Indian Oil Corporation Limited v. State of Andhra Pradesh
2023-11-17
AKULA VENKATA SESHA SAI, SUMATHI JAGADAM
body2023
DigiLaw.ai
JUDGMENT : Akula Venkata Sesha Sai, J. 1. Since these two writ appeals arise from a common order, this Court deems it appropriate to hear these two appeals together and to dispose of by way of this common judgment. 2. Heard Sri O. Manohar Reddy, learned Senior Counsel, representing the learned counsel for the appellants on record, and Sri K. Madhava Reddy, learned Standing Counsel for the Greater Visakhapatnam Municipal Corporation, apart from perusing the material available on record. 3. In these two writ appeals, common order, dated 07.03.2023, passed by the learned single Judge in W.P. Nos. 7430 and 13524 of 2022 is under challenge. W.A. No. 510 of 2023 is an appeal filed by the writ petitioner in W.P. No. 13524 of 2022 and W.A. No. 511 of 2023 is an appeal filed by the writ petitioner in W.P. No. 7430 of 2022. 4. On 12.04.1988, a registered Lease Deed was entered into between the appellant-Indian Oil Corporation Limited and the respondent-Greater Visakhapatnam Municipal Corporation for a period of 20 years, commencing from 01.04.1986 to 31.03.2006, in respect of the land situated in Sy. No. 298/B of Allipuram of Visakhapatnam, for establishment of a petroleum outlet by the appellant-Corporation. In terms of Clause 4 (iii) of the registered Lease Deed, dated 12.04.1988, the appellant-Corporation addressed a letter to the respondent-Municipal Corporation on 31.12.2005 requesting to extend the lease period for a further period of 20 years. In fact, vide letter, dated 12.02.2013, the respondent-Municipal Corporation informed the appellant-Corporation that the request for extension of the lease period cannot be considered. It is significant to note in this context that the appellant-Corporation made a representation to the State Government on 01.04.2013 with a request to extend the lease period in respect of the subject property for a further period of 20 years or more. Even according to the respondent-Municipal Corporation, the appellant-Corporation continued to be in possession of the subject property till 23.02.2022 i.e., till the date of holding panchnama at the instance of the respondent-Municipal Corporation. 5. Even after 12.02.2013, the respondent-Municipal Corporation vide a number of communications /proceedings extended the lease period from time to time, while informing the appellant-Corporation that the issue as regards the extension of lease period was pending consideration with the State Government.
5. Even after 12.02.2013, the respondent-Municipal Corporation vide a number of communications /proceedings extended the lease period from time to time, while informing the appellant-Corporation that the issue as regards the extension of lease period was pending consideration with the State Government. Eventually, pending such consideration, the respondent-Municipal Corporation vide notice, dated ...10.2020, which was sent on 09.08.2021, informed the appellant-Corporation that the difference of the lease amount has to be paid within seven days from the date of receipt of the notice, and in the event of any lapses or delay in payment of the difference of the lease amount, the vacant site should be handed over to the GVMC. Assailing the aforesaid notice, the authorised dealer of the appellant-Corporation, M/s. Prem Agencies, filed W.P. No. 7430 of 2022. According to the respondent-Municipal Corporation, after holding panchnama on 23.02.2022, physical possession of the subject land had already been taken by the respondent-Municipal Corporation. When the respondent-Municipal Corporation issued an auction notice, dated 01.05.2022, in respect of the subject property, the appellant-Corporation filed W.P. No. 13524 of 2022. 6. The learned Single Judge vide the impugned common order dismissed the writ petitions. Hence the present Letters Patent Appeals under Clause 15 of the Letters Patent. 7. It is contended by Sri O. Manohar Reddy, learned Senior Counsel, representing the learned counsel for the appellants on record, that the impugned order passed by the learned single Judge, dismissing the writ petitions, confirming the impugned action of the respondent-Municipal Corporation, is highly erroneous, contrary to law, arbitrary, not in conformity with the settled principles of law, and also contrary to Articles 14 and 19 (1) (g) of the Constitution of India. It is further contended that since the amendment to Section 148 (3) of the Municipal Corporations Act, 1955 (for short "the Act") came into effect much subsequent to the registered Lease Deed, dated 12.04.1988, the said provision of law cannot be pressed into service for extension of the lease period in favour of the appellant-Corporation. It is further submitted that the learned single Judge grossly erred in placing reliance on the decisions, which dealt with the Receipts and Expenditure Rules, 1968 pertaining to Municipalities, which have no relevance to the present cases which pertain to Municipal Corporations which are governed by the Municipal Corporations Act, 1955.
It is further submitted that the learned single Judge grossly erred in placing reliance on the decisions, which dealt with the Receipts and Expenditure Rules, 1968 pertaining to Municipalities, which have no relevance to the present cases which pertain to Municipal Corporations which are governed by the Municipal Corporations Act, 1955. It is further argued by the learned Senior Counsel that even if, in respect of non-statutory contracts, writ petition is maintainable when the action of any statutory authority is patently arbitrary. It is also submitted that in view of the proceedings of the respondent-Municipal Corporation issued from time to time, extending the lease period periodically even after expiry of the original period, the order of the respondent-Municipal Corporation, dated 12.02.2013, pales into insignificance. It is further argued that the order of the State Government, refusing to extend the lease period, dated 09.06.2022, is assailed in W.P. No. 14293 of 2022 and the said writ petition is pending consideration before this Court. In support of his submissions and contentions, the learned Senior Counsel, Sri O. Manohar Reddy, places reliance on the following judgments: 1. Judgment of the Hon'ble Supreme Court in the case of M.P. Power Management Company Limited, Jabalpur Vs. Sky Power Southeast Solar India Private Limited and others, 2022:INSC:1208 : 2023 (2) SCC 703 , 2. Judgment of the composite High Court of Andhra Pradesh in W.A. No. 676 of 2017 in the case of Kotha Sambasiva Rao Vs. State of Andhra Pradesh represented by its Principal Secretary 2017 (5) ALD 94 , and 3. Judgment of the Hon'ble Supreme Court in the case of State of U.P. and others Vs. Lalji Tandon (dead) through L.Rs (2004) 1 SCC. 8.
State of Andhra Pradesh represented by its Principal Secretary 2017 (5) ALD 94 , and 3. Judgment of the Hon'ble Supreme Court in the case of State of U.P. and others Vs. Lalji Tandon (dead) through L.Rs (2004) 1 SCC. 8. On the contrary, Sri K. Madhava Reddy, learned Standing Counsel for the respondent-Municipal Corporation, strongly resisting the writ appeals, contends that there is absolutely no error nor there exists any infirmity in the impugned order passed by the learned single Judge and, in the absence of the same, the questioned order is not amenable for any correction under Clause 15 of the Letters Patent; that as the appellants failed to challenge the order of refusal passed by the respondent-Municipal Corporation on 12.02.2013 and the order of the State Government, dated 09.06.2022, declining to extend the period of lease, the appellants are not entitled for any relief from this Court; that in view of the provisions of Section 148 (3) of the Act, the appellants are not entitled for extension of the lease period for more than 25 years; and that in case of any non-statutory contract, writ petition cannot be entertained under Article 226 of the Constitution of India. To bolster his submissions and contentions, the learned Standing counsel takes the support of the following judgments: 1. Judgment of the Hon'ble Supreme Court in the case of Amarjeet Singh and others vs. Devi Ratan and others 2009:INSC:1244 : (2010) 1 SCC 417 , and 2. Judgment of the Hon'ble Supreme Court in the case of Amina Marwa Sabreen (a Minor) and others Vs. State of Kerala and others, 2017:INSC:805 : (2018) 14 SCC 193 . 9. In the above background, now the issues, which this Court is called upon to consider and answer in the present writ appeals, are as follows: 1) Whether the common order passed by the learned single Judge, which is impugned in the present writ appeals, in the facts and circumstances of the case, is sustainable and tenable? and 2) Whether the appellants are entitled for any relief from this Court under Clause 15 of the Letters Patent? 10. ISSUES 1 & 2: There is absolutely no controversy as regards execution of the registered Lease Deed, dated 12.04.1988, and its validity till 31.03.2006. It is equally true that Clause 4 (iii) of the said registered Lease Deed made a provision for extension of lease period.
10. ISSUES 1 & 2: There is absolutely no controversy as regards execution of the registered Lease Deed, dated 12.04.1988, and its validity till 31.03.2006. It is equally true that Clause 4 (iii) of the said registered Lease Deed made a provision for extension of lease period. 11. For non-suiting the appeals, learned Standing Counsel for the respondent-Municipal Corporation seeks to place reliance on Section 148 (3) of the Act. Therefore, it would be quite apposite to refer to the said provision of law. Section 148 of the Act deals with the disposal of property and interests therein. The provision of law, which is relevant and germane for the purpose of resolving the issue in the present writ appeals, is sub-section (3) of Section 148 of the Act, which reads as follows: "(3). In cases not covered by sub-section (1) or sub-section (2), the Commissioner shall not lease, sell or otherwise dispose of any movable or immovable property belonging to the Corporation without the previous sanction of the Corporation and of the Government. Provided that in no case the lease period of immovable property shall exceed twenty five years." It is very much evident from a reading of the proviso to sub-section (3) of Section 148 of the Act that in no case the lease period of immovable property shall exceed 25 years. Admittedly, the said proviso came into being by virtue of Act 15 of 2013 which came into effect from 16.07.2013 i.e., long after the execution of the registered Lease Deed, dated 12.04.1988. According to the learned Senior Counsel appearing for the appellants, since the said amendment is only prospective in nature, the said provision cannot be made applicable to the case on hand, and it would be obligatory on the part of the respondent-Municipal Corporation and the Government to adhere to the recitals in the registered Lease Deed, dated 12.04.1988, which provided a clause for extension of the lease period. In fact, this vital aspect, which is a prime question of law, never fell for consideration before the learned single Judge. 12. Another significant aspect, which needs mention in this context, is that a Division Bench of the composite High Court of Andhra Pradesh, in the case of Kotha Sambasiva Rao Vs. State of Andhra Pradesh rep.
In fact, this vital aspect, which is a prime question of law, never fell for consideration before the learned single Judge. 12. Another significant aspect, which needs mention in this context, is that a Division Bench of the composite High Court of Andhra Pradesh, in the case of Kotha Sambasiva Rao Vs. State of Andhra Pradesh rep. by its Principal Secretary (2nd cited supra), dealt with the applicability of Receipts and Expenditure Rules, 1968 framed under the A. P. Municipalities Act, 1965, and held that the said Rules would not apply to Municipal Corporations. With regard to the contention as regards the maintainability of the writ petition on the ground that the subject contract is a non-statutory contract, reference to the judgment of the Hon'ble Supreme Court in the case of M.P. Power Management Company Limited, Jabalpur Vs. Sky Power Southeast Solar India Private Limited and others (1st cited supra) may be essential and necessary. In the said judgment, the Hon'ble Apex Court dealt with the maintainability of writ petitions in respect of non-statutory contracts, at paragraphs 81 and 82.1 to 82.7, which read as follows: "81. We have already concluded that PPA is not a statutory contract. However, that would not be the end of enquiry. Dr A.M. Singhvi, learned Senior Counsel, would point out that the contract, not being a statutory contract, assumes relevance only for the purpose of deciding as to whether the Court should relegate the writ applicant, to alternate remedies. In other words, while the Court would retain its discretion to entertain the petition or decline to do so, in the facts of each case, there is no absolute taboo against the Court granting relief, even if the challenge to the termination of a contract is made in the case of a contract, which is not statutory in nature, when the offending party is the State. In other words, the contention is that the law in this field has witnessed an evolution and, what is more, a revolution of sorts and a transformatory change with a growing realisation of the true ambit of Article 14 of the Constitution of India. The State, he points out, cannot play the Dr Jekyll and Hyde game anymore. Its nature is cast in stone. Its character is inflexible. This is irrespective of the activity it indulges in.
The State, he points out, cannot play the Dr Jekyll and Hyde game anymore. Its nature is cast in stone. Its character is inflexible. This is irrespective of the activity it indulges in. It will continue to be haunted by the mandate of Article 14 to act fairly. There has been a stunning expansion of the frontiers of the Court's jurisdiction to strike at State action in matters arising out of contract, based, undoubtedly, on the facts of each case. It remains open to the Court to refuse to reject a case, involving State action, on the basis that the action is, per se, arbitrary. 82. We may cull out our conclusions in regard to the points, which we have framed: 82.1. It is, undoubtedly, true that the writ jurisdiction is a public law remedy. A matter, which lies entirely within a private realm of affairs of public body, may not lend itself for being dealt with under the writ jurisdiction of the Court. 82.2. The principle laid down in Bareilly Development Authority that in the case of a non-statutory contract the rights are governed only by the terms of the contract and the decisions, which are purported to be followed, including Radhakrishna Agarwal, may not continue to hold good, in the light of what has been laid down in ABL and as followed in the recent judgment in Sudhir Kumar Singh. 82.3. The mere fact that relief is sought under a contract which is not statutory, will not entitle the respondent State in a case by itself to ward off scrutiny of its action or inaction under the contract, if the complaining party is able to establish that the action/inaction is, per se, arbitrary. 82.4. An action will lie, undoubtedly, when the State purports to award any largesse and, undoubtedly, this relates to the stage prior to the contract being entered into (see Ramana Dayaram Shetty). This scrutiny, no doubt, would be undertaken within the nature of the judicial review, which has been declared in the decision in Tata Cellular v. Union of India. 82.5. After the contract is entered into, there can be a variety of circumstances, which may provide a cause of action to a party to the contract with the State, to seek relief by filing a writ petition. 82.6.
82.5. After the contract is entered into, there can be a variety of circumstances, which may provide a cause of action to a party to the contract with the State, to seek relief by filing a writ petition. 82.6. Without intending to be exhaustive, it may include the relief of seeking payment of amounts due to the aggrieved party from the State. The State can, indeed, be called upon to honour its obligations of making payment, unless it be that there is a serious and genuine dispute raised relating to the liability of the State to make the payment. Such dispute, ordinarily, would include the contention that the aggrieved party has not fulfilled its obligations and the Court finds that such a contention by the State is not a mere ruse or a pretence. 82.7. The existence of an alternate remedy, is, undoubtedly, a matter to be borne in mind in declining relief in a writ petition in a contractual matter. Again, the question as to whether the writ petitioner must be told off the gates, would depend upon the nature of the claim and relief sought by the petitioner, the questions, which would have to be decided, and, most importantly, whether there are disputed questions of fact, resolution of which is necessary, as an indispensable prelude to the grant of the relief sought. Undoubtedly, while there is no prohibition, in the writ court even deciding disputed questions of fact, particularly when the dispute surrounds demystifying of documents only, the Court may relegate the party to the remedy by way of a civil suit." 13. In view of the law laid down in the above referred judgment, there cannot be a dispute on the maintainability of the writ petition even in respect of non-statutory contracts, when the action of the authorities is patently and palpably arbitrary. It is also required to be noted that the order of the State Government, dated 09.06.2022, declining to consider the request of the appellant-Corporation for extension of the lease period, is the subject matter of W.P. No. 14293 of 2023 and the said writ petition is pending consideration before this Court. All the aspects narrated supra need complete consideration in the writ petitions along with W.P. No. 14293 of 2023 where the order of the State Government, declining to extend the lease period, is under challenge. 14.
All the aspects narrated supra need complete consideration in the writ petitions along with W.P. No. 14293 of 2023 where the order of the State Government, declining to extend the lease period, is under challenge. 14. For the aforesaid reasons, the Writ Appeals are allowed, setting aside the common order, dated 07.03.2023, passed by the learned single Judge in W.P. Nos. 7430 and 13524 of 2022 and the writ petitions stand restored to file for consideration of the same along with W.P. No. 14293 of 2023, after giving opportunity to all the stakeholders. It is made clear that all the contentions are kept open. It is also made clear that the interim orders, subsisting prior to the disposal of the writ petitions, would continue, pending disposal of the writ petitions. No order as to costs. As a sequel thereto, miscellaneous petitions, if any pending, shall stand closed.