standard of review of exercise of prerogative powers. Lord Diplock in his speech found no reason why simply because the decision-making power is derived from a common law and not from a statutory source, it should 29 for that reason be immune from judicial review. He observed:--
Judicial review has I think developed to a stage today when without reiterating any analysis of the steps by which the development has come about, one can conveniently classify under three heads of the grounds upon which administrative action is subject to control by judicial review. The first ground I would call "illegality", the second "irrationality" and the third "procedural impropriety".
32. In India, notion of negation of arbitrariness in the exercise of public power is considered to be as cardinal component of Rule of Law. The Rule of Law notion evolved by the Indian courts extend not just to providing constraints on governmental or public power but also to imposition of specific regime of fairness discipline on holders of public power. The courts have invalidated what appeared to them to be arbitrary conferrals of discretion power. The courts have maintained strict invigilation over the exercise of discretionary power. Article 14 of the Constitution of India strikes at arbitrariness in state action and ensures fairness and equality of treatment. In India, judicial policy regarding administrative discretion was stated in Jai Singhani v. Union of India, AIR 1967 SC 1427 at 1434 as under :
30
The absence of arbitrary power is the first essential of rule of law upon which our whole constitutional system is based. In a system governed by rule of law, discretion, when conferred upon executive authorites, must be confined within clearly defined limits. The rule of law from this point of view means that decisions should be made by the application of known principles and rules and, in general, such decision should be predictable and the citizen should know where he is.
The Supreme Court of India in case of E. P. Royappa v. State of Tamil Nadu, AIR 1974 SC 555, gave a new dimension to Article 14 and pointed out that Article 14 has highly activist magnitude and it embodies a guarantee against arbitrariness. It was observed :
Equality is a dynamic concept with many aspects and dimensions and it cannot be "cribbed, cabined and confined" within traditional and doctrainaire limits. From a positivistic point of view, equality is antithetic to arbitrariness. In fact, equality and arbitrariness are sworn enemies; one belongs to the rule of law in a republic while the other, to the whim and caprice of an absolute monarch. Where an act is arbitrary it is implicit in it that it is unequal both according to political logic and constitutional law and is therefore violative of Article 14. . . . Article 14 . . . strike at arbitrariness in state action and ensure fairness and quality of treatment.
33. The basic principle of judicial review is that the courts are 31 concerned with the legality rather than the merits of the case. The court would not interfere with, or probe into the merits of the exercise of discretion by an authority, as it is not a forum to hear appeals from the decision of the authority. It is not for court to see how the discretion ought to have been exercised. If it were, this would effectively transfer the power from the authority to the court. They cannot substitute its own views for that of the concerned authority. The court would not enter into the merits of case by embarking enquiry into the facts. The purpose of judicial review is to ensure that the individual receives fair treatment and not to ensure that the authority; after according fair treatment, reaches on a matter which it is authorised or enjoined by law to decide for itself a conclusion, which is correct in the eyes of the court. In India courts have constantly and clearly stated that there are inherent limitations in exercise of power of judicial review. Judicial quest in administrative matters has been to find the right balance between the administrative discretion to decide matters whether contractual or political in nature or issues of social policy; thus they are not essentially justiciable and the need to remedy any unfairness. Such an unfairness is set right by judicial review. It is held that judicial review is concerned with reviewing 32 not the merits of the decision, but the decision making process itself. It is different from an appeal. The court cannot substitute its own decision under garb of judicial review.
In Tata Cellular v. Union of India, (1994) 6 SCC 651 at 676, it was observed as under :--
"Judicial review is concerned with reviewing not the merits of the decision in support of which the application for judicial review is made, but the decision-making process itself."
34. The defendant is an instrumentality of the state and is controlled by the provisions of the New Delhi Municipal Council Act, 1994. The defendant has been given discretion to increase the licence fee at the time of renewal of the licence of the shop in question as provided under Deed of licence as mentioned hereinabove. The Deed of licence executed between the parties prescribed the enhancement of licence fee by 10% at the time of renewal of licence. The Deed of licence do not provide or prescribe upward revision of licence more than by 10%. The defendant has regularized the licence in favour of the plaintiff subject to enhancement by 10%. The defendant before December, 1996 has never expressed its willingness to enhance the licence fee by more than 10% i.e.by 30% in pursuance of Resolution No. 49 dated 33 12.09.1991. The defendant being the licensor can revise the licence fee as well as cancel the licence in case of breach of terms and conditions as mentioned in various Deeds of licence. There can be no bar on the power of the defendant to increase the licence fee and in failure or in the eventuality of default in the terms and conditions of the licence to cancel licence.
35. The defendant is an administrative body controlled by the law. The defendant is not a private individual. The defendant is not permitted to increase or revise licence fee at the time of renewal of licence at its whims and fancies. The defendant is expected to function only in accordance with law. The law has put a check on the exercise of discretion by the defendant in the revision of licence fee at the time of renewal of licence. The defendant cannot be permitted to revise the licence fee by 30% unilaterally and without giving an opportunity of being heard to the licensee i.e. the plaintiff. The defendant cannot exercise its power to revise or enhance the licence fee in an arbitrary manner and against all canons of principles of natural justice. It is not the case of the defendant that the plaintiff has ever been given any notice, intimation or any opportunity of being heard before the enhancement of licence fee by 34 30%. The perusal of Resolution No. 49 dated 12.09.1991 reflects that vide said Resolution, earlier Resolution No. 22 dated 10.11.1978 Ex.PW1/1 has never been rescinded, altered, changed or modified. The Resolution No. 49 dated 12.09.1991 does not modify the terms and conditions contained in Resolution No.22 dated 10.11.1978 Ex.PW1/1 in respect to the revision of licence fee. It is not the case of the defendant that except the non-payment of revised licence fee, the plaintiff has contravened any other terms and conditions of the Deed of licence. The defendant vide Resolution No. 49 dated 12.09.1991 has changed the position unilaterally which adversely effected the rights of the plaintiff. The plaintiff is a citizen of this country and is enjoying certain basic positive rights which cannot be denied merely on the whims and fancies of the defendant just by passing the Resolution No. 49 dated 12.09.1991. The various documents of the defendant speak itself that the upward revision or enhancement of the licence fee can only be upto 10%. If the defendant due to compelling circumstances as mentioned in Resolution No. 49 dated 12.09.1991 wanted to revise the licence fee by 30% then the defendant would have given sufficient opportunity to the shop-holders including the plaintiff to represent their 35 case before enhancement or revision of the licence fee. Although day to day care, maintenance, repairs, security, entry and exit etc. are within the command and control of the defendant but it does not mean that the defendant is providing service to the satisfaction of the shop keepers of the Palika Bazar.
36. The plaintiff cannot be said to be an unauthorized occupant in the shop in question as the plaintiff has already paid the licence fee enhancing the same by 30% and also paying the licence fee increased by 10% as per the direction of the court. The defendant is not entitled to recover the licence fee from the plaintiff in excess of 10% over the last paid rent in terms of Deed of licence dated 11.01.1989 Ex.PW1/4. However, there cannot be any restrain on the power of the defendant to increase the licence fee. The defendant can increase the licence fee in pursuance of Resolution No. 49 dated 12.09.1991 but only after giving proper notice and opportunity of being heard to the plaintiff. The defendant is permitted to increase the licence fee only in accordance with law and after following the principles of natural justice. Issues no.3 and 4 are decided in favour of the plaintiff and against the defendant. 37. Issues No.5 and 6 36
Whether the plaintiff is entitled to relief claimed by him in the present suit? OPP.
Relief In view of findings on issues no.1,3 and 4, the suit of the plaintiff is decreed and a decree of declaration is passed in favour of the plaintiff and against the defendant that the defendant can not recover the licence fee from the plaintiff in excess of 10% over the last paid licence fee in terms of clause 1 of the Deed of Licence dated 11.01.1989 Ex.PW1/4 in respect of the shop in question bearing no. 90, Palika Bazar, Connaught Place, New Delhi; and the defendant, its employees, servants, representatives etc. are further restrained to disconnect, to cut off the electricity of the shop in question on account of non payment of licence fee at the enhanced rate of 30% over the last paid rent and also to dispossess the plaintiff or its agents from shop in question in case of non-payment of licence fee at the enhanced rent of 30% over the last paid rent. The licence fee already been paid by the plaintiff either by court order or in pursuance of various notices issued by the defendant shall be adjusted accordingly. However, the defendant is permitted to enhance the licence fee in terms of Resolution No. 49 dated 12.09.1991 prospectively after giving proper 37 notice and opportunity of being heard to the plaintiff within reasonable time. The relief of the plaintiff to declare that plaintiff is a Lessee in perpetuity in respect of shop in question and that the shop is being held by the plaintiff by virtue of a grant in favour of the plaintiff under the provisions of the Governments Grants Act are dismissed. No order as to costs. The parties to bear their own costs. The decree sheet be prepared accordingly. File be consigned to the record room. Announced in the open court (Dr.Sudhir Kumar Jain) Dated: 21.10.2008 Additional District Judge, Delhi