BHARAT PETROLEUM CORPN. LTD. v. HEMANTA KUMAR SAHU
2008-01-15
A.K.PARICHHA
body2008
DigiLaw.ai
JUDGMENT : A.K. Parichha, J. - Defendant, Bharat Petroleum Corporation Ltd. is in appeal against the Judgment and decree passed by the Learned Ad hoc Additional District Judge, Fast Track Court No. 1, Cuttack in Title Appeal No. 29 of 2000 confirming the Judgment and decree of the Learned Civil Judge (Senior Division), First Court, Cuttack in Title Suit No. 6 of 1997. 2. The Appellant is a Government company and successor in interest of erstwhile Burmah Shell Company, which was taken over by the Central Government by virtue of Burmah Shell (Acquisition of Undertakings on India) Act, 1976 (hereinafter to be referred to as "the Act", in short) and by the notification of the Government of India, the right, title, interest and liabilities of Burmah Shell Company was transferred in favour of the Appellant-company. The Respondent's father had leased out a piece of land in favour of Burmah Shell Company with effect from 1.1.1967 for a period of 10 years with the option of two renewals at an interval of 10 years each and pursuant to the said lease, Burmah Shell Company opened its retail out-let on that land. The father of Respondent died on 23.3.1988 leaving behind two sons, namely, Respondent and Basanta. There was a suit bearing T.S. No. 125 of 1992 between these two sons for partition and in that suit the northern half of the lease hold land measuring an area of Ac. 0.151 decimals fell to the share of the Respondent. The Appellant-company continued to transact the outlet business on the lease land on the same terms and conditions on which the lease was held by Burmah Shell Company. Respondent asked the Appellant-company to enhance the rent and to pay the same regularly, but the Appellant-company did not enhance the rent and did not pay rent regularly. The Respondent also needed the suit land for his own use as kerosene depot, he being a wholesaler in kerosene and his present place of business being no more suitable. The Respondent served notice u/s 106 of the Transfer of Property Act on the Appellant-company asking it to vacate the suit land indicating therein that the lease period is over and that he is in need of the suit land for his own use.
The Respondent served notice u/s 106 of the Transfer of Property Act on the Appellant-company asking it to vacate the suit land indicating therein that the lease period is over and that he is in need of the suit land for his own use. The Appellant resisted the suit, pleading, inter alia, that it is a Government company within the meaning of Article 12 of the Constitution and the suit is not maintainable for not impleading the Central Government vis-a-vis non-compliance of the provisions of Section 80, C.P.C, that the termination notice u/s 106 of the Transfer of Property Act is defective, that the Appellant is entitled to exercise renewal option by virtue of the provisions contained in Sections 5(2) and 7(3) of the Act. 3. Considering the plea of the parties, the evidence produced by them, Learned Trial Court held that the Appellant does not come within the expression "other authorities" occurring in Article 12 of the Constitution, that the Central-Government is not a necessary party, and notice to the Appellant u/s 80, CPC was not necessary, that notice u/s 106 of the Transfer of Property Act was not defective or invalid, that the lease was not perpetual and renewal of the same was not automatic by simple exercise of option by the lessee, and that the formalities required u/s 107 of the Transfer of Property Act was essential for renewal of the lease. With these findings, Learned Trial Court decreed the suit of the Plaintiff for eviction. The Appellant-company carried appeal, but the Learned 1st Appellate Court by the impugned Judgment and decree confirmed the findings of the Learned Trial Court, but considering the fact that huge investment was involved in installation of petrol pump, allowed time till 31st December, 2006 for vacation of the suit land and further directed the Appellant to pay rental of Rs. 4,000/- per month with effect from 1.1.1997 and also to clear up the arrear rent, if any, within a period of two months. The said Judgment and decree is under challenge in this appeal. 4. At the time of admission, the following substantial questions of law were formulated for consideration. (i) Whether in view of the provisions of the Burmah Shell (Acquisition of Undertakings in India) Act, 1976 (Act 2 of 1976), the Appellant was entitled to renewal of the lease granted in his favour?
4. At the time of admission, the following substantial questions of law were formulated for consideration. (i) Whether in view of the provisions of the Burmah Shell (Acquisition of Undertakings in India) Act, 1976 (Act 2 of 1976), the Appellant was entitled to renewal of the lease granted in his favour? (ii) Whether the maxim 'generalia specialibus non derogant' applies to the present suit? 5. Mr. G. Mukherji, Learned Counsel appearing for the Appellant submitted that by virtue of Section 5(2) and Section 7(3) of the Act, renewal of lease was automatic once the Appellant-company expresses its intention for renewal of lease. He submitted that once the Appellant-company expresses the intention for renewal of lease, formalities as contemplated u/s 107 of the Transfer of Property Act was not necessary to be complied as the provisions of the provision of Special statute always override the provisions contemplated under the common law. In support of his contention, Mr. Mukherjee relied the case of Bharat Petroleum Corporation Ltd. v. P. Kesavan and Anr. AIR 2004 1989. 6. Mr. Bidyadhar Mishra, Learned Counsel for the Respondent counter argued that the terms and conditions of the lease no where indicate that it was perpetual in nature or that it would be renewed at the unilateral option of the lessee. He stated that Section 5(2) and Section 7(3) of the Act never contemplate that the lease can be renewed unilaterally by a public company for unlimited period over-riding the terms and conditions of the lease. He further submitted that the ratio laid down in the case of P. Kesavan (supra) will not be applicable to the present case as the facts and circumstances are different and as it was said by the Apex Court that the findings in that case will not be a precedent. 7. There is no dispute that by virtue of Section 4 of the Act, the; assets, rights, privileges, liabilities and all movable and immovable properties, cash balances, reserve funds, book-debts, investments etc. the Burmah Shell Company vested in the Central Government and the Central Government by the notification under the provisions of Section 7(1) allowed vesting of the above noted rights, liabilities, assets, and properties of Burmah Shell Company with the Appellant-company and the Appellant-company continued to retain the petroleum business on the lease hold land taken from the father of the Respondent.
The question, which now arises, is whether by virtue of Section 5(2) and Section 7(3) of the Act, the Appellant can renew the lease over the suit land for an unlimited period unilaterally by simply expressing its desire to renew the lease. 8. At the out-set it will be profitable to note down the provisions of Sections 5 and 7 of the Act. 5. Central Government to be lessee or tenant under certain circumstances- (1) where any property is held in India by Burmah Shell under any lease or under any right of tenancy, the Central Government shall, on and from the appointed day, be deemed to have become the lessee or tenant, as the case may be, in respect of such property as if the lease or tenancy in relation to such property had been granted to the Central Government, and thereupon all the rights under such lease or tenancy shall be deemed to have been transferred to, and vested in, the Central Government. (2) On the expiry of the term of any lease or tenancy referred to in Sub-Section (1), such lease or tenancy shall, if so desired by the Central Government, be renewed on the same terms and conditions on which the lease or tenancy was held by Burmah Shell immediately before the appointed day. 7. Power of Central Government to direct vesting of the undertakings of the Burmah Shell in a government company- (1) Notwithstanding anything contained in Sections 3,4, and 5, the Central Government may, if it is satisfied that a Government company is willing to comply, or has complied, with such terms and conditions as that Government may think fit to impose, direct by notification, that the right, title and interest and the liabilities of Burmah Shell in relation to any of its undertakings in India shall, instead of continuing to vest in the Central Government, vest in the Government company either on the date of the notification or on such earlier or later date (not being a date earlier than the appointed day) as may be specified in the notification.
(2) Where the right, title and interest and the liabilities of Burmah Shell in relation to its undertakings in India vest in a Government company under Sub-section (1) the Government company shall, on and from the date of such vesting, be deemed to have become the owner, tenant or lessee, as the case may be, in relation to such undertakings, and all the rights and liabilities of the Central Government in relation to such undertakings shall, on and from the date of such vesting, be deemed to have become the rights and liabilities, respectively, of the Government company. (3) The provisions of Sub-section (2) Section 5 shall apply to a lease or tenancy, which vests in a Government company, as they apply to a lease or tenancy vested in the Central Government and reference therein to the "Central Government" shall be construed as a reference to the Government company. Section 5(2) says that on expiry of the terms of any lease or tenancy noted in Sub-section 1 the same shall be renewed, if so desired, by the Central Government and this Provision of renewal would also apply to a lease or tenancy which vests in a Government Company as they apply to the lease or tenancy vested in Central Government. Relying on this provisions the Appellant asserts that the Respondent cannot refuse the renewal of the lease when the Appellant company has expressed desired for renewal of the lease. The counter argument is that Section 5(2) and Section 7(3) of the Act simply provide that after the vesting the Government Company would step into the shoes of the original lessee- Burmah Shell Oil Storage Distribution Company and would have the same right and option of renewal as that company would have had the vesting not come at all. 9. In the case of P. Kesavan (supra) the deed of lease was executed on or about 22.11.1967 in favour of Burmah Shell Oil Storage and Distributing Company Limited. By virtue of vesting as provided under Sections 4 and 5 of the Act, Bharat Petroleum Corporation Ltd. became a tenant in respect of the lease premises. The lessor by a notice purported to terminate the tenancy called upon the Appellant to quit and deliver peaceful and vacant possession as per the terms of the lease deed.
By virtue of vesting as provided under Sections 4 and 5 of the Act, Bharat Petroleum Corporation Ltd. became a tenant in respect of the lease premises. The lessor by a notice purported to terminate the tenancy called upon the Appellant to quit and deliver peaceful and vacant possession as per the terms of the lease deed. In reply to the said notice, the Appellant-company invoked the provisions of Sections 5(2) and 7(3) of the Act and exercised its option to renew the lease for a further period of 20 years commencing from 1.7.1989 on the same terms and conditions on which the Burmah Shell Company held lease immediately prior to the appointed day. In appeal before the Apex Court, the question arose whether the provisions of Section 107 of the Transfer of Property Act are required to be complied with, which mandates execution of registered documents. The Apex Court held that the provisions of Transfer of Property Act has no application in a case where the transfer of property takes place by the provisions of law and that provisions of Transfer of Property Act applies only to transfer by act of the parties. The Apex Court further observed that by reasons of Section 5(2) and Section 7(3) of the Act, a right of renewal was created in the Appellant-company in terms whereof in the event of exercise of its option, the existing lease would be renewed on the same terms and conditions on which lease or tenancy was held by Burmah Shell Company immediately prior to the appointed date. The Apex Court however remarked that such unilateral exercise of option by the Central Government or the Government company must be fair, reasonable and bonafide. 10. While analyzing the scope and affect of Section 5(2) and Section 7(3) of the Act, the object and purport of the Act must be considered. The Central Government acquired running business undertakings dealing in distribution and marketing of Petroleum products, where after, the leases and tenancy for outlets were continued to be kept with the Central Government or the Government Company, as the case may be, so that no let or hindrance would occur in the matter of distribution of the petroleum products from the established retail outlets until alternate arrangements are made.
Having regard to such object of the Act it has to be inferred that an unilateral desire of the Central Government or the Government Company is enough to effect the renewal of the lease and that existence of need for renewal or execution of registered document for the renewal of the lease are not essential. However, as observed by the Apex Court the Central Government or the Government Company being public authorities are required to act fairly in exercising the option of renewal. In other words, the exercise of option by the Central Government or the Government Company must be fair, reasonable and bonafide. In the case of Bharat Petroleum Corporation Ltd. v. P. Kesavan and Anr. (supra), the Government Company had intimated its desire for renewal of the lease before the expiry of the original lease period and because it was a fair exercise of option, the Apex Court held that despite reluctance of the land owner, the lease would stand renewed for one term. In the present case, the original lease agreement between the Burmah Shell Company and the father of the Respondent contemplated that after the expiry of the original lease period, there can be renewal of the lease for two terms, each term being for a period of ten years. Admittedly, the original lease period as well as both the renewal periods are over. But the Appellant-company is insisting of further renewal taking shelter of Section 7(3) of the Act, despite the plea of the Respondent that he needs the premises for his bona fide use. Whether such conduct on the part of the Appellant-company can be considered as fair and reasonable. The purpose of the Act as stated above is to facilitate the smooth distribution of the Petroleum products through retail outlets to the public at large and to safeguard the public interest and for achieving this purpose, provisions as noted in Sections 5(2) and 7(3) of the Act were created, so that the retail outlets previously operated by private companies such as Burmah Shell Company would not be closed, after the take over of the same by the Central Government and the Government companies due to cancellation or non-renewal of the lease by the land owner.
Such unilateral exercise of option of renewal was to give the public company sufficient time to either continue the outlet under proper lease or to get sufficient time to make alternative arrangement. The provision created for such purpose cannot be used as a weapon to convert the lease entered into for a limited period into a perpetual lease. No doubt, Sections 5(2) and 7(3) would entitled the Central Government of the Government Company to obtain renewal of the lease unilaterally for a reasonable period, but the said provisions cannot give unfettered and unrestricted authority to the Central Government or the Public Company to insist the renewal of the lease for innumerable terms, despite the genuine need of the lessor as such action would be unfair and unreasonable. 11. As has been said earlier, the Appellant-company has already availed two renewals after expiry of the original lease period and such renewal of two terms ended in January, 1997. Now further 10 years have passed. The Courts below have concurrently held that the Respondent is in bonafide need of the lease land for his own use. In such a situation, unilateral demand for further renewal does not appear to be fair or bonafide. So, it would be unfair to allow the Appellant-company to go on renewing the lease unilaterally for an indefinite period. The substantial question of law is therefore, answered against the Appellant and the impugned Judgment and decree are confirmed.