Jharkhand High Court
Ashiana Housing Limited Through Sri ... vs The State Of Jharkhand Through The ... on 29 September, 2023
Author: Gautam Kumar Choudhary
Bench: Gautam Kumar Choudhary
IN THE HIGH COURT OF JHARKHAND AT RANCHI
W.P.(C) No. 529 of 2019
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Ashiana Housing Limited through Sri Satyendra Narayan Singh .... .... .... Petitioner Versus
1. The State of Jharkhand through the Principal Secretary, Revenue & Land Reforms Department, Ranchi
2. The Commissioner, Singhbhum (Kolhan) Division, Chaibasa
3. The Deputy Commissioner, East Singhbhum
4. M/s. Tata Steel Ltd. through its Managing Director
5. Jamshedpur Notified Area Committee, Jamshedpur through its Special Officer .... .... .... Respondents WITH W.P.(C) No. 2697 of 2019
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Praikh Inn Pvt. Ltd. through its Director Rajnikant Bhagwan Ji Parikh .... .... .... Petitioner Versus
1. The State of Jharkhand through the Principal Secretary, Revenue & Land Reforms Department, Ranchi
2. Jamshedpur Notified Area Committee through its Special Officer, having its office at Sakchi, Jamshedpur .... .... .... Respondents CORAM: HON'BLE MR. JUSTICE GAUTAM KUMAR CHOUDHARY For the Petitioner : Mr. Anil Kumar, Advocate Ms. Chandana Kumari, Advocate For the Tata Steel Ltd.: Mr. Indrajit Sinha, Advocate Ms. Puja Agarwal, Advocate For the JNAC : Mr. Vijay Kumar Roy, Advocate
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C.A.V. ON: 21.08.2023 PRONOUNCED ON: 29.09.2023 Both the writ petitions have been preferred by the parties who had been allotted plots of land on agreement for sub-lease by Tata Steel (R-4) and permission was granted by JNAC (R-5) for the construction of the commercial buildings.
2. It is the case of Ashiana Housing Limited that due permission was obtained for the sub-lease in favour of the petitioner from the State Government and upon receipt of the approval of the settlement of land in favour of the petitioner by way of a sub-lease, the Deputy Commissioner (R-
3) addressed to the Petitioner, directed the Petitioner to deposit annual rent and cess.
3. In case of Parikh Inn Pvt. Ltd also the petitioner was allotted a land on sub-Lease basis regarding which agreement was entered into by and between the petitioner and Tata Steel Ltd. The said agreement was pursuant to 2 the permission of the State Govt. as intimated to the petitioner by the Tata Steel. Permission for the construction of the said Hotel was granted and the requisite fee was also deposited with Jamshedpur Notified Area Committee.
4. Despite the permission for sub-lease having been granted, an order of status quo has been communicated by the Deputy Commissioner, pursuant to a decision of the State Government, consequently the execution of registered sub-lease has been stalled. Aggrieved by the non-execution of the sub-lease, the instant writ petition has been filed. Since both the cases involve common question of fact and law, therefore they are together and will be disposed of by the common order.
PETITIONER'S CASE
5. Petitioner in W.P.(C) No.529 of 2019 is a Public Limited Company engaged in the business of real estate development. Respondent no.4-M/s. Tata Steel Limited executed agreement for lease on 7th October, 2009 in favour of Petitioner-Company with respect to portion of land measuring portion of land 02 acre in Plot No.75(A), Khata No.622, JNAC, Sonary, Jamshedpur.
6. Tata Steel Limited is the leaseholder. The lease deed contains provision for grant of sub-lease of the said lease commonly known as "Tata Lease Land" in favour of any other party with the prior approval of the State Government as per clause-8 of the Lease Deed. An appropriate committee had been constituted by the Government of Jharkhand to give effect to provision of clause-8 by Circular No.3874/RA-6/12/05.
7. On the request of the petitioner to Tata Steel for allotment of a piece of land for setting up of multiplex/shopping mall/commercial complex, proposal was recommended to the Deputy Commissioner, East Singhbhum, Jamshedpur for grant of sub-lease right in favour of the petitioner- Ashiana Housing Limited vide their letter dated 03.05.2007. The proposal was forwarded to the Principal Secretary, Revenue and Land Reforms Department, Govt of Jharkhand for settlement of a portion of lease land of Tata Steel Ltd. in favour of the Petitioner Company by way of sub-lease.
8. The due permission was obtained for the sub-lease in favour of the petitioner- Ashiana Housing Limited from the State Government (Memo No.3858/Ra dated 17.11.2008). The aforesaid approval was accorded in the letter of the Deputy Secretary in the Department of Revenue and Land Reforms, Govt of Jharkhand addressed to the Deputy Commissioner (R-3).
9. Upon receipt of the approval of the settlement of land in favour of the 3 petitioner by way of a sub-lease, the Deputy Commissioner (R-3) vide letter no. 837 dated 01.12.2008 addressed to the petitioner, directed the petitioner to deposit annual rent and cess.
10. Deputy Commissioner (R-3) recommended the sub-lease for 2.00 acres of land in favour of petitioner- Ashiana Housing Limited on annual rent and cess being paid, in favour of the petitioner.
11. Tata Steel (R-4) consequently delivered the possession of the land in question as would be evident from the certificate of delivery of possession of sub-leased land on 02.01.2009 and the possession of the plot was received by the Petitioner Company.
12. Tata Steel (R-4) entered into an agreement for lease with the Petitioner on 07.10.2009 for land measuring 2.00 acres. This was followed by a supplementary agreement dated 04.11.2011 and no objection certificate was issued in favour of the petitioner by Tata Steel (R-4) for carrying out construction on the allotted piece of sub-lease land.
13. The petitioner after due approval of the building plan on 03.05.2011 and vide building permit No.28128 dated 24.08.2012 issued under the signature of Jamshedpur Notified Area Committee (JNAC). Environmental Clearance and Fire NOC was also obtained.
14. The petitioner- Ashiana Housing Limited paid annual rent @ Rs 6,70,000/- and road cess amounting to ₹ 167,500 annually to Tata Steel (R-4) from 2009-10 to 2014-15.
15. The possession was delivered by TISCO. The certificate of delivery of possession of sub-leased land has been annexed as Annexure-4 dated 02.01.2009. After getting the sub-lease executed, the petitioner obtained permission for construction of the building from the Jamshedpur Notified Area Committee vide permission dated 24.08.2012 and construction work was also initiated.
16. After execution of the agreement of lease, certain objections were received by the Government. The status quo order was passed on the sub lease plot vide letter of Deputy Commissioner dated 21.09.2012 in pursuant to letter of Principal Secretary, Land Revenue and Land Reforms Department, Government of Jharkhand dated 17.09.2012.
17. As stated above, the case of petitioner in W.P.(C) No.2697 of 2019 is somewhat Pari-Passu to that of the Petitioner in W.P.(C) No.529 of 2019 and the cause of action arose on passing of the status quo order by the Deputy 4 Commissioner, on 21.09.2012.
18. Several writ applications were filed before this Court assailing the order of stay on construction activities. This Court allowed the batch writ applications in W.P.(C) No.6138 of 2012 & connected matters vide order dated 17.12.2014 to the extent that if the State Government decided to conduct an enquiry in the matter, the same be completed on or before 31.03.2015. Earlier by order dated 07.03.2013 interim relief permitting further construction in sub-leased area was allowed in these cases. It was held in the interim order dated 07.03.2013 at para 27 as under:-
"In that view of the matter, I am satisfied that the petitioners are entitled to an interim relief. Accordingly, except the petitioner in WPC No.6199/12, rest of the petitioners are permitted to carry out any further construction in respect of the sub-leased area as per their undertaking, which shall however, be at their own cost and risk and they will not claim any equity on that account. It is also made clear that the petitioners would not create any third party right on the said properties or construction which are being permitted to be carried out. It is however desirable that the writ application itself be heard at an early date so that issues raised in the present batch of writ petitions are resolved."
The writ was finally disposed of by order dated 17.12.2014 in which it was held at para 17 that "If the State Government decides to conduct an enquiry in the matter, the same must be completed on or before 31.03.2015 and the petitioners would be given individual notices. It is further ordered that the petitioners and M/s Tata Steel Limited would furnish all required informations, if any, sought by the State Government and they would co-operate in expeditious conclusion of the enquiry."
19. It is submitted on behalf of the Petitioner that the enquiry was not being completed despite the time being extended by this Court extending the time till 30.06.2015.
20. Additional Deputy Commissioner, East Singhbhum issued a letter bearing letter no. 22 dated 12.01.2016 to Tata Steel (R-4) informing him that enquiry was complete and the report was submitted to the State Government. Pursuant to the said letter, the rent is not being received from the sub lessee. In view of ongoing impasse, there has been gross delay in execution of the sub- lease and its registration by Tata Steel.
CASE OF RESPONDENT NO.5 JNAC
21. Pursuant to the direction of this Court dated 17.12.2014, the enquiry committee constituted by the Revenue Registration and Land Reforms Department, Jharkhand with regard to the legality and propriety of Sub-lease 5 matter has submitted its report which is under consideration of the Government. It is for this reason that it was not in a position to revalidate the building permit which expired on 23.08.2015 and the rent was not being realized.
CASE OF THE STATE (R-1, 2 & 3)
22. In the counter affidavit dated 03.12.2021, it was stated that enquiry was directed to be concluded till 31st March, 2015, had not been concluded. In counter affidavit dated 21.08.2023, it is now stated that Member, Board of Revenue, Jharkhand inquired into the matter relating to sub-lease of land and submitted its report vide letter no.169 dated 12.10.2010. A report of the public accounts committee of the Jharkhand legislative assembly had been prepared and presented on 21.07.2018 before the legislative assembly. A further prayer of six months has been made to conclude the matter and to take a decision. The decision on 59 sub-lease matter is under consideration at the level of Government.
23. Written note of argument has been filed on behalf of the answering respondents. It is stated that the present matter is related to TATA 59 sub- lease, three different committees were formed and separate enquiry reports have been submitted by these Committees. The report of the committee is under consideration of the State Government. The salient features of the report as stated in the written notes of argument can be summed up as under. a. The departmental resolution under number 3874 dated 06-12-2005 by which the Appropriate Committee under clause 8 of the lease agreement was constituted, was not in accordance with the rules, and consequently the consent earlier granted should be cancelled. If any claim of investment is presented by the lessee, then the lands should be settled through open Daak for this purpose, which is according to the Government's plan.
b. The second option was to provide post-facto approval by bringing all the proposals of settlements to the competent level of the Government. It has however been opined that this this will leave the possibility of wrong precedent.
c. There was flaw in the Government decision taken by the revenue Department, due to which loss of revenue has been caused. The proposed value of the land itself is the proof that this process has not been made in a transparent manner and needs to be improved.
6d. According to Schedule-3 Entry 32 of Jharkhand Executive Manual, land lease, settlement, etc. which is a long-term settlement, is to be agreed upon by the approval of the Cabinet.
e. If there was a proposal for land settlement for any commercial purpose, then the sub-lease settlement should be considered through an open Daak like Sairat so that along with increasing revenue, the process is also determined.
f. According to section 2(L) of the Bihar Land Reforms Act, sub-lease is a variant of lease and therefore its process should also be done accordingly.
g. As sub-lease emerges from paragraph 8 of the Tata lease document where Tata is authorised to send such proposals. Therefore, only a resolution duly passed by the Board of Directors of Tata shall be deemed to be a resolution forwarded by Tata.
24. In the light of the order dated 17.12.2014 passed in WP(C) No. 6138 of 2012, an enquiry report on Tata sub-lease case has been prepared by enquiry committee headed by the divisional Commissioner, Singhbhum and the same has been forwarded to the Government which is under consideration of the Govt.
25. Tata Steel Limited is not the Paramount owner of the land in question, but the State Government is, which by execution of lease in favour of Tata steel transferred some rights over the property to the lessee, and the reversionary rights remained with the State which was the paramount owner.
26. Possession of the land in question was given without executing the registered sub-lease agreement and without complying with the Transfer Of Property Act, 1882, Registration Act, 1908 and Indian Stamp Act, 1899.
27. Transfer of the leasehold right was without permission of the State Government and without execution of a registered sub-lease agreement.
28. Permitting commercial use of residential quarters and recommending construction of new structure to sub-lease by demolishing residential quarters located on the land in question was contrary to the term of original lease. ANALYSIS
29. The main question of law that falls for consideration in these matters is, can the State Govt. cancel or withdraw the consent for sub-lease already granted under clause-8 of the agreement, in the absence of any allegation of fraud or undue influence?
730. There was a specific provision for sub-lease in clause-8 of lease deed which reads as under :
"Clause 8- That should a lessee find it necessary in future to sub-lease any portion of the vacant lease in favour of any person, such allotment will be made with the prior approval of the lessor on terms to be settled. An Appropriate Machinery Committee has been set up by the lessor in consultation with the lessee for expeditious disposal of such cases of sublease."
31. From the above, it is clear that for grant of sub-lease prior approval of the Appropriate Machinery Committee (for short AMC) set up by the lessor in consultation with the lessee was an imperative requirement as per the written indenture of lease between the State Government and the Tata Steel limited (R-4).
32. A specific mechanism was devised and put in place by the lease agreement by constituting AMC to be set up for expeditious disposal of sub- lease matters. This Court is of the view that once the said Committee takes a decision and accords its consent to the sub-lease, the State cannot withdraw the consent or throw spanner in the process, by unilaterally ordering status quo, unless the said consent was obtained by fraud or by undue influence.
33. Earlier W.P.(C) No.6138 of 2012 & connected matters which was allowed in favour of the petitioners who had moved the Court for similar relief, in which the State Government was given an option to conduct enquiry and complete the same by 31.03.2015 which was further extended by the Court to 30.06.2015. There are reference in the counter affidavit of other reports, but the enquiry under the orders of this Court is under submission before the Government, and further extension of time by six months has been sought for. Prayer for extension is devoid of any merit and is made after eight years only to procrastinate the matter and is accordingly rejected.
34. The notes of argument have extracts of the other enquiry reports which is not relevant for the present. It deals about a proposed mechanism granting consent in such matter, but it does not refer to any undue influence or fraud in the process of consent already granted by competent authority in terms of the agreement for the sub-lease.
35. It states that there was error in the decision of the Government resulting in loss of revenue to the State. Argument of loss of huge revenue in the grant of sub-lease by the State which had only a reversionary interest is flawed to the core and misconceived. Reversionary interest is limited by its very nature to the right to retake possession of property if the conditions were 8 not fulfilled. Lessor cannot raise any financial claim beyond the term of lease. When sub-lease is granted as per the term of lease the paramount owner cannot claim anything more than what is provided under the terms of lease.
36. Further, arguments like the absence of approval by the Cabinet to such long-term settlement, and reconstitution of the Appropriate Committees are issues beyond the term of lease and post litum in nature and therefore, it cannot be a ground to withdraw approval which has been duly granted by the said Committee. State is not at impunity to review the accomplished state of affairs like the lease granted to Tata Steel Ltd. and the terms thereunder. It has been held in ITC Ltd. v. State of U.P. & Others, (2011) 7 SCC 493
30. A lease governed exclusively by the provisions of the Transfer of Property Act, 1882 ("the TP Act", for short) could be cancelled only by filing a civil suit for its cancellation or for a declaration that it is illegal, null and void and for the consequential relief of delivery back of possession. Unless and until a court of competent jurisdiction grants such a decree, the lease will continue to be effective and binding. Unilateral cancellation of a registered lease deed by the lessor will neither terminate the lease nor entitle a lessor to seek possession.
37. Fact of the matter remains that neither Petitioners nor the State can resile from the terms of the lease. Once there is an agreement for sub-lease, after due approval by the Appropriate Committee, the same cannot be annulled. If any party is permitted to resile from the lease agreement on the ground that it was financially not viable, or that it was flawed as the Govt rules had not been followed while entering in the said agreement, the certainty of contract with Govt will be seriously undermined, which is at the foundation of contractual relations.
38. Even if it is assumed that there was violation of certain rules in grant of the sub lease it will have no bearing, unless there is something to show that the Petitioners/sublessees were at fault and obtained the said sub-lease by exercising undue influence or fraud. There is no allegation far less materials in this regard against the Petitioners. Hon'ble Supreme Court had occasion to examine the consequence in such cases wherein it held in ITC Ltd. (supra) :
IV. What should be the consequence of the violation?
The question was answered in the following words : The allottees were in no way to be blamed for the mistake. Nor were the allottees guilty of any suppression, misstatement or misrepresentation of facts, fraud, collusion or undue influence in obtaining the allotments at Rs 7400 per square metre. The mistake was found out by the State Government, in exercise of revisional 9 jurisdiction. But by then the allotment was followed by payment of premium, execution of the lease deed, and delivery of possession.
Further in the same case ITC Ltd.(supra) at para 106 it has been held :
A "transfer" of property is an executed contract. Section 4 of the Transfer of Property Act, 1882 provides that the chapters and sections of that Act relating to contracts, shall be taken as part of the Contract Act, 1872. Section 20 of the Contract Act provides that: "20.Agreement void where both parties are under mistake as to matter of fact.--Where both the parties to an agreement are under a mistake as to a matter of fact essential to the agreement, the agreement is void."
But the Explanation thereto provides that:
"Explanation.--An erroneous opinion as to the value of the thing which forms the subject-matter of the agreement, is not to be deemed a mistake as to a matter of fact."
Section 21 of the Contract Act provides that a contract is not voidable because it was caused by a mistake as to any law in force in India. Therefore, having regard to the provisions of the Transfer of Property Act and the Contract Act, a transfer cannot be cancelled on the ground that parties were mistaken about the consideration. (Emphasis supplied)
39. From the above, it is apparent that the arguments that have been advanced that the consent to the said sub-lease was granted in derogation to the Rules of executive business or that permission of the Cabinet was not taken, or that the said sub-lease caused loss to the State, are not acceptable and is rejected. Fact of the matter remains that Tata Steel Ltd. is the lease holder and the primary consideration for the lease was not a premium in rupees and an annual rent, but there were larger considerations of industrialization, regional development and employment to the people. The Development and history of Tatanagar is well known. Therefore, construing it as a Clause in the lease, a reasonable construction will mean that so long a sub lessee is not an undesirable person or entity, the Government cannot take these hyper technical pleas.
40. Fact remains that the Appropriate Committee was constituted to give effect to the provision of sub-lease under Clause-8 by Circular No.3874/RA- 06/12/05. The said Committee has given due consent. There are no allegations of undue influence or fraud. After the consent was accorded the petitioners entered into the agreement for sub-lease with Tata Steel Ltd. (R-4), and as discussed above acted upon the said consent by performing different acts of depositing requisite fees, getting clearance from the Fire Fighting services etc. Now the State authorities cannot turn around and resile from the term of lease and the consent already given under it for sub-lease. To permit such a course 10 will be against the settled principles of certainty in contractual matters. It has been held in, Raval & Co. v. K.G. Ramachandran and Others, (1974) 1 SCC 424 that terms of the registered lease cannot be varied in view of Section 92 of the Evidence Act.
Urban Improvement Trust, Bikaner v. Mohan Lal, (2010) 1 SCC 512
5. It is a matter of concern that such frivolous and unjust litigations by Governments and statutory authorities are on the increase. Statutory authorities exist to discharge statutory functions in public interest. They should be responsible litigants. They cannot raise frivolous and unjust objections, nor act in a callous and high-handed manner.
6. This Court has repeatedly expressed the view that Governments and statutory authorities should be model or ideal litigants and should not put forth false, frivolous, vexatious, technical (but unjust) contentions to obstruct the path of justice. We may refer to some of the decisions in this behalf.
41. There is no merit in the arguments that agreement for sub-lease is not registered and therefore the possession could not have been handed over on its basis. Section 107 of the Transfer of Property Act, mandates registration of lease and not for an agreement to enter into a lease.
Under the circumstance and for the reasons discussed above, both the Writ Petitions succeed. Tata Steel Ltd. is directed to execute registered sub- lease in favour of the petitioners for the land in question regarding which consent had earlier been accorded by the Appropriate Machinery Committee, and further the Jamshedpur Notified Area Committee is directed to accord approval of the revised Building Plan as per rule and in terms of the said sub- lease. Needless to say that the order of status quo communicated by the Deputy Commissioner, with regard to the sub-lease will not come in the way for the execution of the sub-lease.
Both Writ Petitions are allowed. I.As, if any, are also disposed of.
(Gautam Kumar Choudhary, J.) Jharkhand High Court, Ranchi Dated the 29th September, 2023 AFR / Anit