Jharkhand High Court
Hanuman Mal Surana vs Steel Authority Of India Limited & ... on 18 July, 2022
Author: Kailash Prasad Deo
Bench: Kailash Prasad Deo
1
IN THE HIGH COURT OF JHARKHAND AT RANCHI
(Civil Writ Jurisdiction)
W.P.(C) No. 2440 of 2015
........
Hanuman Mal Surana .... ..... Petitioner
Versus
Steel Authority of India Limited & Others . ..... Respondents With W.P.(C) No. 2442 of 2015 ........
Smt. Kamla Devi Kothari .... ..... Petitioner Versus Steel Authority of India Limited & Others ..... Respondents With W.P.(C) No. 2443 of 2015 ........
Shanti Lal Lunkar .... ..... Petitioner
Versus
Steel Authority of India Limited & Others ..... Respondents With W.P.(C) No. 2451 of 2015 ........
Tanima Bajaj & Another .... ..... Petitioners Versus Steel Authority of India Limited & Others ..... Respondents With W.P.(C) No. 2453 of 2015 ........
Varun Chadda @ Varun Kumar Chadda .... ..... Petitioner Versus Steel Authority of India Limited & Others ..... Respondents With W.P.(C) No. 2477 of 2015 ........
Chittaranjan Das .... ..... Petitioner
Versus
Steel Authority of India Limited & Others ..... Respondents With W.P.(C) No. 2741 of 2018 ........
Birendra Kumar Agrawal .... ..... Petitioner Versus Steel Authority of India Limited & Others ..... Respondents With W.P.(C) No. 2749 of 2018 ........
Ms Modern Ice Manufacturing and Air Conditioning Co.
.... ..... Petitioner Versus Steel Authority of India Limited & Others ..... Respondents CORAM: HON'BLE MR. JUSTICE KAILASH PRASAD DEO ............
2For the Petitioner(s) : Mr. Rahul Lamba, Advocate.
(in W.P.(C) Nos.2442/15,2443/15, 2741/18 & 2749/18) : Mr. Kushal Kumar, Advocate.
(in W.P.(C) Nos. 2440/2015, 2453/2015 & 2477/2015) : Mr. Shambhu Nath Singh, Advocate (in W.P.(C) No.2451/2015) For the Respondents : Mr. Indrajit Sinha, Advocate.
Mr. Vijay Kant Dubey, Advocate.
(In all cases) ........
08/18.07.2022.
I.A. No. 6343/2022 in W.P. (C) No. 2442/2015 & I.A. No. 6358/2022 in W.P.(C) No. 2749/2018 Learned counsel for the petitioner(s), Mr. Rahul Lamba has submitted, that I.A. No. 6343/2022 has been filed in W.P. (C) No. 2442/2015 for substituting the lessee namely, Smt. Kamla Devi Kothari who died on 25.11.2021, leaving behind her sons / legal heirs namely, Mr. Prakash Kothari and Mr. Laxmi Kant Kothari.
Learned counsel for the petitioner(s), Mr. Rahul Lamba has further submitted, that I.A. No. 6358/2022 has been filed in W.P.(C) No. 2749/2018 for substitution of original lessee / proprietor of petitioner Company namely, Mr. Pratap Singh Houra who died on 03.11.2020, leaving behind his sons / legal heirs namely, Mr. Gajendra Pal Singh and Mr. Atindra Pal Singh.
Learned counsel for the respondents, Mr. Vijay Kant Dubey has no objection.
In view of the submissions, I.A. No. 6343/2022 and I.A. No. 6358/2022 are allowed.
W.P.(C) No. 2440 of 2015, W.P.(C) No. 2442 of 2015, W.P.(C) No. 2443 of 2015, W.P.(C) No. 2451 of 2015, W.P.(C) No. 2453 of 2015, W.P.(C) No. 2477 of 2015, W.P.(C) No. 2741 of 2018 & W.P.(C) No. 2749 of 2018 All the writ petitions are being heard together, as they are arising out of a common question of law that the petitioners are the original lessee / lessee, who have been granted lease with regard to land at City Centre, Sector-IV, Bokaro Steel City in the year 1978, 1979 & 1980 for 31 years and 33 years.
Learned counsel for the petitioners, Mr. Rahul Lamba assisted by learned counsel, Mr. Kushal Kumar has submitted, that 3 exorbitantly high amount has been fixed by the SAIL for renewal of lease on the basis of assessment made by a Company namely, UTI Infrastructure Technology and Services Ltd. of Mumbai. The Company has considered the revenue rate of Chas area, but has not considered the rate of adjacent areas of Bokaro Steel City and thus the initial amounts, which was deposited at the time of allotment has been enhanced exorbitantly. The initial lease amount and renewal amount of aforesaid cases may profitably be quoted hereunder:-
Sl. Case Details Rate of Premium Rate of Premium No. Amount Paid for Amount being Original Lease demanded by Respondent for Renewal 1 W.P.(C) No. 2440/2015 Rs. 15,000/- for 250 Rs. 17,05,005.45 for Sq. Yards (Rs. 60/- per 250 Sq. Yards (Rs.
Sq. Yard) 6820.02 per Sq. Yard)
2 W.P.(C) No. 2442/2015 Rs. 15,000/- for 250 Rs. 19,53,019.55 for
Sq. Yards (Rs. 60/- per 250 Sq. Yards (Rs.
Sq. Yard) 7812.07 per Sq. Yard)
3 W.P.(C) No. 2443/2015 Rs. 15,000/- for 250 Rs. 17,05,005.45 for
Sq. Yards (Rs. 60/- per 250 Sq. Yards (Rs.
Sq. Yard) 6820.02 per Sq. Yard)
4 W.P.(C) No. 2451/2015 Rs. 24,000/- for 400 Rs. 25,39,646.08 for
Sq. Yards (Rs. 60/- per 400 Sq. Yards (Rs.
Sq. Yard) 6349.11 per Sq. Yard)
5 W.P.(C) No. 2453/2015 Rs. 15,000/- for 250 Rs. 22,11,171.60 for
Sq. Yards (Rs. 60/- per 250 Sq. Yards (Rs.
Sq. Yard) 8844.68 per Sq. Yard)
6 W.P.(C) No. 2477/2015 Rs. 15,000/- for 250 Rs. 22,11,171.60 for
Sq. Yards (Rs. 60/- per 250 Sq. Yards (Rs.
Sq. Yard) 8844.68 per Sq. Yard)
7 W.P.(C) No. 2741/2018 Rs. 23,990/- for Rs. 26,77,786.88 for
580.55 Sq. Yards (Rs. 580.55 Sq. Yards (Rs.
41.32/- per Sq. Yard) 4612.50 per Sq. Yard)
8 W.P.(C) No. 2749/2018 Rs. 9,600/- for 160 Sq. Rs. 7,77,261.80 for
Yards (Rs. 60/- per Sq. 160 Sq. Yards (Rs.
Yard) 4857.88 per Sq. Yard)
Learned counsel for the petitioners has further submitted, that Hon'ble Coordinate Bench of this Court in W.P. (C) No. 1155/2004 has considered all aspects of the matter including the matter of maintainability and resolutions of Corporate Office and thus after considering the maintainability of the application, the Hon'ble Coordinate Bench of this Court has allowed the writ petition in terms of order dated 12.09.2018.4
Learned counsel for the petitioners has further submitted, that though the plots were initially allotted as Commercial Plot, but it is within the knowledge of Bokaro Steel Limited / SAIL that residential-cum-commercial maps were sanctioned and there was no objection to that, as such, it is not true that entire plot is of commercial use, rather it is for both residential and commercial use.
Learned counsel for the petitioners has further submitted, that while assessing the valuation for fixing rate for renewal of lease, the Company came from Mumbai and have only considered the revenue rate of Chas area, which is wholesale market and it has a different revenue rate from Bokaro. Also,the market survey and local enquiry alleged to be made by the valuers were not based on any property rather the same is based on the oral statements,which is total irrational and unjust.
Learned counsel for the petitioners has further submitted, that the valuation is absolutely incorrect as the properties in the chas area are neither similarly located nor they are similar as that of the concerned plot of the petitioner. The chas area is located far away from the concerned plot of the petitioner. Also,the properties in Chas area are freehold in nature and the plot of the petitioner is the leasehold in nature. Further, on one side of Bokaro Steel City, there is Chira Chas and, on another side, Chandrapura and on the third side Jaina More and thus without considering the revenue rate of those areas, which are adjacent to Bokaro Steel City, such renewal rate has been enhanced exorbitantly.
Learned counsel for the petitioners has further submitted, that lease is to be renewed considering the persons to be an old associates, but as per the impugned demand, it appears that they have considered the commercial value of the land as on today as these petitioners are not new lease holders of the property, as such, the impugned order is itself bad in law as the same has been fixed on non-consideration of the material fact and same is enhanced for more than 150 times, which will be evident from above-mentioned chart. These lease have been granted for 31 years and 33 years, but while assessing the rate for renewal of lease, revenue rate of adjoining area 5 of City Centre i.e. Chira Chas, Chandrapura and Jaina More have not been considered. The respondents ought to have provided all the revenue records of the village of district of Bokaro to the Valuer so as to consider an average of the same, as such the impugned demand is bad in law.
Learned counsel for the petitioners has further submitted, that the respondent SAIL ought to have considered the fact that these agreements were made with petitioners and other persons during the initial stage of establishment of Bokaro City Centre by providing them residential - cum - commercial space, but when the market has established, then such hike is arbitrary without any basis, as the SAIL has himself admitted before this Court that in the Bokaro Township there is no saleable land.
Learned counsel for the petitioners has further submitted, that in W.P. (C) No. 2741/2018, it has not been denied by the SAIL that a fresh lease has been entered into by respondents / SAIL with M/s Amit Reality Private Limited on 07.02.2009 @ Rs. 1440/- per Sq. Yard, which is purely commercial and as such, the demand @ Rs. 6820.02 per Sq. Yard (In W.P.(C) Nos. 2443/2015 & W.P.(C) Nos. 2440/2015) for commercial-cum-residential land to the old lessee is unjustified. At best, they can ask for less than Rs. 1440/- per Sq. Yard as because fresh lease was granted on 07.02.2009 just 08 days prior to the lapse of the lease of these petitioners, which are going to lapse on 15.02.2009 and therefore, respondent can verify their own record that on what rate, they have given lease to the petitioners and such exorbitant enhancement of the amount is without any basis, as such, impugned order may be set aside.
Learned counsel for the petitioners has relied upon the judgment passed by the Apex Court in the case of Jamshed Hormusji Wadla Vs. Board of Trustees, Port of Mumbai and Another reported in (2004) 3 SCC 214, of which para-14, 16 & 18 may profitably be quoted hereunder:-
14. The Bombay Port Trust is an instrumentality of State and hence an 'authority' within the meaning of Article 12 of the Constitution. (See - M/s Dwarkadas Marfatia And Sons Vs. Board of Trustees of the Port of Bombay (1989) 3 SCC 293). It is 6 amenable to writ jurisdiction of the Court. This position of law has not been disputed by either party. The consequence which follows is that in all its actions, it must be governed by Article 14 of the Constitution. It cannot afford to act with arbitrariness or capriciousness. It must act within the four corners of the statute which has created and governs it. All its actions must be for the public good, achieving the objects for which it exists, and accompanied by reason and not whim or caprice.
16. The position of law is settled that the State and its authorities including instrumentalities of States have to be just, fair and reasonable in all their activities including those in the field of contracts. Even while playing the role of a landlord or a tenant, the State and its authorities remain so and cannot be heard or seen causing displeasure or discomfort to Article 14 of the Constitution of India.
18. In our opinion, in the field of contracts the State and its instrumentalities ought to so design their activities as would ensure fair competition and non-discrimination. They can augment their resources but the object should be to serve the public cause and to do public good by resorting to fair and reasonable methods. The State and its instrumentalities, as the landlords, have the liberty of revising the rates of rent so as to compensate themselves against loss caused by inflationary tendencies. They can - and rather must - also save themselves from negative balances caused by the cost of maintenance, and payment of taxes and costs of administration. The State, as landlord, need not necessarily be a benevolent and good charitable Samaritan. The felt need for expanding or stimulating its own activities or other activities in the public interest having once arisen, the State need not hold its hands from seeking eviction of its lessees. However, the State cannot be seen to be indulging in rack-renting, profiteering and indulging in whimsical or unreasonable evictions or bargains.
Learned counsel for the petitioners has further submitted, that the delay surcharge ought not to have claimed by the respondents / SAIL because the stand taken by the SAIL has been assailed before this Court and the delay is not on account of non-co-operation or non-payment, but the same is on account of demand of exorbitantly high amount, which cannot be paid by the petitioners and petitioners have sought legal remedy against that, as such, delay surcharge may 7 also be quashed.
Learned counsel for the petitioners has further submitted, that from perusal of the demand, it appears that interest has been exorbitantly charged @ 10.25% for the period of 62 months from the due date of renewal to the date of issuance of the letter, though the nationalized bank has fixed the rate as per RBI guidelines, which is less than 6%.
Learned counsel for the petitioners has further submitted, that as per terms and condition of Annexure-1 at point no. (iii), respondents / SAIL have also asked for rate for annual land rent and service charge and thus, SAIL is not behaving proper and rational to their own persons, who have helped them in the initial stage, as such, the impugned demand may be quashed.
Learned counsel for the respondents / SAIL, Mr. Indrajit Sinha assisted by learned counsel, Mr. Vijay Kant Dubey has submitted, that the writ petitions are not maintainable in the eyes of law as the petitioners have alternate remedy of filing a suit for specific performance of contract and terms and conditions of a contract in the form of lease agreement cannot be adjudicated before this Hon'ble Court under Article 226 of Constitution of India.
Learned counsel for the respondents / SAIL has further submitted, that against the order dated 12.09.2018 passed in W.P.(C) No. 1155/2004 by Hon'ble Coordinate Bench of this Court, L.P.A. No. 352/2011 has been preferred, which is pending before Hon'ble Division Bench of this Court.
Learned counsel for the respondents / SAIL has further submitted, that counter-affidavit has been filed by the SAIL in W.P. (C) No. 2440/2015 on 03.04.2017. Para-3 to 12 of the counter- affidavit may profitably be quoted hereunder: -
3. That the aforesaid plot was allotted to the petitioner on lease basis for a period of 31 years w.e.f. 15.02.1978, further the lease period expired on 14.02.2009 and since then the renewal of lease is due.
4. That at the very outset the answering respondent begs to submit that the present writ application is not maintainable in the eyes of law as the petitioner has alternative remedy of filing a 8 suit for specific performance of contract.
5. That the dispute regarding terms and conditions of a contract in the form of a lease agreement cannot be adjudicated upon before this Hon'ble Court under Article 226 of the Constitution of India when the petitioner has alternative remedy to file a suit for specific performance of contract.
6. That it is stated that in a similar matter wherein the answering respondent was a party respondent, this Hon'ble Court vide judgment reported in (2004) 1 JCR 127 (Jhr.) has held that writ proceeding is not an appropriate proceeding in case of dispute regarding contractual obligation.
7. That it is stated that the answering respondent has defined a single renewal policy for all its units all over India and the renewal premium rates are based on the valuations done by the authorized valuer of the answering respondent appointed at the corporate level.
8. That it is stated that as per the Board Guidelines the following conditions are applicable at the time of renewal of lease:
a. The valuation is done for the land only and lease is to be renewed on the applicable renewal charges equivalent to 25% of land premium prevailing on the due date of renewal.
b. Annual ground /land rent to be charged from various parties / institutions / organizations etc. shall be @ 1% p.a. of the applicable land premium.
c. Annual service charges shall be @ 2% p.a. of the applicable land premium.
d. Security Deposits to be charged from various parties / institution / organizations shall be @ 2% p.a. of the applicable land premium subject to the minimum of Rs. 50,000/-.
9. That it is stated that all actions are in accordance with the aforesaid guidelines approved in accordance with the lease agreement and as such the terms and conditions for renewal are valid and are supported by the board guidelines.
10. That it is stated that with regard to the prayer made in respect of the spirit of acquisition made by the State Government and thereupon transfer of the land to the answering respondent, further, renewal of lease is equivalent to a fresh lease, a one-time premium for the agreed term of lease as decided by the lessor has 9 to be paid by the lessee.
11. That it is stated that all actions are taken as per uniformly applicable and approved SAIL Board Guidelines / rules and in accordance with the lease agreement.
12. That it is stated that the petitioner has shown unwillingness to obtain renewal of lease which is a need of the hour and for the purposes of the same Clause 28 of the lease agreement provides for termination of the lease agreement in case where a lessee is not interested to renew the lease agreement, relevant portion of Clause 28 is quoted herein below for ready reference :
"And that in the event of Lessee not being interested in having a renewal of his demise he shall immediately upon termination of the period of this Lease make over khas possession of the demised land and structure constructed thereon by him to the Lessor"
Learned counsel for the respondents has thus submitted, that because of need of time, such enhancement has been made on the basis of a uniform standard taken by the Corporate Office, in which the respondent BSL has no role, as the Valuer has been appointed by the Corporate Office and all properties of SAIL has been assessed on the basis of facts and circumstances as well as geographical location of the Bokaro Steel Limited, for which, the revenue rate of Chas area has been taken into consideration, which is commercial area, as such, this Court may not interfere with the same.
Considering the rival submissions of the parties, looking into facts and circumstances of the case, it would be proper to dealt firstly with the contention raised by the respondents that the dispute regarding terms and conditions of a contract in the form of a lease agreement cannot be adjudicated upon before this Hon'ble Court under Article 226 of the Constitution of India when the petitioner has alternative remedy to file a suit for specific performance of contract.
The Hon'ble Apex Court in the case of ABL International Ltd. v. Export Credit Guarantee Corpn. of India Ltd. reported in (2004) 3 SCC 553 has held that a writ petition under Article 226 of the Constitution of India is maintainable to enforce a contractual obligation of the State or its instrumentality, by an aggrieved party. Relevant paras of the aforesaid judgement read as follows: -
1010. It is clear from the above observations of this Court in the said case, though a writ was not issued on the facts of that case, this Court has held that on a given set of facts if a State acts in an arbitrary manner even in a matter of contract, an aggrieved party can approach the court by way of writ under Article 226 of the Constitution and the court depending on facts of the said case is empowered to grant the relief. This judgment in K.N. Guruswamy v. State of Mysore [AIR 1954 SC 592 :
(1955) 1 SCR 305] was followed subsequently by this Court in the case of D.F.O. v. Ram Sanehi Singh [(1971) 3 SCC 864] wherein this Court held: (SCC p. 865, para 4) "By that order he has deprived the respondent of a valuable right. We are unable to hold that merely because the source of the right which the respondent claims was initially in a contract, for obtaining relief against any arbitrary and unlawful action on the part of a public authority he must resort to a suit and not to a petition by way of a writ. In view of the judgment of this Court in K.N. Guruswamy case [AIR 1954 SC 592 : (1955) 1 SCR 305] there can be no doubt that the petition was maintainable, even if the right to relief arose out of an alleged breach of contract, where the action challenged was of a public authority invested with statutory power."
(emphasis supplied)
11. In the case of Gujarat State Financial Corpn. v. Lotus Hotels (P) Ltd. [(1983) 3 SCC 379] this Court following an earlier judgment in Ramana Dayaram Shetty v. International Airport Authority of India [(1979) 3 SCC 489] held: (SCC pp. 385-86, paras 9 & 11) The instrumentality of the State which would be 'other authority' under Article 12 cannot commit breach of a solemn undertaking to the prejudice of the other party which acted on that undertaking or promise and put itself in a disadvantageous position. The appellant Corporation, created under the State Financial Corporations Act, falls within the expression of 'other authority' in Article 12 and if it backs out from such a promise, it cannot be said that the only remedy for the aggrieved party would be suing for damages for breach and that it could not compel the Corporation for specific performance of the contract under Article 226.
16. A perusal of this judgment though shows that a writ petition involving serious disputed questions of facts which requires consideration of evidence which is not on record, will not normally be entertained by a court in the exercise of its jurisdiction under Article 226 of the Constitution of India. This decision again, in our opinion, does not lay down an absolute rule that in all cases involving disputed questions of fact the 11 parties should be relegated to a civil suit. In this view of ours, we are supported by a judgment of this Court in the case of Gunwant Kaur v. Municipal Committee, Bhatinda [(1969) 3 SCC 769] where dealing with such a situation of disputed questions of fact in a writ petition this Court held: (SCC p. 774, paras 14-16) "14. The High Court observed that they will not determine disputed question of fact in a writ petition. But what facts were in dispute and what were admitted could only be determined after an affidavit-in-reply was filed by the State. The High Court, however, proceeded to dismiss the petition in limine. The High Court is not deprived of its jurisdiction to entertain a petition under Article 226 merely because in considering the petitioner's right to relief questions of fact may fall to be determined. In a petition under Article 226 the High Court has jurisdiction to try issues both of fact and law. Exercise of the jurisdiction is, it is true, discretionary, but the discretion must be exercised on sound judicial principles. When the petition raises questions of fact of a complex nature, which may for their determination require oral evidence to be taken, and on that account the High Court is of the view that the dispute may not appropriately be tried in a writ petition, the High Court may decline to try a petition. Rejection of a petition in limine will normally be justified, where the High Court is of the view that the petition is frivolous or because of the nature of the claim made dispute sought to be agitated, or that the petition against the party against whom relief is claimed is not maintainable or that the dispute raised thereby is such that it would be inappropriate to try it in the writ jurisdiction, or for analogous reasons.
15. From the averments made in the petition filed by the appellants it is clear that in proof of a large number of allegations the appellants relied upon documentary evidence and the only matter in respect of which conflict of facts may possibly arise related to the due publication of the notification under Section 4 by the Collector.
16. In the present case, in our judgment, the High Court was not justified in dismissing the petition on the ground that it will not determine disputed question of fact. The High Court has jurisdiction to determine questions of fact, even if they are in dispute and the present, in our judgment, is a case in which in the interests of both the parties the High Court should have entertained the petition and called for an affidavit-in- reply from the respondents, and should have proceeded to 12 try the petition instead of relegating the appellants to a separate suit."
20. The learned counsel for the respondent then placed reliance on a judgment of this Court in the case of VST Industries Ltd. v. Workers' Union [(2001) 1 SCC 298 : 2001 SCC (L&S) 227] . In the said case, this Court held: (SCC p. 306, para
8) "In Andi Mukta case [Andi Mukta Sadguru Shree Muktajee Vandas Swami Suvarna Jayanti Mahotsav Smarak Trust v. V.R. Rudani, (1989) 2 SCC 691] this Court examined the various aspects and the distinction between an authority and a person and after analysis of the decisions referred in that regard came to the conclusion that it is only in the circumstances when the authority or the person performs a public function or discharges a public duty that Article 226 of the Constitution can be invoked. In the present case, the appellant is engaged in the manufacture and sale of cigarettes. Manufacture and sale of cigarettes will not involve any public function."
23. It is clear from the above observations of this Court, once the State or an instrumentality of the State is a party of the contract, it has an obligation in law to act fairly, justly and reasonably which is the requirement of Article 14 of the Constitution of India. Therefore, if by the impugned repudiation of the claim of the appellants the first respondent as an instrumentality of the State has acted in contravention of the abovesaid requirement of Article 14, then we have no hesitation in holding that a writ court can issue suitable directions to set right the arbitrary actions of the first respondent. In this context, we may note that though the first respondent is a company registered under the Companies Act, it is wholly owned by the Government of India. The total subscribed share capital of this Company is 2,50,000 shares out of which 2,49,998 shares are held by the President of India while one share each is held by the Joint Secretary, Ministry of Commerce and Industry and Officer on Special Duty, Ministry of Commerce and Industry respectively. The objects enumerated in the memorandum of association of the first respondent at para 10 read:
"To undertake such functions as may be entrusted to it by the Government from time to time, including grant of credits and guarantees in foreign currency for the purpose of facilitating the import of raw materials and semi-finished goods for manufacture or processing goods for export."13
Para 11 of the said object reads thus:
"To act as agent of the Government, or with the sanction of the Government on its own account, to give the guarantees, undertake such responsibilities and discharge such functions as are considered by the Government as necessary in national interest."
27. From the above discussion of ours, the following legal principles emerge as to the maintainability of a writ petition:
(a) In an appropriate case, a writ petition as against a State or an instrumentality of a State arising out of a contractual obligation is maintainable.
(b) Merely because some disputed questions of fact arise for consideration, same cannot be a ground to refuse to entertain a writ petition in all cases as a matter of rule.
(c) A writ petition involving a consequential relief of monetary claim is also maintainable.
52. On the basis of the above conclusion of ours, the question still remains why should we grant the reliefs sought for by the appellants in a writ petition when a suitable efficacious alternate remedy is available by way of a suit. The answer to this question, in our opinion, lies squarely in the decision of this Court in the case of Shrilekha Vidyarthi [(1991) 1 SCC 212 : 1991 SCC (L&S) 742] wherein this Court held: (SCC pp. 235-37, paras 20- 22 & 24) The requirement of Article 14 should extend even in the sphere of contractual matters for regulating the conduct of the State activity. Applicability of Article 14 to all executive actions of the State being settled and for the same reason its applicability at the threshold to the making of a contract in exercise of the executive power being beyond dispute, the State cannot thereafter cast off its personality and exercise unbridled power unfettered by the requirements of Article 14 in the sphere of contractual matters and claim to be governed therein only by private law principles applicable to private individuals whose rights flow only from the terms of the contract without anything more. The personality of the State, requiring regulation of its conduct in all spheres by requirements of Article 14, does not undergo such a radical change after the making of a contract merely because some contractual rights accrue to the other party in addition. It is not as if the requirements of Article 14 and contractual obligations are alien concepts, which cannot coexist. The Constitution does not envisage or permit unfairness or unreasonableness in State actions in any sphere of its activity contrary to the professed ideals in the preamble. Therefore, total exclusion of Article 14 -- non-arbitrariness which is basic to rule of law -- from State actions in contractual field is not 14 justified. This is more so when the modern trend is also to examine the unreasonableness of a term in such contracts where the bargaining power is unequal so that these are not negotiated contracts but standard form contracts between unequals. Unlike the private parties the State while exercising its powers and discharging its functions, acts indubitably, as is expected of it, for public good and in public interest. The impact of every State action is also on public interest. It is really the nature of its personality as State which is significant and must characterize all its actions, in whatever field, and not the nature of function, contractual or otherwise, which is decisive of the nature of scrutiny permitted for examining the validity of its act. The requirement of Article 14 being the duty to act fairly, justly and reasonably, there is nothing which militates against the concept of requiring the State always to so act, even in contractual matters. This factor alone is sufficient to import at least the minimal requirements of public law obligations and impress with this character the contracts made by the State or its instrumentality. It is a different matter that the scope of judicial review in respect of disputes falling within the domain of contractual obligations may be more limited and in doubtful cases the parties may be relegated to adjudication of their rights by resort to remedies provided for adjudication of purely contractual disputes. However, to the extent, challenge is made on the ground of violation of Article 14 by alleging that the impugned act is arbitrary, unfair or unreasonable, the fact that the dispute also falls within the domain of contractual obligations would not relieve the State of its obligation to comply with the basic requirements of Article 14. To this extent, the obligation is of a public character invariably in every case irrespective of there being any other right or obligation in addition thereto. An additional contractual obligation cannot divest the claimant of the guarantee under Article 14 of non- arbitrariness at the hands of the State in any of its actions.
53. From the above, it is clear that when an instrumentality of the State acts contrary to public good and public interest, unfairly, unjustly and unreasonably, in its contractual, constitutional or statutory obligations, it really acts contrary to the constitutional guarantee found in Article 14 of the Constitution. Thus if we apply the above principle of applicability of Article 14 to the facts of this case, then we notice that the first respondent being an instrumentality of the State and a monopoly body had to be approached by the appellants by compulsion to cover its export risk. The policy of insurance covering the risk of the appellants was issued by the first respondent after seeking all required information and after receiving huge sums of money as premium exceeding Rs 16 15 lakhs. On facts we have found that the terms of the policy do not give room to any ambiguity as to the risk covered by the first respondent. We are also of the considered opinion that the liability of the first respondent under the policy arose when the default of the exporter occurred and thereafter when the Kazakhstan Government failed to fulfil its guarantee. There is no allegation that the contracts in question were obtained either by fraud or by misrepresentation. In such factual situation, we are of the opinion, the facts of this case do not and should not inhibit the High Court or this Court from granting the relief sought for by the petitioner.
In the view of the judgment rendered in ABL International Ltd.(supra), this court is of opinion that there is no dispute that the respondent SAIL being a state organisation, which falls within the purview of the state and its instrumentalities, as such, the instant writ petition is maintainable against the respondents- SAIL.
However, this court in the instant writ petitions is only concerned with the arbitrary and exorbitant enhancement of the rates by the respondent-SAIL, during renewal of lease, as the prayed by the petitioners.
It appears that the assessment has been made by a Company namely, UTI Infrastructure Technology and Services Ltd. of Mumbai, whose report has been brought on record in the Counter Affidavit dated 03.04.2017, in W.P.(C) No. 2440/2015.The initial lease amount and renewal amount in all the cases are as follows: -
Sl. Case Details Rate of Premium Rate of Premium No. Amount Paid for Amount being Original Lease demanded by Respondent for Renewal 1 W.P.(C) No. 2440/2015 Rs. 15,000/- for 250 Rs. 17,05,005.45 for Sq. Yards (Rs. 60/- per 250 Sq. Yards (Rs.
Sq. Yard) 6820.02 per Sq. Yard)
2 W.P.(C) No. 2442/2015 Rs. 15,000/- for 250 Rs. 19,53,019.55 for
Sq. Yards (Rs. 60/- per 250 Sq. Yards (Rs.
Sq. Yard) 7812.07 per Sq. Yard)
3 W.P.(C) No. 2443/2015 Rs. 15,000/- for 250 Rs. 17,05,005.45 for
Sq. Yards (Rs. 60/- per 250 Sq. Yards (Rs.
Sq. Yard) 6820.02 per Sq. Yard)
4 W.P.(C) No. 2451/2015 Rs. 24,000/- for 400 Rs. 25,39,646.08 for
Sq. Yards (Rs. 60/- per 400 Sq. Yards (Rs.
Sq. Yard) 6349.11 per Sq. Yard)
5 W.P.(C) No. 2453/2015 Rs. 15,000/- for 250 Rs. 22,11,171.60 for
Sq. Yards (Rs. 60/- per 250 Sq. Yards (Rs.
16
Sq. Yard) 8844.68 per Sq. Yard)
6 W.P.(C) No. 2477/2015 Rs. 15,000/- for 250 Rs. 22,11,171.60 for
Sq. Yards (Rs. 60/- per 250 Sq. Yards (Rs.
Sq. Yard) 8844.68 per Sq. Yard)
7 W.P.(C) No. 2741/2018 Rs. 23,990/- for Rs. 26,77,786.88 for
580.55 Sq. Yards (Rs. 580.55 Sq. Yards (Rs.
41.32/- per Sq. Yard) 4612.50 per Sq. Yard)
8 W.P.(C) No. 2749/2018 Rs. 9,600/- for 160 Sq. Rs. 7,77,261.80 for
Yards (Rs. 60/- per Sq. 160 Sq. Yards (Rs.
Yard) 4857.88 per Sq. Yard)
It appears that the rates of enhancement, which are based only upon the revenue rate of Chas area without taking into consideration that on 07.02.2009 while granting fresh lease to a Commercial mall, the rate was fixed @ Rs. 1440/- per Sq. Yard, but from 15.02.2009 onwards, the rates have been fixed to Rs. 6,820.02 per Sq. Yard, Rs.
7812.07 per Sq. Yard, Rs. 6349.11 per Sq. Yard, Rs. 8844.68 per Sq. Yard, Rs. 4612.50 per Sq. Yard and Rs. 4857.88 per Sq. Yard, which seems irrational and without any justification. The valuation report submitted by the aforesaid assessing company is based on without considering the revenue rates of the adjacent areas of Bokaro Steel City, resulting into enhancement of renewal rates exorbitantly, which is arbitrary. Even though on one side of Bokaro Steel City, there is Chira Chas and, on another side, Chandrapura and on the third side Jaina More and the rates of these area should have been considered for valuation of the rates for the renewal of lease, for the aforesaid lands.
The Apex court in the case of Style (Dress Land) v. UT, Chandigarh reported in (1999) 7 SCC 89 has held, that all actions of every public functionary in whatever sphere must be guided by reason and not humour, whim, caprice, or personal predilections of the persons entrusted with the task on behalf of the State and exercise of all powers must be for public good instead of being an abuse of power. Relevant para of the aforesaid judgment is quoted hereunder: -
10. ......... the action of the respondents regarding imposition of the terms and conditions of the lease including the enhancement of rent is required to be fair and reasonable and not actuated by considerations which could be termed as arbitrary or discriminatory. The Government cannot act like a 17 private individual in imposing the conditions solely with the object of extracting profits from its lessees. Governmental actions are required to be based on standards which are not arbitrary or unauthorised. This Court in Ramana Dayaram Shetty v. International Airport Authority of India [(1979) 3 SCC 489 : AIR 1979 SC 1628] while agreeing with the observations of Mathew, J. held: (SCC pp. 505-06, para 12) "12. We agree with the observations of Mathew, J., in V. Punnen Thomas v. State of Kerala [AIR 1969 Ker 81 : 1968 Ker LT 800 (FB)] that:
'The Government is not and should not be as free as an individual in selecting the recipients for its largesse. Whatever its activity, the Government is still the Government and will be subject to restraints, inherent in its position in a democratic society. A democratic Government cannot lay down arbitrary and capricious standards for the choice of persons with whom alone it will deal.' The same point was made by this Court in Erusian Equipment and Chemicals Ltd. v. State of W.B. [(1975) 1 SCC 70 : AIR 1975 SC 266 : (1975) 2 SCR 674] where the question was whether blacklisting of a person without giving him an opportunity to be heard was bad? Ray, C.J., speaking on behalf of himself and his colleagues on the Bench pointed out that blacklisting of a person not only affects his reputation which is, in Poundian terms, an interest both of personality and substance, but also denies him equality in the matter of entering into contract with the Government and it cannot, therefore, be supported without fair hearing. It was argued for the Government that no person has a right to enter into contractual relationship with the Government and the Government, like any other private individual, has the absolute right to enter into contract with anyone it pleases. But the Court, speaking through the learned Chief Justice, responded that the Government is not like a private individual who can pick and choose the person with whom it will deal, but the Government is still a government when it enters into contract or when it is administering largesse and it cannot, without adequate reason, exclude any person from dealing with it or take away largesse arbitrarily. The learned Chief Justice said that when the Government is trading with the public, 'the democratic form of government demands equality and absence of arbitrariness.... The activities of the Government have a public element and, therefore, there should be fairness and equality. The State need not enter into any contract with anyone, but if it does so, it must do so fairly without discrimination and without unfair procedure'. This proposition would hold good in all cases of 18 dealing by the Government with the public, where the interest sought to be protected is a privilege. It must, therefore, be taken to be the law that where the Government is dealing with the public, whether by way of giving jobs or entering into contracts or issuing quotas or licences or granting other forms of largesse, the Government cannot act arbitrarily at its sweet will and, like a private individual, deal with any person it pleases, but its action must be in conformity with standard or norms which is not arbitrary, irrational or irrelevant. The power or discretion of the Government in the matter of grant of largesse including award of jobs, contracts, quotas, licences, etc. must be confined and structured by rational, relevant and non-discriminatory standard or norm and if the Government departs from such standard or norm in any particular case or cases, the action of the Government would be liable to be struck down, unless it can be shown by the Government that the departure was not arbitrary, but was based on some valid principle which in itself was not irrational, unreasonable or discriminatory."
11. Even the administrative orders and not (sic only) quasi-
judicial are required to be made in a manner in consonance with the rules of natural justice, when they affect the rights of the citizens to the property or the attributes of the property. While exercising the powers of judicial review the court can look into the reasons given by the Government in support of its action but cannot substitute its own reasons. The Court can strike down an executive order, if it finds the reasons assigned were irrelevant and extraneous. The courts are more concerned with the decision-making process than the decision itself.
12. This Court in Shrilekha Vidyarthi (Kumari) v. State of U.P. [(1991) 1 SCC 212: 1991 SCC (L&S) 742] held that every State action, in order to survive, must not be susceptible to the vice of arbitrariness which is the crux of Article 14 and basic to the rules of law, the system which governs us, arbitrariness being the negation of the rule of law. Non-arbitrariness, being a necessary concomitant of the rule of law, it is imperative that all actions of every public functionary in whatever sphere must be guided by reason and not humour, whim, caprice or personal predilections of the persons entrusted with the task on behalf of the State and exercise of all powers must be for public good instead of being an abuse of power. Action of renewability should be gauged not on the nature of function but public nature of the body exercising that function and such action shall be open to judicial review even if it pertains to the contractual field. The State action which is not informed by reason cannot be protected as it would be easy for the citizens to question such an action as being arbitrary.
19In the view of the judgment rendered in Style (Dress Land) (supra) and Jamshed Hormusji Wadla(supra),this Court directs the respondents-SAIL to reassess the rate through a rational agency, considering the value of the land of the surrounding area of North, South, East, and West, keeping in mind that these persons are the old lessee and they are associated with the SAIL or its employee for last 30-33 years and the initial rate was Rs. 60/- per Sq. Yard and Rs. 41.32 per Sq. Yard and while granting new lease to the commercial mall, the rate was considered by SAIL on 07.02.2009 as Rs. 1440/- Per Sq. Yard, which was subsequently enhanced exorbitantly for these petitioners on 15.02.2009 as Rs. 6,820.02 per Sq. Yard, Rs. 7812.07 per Sq. Yard, Rs. 6349.11 per Sq. Yard, Rs. 8844.68 per Sq. Yard, Rs. 4612.50 per Sq. Yard and Rs. 4857.88 per Sq. Yard respectively.
Accordingly, the impugned demands made by the respondents / SAIL are hereby set aside.
Interim order dated 09.09.2021 granted earlier in W.P. (C) No. 2741/2018 is hereby vacated.
All the writ petitions are allowed.
All pending I.As. stand closed.
(Kailash Prasad Deo, J.) Sunil/-