Lease renewal under special statute remains subject to fairness, reasonableness and bona fide exercise of power.

The Supreme Court examined whether a Government company had an absolute statutory right to renew a lease under the Burmah Shell (Acquisition of Undertakings in India) Act, 1976, and held that the renewal power was not immune from constitutional control. Although the statutory scheme transferred the undertakings and leasehold rights and extended the renewal mechanism to the company, the phrase "if so desired" did not authorise arbitrary action. As a State under Article 12, the company had to act on objective criteria, with fairness, reasonableness and bona fides. The claim of unfettered automatic renewal was rejected, and the concurrent finding that the renewal request was not bona fide was left undisturbed.

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Issues: Whether the appellant, a Government company, had an absolute statutory right to renew the lease under sections 5(2) and 7(3) of the Burmah Shell (Acquisition of Undertakings in India) Act, 1976, and whether the exercise of that power had to satisfy the requirements of fairness, reasonableness and bona fides.

Analysis: The statutory scheme vested the undertakings and the leasehold rights in the Central Government and extended the renewal mechanism to the Government company, but the phrase "if so desired" did not exclude constitutional control over the exercise of that power. As the appellant was a State within the meaning of Article 12 of the Constitution of India, its action had to be informed by reason, based on objective criteria, and free from arbitrariness. A statutory power, even if conferred in special legislation overriding the general law of transfer of property, could not be exercised in an unfair or unreasonable manner. The concurrent finding of fact was that the appellant's desire for renewal was not bona fide.

Conclusion: The claim of an unfettered automatic renewal was rejected, and the refusal to interfere with the concurrent findings was upheld in favour of the respondents.

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