TaxTMI 
TaxTMI 
2012 (3) TMI 645
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....ta and father-in-law of respondent No. 2 - Smt. Kamla Devi), Municipal Committee of Nagpur (for short, 'the Committee') passed resolution dated 17.3.1944 for grant of lease to him in respect of the plot described herein above for a period of 30 years. In furtherance of that resolution, lease deed dated 28.10.1944 was executed in favour of Gopaldas Mohta. The tenure of lease commenced from 17.3.1944. For the sake of convenient reference, Clauses 6 and 8 of the lease deed are extracted below: "6. The lessee shall upon every assignment of the said land or any part thereof within a calendar month thereafter deliver to the lessor or to such person as he may appoint in this behalf a notice of such assignment putting forth the names and description of the parties thereto and the particulars and effect thereof. 8. The Municipal Committee i.e. the lessor will have the option to retake structure at end of the term of 30 years hereby granted by paying the then market value of the structure or to renew the lease on the revised ground rent, fair and equitable, for a further term of 30 years or more. Provided also that every such renewed lease of the land shall contain such of the coven....
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....d to all the rights and interest of the lessor under the said clause for renewal, together with all other interests which the lessor may have under the lease before mentioned, dated 17th March, 1944 including the right of renewal, therein mentioned. 5. The lessees shall have the option to pay to the lessor a sum of ₹ 90,000/- (Rupees Ninety Thousand only) at any time during the first five years of the lease and to purchase all the rights of the Lessor under said Head Lease from the Municipal Committee, Nagpur, together with his rights over the plinth and the material and on this amount being paid as per this conditions, the lessor shall be bound to execute the necessary assignment or other assurance in favour of the lessees at the cost and expenses of the lessees. The lessees shall have also the option to acquire the said interest from the lessor at any time, on payment of the same price, namely ₹ 90,000/- only during the last year before the expiry of the lease by afflux of time. 10. On expiry of the lease in due course, the lessees shall hand over the possession of the premises leased together with the structures thereon to the lessor who shall thereupon be enti....
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....ed 25.7.1991 are extracted below: "20. To this letter (Exh. 98) a reminder was sent on 15th February 1974 after a gap of one year. That letter is Exh. 99. That letter is addressed to defendant no. 1 Parmanand by the Counsel of the plaintiff. It makes an interest reading. It is hence extracted as a whole. It reads as under:- Dear Sir, Under instructions of my clients M/s Saroj Screens Pvt. Ltd., I have to invite your attention to their registered letter dated 15.1.1973 received by your on 19.1.1973. My client has not received any reply so far. 2.Please let me know whether you have applied to the Municipal Corporation, Nagpur for renewal of the lessor whether you want to apply for renewal of the lease. If you have applied, what is the result of your application. 3.My client has been ever ready and willing to perform his part of the contract under the Indenture dated 10.9.1947 with Diwan Bahadur Seth Gopaldas Mohta, by which you are bound. 4.Please note that if you do not sent any satisfactory reply within ten days of the receipt of this letter, my client will take it that you do not want to get the lease dated 28.10.1944 renewed and to perform your part of the contr....
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....ated on Geeta Ground, Sitabuldi, where upon Anand Talkies is situate has expired on 16.3.1974. The present owner of that plot viz Shri Parmananddas Kisandas Mundhada, resident of 55/58 Isra Street, Calcutta, having made an application on 7.3.1974 for renewal or lease for further 30 years, the house took into consideration the said request. xxx xxx xxx With regard to the subject under consideration, the Hon'ble Members have made a request that the House should give information to them regarding the notes made by way of amendment by the Municipal Commissioner. The Hon'ble Mayor has suggested that the Municipal Commissioner should clarify about the amended notes. Accordingly the Hon'ble Municipal Commissioner made clarification about his notes made on 17.10.1975 in details. xxx xxx xxx After that discussion, as mentioned in the notes of the Hon'ble Municipal Commissioner dated 17.10.1975, the House has taken unanimous decision to renew the lease on other conditions for further 30 years by charging per year ₹ 13,120/- as ground rent, and the previous lease having committee breach of two minor conditions, by penalizing him ₹ 1500/- for each ....
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....d and the land and building thereon are in possession of the Saroj Screen Private Limited, there should be no objection for mutation of the land in their name. Messrs Saroj Screen Private Limited, has by written letter guaranteed to pay ₹ 15,000/- per year by way of ground rent of the land. Therefore, as by way of resolution dated 29.10.1975, bearing no. 162, the Nagpur Municipal Corporation has fixed the ground rent at ₹ 13,120/- per year and ₹ 15,000/- by way of ground rent is being paid, which is more than ground rent of ₹ 13,120/- which is fixed, there will be no kind of financial loss of the Corporation. M/s Saroj Screen Private Limited had paid the amount of ground rent of ₹ 2,12,529.60 for the period 16.3.1984 to 25.3.1991. Therefore, the House has taken into consideration the resolution renewal of lease for 30 years from 16.3.1991 at the ground rent of ₹ 15,000/- per annum and as per resolution no. 162 dated 29.10.1975 fix the ground rent at ₹ 15,000/- after making recovery of arrears according to that resolution and recommended for acceptance. It also proposed that in stead of ground rent of ₹ 13,120/- in future ground rent o....
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....tion that during the pendency of Writ Petition No.1613 of 1992, respondent nos.1 and 2 filed Special Civil Suit No.1135 of 1993 for eviction of the appellant, possession of the suit property and recovery of damages by alleging that Resolution dated 28.8.1991 was illegal and without jurisdiction and lease deed dated 4.9.1991 executed in favour of the appellant did not create any rights in its favour. 3.13 After filing the written statement in Writ Petition No.1613 of 1992, the Corporation passed Resolution dated 22.7.1996 and cancelled the lease granted to the appellant on the ground that previous sanction of the State Government had not been obtained as per the requirement of Section 70(5) of the Act. The appellant questioned this action of the Corporation in Writ Petition No.1786 of 1996. By an interim order dated 14.8.1996, the High Court directed that status quo be maintained regarding possession of the plot. After 1 year and about 8 months, the Corporation sent letter dated 27.4.1998 to the appellant and gave an assurance for restoration of the lease subject to the condition that it shall have to withdraw the writ petition. Thereupon, the appellant filed an application dated ....
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....ility of the alternative remedy does not operate as a bar. The Division Bench further held that respondent nos. 1 and 2 cannot be held guilty of suppressing the factum of filing suit for eviction because the first writ petition had been instituted much before filing the suit. While dealing with the challenge to Resolution dated 28.8.1991 and the decision of the State Government to accord sanction under Section 70(5), the Division Bench opined that during the subsistence of Resolution dated 29.10.1975, the Corporation could not have granted lease in favour of the appellant and the State Government had no right to validate such grant. However, the prayer of respondent nos. 1 and 2 for issue of a direction to the Corporation to implement Resolution dated 29.10.1975 was rejected on the premise that the issue was pending consideration before the trial Court. 4. Shri Gagan Sanghi, learned counsel for the appellant argued that the reasons assigned by the High Court for nullifying the decision taken by the State Government and the Corporation to grant lease in favour of the appellant are legally unsustainable and the impugned judgment is liable to be set aside because Resolution dated 29....
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....of lease deed dated 28.10.1944, the Corporation could have made fair and equitable revision of the ground rent and argued that there was no justification for 10 times increase in the ground rent necessitating filing of an appeal by Parmanand Mundhada. 6. Before dealing with the arguments of the learned counsel, we consider it necessary to make the following observations: i) Although, the appellant has not disputed that in the partition, which took place in 1959 in the family of Gopaldas Mohta, the plot in question came to the share of his wife Smt. Gangabai and that she had executed assignment deed dated 12.8.1960 in favour of Parmanand Mundhada, it has not placed on record copies of the partition deed and assignment deed so as to enable the Court to appreciate the extent and magnitude of the right acquired by Parmanand Mundhada. ii) Before the High Court the appellant and the Corporation pleaded that neither of them had any knowledge about assignment deeds dated 2.9.1985 executed by the heirs of Parmanand Mundhada in favour of respondent nos. 1 and 2 but their denial is belied by the averments contained in paragraph 3 of C.A. No.1246 of 1991 filed by the appellant in First....
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....Parmanand Mundhada and respondent No. 2 and the Corporation, the High Court reversed the judgment of the trial Court and dismissed the suit by observing that the appellant could not prove its readiness or willingness to implement the contract. The appellant did not challenge the judgment of the High Court by filing a petition under Article 136 of the Constitution. Therefore, the finding recorded by the High Court on the tenability of the appellant's claim, which was primarily founded on Clause 5 of lease deed dated 10.9.1947, will be deemed to have become final and the appellant cannot now rely upon the terms and conditions of lease deed dated 10.9.1947 for contending that the Corporation was bound to renew the lease in its favour for a period of 30 years. 9. The resolution passed by the Corporation for renewal of lease in favour of the appellant and the consequential action taken for the execution of lease deed dated 4.9.1991 were ex facie illegal and the High Court did not commit any error by quashing the same because, (i) Resolution dated 29.10.1975 passed by the Corporation for renewal of lease in favour of Parmanand Mundhada for a period of 30 years had not been cancelled....
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....(b) With the sanction of the Standing Committee the Commissioner may dispose of by sale or otherwise, any such right as aforesaid, for any period not exceeding three years at a time of which the premium or rent or both, as the case may be, for any one year does not exceed [One lakh] rupees; (c) With the sanction of the Corporation, the Commissioner may lease, sell or otherwise convey any immoveable property belonging to the Corporation. (3) The Commissioner may - [(a)………………….] (b) with the sanction of the Standing Committee, dispose of by sale or otherwise any moveable property belonging to the Corporation: (c) with the sanction of the Corporation, sell or otherwise convey any moveable property belonging to the Corporation. (4) The sanction of the Standing Committee or of the Corporation under sub-section (2) or sub-section (3) may be given either generally for any class of cases or specifically in any particular case. (5) The foregoing provisions of this section shall apply to every disposal of property belonging to the Corporation made under, or for the purposes of this Act: Provided that - (i) no propert....
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.... 'State' as it was known before the commencement of the Constitution and as it was understood for about two decades after 26.1.1950 has undergone drastic change in recent years. Today, the State cannot be conceived of simply as a coercive machinery wielding the thunderbolt of authority. Now the Government is a regulator and dispenser of special services and provides to the large public benefits including jobs, contracts, licences, quotas, mineral rights etc. The law has also recognised changing character of the governmental functions and need to protect individual interest as well as public interest. The discretion of the Government has been held to be not unlimited. The Government cannot give or withhold largesse in its arbitrary discretion or according to its sweet-will. The Government cannot now say that it will transfer the property (land etc.) or will give jobs or enter into contracts or issue permits or licences only in favour of certain individuals. In V. Punanan Thomas v. State of Kerala AIR 1969 Ker. 81, K.K. Mathew, J. (as he then was) observed: - "The Government is not and should not be as free as an individual in selecting recipients for its largesse. Whateve....
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.... review of discretionary decisions may be minimal. It remains axiomatic that all discretion is capable of abuse, and that legal limits to every power are to be found somewhere." 13. In Padfield v. Minister of Agriculture, Fishery and Food (1968) A.C. 997, the Court was called upon to decide whether the Minister had the prerogative not to appoint a Committee to investigate the complaint made by the members of the Milk Marketing Board that majority of the Board had fixed milk prices in a way which was unduly unfavourable to the complainants. While rejecting the theory of absolute discretion, Lord Reid observed:- "Parliament must have conferred the discretion with the intention that it should be used to promote the policy and objects of the Act; the policy and objects of the Act must be determined by construing the Act as a whole and construction is always a matter of law for the court. In a matter of this kind it is not possible to draw a hard and fast line, but if the Minister, by reason of his having misconstrued the Act or for any other reasons, so uses his discretion as to thwart or run counter to the policy and objects of the Act, then our law would be very defective if per....
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....es/instrumentalities to give largesse or confer benefit must be founded on a sound, transparent, discernible and well-defined policy, which shall be made known to the public by publication in the Official Gazette and other recognised modes of publicity and such policy must be implemented/executed by adopting a non-discriminatory and non-arbitrary method irrespective of the class or category of persons proposed to be benefited by the policy. The distribution of largesse like allotment of land, grant of quota, permit licence, etc. by the State and its agencies/instrumentalities should always be done in a fair and equitable manner and the element of favouritism or nepotism shall not influence the exercise of discretion, if any, conferred upon the particular functionary or officer of the State. We may add that there cannot be any policy, much less, a rational policy of allotting land on the basis of applications made by individuals, bodies, organisations or institutions dehors an invitation or advertisement by the State or its agency/instrumentality. By entertaining applications made by individuals, organisations or institutions for allotment of land or for grant of any other type o....
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....io of the judgment in Damodhar Tukaram Mangalmurti v. State of Bombay (supra) which has been relied upon by Shri Naphade has no bearing on this case. The question which came up for consideration in that case was whether Civil Court has the jurisdiction to decide the issue of fair and equitable enhancement of the annual rent. The facts of that case were that the then Provincial Government of the Central Provinces and Berar, Nagpur devised a scheme to extend residential accommodation by acquiring agricultural land and making it available for residential purposes. The lease granted in respect of building sites of 10,000 sq. ft. contained a renewal clause with a stipulation that the lessor can make fair and equitable increase in the amount of annual rent. At the time of renewal, the lessor increased the annual rent from ₹ 3-8-0 to ₹ 21-14-0 in accordance with Clause III of the indenture of lease. One of the preliminary issues framed by the Subordinate Judge, Nagpur was whether the Civil Court has the jurisdiction to decide as to what should be fair and equitable enhancement in the amount of annual rent. He ruled in favour of the plaintiff and his view was confirmed by the l....