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1991 DIGILAW 164 (PAT)

Tapen Sen v. State of Bihar

1991-04-16

S.N.JHA

body1991
JUDGMENT S.N. Jha, J. The petitioner in this writ application has made a prayer, inter alia to quash the order as contained in Annexure-12 by which the Deputy Commissioner Hazaribagh while rejecting the application on behalf of the petitioner and the other members of his family for renewal of the lease on the same terms and conditions as before has directed them to deposit the amount of Rs. 59,737.59 paise in one lump sum by 10.8.1985, being the amount of Salami and the annual rent for the period 1.4.1970 to 31.3.1976 and to keep the petrol pump business being carried on the lands in question closed pending order in regard to renewal on deposit of the aforesaid sum being made. A further prayer to issue a writ or in the nature of mandamus directing the respondents to forthwith renew the lease in respect of the land in question for a further period of 30 years has also been made. 2. The facts, which do not appear to be in dispute, are these. The father of the petitioner, Late D.N. Sen was granted a lease for a period of 1.4.1950 to 31.3.1960 in respect of the premises appertaining to Plot No. 733, Holding No. 337 measuring 0.59 acres in the town of Hazaribagh under a deed dated 12.3.1951 for the purpose of establishing and carrying on the business of petrol pump. The lease was renewed in his favour for a further period of 10 years commencing from 1.4.1960 to 31.3.1970 on payment of Saalmi of Rs. 5900/- and the annual rental of Rs. 7,080/- vide letter of the Revenue and Land Reforms Department, Government of Bihar bearing Memo No. 1001 dated 18.2.1972, a copy whereof has been annexed as Annexure-1 to this application. 5900/- and the annual rental of Rs. 7,080/- vide letter of the Revenue and Land Reforms Department, Government of Bihar bearing Memo No. 1001 dated 18.2.1972, a copy whereof has been annexed as Annexure-1 to this application. It may be stated here that although in terms of Clause 'Gh' of the aforesaid letter the lease was subject to renewal after 31.3.1970 on terms and conditions to be approved by the State Government, the deed of lease (Annexure-2) that was executed on 29.1.1975 for the aforesaid period ending 31.3.1970, a renewal clause was 'included vide paragraph 17 of the deed in the following words :- "That on the expiry of the terms of the present lease the LESSOR shall if the LESSEE had duly observed and performed all the conditions of the Lease, execute a new lease on the same terms as the old lease, for such period and on such• rent al the Collector or the Deputy Commissioner of the District may think fit not exceeding double the existing rent…………….." 3. The father of the petitioner again applied for renewal for the period 1.4.1970 to 31.3.1980 and ultimately the State Government vide its letter dated 4.10.1976 (Annexure-3) communicated its decision to grant renewal for the aforesaid period on payment of Salami of Rs. 18,437.50 paise and annual rental at the rate of Rs. 19,175/- for the first six years and at the rate of Rs. 22,125/- for the next four years totalling a sum of Rs. 41,530/- as rent. Thereafter the dispute arose. According to the stand of the petitioner, no Salami at all was/is payable at the stage of renewal of the lease and so far as the enhancement of the annual rental is concerned, the same cannot exceed double the existing rate. It would appear from the writ petition that a number of representation/petition were made in this regard on behalf of the petitioner but each time the State Government or the Deputy Commissioner, Hazaribagh took the stand that the aforesaid amount as Salami and the annual rent was payable for the purpose of renewal of the lease. Ultimately, by the aforementioned impugned order, a further direction was given to close the petrol pump business giving rise to the present application. Ultimately, by the aforementioned impugned order, a further direction was given to close the petrol pump business giving rise to the present application. It would not be out of place to mention here that at the time of admission of this writ application, the operation of the impugned order as contained in Annexure-12 was stayed by order dated 13.8.1985. The aforesaid interim order has continued for over five years, the result being that the petitioner has remained in possession of the premises in question for the last over 21 years as of today, carrying business therein without there being any lease. It may be also stated here that no counter affidavit has been filed on behalf of the respondents. 4. The petitioner, an Advocate of this Court, who has filed this writ application in representative capacity on behalf of the other members of his family as well as himself, has argued this case in person with grace and objectivity. The substance of the submissions is that in terms of the provisions of the Khas Mahal Manual (hereinafter referred to as 'the Manual') which has a binding effect, as well as on the principles of 'promissory estoppel' and 'legitimate expectation', the petitioner is entitled to automatic renewal of the lease on payment of annual rent not exceeding the double of the rent which was being paid for the period 1.4.1960 to 31.3.1970, and without paying any Salami at all. The impugned direction for the closure of the petrol pump business in the premises has been challenged as being unknown to the provisions of the Manual as also being violative of the constitutional right enshrined under Articles 14, 19 (1) (g) and 300A of the Constitution. According to the petitioner further, this Court, on the facts of the case, is entitled to issue a writ of mandamus directing the respondents to renew the lease commencing from 1.4.1970 on the terms as mentioned above. 5. Learned Government Pleader No. II has submitted that the petitioner is not entitled to renewal of the lease as a matter of right and the same can be granted only on payment of the Salami and enhanced rent, as indicated in the different notices/orders in view of the increase in the value of the land in question and the development of the area in question. He also submitted that the dispute raised in the instant application is purely contractual in nature and this Court cannot issue any writ of mandamus for the enforcement of the rights claimed by the petitioner in this application under Articles 226 & 227 of the Constitution. 6. On the submissions of the parties, the questions which arise for consideration are whether a writ can be issued directing the respondents to renew the lease in the writ application and assuming that such a writ or direction can be issued whether having regard to the provisions of the Manual and the attending facts of the case any such writ order or direction should be issued. Last but not the least assuming that no order or direction can be issued at all as prayed for, for the renewal of the lease whether the impugned order directing the closure of the petrol pump business is in accordance with law. 7. The question, as to whether contractual obligations between the State and its citizens can be enforced through writ petition under Article 226 of the Constitution, has been debated on various occasions in the Supreme Court as well as in different High Courts. In the case of Radhakrishna Agarwal and others v. State of Bihar and others (AIR 1977 Supreme Court 1496). In the case of Radhakrishna Agarwal and others v. State of Bihar and others (AIR 1977 Supreme Court 1496). the Supreme Court held that the cases arising out of the alleged breaches of obligations by the State or its agents can be grouped in three categories ; "(i) Where a petitioner makes a grievance of breach of promise on the part of the State in cases where on assurance or promise made by the State he has acted to his prejudice and predicament but the agreement is short of a contract within the meaning of Article 299 of the Constitution; (ii) Where the contract entered into between the person aggrieved and the State is in exercise of a statutory power under certain Act or Rules framed thereunder and the petitioner alleges a breach on the part of the State; (ii) Where the contract entered into between the State and the person aggrieved is non-statutory and purely contractual and the rights and liabilities of the parties are governed by the terms of the contract, and the petitioner complains about breach of such contract by the State." While the cases coming under categories (i) and (ii) are concerned, writ application under Article 226 was held to be maintainable, but so far as the cases following under category (iii) are concerned, i.e. where the contract entered into between the State and the person aggrieved is not statutory and purely contractual and the petitioner complains about the breach of such contract by the State, no application invoking the jurisdiction of the High Court under Article 226 of the Constitution was held to be maintainable. The law on the subject came for consideration before the Supreme Court in various subsequent cases beginning from Ramana Dayaram Shetty v. The International Airport Authority of India and others (AIR 1979 Supreme Court 1628) and M/s. Kasturi Lal Lakshmi Reddy etc. v. The State of Jammu & Kashmir and another (AIR 1980 Supreme Court, 1992) and recently in the case of Mahabir Auto Stores and other v. Indian Oil Corporation and others (AIR 1990 Supreme Court 1031) and Kumari Shrilekha Vidyarthi v. State of U.P. & others [(1990) 3 Supreme Court Journal, 336]. v. The State of Jammu & Kashmir and another (AIR 1980 Supreme Court, 1992) and recently in the case of Mahabir Auto Stores and other v. Indian Oil Corporation and others (AIR 1990 Supreme Court 1031) and Kumari Shrilekha Vidyarthi v. State of U.P. & others [(1990) 3 Supreme Court Journal, 336]. A perusal of the above mentioned as also other decisions on the point, however, would show, so far as the cases coming under the aforesaid category (iii) are concerned, the law laid down by the Supreme Court in the case of Radhakrishna Agrawal (supra) still holds the field. The only inroad that has been made into it is where the challenge is made on the ground of violation of Article 14. In the case of Kumari Shrilekha Vidyarthi (supra) it was stated as follows :- "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 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." 8. While dealing with the aforesaid question, a Full Bench of this Court very recently in the case of M/s. Pancham Singh v. The State of Bihar and others reported in 1991 (1) PLJR 352 , has stated: "It is true that in none of the cases referred to above any formal agreement had been executed between the persons concerned and the State; the observations in respect of applicability of Article 14 of the Constitution, in connection with contractual obligations has been made in connection with the contracts in general. But at the same time the observation in the case of Radhakrishna Agarwal (supra) that once the State or its agents have entered into the field of ordinary contract no question arises of violation of Article 14 or any other constitutional provision, must be read in connection with the grievances referable to breach the terms of duly executed agreement; I have already pointed out above, that there will be difference, where the cancellation is because of the breach of any of the terms of the contract and where cancellation of the contract, is on a ground de hors the terms of the contract. In my view, where an agreement executed in accordance with Article 299 of the Constitution is cancelled on a ground which is not referable to any of the terms of the contract, and is per se violative of Article 14 of the Constitution this Court can exercise the jurisdiction under Article 226 of the Constitution....." In other words, so far as the cases coming under the aforesaid category (iii) are concerned, this Court under Article 226 of the Constitution has been held to have jurisdiction to issue an appropriate writ, order or direction in the nature of mandamus provided that the alleged action is shown to be arbitrary, unfair or unreasonable, thus, being violative of Article 14 of the Constitution and the same is de hors the contract i.e. it is not referable to any term of the contract. 9. The petitioner relied, as he said, heavily on an unreported decision of this Court in the case of Rajat Nath Roy and another v. State of Bihar and others (C.W.J.C. No. 504 of 1989 (8) disposed of on 4th March, 1991. He has also referred to certain other decisions of the Supreme Court, namely, AIR 1987 Supreme Court 537, AIR 1989 Supreme Court 1642, 1983 (4) SCC 582 , as well as of this Court in 1987 BLT 255 : 1988 PLJR 440 , 1987 BLT 276 : 1988 PLJR 12, 1988 BLT 540, 1989 BLJR 354 and AIR 1990 Patna 20. Almost all those decision a have been noticed in the judgment in the case of Raj Nath Roy (supra). 10. Almost all those decision a have been noticed in the judgment in the case of Raj Nath Roy (supra). 10. It is true that while allowing the writ application in the case of Rajat Nath Roy (supra), this Court, inter alia, directed the respondent authorities to renew the instrument of lease, but it appears that in that case the authorities had granted renewal of the lease only with respect to portion of the lease-hold property and the question for consideration was whether the Khas Mahal authorities could refuse the prayer for renewal with respect to the remaining portion of the lease-hold property. In other words, in that case there was already a decision refusing the renewal of the lease. In the instant case, however, there is no such decision. On the other hand, the Khas Mahal authorities all along expressed their readiness to renew the lease but on compliance of certain conditions in regard to payment of Sarami and enhanced annual rent. As such, in my opinion, the facts of that case were entirely different and therefore, decision rendered in that case on consideration of the relevant provisions of the Manual in an entirely different context or background cannot be said to be applicable in the instant case. 11. Admittedly, as noticed above, the whole thrust of the petitioner's case is that the impugned notice/order is violative of Clause 17 of the lease referred to above. According to the petitioner, he is entitled by reason of the terms and conditions incorporated in Clause 17 to automatic renewal. According to respondent, no such renewal can be granted except on payment of Salami and enhanced annual rent. What therefore, the petitioner is seeking in this application is enforcement of a contract. It is well settled that a renewal clause in a deed of lease constitutes a separate and independent agreement, which can be enforced by a suit for specific performance of contract. The question is whether this Court, while exercising jurisdiction under Article 226 of the Constitution, which is discretionary in nature, can issue a writ of mandamus in the nature of a decree for specific performance of contract’ The grievance of the petitioner basically relates to an alleged breach of the contract. The alleged breach is not independent or de hors the contract but is very much referable to the terms of the contract and in fact flows from it. The alleged breach is not independent or de hors the contract but is very much referable to the terms of the contract and in fact flows from it. The State is competent to enter into contracts with its citizens and lease out its properties on terms and conditions as incorporated in the agreement. There is no doubt that in such cases where formal agreement is also executed, the case will be covered by aforesaid category (iii). Therefore, as held by this Court in the case of M/s Pancham Singh (supra), unless the alleged broach can be said to be de hors the terms of the contract and per se violative of Article 14 of the Constitution no writ can be issued. I have already stated above that the breach alleged is not de hors terms of the contract. In that view of the matter, it has to be held that this Court cannot issue any writ of or the in the nature of mandamus directing the respondents to renew the lease for the period of 33 years on the same terms and conditions, as prayed for. 12. The question that next arises for consideration, on the submission of the parties is that assuming that a writ or direction to the respondents for the renewal of the lease can be issued by this Court in this application under Article 226 of the Constitution, whether it is possible, on the facts of the case and further in view of the provisions of the Manual, to direct them to renew the lease on the terms and conditions as before. In order to examine the contention that no Salami is payable at the time of renewal of the lease, it would be necessary to refer to the relevant provisions as contained in the Manual. The rationale behind levy of Salami in respect of town khasmahals beings settled for non-agricultural purpose, as mentioned Clause (b) of Rule 9 (i) of the Manual, is that in a growing town land appreciates rapidly in value and in the initial stages of development, Government is often required to undertake capital expenditure with corresponding benefits to the residents. This burden, however, is not shared by them. It has, therefore, been considered equitable that the Government should take in advance a share of the increased value by means of Salami. This burden, however, is not shared by them. It has, therefore, been considered equitable that the Government should take in advance a share of the increased value by means of Salami. 'Salami' as defined therein, is not 'rent capitalised but a share in the increase of value anticipated during the period of non-agricultural lease'. Clauses (iv) and (v) dealing with the mode of levy of Salami are as follows :- "(iv) Salami will ordinarily be levied on original leases but where the progressive increase in the value of land or other special circumstances justify it, a fresh Salami is taken for the renewal of a lease, it should include not only the share of Government in the progressive increase in value anticipated within the period of the lease to be renewed but also a sum equivalent to their share in the known increment in value due to causes (e.g.; capital and enterprise of Government and third parties in developing the place and providing amenities for it) which were not anticipated when the lease was originally granted or previously renewed. (v) Salami should not ordinarily be required- (a) When granting short leases ; or (b) from an old tenant when the relationship of landlord and tenant existed before the development began and the tenant is building a suitable house for his own occupation only. When, however, he applies for an original lease of an unoccupied piece of land or acquires lands outside his original holding he may fairly be required to pay a salami." It would appear from the perusal of the aforesaid provisions that ordinarily salami should be levied only at the time of grant of first lease. However, in appropriate cases as mentioned therein even at the stage of renewal of the lease, fresh salami can be taken. The petitioner submitted that the use of the form 'ordinarily' suggests that as a rule fresh salami should not be charged at the time of renewal. However, the word 'ordinarily' in my opinion, means 'usually but not always'. Therefore, in appropriate cases where there has been a progressive increase in the value of land or some other special circumstances exist the Government will not be precluded from levying Salami as its share in the progressive increase in value anticipated within the period of lease, for which it is to be renewed. Therefore, in appropriate cases where there has been a progressive increase in the value of land or some other special circumstances exist the Government will not be precluded from levying Salami as its share in the progressive increase in value anticipated within the period of lease, for which it is to be renewed. Such reasons may exist on account of development of the place providing more amenities due to Government enterprise or similar enterprises of third parties, which were not anticipated when the lease was originally granted or previously renewed. Whether in a particular case or in the instant case, there has been development of the place where the premises in question are situate either on account of the activities on the part of the Government or third parties leading to increase in value of the land, is a question of fact. Whether authorities are justified in demanding the Salami for the purpose of renewal of the lease after 31.3.1970 is therefore also a question of fact. This Court in exercise of its writ jurisdiction under Article 226 is hardly an appropriate forum to consider and decide one way or the other these facts in issue. In my considered opinion, therefore, the question in regard to grant of renewal on the same terms and conditions as in the previous deed and without payment of Salami etc. involves disputed questions of fact and cannot be properly decided in the instant proceeding under Article 226 of the Constitution. 13. The claim of the petitioner on the principle of legitimate expectation or promissory estoppel also cannot be upheld. As regards the former, it may only be stated once again that earlier also at the stage of first renewal for the period 1.4.1960 to 31.3.1970 the petitioner's father had agreed to pay Salami and also enhanced annual rent. If can, therefore, be said that far from the so called 'legitimate expectation' otherwise, there was a reasonable belief on the part of the petitioner that after expiry of that period on 31.3.1970, fresh Salami may have to be paid once again if the lease is renewed. So far as the question of promissory estoppel is concerned, the principle has hardly any application to the facts of the case. As stated above the claim of the petitioner arises out of the terms of the contract. So far as the question of promissory estoppel is concerned, the principle has hardly any application to the facts of the case. As stated above the claim of the petitioner arises out of the terms of the contract. It is the so-alled contractual obligation of the Government said to be arising out of the contract which is sought to be enforced. As has been held above, the instant case falls in the third category of cases, as per Radhakrishna Agarwal's case (supra). The principle of promissory estoppel has no application to such cases. As such, I find no merit in the submission of the petitioner on this count also. 14. The question that next arises for consideration is whether the order of the Deputy Commissioner directing closure of the petrol pump business is in accordance with law. Learned Government Pleader No. II could not point out any provision in the Manual or any other law which authorises the Government or its functionaries to stop any business activity being lawfully carried on. No violation of any provision of law, terms and conditions of any statutory licence etc. has been alleged. The grievance of the petitioner, therefore, so far as this part of the impugned order is concerned, is well justified. It would not be out of place to mention here that this Court in a number of cases has held that Khas Mahal Authorities cannot forcibly evict the lessee and in absence of any consent, possession can be taken only through civil suit. Reference in this connection may be made to only one of them, namely, the case of Deba Jyoti Dutt and others v. State of Bihar and another, reported in 1988 PLJR 440 equivalent to 1987 BLT 265. If that be the position, it is very difficult to countenance such a direction to close the petrol pump business indefinitely pending any decision to the matter of renewal by the authorities. That part of the order as contained in Annexure-12 directing closure of petrol pump business in the premises in question being patently arbitrary and illegal has to be quashed. 15. It is, accordingly, held that this writ application in so far as the prayer for issuance of writ or in the nature of mandamus directing the respondents to renew the lease is concerned, is not maintainable and to that extent is dismissed. 15. It is, accordingly, held that this writ application in so far as the prayer for issuance of writ or in the nature of mandamus directing the respondents to renew the lease is concerned, is not maintainable and to that extent is dismissed. The question as to whether the petitioner is entitled to renewal and if so on what terms and conditions, has to be decided in civil suit which the parties, as advised, may prefer. The order as contained in Annexure-12 directing closure of the petrol pump business in the premises in question is, however, quashed. 16. This writ application is accordingly, allowed in part to the extent mentioned above. In the circumstances of the case, however, there will be no order as to costs.