Alakram International Trading Company Private Limited v. State of Andhra Pradesh
2021-10-21
U.DURGA PRASAD RAO
body2021
DigiLaw.ai
ORDER : 1. Petitioner implores for writ of mandamus declaring the letter dated 03.10.2019 sent by the 2nd respondent/District Educational Officer, Visakhapatnam expressing his disinclination to intervene in the dispute between the writ petitioner/lessor and respondent Nos. 3 and 4/lessee and to derecognize Ravindra Bharathi School, Visakhapatnam run by respondent Nos. 3 and 4 as illegal, arbitrary, violative of provisions of the Andhra Pradesh Education Act, 1982 and its Rules and for consequential direction to 2nd respondent to cancel permission granted to the said School. 2. Petitioner’s case succinctly is thus: Petitioner is a private limited Company and it is the owner of the site and building in an extent of Ac. 1.26 cents in S. No. 171/6A1, 171/6A2 and 171/5-B-2-E part situated at Vellanki Village, Anandapuram Mandal, Visakhapatnam District. Respondent Nos. 3 and 4 with an intend to run an educational institution in the name and style “Ravindra Bharathi Educational Society” entered into a lease deed dated 16.11.2016 with the petitioner for a period of 30 years from 01.06.2017 to 29.05.2047. As there was some mistake regarding the period of lease and schedule of the property, both of them entered into deed of rectification dated 05.08.2017 limiting the period of lease to 10 years commencing from 01.06.2017 to 31.05.2027. The property schedule was also suitably rectified while keeping other terms intact. After entering into the lease deed, the 3rd respondent submitted application to 2nd respondent to commence the School and the 2nd respondent granted permission vide L. Dis No. 5429/A1/2017, dated 09.11.2017. The respondent No. 3 has been running the school. While so, respondent Nos. 3 and 4 stopped paying rents to petitioner without any plausible reason from February, 2019 and thus they violated the terms of the lease. The petitioner got issued legal notice dated 17.02.2019 to the 3rd respondent and terminated the lease from 31.03.2019 and directed the lessee to vacate the premises as the terms of lease facilitate such termination. Therefore, the lease deed was cancelled. At the time of entering into the lease, a tripartite agreement was entered into by the petitioner, respondent Nos. 3 and 4 and LIC (HFL) Corporation whereunder the 3rd respondent has to deposit the monthly rents payable to the petitioner to the credit of LIC (HFL). Since the 3rd respondent committed default, the LIC (HFL) Corporation initiated proceedings U/s 13 of SARFAESI Act, 2002 against the petitioner.
3 and 4 and LIC (HFL) Corporation whereunder the 3rd respondent has to deposit the monthly rents payable to the petitioner to the credit of LIC (HFL). Since the 3rd respondent committed default, the LIC (HFL) Corporation initiated proceedings U/s 13 of SARFAESI Act, 2002 against the petitioner. In the above circumstances, since lease was cancelled, the 3rd respondent is not legally entitled to run the school in the premises of the petitioner. The petitioner brought the factum of the cancellation of the lease to the notice of the 2nd respondent and requested him to derecognize the 3rd respondent school and cancel its permission. To the knowledge of the petitioner, the 2nd respondent issued show-cause notice dated 16.07.2019 to 3rd respondent and called for the explanation but there was no response from the 3rd respondent. Thereafter the petitioner issued another notice dated 12.09.2019 to 2nd respondent and also to Assistant Director, Office of D.E.O. Visakhapatnam and also visited the office of 2nd respondent a number of times. At last, the 2nd respondent vide his letter 03.10.2019 declined to interfere in the matter and derecognize the 3rd respondent school. The 2nd respondent being the concerned authority, he has to act as per rules and withdraw recognition accorded to 3rd respondent. However, he abrogated his powers and allowed the 3rd respondent to perpetuate the illegality. Hence, the writ petition. 3. The 2nd respondent filed counter contending thus: Recognition was accorded to Ravindra Bharathi School, Anandapuram vide proceedings R.C. No. 5429/A1/2017, dated 09.11.2017 on fulfillment of pre-requisite conditions laid under G.O.Ms. No. 1, School Education (PS-2) Department dated 01.01.1994. The Management of the said school submitted documents required for granting recognition which contained lease deed entered by it with the writ petitioner for a period of 30 years from 01.06.2017 to 29.05.2047 under a registered lease deed. As per the terms of the lease, if lessee fail to pay rent for more than 3 months or omit to perform any stipulations contained in the lease deed, the lessor may terminate the lease and take such action which he is entitled to under law irrespective of the period fixed in the document. However, no termination of the lease is made so far and hence the department cannot intervene between the parties.
However, no termination of the lease is made so far and hence the department cannot intervene between the parties. Further, the Management of Ravindra Bharathi School informed that the lessor approached the Court of Chief Metropolitan Magistrate for rents and they would submit their case before the Court. As such, the 2nd respondent would act as per the verdict of the Court. Since the welfare of innocent students is at stake, it is not feasible to withdraw recognition of school at once because of the internal conflicts between the two parties. 4. Respondent Nos. 3 and 4 filed counter and opposed the writ petition inter-alia contending that the violation of conditions of lease is no ground to cancel the recognition by respondent Nos. 1 and 2. Further, lease deed dated 16.11.2016 is still in force and if any violation of the terms of the lease is committed by respondents, the petitioner is required to approach competent Civil Court to seek redressal of his grievance but he cannot make unilateral cancellation of lease deed without intervention of the Court. 2nd respondent also cannot withdraw the recognition unless the conditions under which the recognition granted are violated. It is further contended that merely because the petitioner initiated proceedings under the Negotiable Instruments Act, 1881 against the 3rd respondent for dishonour of cheque said to be issued by it, the same does not give any cause of action to terminate the lease nor does it serve as a ground to withdraw the recognition. Respondents thus prayed to dismiss the writ petition. 5. Heard learned counsel for petitioner Sri. S. Subba Reddy, learned Government Pleader for School Education representing respondent Nos. 1 and 2 and Sri. N. Subba Rao representing respondent Nos. 3 and 4. 6. The point for consideration is whether the petitioner is legally entitled to unilaterally cancel the lease deed dated 16.11.2016 on the ground of violation of terms of the lease committed by respondent Nos. 3 and 4? Sri. S. Subba Reddy, learned counsel for petitioner would vehemently argue that the respondent Nos. 3 and 4 have failed to deposit the monthly rents payable to the petitioner to the credit of LIC (HFL) Corporation as per tripartite agreement and thus breached the terms of the lease and therefore, the petitioner is legally entitled to terminate the lease which he did by issuing termination notice dated 31.03.2019.
3 and 4 have failed to deposit the monthly rents payable to the petitioner to the credit of LIC (HFL) Corporation as per tripartite agreement and thus breached the terms of the lease and therefore, the petitioner is legally entitled to terminate the lease which he did by issuing termination notice dated 31.03.2019. He would submit that since the petitioner expressed his intention to determine the lease, the covenant is no more in force, in the absence of which the respondent Nos. 3 and 4 cannot conduct the school in the premises of the petitioner. One of the conditions for granting permission and renewal of recognition to run a school is that the Management of the school should be either the owner or lessee of the school premises. Since respondent Nos. 3 and 4 are no more lessees, the 2nd respondent should have honoured the letters and representations of the petitioner and cancelled the recognition and permission accorded to respondent Nos. 3 and 4 to run the school. Learned counsel lamented that the 2nd respondent has willfully abdicated his responsibility. He relied upon Aga Khan Social Welfare Society vs. Samudrala Srinivasa Rao, 2000 (3) ALD 167 : MANU/AP/0315/2000. He thus prayed to allow the writ petition. 7. Per contra, learned Government Pleader for School Education argued that since respondent Nos. 3 and 4 fulfilled all the requirements including, the one, securing the place for running the school by obtaining a registered lease deed, permission and recognition were granted. Subsequently, some disputes arose between the petitioner and respondent Nos. 3 and 4 in the matter of payment of rents. Learned Government Pleader while admitting that the petitioner sent letter to 2nd respondent authority to cancel the recognition, however, would argue that the respondent authorities cannot cancel the recognition on the mere asking of the petitioner without obtaining a positive order from a competent Court. Referring to the lease deed, learned Government Pleader argued that even as per the terms of the lease, if the lessee commits any violation, the lessor can take action as per law and he cannot cancel the lease deed unilaterally and request the authorities to derecognize the school. He concluded that the official respondents would honour the decree of competent Court. In the same lines, Sri. N. Subba Rao learned counsel for respondent Nos. 3 and 4 submitted his arguments.
He concluded that the official respondents would honour the decree of competent Court. In the same lines, Sri. N. Subba Rao learned counsel for respondent Nos. 3 and 4 submitted his arguments. Learned counsel strenuously argued that even assuming that his client fell in arrears of rents, that by itself the petitioner cannot unilaterally cancel the lease deed. He has to seek the intervention of competent Court and get a decree. The lease deed is still in force and the respondent Nos. 3 and 4 since fulfilled all the conditions for granting permission to run the school, neither the permission nor the recognition can be cancelled by the authorities except on the breach of the terms. 8. I gave my anxious consideration to above arguments. Requirements for establishment of new school or upgradation of existing school and granting of permission etc., are covered by the Andhra Pradesh Educational Institutions (Establishment, Recognition, Administration and Control of Schools under Private Managements) Rules, 1993. Rule-5 speaks of requirement of establishing of a new school or upgradation of existing school. Rule-5(2) says that every educational agency desirous of opening a school or upgrading the existing school shall have a provision of adequate accommodation for the smooth conduct of classes. This shall be approximately 6-8 Square Feet per pupil and the area shall be calculated section wise: (a) Then, Rule-6 deals with the submission of application in Form-I for establishment of new school or upgradation of existing school. One of the requirements under Rule-6(2)(f) is that the applicant shall show the evidence of ownership of the land and building or lease of land or building as the case may be. Rule-7 speaks about the scrutiny and grant of permission. Rule-8 deals with the validity of the permission. It says that permission granted under Rule-7 is valid only upto the end of July of every year and it shall be incumbent upon the educational agency to apply in the manner prescribed under the Rules for recognition. Failure to do so, will result in the permission being automatically lapsed. Rule-9 speaks about the recognition. Rule-9(5) says that recognition shall be valid for a period of 10 academic years. These are the rules governing the establishment of private educational institutions and granting permission and recognition. 9. Coming to the instant case, in the counter, respondent Nos.
Failure to do so, will result in the permission being automatically lapsed. Rule-9 speaks about the recognition. Rule-9(5) says that recognition shall be valid for a period of 10 academic years. These are the rules governing the establishment of private educational institutions and granting permission and recognition. 9. Coming to the instant case, in the counter, respondent Nos. 1 and 2 admitted that recognition was accorded to Ravindra Bharathi School, Anandhapuram, Visakhapatnam vide proceedings L. Dis. No. 5429/A1/2017, dated 09.11.2017 of the 2nd respondent on fulfillment of pre-requisite conditions. In their counter it is further stated that the respondent Nos. 3 and 4 have shown the registered lease deed vide document No. 5670/2016 entered into between the petitioner and respondent Nos. 3 and 4 which is for a period of 30 years from 01.06.2017 to 29.05.2047. Thus, from the admissions of the official respondents, recognition was given to the respondents’ school upon fulfillment of all the requirements including the school building. 10. Then, coming to the lease transaction, the material papers filed by the petitioner would show that initially the petitioner and respondent Nos. 3 and 4 entered into a registered lease deed dated 16.11.2016 whereunder the petitioner agreed to lease out his property containing building and vacant place to respondent Nos. 3 and 4 for running Ravindra Bharathi Educational Society. The lease period was mentioned as 30 years from 01.06.2017 to 29.05.2047. However, the parties entered into a rectification deed dated 05.08.2017 whereunder they rectified the lease period to 10 years commencing from 01.06.2017 to 31.05.2027. They also amended the schedule of the property. Most of the other terms of the original lease deed were allowed to remain intact. 11. Be that it may, clause-18 of the original lease deed dated 16.11.2016 reads thus: “18.
They also amended the schedule of the property. Most of the other terms of the original lease deed were allowed to remain intact. 11. Be that it may, clause-18 of the original lease deed dated 16.11.2016 reads thus: “18. If any rent falls in arrears, whether demanded for more than three months becoming due and payable or if the Lessee shall omit to perform or observe any of the stipulations herein contained and on their part to be observed and performed the Lessor may terminate the Lease and take such action as the Lessor will be entitled to under law irrespective of the period fixed in the document.” As per the above Clause, if the rent remain unpaid for three months or if the lessee omits to perform or observe any of the stipulations of the lease deed, the lessor may terminate the lease and take action as per law. Subsequently, it appears there arose disputes between the petitioner and respondent Nos. 3 and 4 in the matter of payment of rents. As per the averments in the writ petition, the 3rd respondent stopped paying rents from February, 2019 and therefore, the petitioner got issued legal notice dated 17.02.2019 to 3rd respondent and terminated the lease from 31.03.2019. Now the crucial question is whether the petitioner can unilaterally terminate the lease without intervention of a Court and obtaining a decree for cancellation of the lease deed which will be in force upto 2027 and for recovery of possession. In my considered view, the petitioner cannot unilaterally terminate the lease deed. The lease is a contract and parties thereunder are governed by the terms of the lease. As such, if either party is guilty of violation of the terms of the lease the aggrieved party, no doubt has a right to issue notice to other party expressing his intention to determine the lease. However, mere expression of intention will not automatically terminate the lease. The aggrieved party has to approach a competent Civil Court and obtain a decree in its favour. Till such time, the lease shall be deemed to be in continuance. The issue is no more res integra. In ITC Ltd. vs. State of U.P. (2011) 7 SCC 493 in similar circumstances Hon’ble Apex Court observed thus: “30.
The aggrieved party has to approach a competent Civil Court and obtain a decree in its favour. Till such time, the lease shall be deemed to be in continuance. The issue is no more res integra. In ITC Ltd. vs. State of U.P. (2011) 7 SCC 493 in similar circumstances Hon’ble Apex Court observed thus: “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. This is the position under private law. But where the grant of lease is governed by a statute or statutory regulations, and if such statute expressly reserves the power of cancellation or revocation to the lessor, it will be permissible for an authority, as the lessor, to cancel a duly executed and registered lease deed, even if possession has been delivered, on the specific grounds of cancellation provided in the statute. 31. Noida Authority is an authority constituted for the development of an industrial and urban township (also known as Noida) in Uttar Pradesh under the provisions of the U.P. Urban Planning and Development Act, 1973. Section 7 empowers the Authority to sell, lease or otherwise transfer whether by auction, allotment or otherwise, any land or building belonging to it in the industrial development area, on such terms and conditions as it may think fit to impose, on such terms and conditions and subject to any rules that may be made. 32. Section 14 provides for forfeiture for breach of conditions of transfer.
32. Section 14 provides for forfeiture for breach of conditions of transfer. The said section empowers the Chief Executive Officer of the Authority to resume a site or building which had been transferred by the Authority and forfeit the whole or part of the money paid in regard to such transfer, in the following two circumstances: (a) non-payment by the lessee, of consideration money or any instalment thereof due by the lessee on account of the transfer of any site or building by the Authority; or (b) breach of any condition of such transfer or breach of any rules or regulations made under the Act by the lessee. 33. Sub-Section (2) provides that where the Chief Executive Officer of the Authority resumes any site or building under sub-section (1) of Section 14, on his requisition, the Collector may cause the possession thereof to be taken from the transferee by use of such force as may be necessary and deliver the same to the Authority. This makes it clear that if a lessee commits default in paying either the premium or the lease rent or other dues, or commits breach of any term of the lease deed or breach of any rules or regulations under the Act, the Chief Executive Officer of Noida Authority can resume the leased plot or building in the manner provided in the statute, without filing a civil suit. The Authority to resume implies and includes the Authority to unilaterally cancel the lease.” Thus, from the above jurisprudence it is clear that since the lease in the instant case is a private contract and parties are governed by the provisions of the Transfer of Property Act or by the local statutes such as Rent Act, the lessor cannot unilaterally cancel the registered lease deed. He should seek intervention of a competent Civil Court and obtain decree. Till then, the lease will continue to be effective and binding. 12. In that view, the 2nd respondent was right in declining the request of the petitioner to cancel the recognition of 3rd respondent school. Of course, he will have such power of de-recognition in case respondent Nos. 3 and 4 commit violation of the terms granting recognition. In that view, I find no merits in the writ petition.
12. In that view, the 2nd respondent was right in declining the request of the petitioner to cancel the recognition of 3rd respondent school. Of course, he will have such power of de-recognition in case respondent Nos. 3 and 4 commit violation of the terms granting recognition. In that view, I find no merits in the writ petition. The decision in Aga Khan Social Welfare Society vs. Samudrala Srinivasa Rao (supra) relied by the petitioner will be of no avail to him. Accordingly, this writ petition is dismissed. No costs. 13. As a sequel, miscellaneous petitions pending, if any, shall stand closed.