RAM BHAROSEY LAL GUPTA(D) BY LRS. & ORS.versusM/S HINDUSTAN PETROLEUM CORP. LTD. & ANR.

         •


                     [2013] 6 S.C.R. 323


   RAM BHAROSEY LAL GUPTA(D) BY LRS. & ORS.                         A
                          v.
   MIS HINDUSTAN PETROLEUM CORP. LTD. & ANR.
           (Civil Appeal No. 3902 of 2013)
                       APRIL 17, 2013
                                                                    B
          [CHANDRAMAULI KR. PRASAD AND
               V. GOPALA GOWDA, JJ.]

      Transfer of Property Act, 1882 - ss. 106 and 111(g) -
Lease - Renewal of - Property leased out for 20 years -             C
Meanwhile, property mortgaged by appellant-lessor, but later
redeemed to it - Determination of tenancy by appellant uls. 106
of Transfer of Property Act on expiry of original lease period
- Challenged by respondent no.1-lessee on ground that the
lease deed contemplated a provision for renewal of the lease        D
for 20 years and that a notice for renewal of the lease had
already been sent to the appellant - High Court holding that
appellant was under legal obligation to renew the lease term
for further period of 20 years in terms of clause 3 (d) of the
lease deed - Propriety - Held: Not proper -Respondent no. 1         E
did not comply with ihe requirements as provided under the
lease deed - It did not send notice for renewal to the
mortgagee who had stepped into the shoes of the owner of
the property till the same was redeemed to the appellant-
lessor and thus failed to exercise its right to get renewal of      F
lease - No deemed renewal of lease in favour of respondent
no. 1 in view of the notice sent to the appellant - Determination
of tenancy by appellant uls106 of the Transfer of Property Act
perfectly legal and valid - Respondent no. 1 also not entitled
to continue as tenant with reference to s. 7 of the Caltex Act
as no fairness, reasonableness and non-arbitrariness on its         G
part to avail right under that provision - Since respondent no. 1
continued in possession of the property even after termination
of tenancy, it is liable to pay mesne profits by way of damages
                              323                                   H.
    324     SUPREME COURT REPORTS                 [2013] 6 S.C.R.


A   to appellant - Caltex [Acquisition of Shares of Ca/tex Oil
    Refining (India) Ltd. and of the Undertakings in India of Caltex
    (India) Limited] Act 1977 - s. 7.

          The property in question was leased out by the
    appellant in favour of Mis Caltex India Ltd. for 20 years
8
    from 1.07.1960 renewable and determinable as provided
    in ttie lease deed on monthly rent. The said property was
    mortgaged by the appellant on 12.01.1962. Meanwhile,
    the Caltex [Acquisition of Shares of Caltex Oil Refining
C   (India) Ltd. and of the Undertakings in India of Caltex
    (India) Limited] Act 1977, came to be enacted and
    respondent no.1-Corporation became the successor of
    ori~inal lessee. The property was redeemed in favour of
    the appellant on 15.4.1983.

D       Subsequently, the appellant issued a notice under
    Section 106 and 111 (g) of the Transfer of Property Act
    to respondent No.1 determining the tenancy of the
    property and directed the first respondent to vacate the
    same. A suit for ejectment of the respondents and for
E   possession of the property was also filed by the
    ap·pellant. During pendency of the suit, the first
    respondent sent a notice to the appellant to execute
    renewal of lease deed; and also filed written statement
    specifically pleading that the lease deed contemplated a
F   provision for renewal of the lease for a period of 20 years
    and that a notice for renewal of the lease had already
    been sent to the appellant.

        The trial court held that the appellant was not entitled
  to terminate the tenancy in view of the Act of 1977 as the
G said Act is a Special Act and prevails over the Transfer
  of Property Act. The order was set aside by the 1st
  appellate court. The respondents filed appeal before the
  High Court which allowed the same holding that the
  appellant-lessor was under the legal obligation to renew
H tl)e lease term for further period of 20 years in terms of
RAM BHAROSEY LAL GUPTA(D) BY LRS. v. HINDUSTAN 325
           PETROLEUM CORP. LTD.

clause 3 (d) of the lease deed.                               A

    The question which arose for consideration in the
present appeal was whether the High Court was justified
in setting aside the judgment of the first appellate court,
by holding that there was deemed renewal of lease of the      8
demised property for a period of 20 years from (07.1980
to 1.07 .2000.

    Allowing the appeal, the Court

     HELD: 1.1. It is an undisputed fact that the demised C
 premises was mortgaged in favour of the mortgagee with
 possession as the appellant had executed mortgage
deed in his favour on 12.01.1962, who continued to be a
mortgagee till the appellant redeemed the said property
on 15.4.1983. The first respondent had sent a notice for D
renewal of the lease deed to the appellant, but not to the
mortgagee who had stepped into the shoes of the owner
of the mortgaged property till the same was redeemed to
the appellant on 15.04.1983. In view thereof, to avail the
benefit of Clause 3 (d) of the lease deed, the first E
respondent should have sent the notice to the mortgagee
of the property seeking renewal of lease of the demised
property as provided under the above clause. Therefore,
the first respondent Corporation failed to exercise its
right to get the renewal of lease in respect of the demised
premises. This aspect of the matter has been overlooked F
by both the trial court as well as the High Court though
the first appellate court considered this aspect of the
matter in its judgment. Therefore, the determination of
tenancy of the demised property by the appellant under
Section 106 of the Transfer of Property Act is perfectly G
legal and valid. The first respondent after termination of
tenancy continued in possession of the property. Holding
over of the suit property by the first respondent after the
termination of lease is that of a trespasser not a tenant
and therefore, it becomes liable to pay mesne profits by H
    326     SUPREME COURT REPORTS                [2013] 6 S.C.R.


A way Qf damages to the appellants. The above important
  aspect of the matter has not been properly considered by
  the High Court. The High Court committed serious error
  both on facts and in law in holding that there was deemed
  renewal of the demised premises in favour of the first
B resp.ondent though it did not comply with the
  requirements as provided under Clause 3 (d) of the lease
  deed. The second appellate court wrongly interpreted
  clau$e 3 (d) of the lease deed and the finding recorded
  by i( that there was a deemed renewal of the demised
c property for a period of 20 years in view of the notice
  dat~d 1.4.1980 sent to the appellant but not to the
  mortgagee was erroneous and, therefore, liable to be set
  aside. [Paras 23, 24j [334-H; 335-A-H; 336-A-C]

          1.2. The first appellate court was right in holding that
D   the possession of the demised property by the first
    respondent Corporation is holding over month to month
    and therefore it is a trespasser of the said schedule
    property and therefore invoking Section 106 of the T.P.
    Act by the appellant and determining the tenancy by him
E   an~ filing the suit for arrears of rent and also decree of
    ejectment of the first respondent from the demised
    pr~mises is legally justified. Further, with reference to
    Section 7 of the Caltex Act the action of the first
    re$pondent is unfair as there is no fairness,
F   re!lsonableness and non- arbitrariness on its part to avail
    the right under the above provision for continuing as a
    tenant in respect of the demised property. Hence, the
    ill)pugned judgment of the second appellate court is set
    aside and the judgment and decree of the first appellate
G   court is restored. [Para 25] [337-G-H; 338-A-B]
      Bharat Petroleum Corporation Ltd. vs. Maddula
  Ratnava/li and Ors. (2007) 6 SCC 81: 2007 (5) SCR 997 and
  Bharat Petroleum Corporation Ltd. vs. P. Kesavan and Anr.
H (2004) 9 SCC 772: 2004 (3) SCR 811 - referred to.
RAM BHAROSEY LAL GUPTA(D) BY LRS. v. HINDUSTAN 327
           PETROLEUM CORP. LTD.
                     Case Law Reference:                          A
    2007 (5) SCR 997         referred to     Para 14, 16, 24
    2004 (3) SCR 811         referred to     Para 24

    CIVIL APPELLATE JURISDICTION : Civil Appeal No. :             B
3902 of 2013.
    From the Judgment Order dated 04.07.2007 of the High
Court of Judicature at Allahabad in SA No. 1812 of 1988.

    Nagendra Rai, Manita Verma, S.K. Sinha for the                c
Appellants.

   Sanjay Kapur, Priyanka Das, Abha R. Sharma for the
Respondents.

    The Judgment of the Court was delivered by                    D

     V. GOPALA GOWDA, J. 1. Leave granted.
     2. This appeal is filed by the appellants who are owners
of the property questioning the correctness of the impugned
judgment dated 04.07.2007 passed in SA No 1812 of 1988 of         E
the High Court of Judicature at Allahabad wherein it

     has set aside the judgment and decree dated 10.08.1988
passed by the 1st Additional District Judge, Mainpuri in Civil
Appeal No. 45 of 1987 arising out of judgment and decree          F
passed by Munsif, Shikohabad dated 09.02.1987 in Original
Suit No. 32 of 1984, urging various facts and legal contentions
and prayed to set aside the impugned judgment and decree.

     3. The property in question was leased out by lease deed
dated 1.12.1960 by one Mansa Ram, father of the appellants G
in favour of M/s Caltex India Ltd. the demised property
measures 120 x 100 feet situated on Agra Kanpur Road,
Shikohabad. The said property was leased out in favour of

                                                                  H
    328      SUPREME COURT REPORTS                [2013] 6 S.C.R.


A Mis Caltex India Ltd. for the purpose of installing, erecting and
  maintaining on the said piece of land road ways and path ways
  and un~erground petrol, high speed oil tanks and delivery
  pumps etc. and to erect shelter for attendants and other
  buildings of permanent or temporary nature as well as other
8 constructions and carrying on with trade in petro and petroleum
  product with a right to carry on the said trade through its local
  dealers or agents and to use the property so demised at all
  times and for all purposes for an initial period of 20 years from
  1.07 .1960 renewable and determinable as provided in the
C lease deed on the monthly rent of Rs.50/-. The said lease deed
  was registered on 06.01.1961. The said property was
  mortgaged to one Ram Gopal, S/o Ramdayal on 12.01.1962.

       4. In the year 1977, the Parliament enacted the law,
  namely, the Caltex [Acquisition of Shares of Caltex Oil Refining
D (India) Ltd. and of the undertakings in India of Caltex (India)
  Limited] Act 1977, being Act No. 17 of 1977 (hereinafter
  referred to as 'the Caltex Act') as well as of Mis Hindustan
  Petroleum Corporation Ltd. as the successor of the original
  lessee.
E
       5. The first respondent Hindustan Petroleum Corporation
  Ltd. i$ the successor of original lessee. On 15.04.1983, the
  appelilant (since deceased) redeemed the said mortgaged
  property and the same was accordingly informed to the first
F respondent.

       6. On 1.3.06.1983, the appellant issued a notice under
  Secti;on 106 and 111 (g) of the Transfer of Property Act
  (hereinafter referred to as the T.P. Act) to respondent No.1
  determining the tenancy of suit schedule property and directed
G the first respondent to vacate the same upon the expiry of the
  period of the notice and to hand over vacant possession of the
  same to him. The first respondent never sent any reply to the
  said notice.

H         7. A suit for ejectment of the respondents and for the
RAM BHAROSEY LAL GUPTA(D) BY LRS. v. HINDUSTAN 329
  PETROLEUM CORP. LTD. [V. GOPALA GOWDA, J.)
possession of the suit schedule property was filed on A
27.01.1984 despite service of notice of determination of
tenancy which was neither replied nor complied with the
demand for delivering the vacant possession of the leased
property in favour of the appellant. The original suit was filed
by the appellant seeking for arrears of rent and decree of B
eviction against the first respondent and to pass an appropriate
decree against it.

     8. During the pendency of the suit, on 27 .06.1984 the first
respondent sent a notice to the appellant to execute the
renewal of lease deed and in the said notice it had made C
reference about their notice dated 1.04.1980, wherein it is
stated that it has sent a notice to the appellant for renewal of
lease deed and undisputedly the notice was not sent to the
mortgagee as the leased property was mortgaged in his favour
and the rent was being paid to him and he was receiving rent D
upto April, 1983 in respect of the suit schedule property.

      9. The first respondent filed written statement denying the
allegations made in the plaint and further specifically pleaded
that the lease deed contemplated a provision for the renewal            E
of the lease of the plot for a period of 20 years and a plea was
taken that the notice for renewal of the lease was sent to the
appellant. The respondent No. 2 filed an application for
impleadment in the original suit proceeding which was allowed
by the trial court. He also filed a written statement in the original   F
suit.

     10. On 09.02.1987, the trial court framed the issues and
case went for trial where the suit for arrears of rent of Rs. 450/
- was decreed but held that the appellant was not entitled to
terminate the tenancy in view of the _Act of 1977 as the said G
Act is a Special Act and prevails over the Transfer of Property
Act.

     11. On 13.03.1987, aggrieved by the judgment and decree
of the trial court the appellant filed Civil Appeal No. 45 of 1987      H
    330       SUPREME COURT REPORTS                  [2013] 6 S.C.R.

A   before the 1st Additional District Judge Mainpuri. The 1st
    appellate court vide its judgment dated 10.08.1988, allowed the
    appeal by setting aside the judgment and decree of the trial
    court after holding that the provisions of the Transfer of Property
    Act apply to the property in question and the tenancy of the first
B   responqent has rightly been determined by the appellant. The
    respondents herein being aggrieved by the said order of the
    appellate court filed second appeal No. 1812 of 1988 before
    the High Court of Judicature at Allahabad. The said second
    appeal was admitted on the following substantial question of
c   law:
          "(1') Whether under clause 3 (d) of the lease deed executed
          between Mansa Ram and Mis Caltex India Ltd., the lessor
          was under the legal obligation to renew the lease term for
          further period of 20 years, if the conditions of clause 3 (d)
D         were complied with?"

         1~. The second appeal was allowed by the High Court by
    answering the aforesaid substantial question of law in favour
    of the first respondent.
E        13. During pendency of the second appeal, the appellant
    Ram Bharosey Lal Gupta expired. An application for
    substitution of legal representatives of the deceased appellant
    was filed by them along with applications for condonation of
    delay in filing the said substitution application and setting aside
F   abatement. The High Court after hearing the parties answered
    the s11bstantial question of law in the second appeal and set
    aside' the judgment of the first appellate court and allowed the
    same by its judgment dated 04.07.2007.

G        14. The learned senior counsel Mr. Nagendra Rai has
    placed strong reliance upon the decision of this Court in the
    case of Bharat_ Petroleum Corporation Ltd. Vs. Maddula
    Ratnavalli and Ors.' questioning the correctness of the finding
    recorded on the substantial question of law as erroneous in law
H 1.   c2007) s sec a1.
RAM BHAROSEY LAL GUPTA(D) BY LRS. v. HINDUSTAN 331
  PETROLEUM CORP. LTD. [V. GOPALA GOWDA, J.]

and error in law. Further, he has urged that it is the duty cast      A
upon the court to construe the provisions of the Act 17of1977,
strictly as the Act being expropriatory legislation. Further, it is
contended that whether interpretation of provisions of Section
7 of the Caltex Act be permitted to overlook fairness,
reasonableness and non-arbitrariness in action on the part of         B
the first respondent as it is 'State' in terms of Article 12 of the
Constitution of India. ·

      15. He. further contended that no notice was issued to the
mortgagee to invoke the right by the first respondent under
Clause 3 (~) of the lease deed for renewal of lease of the
                                                                      c
property. It is an undisputed fact that rent was being paid by
the first respondent to the mortgagee till 1.04.1983 and
therefore, there is no compliance of the requirement under
clause 3 (d) of the lease deed seeking for renewal of the lease
of the property for a period of another 20 years as per the terms     D
and conditions laid down in the said clause. The conduct of the
first respondent Corporation in continuing with the lease for a
third term of 20 years commencing from 1.07.2000 to
30.06.2020 in the absence of any notice for renewal for the said
period, is illegal, arbitrary and unreasonable. The High Court        E
has failed to take into consideration the conduct of the first
respondent in holding over the property of the appellants herein
under the garb of automatic renewal of lease which action of
the Corporation reflects undue enrichment for itself especially
when the property as on date has a market value of crores of          F
rupees.

     16. It is further contended by the learned senior counsel
that reasonableness, fairness and non-arbitrariness in action
on the part of the first respondent Corporation should be there
                                                                      G
as it is a 'State' within the meaning of Article 12 of the
Constitution. The same is not reflected in the case in hand as
it has claimed renewal of lease under the Caltex Act 17 of
1977. The High Court has erred in law while interpreting the
compliance of the conditions of the clause 3 (d) of the lease
                                                                      H
    332     SUPREME COURT REPORTS                  [2013] 6 S.C.R.

A deed by the first respondent. The High Court has erred in not
  following the law laid down by this Court in Bharat Petroleum
  Corporation Ltd. case (supra) where duty has been cast upon
  the courts to construe the provisions of expropriatory legislation
  strictly. The High Court has also failed to take into consideration
B that the first respondent Corporation again took the shield of
  "speciiil Act" and it cannot be permitted to enjoy any lease
  property in perpetuity. Further, the interpretation of clause 3 (d)
  of the lease deed, particularly the word "will" is not synonymous
  to words "obligatory" or "mandatory". The High Court has also
c erred in holding that there was deemed presumption of renewal
  on the part of the lessor without giving two months' advance
  notice before expiry of the original lease period as
  contemplated under clause 3 (d) of the lease deed and
  indisputably upon the mortgagee who had stepped into the
  shoes of the mortgagor as he was being paid rent by the first
0
  respondent during the relevant period of time. Therefore, the
  interpretation made by the High Court in holding that there was
  a deemed presumption of renewal on the part of the lessor in
  relation to the leased property is erroneous in law. Further, the
E High Court has failed in interpreting the provisions of Section
  7 ofthe Caltex Act and the first respondent Corporation cannot
  be permitted to over look fairness, reasonableness and non-
  arbitrariness on its part.

       17. The High Court has failed to take into consideration
F the conduct of the first respondent in continuing with the lease
  of the property for the third term of 20 years commencing from
  1.07.2000 to 30.06.2020 in the absence of any notice for
  renewal for the said period to the owners of the property.
  Therefore, the learned senior counsel has prayed for setting
G aside the impugned judgment and decree of the High Court.

         18. On the other hand, Mr. H.P. Raval, learned Additional
    Solicitor General appearing for the first respondent contended
    that the impugned judgment and order passed by the 1st
    appellate court is perfectly legal and valid as the same is in
H
RAM BHAROSEY LAL GUPTA(D) BY LRS. v. .HINDUSTAN 333
  PETROLEUM CORP. LTD. [V. GOPALA GOWDA, J]

accordance with the provisions of Section 7 of the Caltex Act A
and the conduct of the first respondent is fair and reasonable
and he has offered a sum of Rs. 5000/- per month as the rent
for the period having regard to the valuation of the property and
further he has contended that beyond Rs.5000/- the
Corporation cannot give rent to the appellants herein. Therefore, B
they have offered Rs.5000/- as rent against the demand of
more than Rs.30,000/- per month made by the appellant's
counsel in respect of the suit schedule property.

      19. With reference to the above said rival legal contentions
urged on behalf of the parties this Court is required to examine C
as to whether the substantial question of law framed by the High
Court and findings recorded in favour of the first respondent is
vitiated in law and whether application of Section 7 of the
Caltex Act to the leased property in question applies even
though there is no fairness, reasonableness and non- D
arbitrariness on the part of the first respondent Corporation, is
legal and valid?

    20. The aforesaid points are answered in favour of the
appellants by assigning the following reasons:-                  E

      The rent for the year 1960 for the vacant property was
Rs.50/-. As per Clause 3 (d) of the lease deed, the renewal of
the lease of the property for a period of 20 years is permissible
if a desire is expressed by the lessee by issuing two months'
notice to the lessor prior to expiry of the lease period of the F
property. Further, the renewal of lease must be for a further
period of 20 years at the rate of 10% increase in the rental and
containing the like covenants. This Court has examined whether
the High Court was justified in setting aside the judgment and
decree of the first appellate court, by holding that there is G
deemed renewal of the lease of the demised property for a
period of 20 years from 1.07.1980 to 1.07.2000, in the absence
of renewal notice issued to the mortgagee on the date of expiry
of the original lease period?
                                                                 H
    334       SUPREME COURT REPORTS                   [2013] 6 S.C.R.


A        21. The lease of the demised premises is of the year 1960
    renewable on a monthly rent of Rs.50/-. The lease deed was
    executed in favour of M/s Caltex India Ltd. The Caltex Act was
    enact!ld in the year 1977 and the first respondent Corporation
    was the automatic successor of the original lessee.
B
           22. It is an undisputed fact that the appellant had executed
    a mortgage deed on 12.01.1962 in favour of Ram Gopal S/o
    Ramdayal, with possession and he had been receiving rent
    from the first respondent up to 1.04.1983. The Caltex Act of 17
    of 1977 was enacted by the Parliament and the first respondent
C   Corporation became successor in place of the original lessee.
    It is an undisputed fact that the first respondent Corporation sent
    a notice to the appellant for renewal of the lease in its favour. It
    is necessary for us to appreciate the correctness of the finding
    recorded by the High Court on the substantial question of law
D   regarding the deemed renewal of the lease in favour of the first
    respondent for a period of20 years from 1.07.1980 to 1.7.2000.
    The sub-clause 3 (d) reads thus:

                 'That the lessor will on the written request of the
E         lessee made two calendar months before the expiry of the
          terms hereby created, and if there shall not at the time of
          such request by any existing breach or non-observance of
          any of the covenants on the part of lessee herein before
          contained, grant to it a tenancy of the demised premises
F         for a further term of twenty years from the expiration of the
          said term at the rent of Rs. 50/- per month and containing
          the like covenants and provisos as are herein contained
          including a clause for renewal for the further term of twenty
          years at 10% increase in rental and containing the like
          covenants and provisos as are herein contained so as to
G
          give the lessee in its option two further renewals each of
          twenty years."

         23. By careful reading of the said clause of the lease deed
    having regard to the undisputed fact that the demised premises
H   was mortgaged in favour of the mortgagee with possession as
RAM BHAROSEY LAL GUPTA(D) BY LRS. v. HINDUSTAN 335
  PETROLEUM CORP. LTD. [V. GOPALA GOWDA, J.]
the appellant had executed mortgage deed in his favour on              A
12.01.1962, he continued to be a mortgagee till the property
was redeemed in his favour on 15.4.1983. It is also the case
of the first respondent that it had sent a notice for renewal of
the lease deed to the appellant, but not to the mortgage!'! as
he had stepped into the shoes of the owner of the mo1 tga,g~d          B
property till the same was redeemed to the appellanf on
15.04.1983. In view of the above undisputed fact to avaift~e
benefit of Clause 3 (d) of the lease deed, the first respondent
should have sent the notice to the mortgagee of the property
seeking renewal of lease of the demised property as provided           c
under the above clause. Therefore, the first respondent
Corporation has failed to exercise its right to get the renewal
of lease in respect of the demised premises. This aspect of
the matter has been overlooked by both the trial court as well
as the High Court though the first appellate court considered
                                                                       0
this aspect of the matter in its judgment. Therefore, the
determination of tenancy of the demised property by the
appellant under Section 106 of the T.P. Act is perfectly legal
and valid. Further, it has been held that the first respondent after
termination of tenancy continued in posses·sion of the property
as a tenant of holding-over. Thus, in law, holding over of the suit    E
schedule property by the first respondent after the termination
of lease is that of a trespasser not a tenant and therefore, it
becomes liable to pay mesne profits by way of damages to the
appellants.
                                                                       F
      24. The above important aspect of the matter has not been
properly considered by the High Court while answering the
substantial question of law. The High Court has committed
s.erious error both on facts and in law in holding that there is
deemed renewal of the demised premises in favour of the first G
respondent and it has not properly interpreted Section 7 of the
Caltex Act regarding the fairness, reasonableness and non
arbitrariness on the part of the first respondent Corporation
though it has not complied with the requirements as provided
under Clause 3 (d) of the lease deed. Therefore, framing of H
    336       SUPREME COURT REPORTS                  [2013] 6 S.C.R.


A   substarntial question of law itself in the second appeal by the
    High CKJurt is bad in law as the same does not arise at all. ·
     Having regard to the undisputed facts of the case in hand, the
    second appellate court has not rightly interpreted clause 3 (d)
    of the ,lease deed and the same is contrary to the facts and
B   therefore, the finding recorded on the substantial question of
    law and holding that there is a deemed renewal of the demised
    property for a period of 20 years in view of the notice dated
     1.4.19.80 sent to the appellant but not to the mortgagee is not
    only erroneous but also error in law, therefore, the said finding
c   is liable to be set aside. In the case of Bharat Petroleum
    Corporation Ltd. Vs. Maddula Ratnavalli and Ors. (supra) this
    Court has interpreted the provisions of Section 5(2) and 7 (3)
    of Burmah Shell (Acquisition and Undertakings in India) Act,
    1976 and Section 7 (3) of the Caltex Act 1977, with reference
    to the provisions ofT.P. Act. Indisputably, 1976 Act is a special
0
    statute. No doubt, it over rides the provisions of Section 107
    of th¢ T.P. Act. Undisputedly, the first respondent Corporation
    is a 'State' as it is a successor of Caltex India Ltd. in terms of
    the definition of Article 12 of the Constitution of India. In the
    above referred case, vide para 13, this Court has laid down
E   the legal principles after referring to its earlier decision in the
    case of Bharat Petroleum Corporation Ltd. Vs. P.Kesavan
    and Anr. 2 The legal principle evolved therein shows that the
    finding recorded by the High Court in the impugned judgment
    on the substantial question of law is contrary to the decision of
F   this Court as well as terms and conditions of clause 3(d) of the
    lease deed. The said paragraph is extracted hereunder:-

           "13. The appellant company is a "State" within the
          meaning of Article 12 of the Constitution of India. It is,
G         therefore, enjoined with a duty to act fairly and reasonably.
          Just because it has been conferred with a statutory power,
          the same by itself would not mean that exercise thereof in
          any manner whatsoever will meet the requirements of law.

H   2.   (2004) 9 sec 772.
RAM BHAROSEY LAL GUPTA(D) BY LRS. v. HINDUSTAN 337
  PETROLEUM CORP. LTD. (V. GOPALA GOWDA, J.]

    The statute uses the words "if so desired by the Central          A
    Government". Such a desire cannot be based upon a
    subjective satisfaction. It must be based on objective
    criteria. Indisputably, the 1976 Act is a special statute. It
    overrides the provisions of Section 107 of the Transfer of
    Property Act. The action of the State, however, must be           B
    judged on the touchstone of reasonableness. Learned
    counselfor both the parties have relied upon a three-Judge
    Bench decision of this Court in Bharat Petroleum Corpn.
    Ltd. v. P. Kesavan wherein this Court in para 11 has held
    as hereunder:                                                     c
     11. The said Act is a special statute vis-a-vis the Transfer
of Property Act which is a general statute. By reason of the
provisions of the said Act, the right, title and interest of Burmah
Shell vested in the Central Government and consequently in the
appellant Company. A lease of immovable property is also an           D
asset and/or right in an immovable property. The leasehold right,
thus, held by Burmah Shell vested in the appellant. By reason
of sub-section (2) of Section 5 of the Act, a right of renewal was
created in the appellant in terms whereof in the event of
exercise of its option, the existing lease was renewed for a          E
further term on the same terms and conditions. As noticed
hereinbefore, Section 11 of the Ac.t provides for a non obstante
clause."

      25. In view of the undisputed facts referred to supra and       F
the clause 3 (d) of the lease deed regarding the renewal of
lease for a period of 20 years after expiry of the initial period
of renewal it has come to an end on 1.7.2000. Therefore, the
first appellate court was right in holding that the possession of
the demised property by the first respondent Corporation is           G
holding over month to month and therefore it is a trespasser of
the said schedule property and therefore invoking Section 106
of the T.P. Act by the appellant and determining the tenancy
by him and filing the suit for arrears of rent and also decree of
ejectment of the first respondent from the demised premises           H
    338     SUPREME COURT REPORTS                   [2013] 6 S.C.R.


A is legally justified. Further, with reference to Section 7 of the
  Caltex Act the action of the first respondent is unfair as there
  is no fairness, reasonableness and non- arbitrariness on its part
  to avail the right under the above provision for continuing as a
  tenant in respect of the demised property. Hence, we are
B required to set aside the impugned judgment of the second
  appellate court and restore the judgment and decree of the first
  app~llate court. The first rHspondent Corporation is not even
  willing to give fair and reai:.onable rent as it has offered only
  Rs.5000/- per month whereas the rental market value of the
c prop,erty according to the appellants counsel is more than
  Rs.30,000/- per month.

       26. Therefore, we are of the view that the aforesaid
  decision of this Court on all fours be applicable to the fact
  situation in favour of the appellants. Accordingly, for the reasons
D stated supra we set aside the impugned judgment and order
  dated 04.07.2007 of the second appellate court passed in
  Second Appeal No.1812 of 1988 and restore the judgment and
  decree dated 10.08.1988 of the first Additional District Judge
  in Civil Appeal No. 45 of 1987. The appeal is allowed with no
E order as to costs.

   B.B.B.                                          Appeal allowed.