Tata Iron And Steel Company Limited v. State Of Bihar
1997-12-02
M.Y.EQBAL
body1997
DigiLaw.ai
Judgment M.Y.Eqbal, J. 1. In this writ application the petitioner seeks issuance of a writ of mandamus commanding upon the respondent State of Bihar and its Officers to renew the petitioners lease, which expired on 31.12.95, in terms of the renewal clause contained therein. A further prayed has been made for a direction to the State Government to adhere to the principles applicable to the renewal of all Government leases as contained in various guidelines/circulars of the State Government. 2. The petitioner is a public limited company and is primarily engaged in the business of manufacture and sale of iron and steel products which is being carried on in its steel plant at Jamshedpur. The petitioners case is that after the entire land of Jamshedpur vested in the State pursuant to the enactment of Bihar Land Reforms Act and subsequent amendment of the said Act, the petitioner entered into an agreement with the respondent State of Bihar in pursuance of which a deed of lease was executed and registered in the year 1985 and the petitioner became lessee under the State with effect from 1.1.1956. Under the said lease besides other the petitioner was given right to carry out the function of development and providing service to the town of Jamshedpur. According to the petitioner, the lease was for a fixed period of 40 years and all the terms and conditions were incorporated in the lease deed, a photocopy of the lease and agreement has been annexed as Annexure-1 and 1-A to the writ application. It is stated that there is a renewal clause in the lease deed making clear stipulation that the lease shall be renewed in the event the petitioner exercises the option of renewal. It is stated that the option for renewal was exercised by the petitioner which was communicated to the Government on 3.8.95. However, the lease deed has not yet been renewed by the State Government and the matter has been pending since August, 1995. The petitioner company said to have been continuously pursuing the matter relating renewal of lease by approaching the authorities of the State Government but nothing has been done. Hence, the petitioner has invoked Articles 226 and 227 of the Constitution of India by filing this writ application seeking the afore mentioned reliefs. 3. Mr. K.D. Chaterjee, learned Sr.
The petitioner company said to have been continuously pursuing the matter relating renewal of lease by approaching the authorities of the State Government but nothing has been done. Hence, the petitioner has invoked Articles 226 and 227 of the Constitution of India by filing this writ application seeking the afore mentioned reliefs. 3. Mr. K.D. Chaterjee, learned Sr. Counsel for the petitioner, submitted that under terms of the lease agreement, the State Government and its authorities are bound to renew the lease. According to the learned Counsel, the inaction of the State Government and its officers in not renewing the lease is otherwise arbitrary and mala fide. According to the learned Counsel, the. lease was granted in pursuance of the settlement of a protracted dispute between the petitioner-company and the State of Bihar as to whether the petitioners land in Jamshedpur had vested under the Bihar Land Reforms Act. The learned Counsel put reliance on the decision of the Apex Court in the case of Central Inland Water transport Corporation Ltd. and Anr. V/s. Brojo Nath Ganguly -- . 4. Before appreciating the submission of Mr. Chatterjee it would be useful to look into certain provisions of the lease agreement dated 4.8.1984. By virtue of the said agreement, the respondent State of Bihar agreed to create a lease of the property in question for a period of 40 years and the terms and conditions have been incorporated in the lease-agreement. Clauses (x) and (xi) of the agreement are reproduced herein below.- (x) That in regard to the leases of land granted by the Company to other industrial undertakings, individuals, societies and associations after 22nd June. 1970 and before the date of enactment of Bihar Land Reforms (Amendment) Act, 1972, the State Government shall execute a lease in favour of the Company for a period of 40 years with option of the Company for renewals for periods of thirty years each provided that the State Government shall have the powers to make enquiries to ensure that such transactions were not made to defeat the purposes of the Bihar Land Reforms Act art will have the power to resume possession of those lands where the State Government comes to a finding after giving due opportunities to the parties for being heard that such transactions were not made with a view to defeating the-purpose of the Bihar Land Reforms Act.
When the Government resumes" possession of such lands Government would settle the same with the company on lease like other lands provided the same is not required for Government purpose or public purposes. Provided, however, that if before expiry of the lease to the Company the period of the Sub-Lease expires and the said sub-lease is renewed then the State Government shall at the time of renewals of such sub-lease have the power to revise the amount of rent payable to the State Government by the Company. Provided, further that in that case the Company shall be at liberty to make a corresponding enhancement in the rent payable by the sub-lessee to the Company. (xi) That in respect of Sub-clauses (ii), (iii), (iv), (v), (vii), (ix) and (x) hereinabove the option for renewals is to be exercised by a written communication by the Company to the Government of Bihar, atleast three months prior to the expiry of the periods of lease, and any omission to do so may be condoned by the Government if it so desires and is convinced as to the reason of failure in exercising the option. 5. From the aforesaid clauses, it is evident that the lease was created for the period of 40 years in respect of the land at Jamshedpur with effect from 1st January, 1956 to 31st December, 1995 and the lease is renewable for a period of 30 years at the option of the petitioner company. It is further evident that for the renewal of the lease, the petitioner lessee has to exercise its option for renewal and, in fact, a notice dated 3.8.1995 was sent by the petitioner exercising its option of renewal of the lease. A copy of the notice has been annexed as Annexure-2 to the writ application. The petitioner, therefore, seeks mandamus from this Court directing the State of Bihar to renew the lease agreement in favour of the petitioner in respect of the land at Jamshedpur. 6. The question, therefore, falls for consideration is whether such relief can be granted to the petitioner by this Court in exercise to writ jurisdiction under Articles 226 and 227 of the Constitution of India. 7.
6. The question, therefore, falls for consideration is whether such relief can be granted to the petitioner by this Court in exercise to writ jurisdiction under Articles 226 and 227 of the Constitution of India. 7. According to the petitioner, the background of creation of the lease by the State of Bihar in favour of the petitioner company is that after the operation of the Bihar Land Reforms (Amendment) Act, 1972, disputes and differences arose between the Government and Company and the petitioner moved this Court and the Supreme Court for staying the implementation of the said Act, against the petitioner company. It is stated that subsequently, the State of Bihar came with an enactment namely the Bihar Land Reforms (Amendment) Act, 1982 by virtue of which the entire estate of Jamshedpur vested in the State of Bihar. However, the petitioner company continued to develop the town of Jamshedpur and to provide diverse civic amenities to the habitants of Jamshedpur, the respondent State decided to grant lease in favour of the petitioner in respect of land at Jamshedpur. This is how the State of Bihar granted lease in favour of the petitioner for a period of 40 years with effect from the year 1956, and an option was given for renewal of the lease in the manner provided under the Act. From bare perusal of the lease agreement and the background of the case, I do not find that the lease agreement, in question is a statutory lease; rather, the Respondent State acting in contractual field, leased out the land at Jamshedpur to the petitioner company. 8. In the case of Radha Krishna Agarwal V/s. State of Bihar -- , the State of Bihar leased out some forest land to the appellant to collect and exploit shall sheets for fifteen years on payment of royalty at certain rates. The State Government subsequently under the terms of the lease revised the rate of royalty and, thereafter, cancelled the lease for breach of the conditions. The petitioner appellant challenged the order of revision of rate and cancellation of the lease as illegal by a writ proceeding under Article 226 of the Construction of India. The Apex Court deciding the question of as to whether Article 226 of the Constitution is an appropriate remedy held as under: 11.
The petitioner appellant challenged the order of revision of rate and cancellation of the lease as illegal by a writ proceeding under Article 226 of the Construction of India. The Apex Court deciding the question of as to whether Article 226 of the Constitution is an appropriate remedy held as under: 11. In the cases before us the contracts do not contain any statutory terms or obligations and no statutory power or obligation which could attract the application of Article 14 of the Constitution is involved hers. Even in cases where the question is of choice or consideration of competing claims before an entry into the field of contract facts have to be investigated and found before the question of a violation of Article 14 could arise. If those facts are disputed and require assessment of evidence the correctness of which can only be tested satisfactorily by taking detailed evidence, involving examination and cross-examination of witnesses, the case could not be conveniently or satisfactorily decided in proceedings under Article 226 of the Constitution. Such proceedings are summary proceedings reserved for extra-ordinary cases where the exceptional and what are described as, perhaps not quite accurately, prerogative powers of the Court are invoked. We are certain that the cases before us are not such in which powers under Article 226 of the Constitution could be invoked. 9. The Apex Court in the aforesaid decision affirmed the principles laid down by this Court to the effect that where the contract entered into between the State and the person 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 the breach of such contract by the State, then the remedy is not available by invoking the jurisdiction of this Court under Article 226 of the Constitution of India. 10. In the case of Express Newspapers Pvt. Ltd. V/s. Union of India, the Apex Court was considering a similar question and observed as under: 201. The rest of the questions relate truly to the civil rights of the parties flowing from the lease deed. These questions cannot be effectively disposed of in this petition under Article 32 of the Constitution. The question arising out of the lease, such as, whether there has been breach of the covenants under the lease, whether the lease can be forfeited.
These questions cannot be effectively disposed of in this petition under Article 32 of the Constitution. The question arising out of the lease, such as, whether there has been breach of the covenants under the lease, whether the lease can be forfeited. Whether relief against forfeiture can be granted etc. are foreign to the scope of Article 32. of the Constitution. They cannot be decided just on affidavits. These are matters which should be tried in a regular civil proceeding. On should remember that the property belongs to the Union of India and the rights in it cannot be bartered away in accordance with the will of an officer or a Minister or a Ltd. Governor but they should be dealt within accordance with law. At the same time a person who has acquired rights in such property cannot also be deprived of them except in accordance with law. The stakes is this case are very high for both the parties and neither of them can take law into his own hands. 11. In the Case of State of U.P. V/s. Maharaja Dharmendra Prasad Singh, the petitioner lessee under the State Government in respect of the land challenged the notice issued by the State Government in canceling the lease and also challenging the order passed by the Lucknow Development Authority canceling its earlier order dated 31.1.1985 granting permission to the lease to develop the lease hold property by erecting thereon a multistoryed building. The Apex Court following the principle laid down in the case of the Express News Papers Pvt. Ltd. (Supra) held that the question whether the purported forfeiture and cancellation of lease were valid or not should not be allowed to be agitated in a proceeding under Article 226 of the Constitution. 12. Having regard to the facts and circumstances of the case and the principles of law discussed above. I am of the definite opinion that the writ proceeding is not an appropriate proceeding for grant of relief sought for by the petitioner. It is not a case where the contract entered into by the Government or its instrumentality with private person on the basis of its standard terms and conditions which are unreasonable and unfair and the petitioner is challenging those terms of the lease as unreasonable, unfair or irrational.
It is not a case where the contract entered into by the Government or its instrumentality with private person on the basis of its standard terms and conditions which are unreasonable and unfair and the petitioner is challenging those terms of the lease as unreasonable, unfair or irrational. Had this been the position, it would have been open to the petitioner to assail those terms by invoking the writ jurisdiction. On the contrary, the petitioner company wants to compel the State Government to fulfil its contractual obligations incorporated in the lease agreement by renewing the lease for further period of 30 years. In such circumstances, I am of the definite opinion that the decisions relied upon by the petitioner i.e. Central Inland Water Transport Corporation V/s. Brojo Nath Ganguly (Supra) does not apply. As stated above, it is a case where the petitioner wants the specific performance of contractual obligation by the State of Bihar. Therefore, the appropriate remedy available to the petitioner is to file a regular suit for specific performance of contract. 13. For the reasons aforesaid, no relief can be granted to the petitioner in this writ application, which is not maintainable, and is, accordingly, dismissed.