Supreme Court of India
SAROJ SCREENS PVT. LTD.versusGHANSHYAM AND OTHERS
- Citation
- 2012 INSC 148
- Decided
- 26 March 2012
- Disposal
- Dismissed
- Bench
- G S SINGHVI
Holding
The resolution for renewal of the lease in favour of the appellant and the subsequent sanction were ex facie illegal; the High Court was correct in quashing them.
Summary
The Supreme Court upheld the Bombay High Court’s order quashing the Municipal Corporation of Nagpur’s 1991 resolution to renew a 30‑year lease in favour of Saroj Screens Pvt. Ltd. and the State Government’s subsequent sanction under Section 70(5) of the City of Nagpur Corporation Act, 1948. The Court held that the earlier 1975 resolution granting renewal to Parmanand Mundhada had not been rescinded, so the corporation lacked authority to grant a new lease to the appellant during its subsistence, and it had also failed to obtain the mandatory prior sanction of the State Government. The post‑factum sanction violated the constitutional requirement of equality (Article 14) because the alienation of public property was not conducted by auction or open tender. Consequently, the lease renewal was deemed ex facie illegal, the appellant was ordered to surrender possession, and the corporation was directed to alienate the land in accordance with Article 14 and pay market value for the structure.
Issues considered
- The legality of the Municipal Corporation’s 28‑August‑1991 resolution renewing the lease in favour of the appellant.
- Whether the State Government’s sanction under Section 70(5) of the City of Nagpur Corporation Act was valid in the absence of prior sanction.
- Whether the earlier 29‑October‑1975 resolution for renewal to Parmanand Mundhada barred any subsequent renewal to the appellant.
- Whether alienation of public property without a procedure consistent with Article 14 is impermissible.
- Whether the respondents could claim a right to the lease under Section 116 of the Transfer of Property Act, 1882.
Legislation cited
Subjects
lease renewalpublic propertyArticle 14 equalitymunicipal corporationSection 70state sanctionadministrative lawtrust doctrinealienation of public land
Judgment
[2012] 5 S.C.R. 141
SAROJ SCREENS PVT. LTD. A
v.
GHANSHYAM AND OTHERS
(Civil Appeal Nos. 3107- 3108 of 2012)
MARCH 26, 2012
B
[G.S. SINGHVI AND SUDHANSU JYOTI
MUKHOPADHAYA, JJ.]
Municipalities - The City of Nagpur Corporation Act,
1948 - s. 70(5) -Right/interest in public property - Alienation C
of - Resolution dated 28-8-1991 passed by Municipal
Corporation of the City of Nagpur for renewal of lease in favour
of appellant and sanction accorded by the State Government
u/s. 70(5) - Quashed by the High Court - Validity - Held:
Resolution passed by the Corporation for renewal of lease in D
favour of appellant and consequential action taken for
execution of lease deed dated 4-9-1991 were ex facie i/legal
- High Court did not commit any error by quashing the same
because, (i) the earlier Resolution dated 29-10-1975 passed
by the Corporation for renewal of lease in favour of 'P' had E
not been cancelled or rescinded and during subsistence of
that resolution, neither the Corporation could have renewed
the lease in favour of the appellant nor the State Government
could have granted sanction u/s. 70(5) for such renewal; (ii)
before passing resolution for renewal of lease in favour of the F
appellant, the Corporation did not obtain sanction of the State
Government, which was sine qua non for any such action/
decision; and (iii) the State Government accorded post facto
sanction for renewal of the lease without realizing that
alienation of any right or interest in a public property in favour G
of any person without following a procedure consistent with the
doctrine of equality is impermissible - The Corporation holds
the property as a trustee of the public and any alienation of
such property or any right or interest therein otherwise than
141 H
142 SUPREME COURT REPORTS [2012] 5 S.C.R.
A by way of auction or by inviting bids would amount to breach
of that trust - Also, the concept of the 'State' has undergone
drastic change in recent years - Today, the State cannot be
conceived of simply as a coercive machinery wielding the
thunderbolt of authority - The Government cannot give or
B 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 the instant case, before granting 30 years'
c lease of the plot in question in favour of the appellant, the
Corporation neither issued any advertisement nor followed
any procedure consistent with the doctrine of equality so as
to enable the members of the public to participate in the
process of alienation of public property - Appellant directed
to hand over possession of the plot to the Corporation -
0
Corporation to alienate the same by sale, lease, or otherwise
by auction or by inviting tenders and after following a
procedure consistent with Article 14 of the Constitution -
Constitution of India, 1950 - Article 14.
E The High Court, vide the impugned judgment,
quashed Resolution dated 28-8-1991 passed by
Municipal Corporation of the City of Nagpur for renewal
of lease in favour of the appellant in respect of a plot of
land as also sanction accorded by the State Government
F under Section 70(5) of the City of Nagpur Corporation Act,
1948. The High Court held that during the subsistence of
an earlier Resolution dated 29-10-1975 in favour of one
'P', the Municipal Corporation could not have granted
lease in favour of the appellant and the State Government
G had no right to validate such grant.
The question which arose for consideration in the
instant appeals was whether the High Court committed
an error by quashing Resolution dated 28.8.1991 passed
by the Corporation and the sanction accorded by the
H
SAROJ SCREENS PVT. LTD. v. GHANSHYAM 143
State Government under Section 70(5) of the City of A
Nagpur Corporation Act, 1948.
Dismissing the appeals, the Court
HELD: 1. The resolution passed by the Corporation
for renewal of lease in favour of the appellant and the B
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 'P' for a C
period of 30 years had not been cancelled or rescinded
and during the subsistence of that resolution, neither the
Corporation could have renewed the lease in favour of
the appellant for 30 years commencing from 16.3.1991
nor the State Government could have granted sanction D
under Section 70(5) of the Act for such renewal; (ii)
Before passing the resolution for renewal of the lease in
favour of the appellant for a period of 30 years, the
Corporation did not obtain sanction of the State
· Government, which was sine qua non for any such E
action /decision; (iii)lt,however, appears that by taking
advantage of the fact that it continued to have
possession of the plot, the appellant induced the
functionaries of the Corporation to enter into a
clandestine compromise for forwarding a proposal to the F
State Government to grant post facto sanction for
renewal of the lease for 30 years from 16.3.1991 and the
latter accorded sanction without realizing that alienation
of any right or interest in a public property in favour of
any person without following a procedure consistent with G
the doctrine of equality is impermissible. [Para 9] [165-A-
G]
Damodhar Tukaram Mangalmurti v. State of Bombay
AIR 1959 SC 639: 1959 Suppl. SCR 130 - held inapplicable.
H
144 SUPREME COURT REPORTS [2012] 5 S.C.R.
A O.F.O., South Kheri v. Ram Sanehi Singh (1971) 3 SCC
864 and S.J. S. Enterprises (P) Ltd. v. State of Bihar (2004) 7
SCC 166: 2004 (3) SCR 56 - referred to.
2. Section 70 of the City of Nagpur Corporation Act,
8 1948 contains provisions governing the disposal of
municipal property or property vesting in or under the
management of the Corporation. Though, the exercise of
power by the Corporation under the aforesaid section is
not hedged with any particular condition except that in a
C case like the present one, the alienation could not have
been made without the previous sanction of the State
Government, but in our constitutional scheme
compliance of the doctrine of equality enshrined in Article
14 of the Constitution has to be read as a condition
precedent for exercise of power by the State Government
D and the Corporation, more so, when it relates to alienation
of public property or any right or interest therein. In this
context, it is necessary to emphasise that the
Corporation holds the property as a trustee of the public
and any alienation of such property or any right or
E interest therein otherwise than by way of auction or by
inviting bids would amount to breach of that trust. [Para
1O] [165-G-H; 166-A; 168-D-F]
3. The concept of the 'State' as it was known before
F 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 conceiv~d of simply as a coercive
machinery wielding the thunderbolt of authority. Now the
G 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
H interest as well as public interest. The discretion of the
SAROJ SCREENS PVT. LTD. v. GHANSHYAM 145
Government has been held to be not unlimited. The A
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 B
individuals. [Para 11] [168-H; 169-A-C]
V. Punanan Thomas v. State of Kera/a, AIR 1969 K~r.
81 - referred to.
4. The traditional view that the executive is not C
answerable in the matter of exercise of prerogative power
has long been discarded. The question whether the State
and/or its agency/instrumentality can transfer the public
property or interest in public property in favour of a
private person by negotiations or in a like manner has D
been considered and answered in negative in several
cases. [Paras 12, 15] [169-E; 171-F-G]
Akhil Bhartiya Upbhokta Congress v. State of Madhya
Pradesh (2011) 5 sec 29: 2011 (5) SCR 77 - relied on. E
S.G. Jaisinghani v. Union of India AIR 1967 SC 1427:
1967 SCR 703; Ramana Dayaram Shetty v. International
Airport Authority of India (1979) 3 SCC 489 : 19('9 (3) SCR
1014; Erusian Equipment and Chemicals Ltd. v. State of W B.
(1975) 1 SCC 70: 1975 (2) SCR 674; Kasturi Lal Lakshmi F
Reddy v. State of J&K (1980) 4 SCC 1: 1980 (3) SCR 1338;
Common Cause v. Union of India (1996) 6 SCC 530: 1996(6)
Suppl. SCR 719; Shrilekha Vidyarthi v. State of U. P. (1991)
1 SCC 212: 1990 (1) Suppl. SCR 625; UC v. Consumer
Education & Research Centre (1995) 5 SCC 482 : 1995 (1) G
Suppl. SCR 349 and New India Public School v. HUDA
(1996) 5 SCC 510: 1996 (3) Suppl. SCR 597 - referred to.
Padfield v. Minister of Agriculture, Fishery and Food
146 SUPREME COURT REPORTS [2012] 5 S.C.R.
A (1968) A.C. 997 and Breen v. Amalgamated Engineering
Union (1971) 2 QB 175 - referred to.
'Administrative Law' 6th Edition by Prof. H.W.R. Wade
- referred to.
B 5. The factual matrix of the instant case shows that
before granting 30 years' lease of the plot in favour of the
appellant, the Corporation neither issued any
advertisement nor followed any procedure consistent
with the doctrine of equality so as to enable the members
C of the public to participate in the process of alienation of
public property. Therefore, the conclusion reached by the
High Court, though for different reasons, that Resolution
dated 28.8.1991 and the sanction accorded by the State
Government vide letter dated 12.6.2000 are legally
D unsustainable does not call for interference by this Court.
[Para 16] [173-D-E]
6.1. However, even though the lease was renewed in
favour of 'P' vi de Resolution dated 29.10.1975,
E respondent Nos.1 and 2 cannot derive any benefit from
the said renewal merely because the Corporation did not
cancel or rescind the resolution. It was neither the
pleaded case of respondent Nos.1 and 2 nor any material
was produced by them before the High Court to show
that 'P' had taken any action in furtherance of Resolution
F dated 29.10.1975 and fresh lease deed was executed in
his favour. The only plea taken by them was that 'P' had
filed an appeal under Section 397(3) read with Section 411
of the Act against increase in the ground rent and the
imposition of penalty. However, nothing has been said
G about the fate of that appeal. If 'P', his heirs or respondent
Nos.1 and 2 felt that the disposal of the appeal has been
unduly delayed then they could have filed a writ for issue
of a mandamus directing the appellate authority to decide
the appeal within a specified period but no such step is
H shown to have been taken by either of them. Therefore,
SAROJ SCREENS PVT. LTD. v. GHANSHYAM 147
Resolution dated 29.10.1975 had become redundant and A
the same can no longer be relied upon by respondent
Nos.1 and 2 for claiming any right or interest in the plot.
[Para 17] [173-E-H; 174-A-C]
6.2. The argument of the counsel for respondent 8
Nos.1 and 2 that the Corporation is bound to renew the
lease granted to his clients in terms of Section 116 of the
Transfer of Property Act, 1882 because the plot in
question remained in their possession through the
appellant also merits rejection. The reason for this C
conclusion is that no evidence was produced before the
High Court to show that the appellant was continuing in
possession with the consent of 'P', his heirs or
respondent Nos.1 and 2. Rather, it was their pleaded case
that the appellant did not have any right to continue in
possession. [Para 20] [175-G-H; 176-A] D
6.3. Also, the Resolution dated 29.10.1975 though
passed in consonance with Clause 10 of initial lease
dated 28.10.1944, has to satisfy the test of
reasonableness, equality and fairness. Though, the initial E
lease was granted before coming into force of the
Constitution, while considering the issue of renewal of
lease the Corporation was duty bound to take action and
decision strictly in consonance with the constitutional
principles and decision to renew the lease in favour of F
'P' could not have been taken except after following a
procedure consistent with the equality clause, which was
not done. [Para 21] [176-A-C]
7. The appellant shall hand over possession of the
plot to the Corporation within a period of three months. G
After taking possession of the plot, the Corporation shall
alienate the same by sale, lease, or otherwise by auction
or by inviting tenders and after following a procedure
consistent with Article 14 of the Constitution. The
Corporation shall pay market value of the structure, as H
148 SUPREME COURT REPORTS [2012] 5 S.C.R.
A obtaining on the date of the order of the High Court to
the appellant. [Para 22] (176-D-E]
Case Law Reference:
(1971) 3 sec 864 referred to Para 3.17
B
2004 (3) SCR 56 referred to Para 3.17
1959 Suppl. SCR 130 held inapplicable Para 5
AIR 1969 Ker. 81 referred to Para 11
c (1968) A.C. 997 referred to Para 13
(1971) 2 QB 175 referred to Para 14
2011 (5) SCR 77 relied on Para 15
D 1967 SCR 703 referred to Para 15
1979 (3) SCR 1014 referred to Para 15
1975 (2) SCR 674 referred to Para 15
1980 (3) SCR 1338 referred to Para 15
E
1996 (6) Suppl. SCR 719 referred to Para 15
1990 (1) Suppl. SCR 625 referred to Para 15
1995 (1) Suppl. SCR 349 referred to Para 15
F 1996 (3) Suppl. SCR 597 referred to Para 15
CIVIL APPELLATE JURISDICTION : Civil Appeal Nos.
3107-3108 of 2012.
G From the Judgment & Order dated 16.10.2009 of the High
Court of Judicature at Bombay, Napur Bench in Writ Petition
No. 1613 of 1992 and Writ Petition No. 3661 of 2001.
Gagan Sanghi, Rameshwar Prasad Goyal for the
Appellant.
H
SAROJ SCREENS PVT. LTD. v. GHANSHYAM 149
Shekhar Naphade, Ashok Shrivastav, Manish Pitale, G.K. A
Sarda, Chander Shekhar, Ashri, Somnath Padhan, Satyajit A.
Desai, Sanjay V. Kharde for the Respondents.
The Judgment of the Court was delivered by
G.S. SINGHVI, J. 1. Leave granted. B
2. These appeals are directed against judgment dated
16.10.2009 of the Bombay High Court, Nagpur Bench whereby
the writ petitions filed by respondent nos. 1 and 2 were partly
allowed, Resolution dated 28.8.1991 passed by Municipal C
Corporation of the City of Nagpur (for short, 'the Corporation')
for renewal of lease in favour of the appellant in respect of Plot
No.5, Circle No.19/27, Division I, Old Sarai Road, Geeta
Ground Layout, Nagpur as also sanction accorded by the State
Government under Section 70(5) of the City of Nagpur D
Corporation Act, 1948 (for short, 'the Act') were quashed and
a direction was issued to Civil Judge (Senior Division), Nagpur
to decide Special Civil Suit No. 1135 of 1993 latest by
31.12.2010.
FACTS: E
3. On an application made by Gopaldas Mohta (father of
respondent No. 1 - Ghanshyam Mohta and father-in-law of
respondent No. 2 - Smt. Kamla Devi), Municipal Committee
of Nagpur (for short, 'the Committee') passed resolution dated F
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 G
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 H
150 SUPREME COURT REPORTS [2012) 5 S.C.R.
A 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
B
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 covenants provisions and
c conditions in these presents contained as shall be
applicable and shall always contain a covenant for further
renewal of the lease."
3.1 After about 3 years, Gopaldas Mohta leased out the
D plot to the appellant for a period of 27 years (from 28.3.1947
to 16.3.1974). The relevant portions of deed dated 10.9.1947
executed between Gopaldas Mohta and the appellant read as
under:
"THIS DEED OF LEASE made on the 10th day of
E September, 1947, between DIWAN BAHADUR Seth
Gopaldas Mohta, resident of Akola (hereinafter called the
Lessor) of the ONE PART, and Messrs Saroj Screens
Ltd., Amraoti, a joint stock company with limited liability,
represented by Mr. Anandrao son of Yadararo, Managing
F Director, resident of Amraoti, Taluq and District Amraoti,
(hereinafter called the Lessees) of the SECOND PART.
WITNESSETH AS FOLLOWS:
1. The Lessor holds and is in possession of a plot of land,
situated in the locality popularly known as ''The Geeta
Ground", in Sitabuldi of Nagpur city in the Central
Provinces and more particularly described in the scheduled
statement herewith below, which he holds under a lease
dated 17th March, 1944, granted by the Municipal
H
SAROJ SCREENS PVT. LTD. v. GHANSHYAM 151
[G.S. SINGHVI, J.]
Committee Nagpur, and on this plot, the Lessor has A
constructed a plinth for construction of a Cinema Theatre,
as per plans, sanctioned and approved by the said
Municipal Committee. Over this plot, certain building
materials, such as sand, stones, metal and other iron and
wooden material etc., belonging to the Lessor, have been B
collected and are lying. The Lessor hereby lessee the said
plot including the plinth and above mentioned materials
which have already been delivered into the possession of
the Lessees by the Lessor), to the Lessees, for a period
commencing from 28.3.1947 till 16th March, 1974, which c
is the entire unexpired period of the Lease which the
Lessor holds under the Municipal Committee, Nagpur.
The main lease in favour of the lessor, contains a clause
for renewal under which the lessor shall be entitled to have
the lease renewed in his favour, for a further period on the D
expiry of the present lease. This right of the lessor, is
however, retained by the lessor, for his own benefit and
the lessees shall have no claim to the interest thereby
created.
E
PROVIDED HOWEVER, if the lessees acquire the
interests of the lessor, as provided in Clause (5) below,
the lessees shall be entitled 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 F
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 Rs. 90,000/- (Rupees Ninety Thousand only) at any
time during the first five years of the lease and to purchase G
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 H
152 SUPREME COURT REPORTS r2012] -5 S.C.R.
A 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 Rs. 90,000/- only during the last
year before the expiry of the lease by afflux of time.
B
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 entitled to take over the structure after valuing
them in the manner hereinbefore provided. In case, he pays
c the value of that part of the structure which the lessees
have constructed to the lessees, then the entire structure
will thereafter belong to the lessor. In case, the lessor does
not elect to take over the materials and in case, the
lessees fail to exercise the option of acquiring the leased
D premises from the lessor as provided, then in that event,
the lessees may remove that part of the structure which he
may have constructed at his cost within reasonable time
of two months and on his failure to do so, the structure shall
thereafter belong to the Lessor and the lessees will have
E no right to the same or price thereof."
3.2. In 1959, there was a partition in the family of Gopaldas
Mohta and the plot in question came to the share of his wife
Smt. Gangabai. She assigned the same to Parmanand
F Kisandas Mundhada of Calcutta by executing deed dated
12.8.1960. Thereafter, the name of Parmanand Mundhada was
entered in the records of the Committee along with that of Smt.
Gangabai. After 12 years, the appellant sent letter dated
15.1.1973 to Parmanand Mundhada indicating therein that it
G was ready to pay Rs.90,000/- and purchase the interest created
in favour of Gopaldas Mohta vide lease deed dated
· 28.10.1944. The appellant also requested Parmanand
Mundhada to approach the Corporation, which had succeeded
the Committee, for renewal of the lease after 16.3.1974.
H 3.3. Parmanand Mundhada submitted application dated
SAROJ SCREENS PVT. LTD. v. GHANSHYAM 153
[G.S. SINGHVI, J.]
7.3.1974 to the Corporation for renewal of lease for a period A
of 30 years. However, without waiting for the Corporation's
response, the appellant filed Special Civil Suit No.96 of 1974
against Parmanand Mund~ada, Gopaldas Mohta, Gangabai
and the Corporation for the specific performance of agreement
dated 10.9.1947 executed by Gopaldas Mohta. During the B
pendency of the suit, Parmanand Mundhada died and his legal
representatives were brought on record.
3.4. The suit filed by the appellant was decreed by Civil
Judge, Senior Division, Nagpur (hereinafter referred to as, 'the C
trial Court') vide judgment dated 28.4.1980 but the same was
reversed by the High Court in First Appeal Nos. 95of1980 and
96 of 1980 filed by the heirs of Parmanand Mundhada and
respondent No.2 and the Corporation respectively. The relevant
portions of the High Court's judgment dated 25. 7.1991 are
extracted below: D
"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. E
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 F
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 G
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 H
154 SUPREME COURT REPORTS [2012] 5 S.C.R.
A 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
8
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 contract and thereby you have committed
breach thereof. In that event my client will be free
to take such steps as he may be advised and in
c the event of litigation you will be held liable for costs
and consequences. Please take notice.
Yours faithfully,
Sd/-
D Advocate
Counsel for M/s. Saroj Screens Pvt. Ltd.
The letter is self explanatory. It clearly calls upon the
defendant no. 1 to get the legal renewed and on failure to
perform that part of contract it would result in breach of the
E contract of his part. Therefore, the readiness or willingness
on the part of the plaintiff was made subject to renewal of
the lease which condition was never agreed upon. This is
more glaring when we peruse the reliefs claimed in the
plaint. In prayer clause (a) the plaintiff claimed a decree
F that the defendant no. 1 do obtain from the defendant no.
2 a renewed lease of the original (Exh. 120) on rent which
is fair and equitable, and in clause (aa) the relief claimed
was that on deposit of Rs. 79,000/- in Court the defendant
no. 1 do execute in favour of the plaintiff a deed of transfer
of all rights in the renewed lease granted to him by the
G
defendant no. 2. The pleadings and the evidence are
restricted to the allegations made in the two letters Exh.
98 and 99 only.
21. Therefore, no doubt is left in our mind that the plaintiff
H came forward seeking implementation of a different
SAROJ SCREENS PVT. LTD. v. GHANSHYAM 155
[G.S. SINGHVI, J.]
contract than the one agreed between the parties. A
Apparently the plaintiff had no desire to pay the amount
of Rs. 90, 0001- till such time the lease is renewed. There
was neither readiness or willingness on the part of the
plaintiff to implement the contract. We hence answer the
point at issue in the negative. The learned Court below had e
completely misdirected itself in coming to a contrary
conclusion not warranted by the facts on record."
(emphasis added)
3.5. During the pendency of the suit filed by the appellant, C
the Corporation passed Resolution No.162 dated 29.10.1975
for renewal of lease in favour of Parmanand Mundhada for a
period of 30 years subject to the condition of payment of ground
rent at the rate of Rs.13, 120/- per annum and penalty of
Rs.3,000/- for breach of the conditions embodied in lease deed D
dated 28.10.1944. The relevant portions of Resolution dated
29.10.1975 are reproduced below:
"Resolution No. 162: The term of the 30 years lease of plot
no. 5 situated on Geeta Ground, Sitabuldi, where upon
Anand Talkies is situate has expired on 16.3.1974. The E
present owner of that plot viz Shri Parmananddas
Kisandas Mundhada, resident of 55/58 lsra 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. F
xxx xxx xxx
With regard to the subject under consideration, the Hon'ble
Members have made a request that the House should G
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 H
156 SUPREME COURT REPORTS [2012] 5 S.C.R.
A 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
B House has taken unanimous decision to renew the lease
on other conditions for further 30 years by charging per
year Rs. 13, 120/- as ground rent, and the previous lease
having committee breach of two minor conditions, by
penalizing him Rs. 1500/- for each breach, total Rs.
c 3000/-, as shown in the concerned file.
The term of 30 years lease of Municipal Plot No. 5 situate
in Geeta Ground, Sitabuldi, on which Anand Talkies is
situate, having expire on 16.3.1974 and the present owner
of the plot Parmananddas having his residence at 55/58
D
lsra Street, Calcutta having made an application for further
renewal of the plot for further 30 years, as also considering
the notes prepared by the Hon'ble Municipal Commissioner
dated 17.10.1975 for the case has been renewed for
further 30 'sanctioned', 'sanctioned', on the following
E conditions.
(1) Considering the fact that the present market price in
comparison to old price, which is 10 times more, it being
proper to enhance the ground rent in ratio by 10 times, it
F was suggested that the ground rent of that plot should be
fixed at Rs. 13120/- per annum.
(2) The previous lessee of the lease deed have committed
breach of two conditions, Rs.1500/- for each breach, total
Rs. 3000/-should be recovered by way of fine from him.
G
(3) Other conditions will be as before."
3.6. Parmanand Mundtiada is said to have filed an appeal
under Section 397(3) read with Section 411 of the Act
H questioning the decision of the Corporation to increase the
SAROJ SCREENS PVT. LTD. v. GHANSHYAM 157
[GS. SINGHVI, J.]
ground rent and to impose penalty. However, the pleadings filed A
before this Court do not show whether Parmanand Mundhada
and/or his heirs pursued the appeal and the same was decided
by the Competent Authority.
3.7. After the judgment of the High Court, respondent nos.1 8
and 2 submitted application dated 1.8.1991 to the
Commissioner of the Corporation for entering their names in
the municipal records by asserting that the heirs of Parmanand
Mundhada had assigned the leasehold rights of the plot in their
favour by registered deeds dated 2.9.1985 and this fact had C
been brought to the notice of the Corporation vide letter dated
23.9.1985. However, instead of taking action on the request of
respondent nos. 1 and 2, the Corporation passed Resolution
No. 137 dated 28.8.1991 for renewal of lease in favour of the
appellant for a period of 30 years commencing from 16.3.1991
subject to the condition of payment of ground rent at the rate D
of Rs.20,000/- per annum. That resolution reads as under:
"Resolution No. 137: Since Messrs Saroj Screen Private
Limited has been paying from time to time ground rent of
the land and the land and building thereon are in E
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 Rs. 15,000/- per year by way of
ground rent of the land. Therefore, as by way of resolution F
dated 29.10.1975, bearing no. 162, the Nagpur Municipal
Corporation has fixed the ground rent at Rs. 13, 120/- per
year and Rs. 15,000/- by way of ground rent is being paid,
which is more than ground rent of Rs. 13, 120/- which is
fixed, there will be no kind of financial loss of the G
Corporation. M/s Saroj Screen Private Limited had paid
the amount of ground rent of Rs. 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 Rs. 15,000/- H
158 SUPREME COURT REPORTS [2012] 5 S.C.R.
A per annum and as per resolution no. 162 dated 29.10.197;5
fix the ground rent at Rs. 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 Rs. 13, 120/- in future ground rent of Rs. 20,000/-
8 should be recovered, which suggestion was made by
Hon'ble Member Shri Atalbahadur Singh. This suggestion
was unanimously sanctioned by the voice of acceptance."
3.8. In furtherance of the aforesaid resolution, lease deed
dated 4.9.1991 was executed between the Commissioner of
C the Corporation and the appellant.
3.9. Respondent Nos. 1 and 2 challenged the decision of
the Corporation to grant lease to the appellant in Writ Petition
No. 1613of1992 and prayed that Resolution dated 28.8.1991
D may be quashed and a direction be issued for registration of
lease deed in their favour because the heirs of Parmanand
Mundhada had assigned leasehold rights in their favour. They
pleaded that in view of Resolution dated 29.10.1975 vide which
the Corporation renewed lease in favour of Parmanand
E Mundhada for a period of 30 years, the subsequent resolution
was liable to be declared as nullity, more so, because while
deciding First Appeal Nos. 95 and 96 of 1980, the High Court
had found that the appellant was not ready and willing to
perform its part of agreement dated 10.09.1947.
F 3.10. In the written statement filed by the appellant, it was
pleaded that respondent nos. 1 and 2 do not have the locus
standi to challenge Resolution dated 28.8.1991 because the
plot had been assigned by Smt. Gangabai to Parmanand
Mundhada. It was further pleaded that the assignment deeds
G dated 2.9.1985 executed by the heirs of Parmanand Mundhada
had no sanctity in the eyes of law because tenure of the initial
lease granted to Ghanshyam Mohta had ended in 1974.
Another plea taken by the appellant was that Resolution dated
29.10.1975 passed by the Corporation for extending the term
H of lease in favour of Parmanand Mundhada had became
SAROJ SCREENS PVT. LTD. v. GHANSHYAM 159
[G.S. SINGHVI, J.]
infructuous because he did not pay the enhanced ground rent A
and penalty.
3.11. In the written statement filed on behalf of the
Corporation, an objection was taken to the maintainability of
the writ petition on the ground that the issues raised therein are
purely contractual and the same cannot be decided by the High
B
Court under Article 226 of the Constitution. On merits, it was
pleaded that assignment deeds dated 2.9.1985 are not binding
on the Corporation because it had not been apprised about the
transfer of leasehold rights by the heirs of Parmanand
Mundhada in favour of respondent nos. 1 and 2. C
3.12. At this stage, it will be appropriate to mention 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 o
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
E
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 F
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 G
lease subject to the condition that it shall have to withdraw the
writ petition. Thereupon, the appellant filed an application dated
6.5.1998 with a prayer that it may be allowed to withdraw the
writ petition. The same remained pending till 18.10.2001, on
H
160 SUPREME COURT REPORTS [2012] 5 S.C.R.
A which date the High Court dismissed Writ Petition No.1786 of
1996 as withdrawn.
3.14. In the meanwhile, the State Government accorded
sanction for grant of lease to the appellant for a period of 30
years, i.e., from 16.3.1991 to 15.3.2021. This was
8 communicated to the Corporation vide letter dated 12.6.2000.
3.15. On coming to know of the aforesaid decision of the
State Government, respondent nos.1 and 2 filed Writ Petition
No.3661 of 2001 and prayed that communication dated
C 12.6.2000 be quashed by contending that during the pendency
of Writ Petition Nos.1613 of 1992 and 1786 of 1996, there was
no justification for according sanction under Section 70(5) of
the Act. Another plea taken by respondent nos.1 and 2 was that
the decision of the State Government and the Corporation was
o violative of Article 14 of the Constitution inasmuch as public
property was transferred to the appellant without conducting
auction or inviting tenders so as to enable the members of
public to participate in the process of grant of lease.
3.16. In its reply, the appellant controverted the allegation
E of favoritism and pleaded that respondent nos. 1 and 2 cannot
question the sanction accorded by the State Government under
Section 70(5) of the Act because their predecessor had not
complied with the conditions incorporated in Resolution dated
29.10.1975. It was further pleaded that the sanction accorded
F by the State Government is not retrospective and the
Corporation is required to execute a new lease which would
be effective from 1991. Another plea taken by the appellant
was that respondent nos. 1 and 2 had not come to the Court
with clean hands inasmuch as they have suppressed the fact
G that the suit filed by them was pending before the Civil Court.
3.17. The Division Bench of the High Court overruled the
preliminary objections raised by the appellant and the
Corporation to the maintainability of the writ petition by relying
H
SAROJ SCREENS PVT. LTD. v. GHANSHYAM 161
[G.S. SINGHVI, J.]
upon the judgments of this Court in D.F. 0., South Kheri v. Ram A
Sanehi Singh (1971) 3 SCC 864 and S.J. S. Enterprises (P)
Ltd. v. State of Bihar (2004) 7 SCC 166. The Division Bench
held that when a public authority is said to have acted in violation
of the statutory provisions, the Court can grant relief to the
aggrieved person and the availability of the alternative remedy B
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 c
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, D
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 E
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 29.10.1975 passed by the F
Corporation for renewal of lease in favour of Parmanand
Mundhada had not been acted upon. Learned counsel
submitted that respondent nos. 1 and 2 had not produced any
evidence before the High Court to substantiate their assertion
that Parmanand Mundhada had filed an appeal under Section G
397(3) read with Section 411 of the Act questioning Resolution
dated 29.10.1975 to the extent of enhancement of ground rent
and imposition of penalty and argued that even if such an
appeal had been filed, the same did not entitle the beneficiary
of the resolution to claim renewal of lease without fulfilling the H
162 SUPREME COURT REPORTS [2012] 5 S.C.R.
A conditions incorporated therein. Learned counsel argued that
the Corporation did not commit any illegality by passing
Resolution dated 28.8.1991 and executing lease deed dated
4.9.1991 in favour of the appellant because Parmanand
Mundhada and his heirs did not come forward for the execution
B of lease deed in terms of Resolution dated 29.10.1975. He
further argued that sanction accorded by the State Government
under Section 70(5) of the Act was legally correct and the High
Court committed an error by nullifying the same on the specious
ground that during the subsistence of Resolution dated
c 29.10.1975, the Corporation could not have granted lease to
the appellant.
5. Shri Shekhar Naphade, learned .senior counsel
appearing for respondent nos. 1 and 2 referred to Clause 8 of
lease deed dated 28.10.1944 executed between the
D Committee and Gopaldas Mohta and argued that the
Corporation, which came to be constituted under the Act had
no option but to renew the lease because the option available
under that clause for resumption of the plot by paying market
value of the structure had not been exercised and Parmanand
E Mundhada in whose favour Smt. Gangabai had executed
assignment deed dated 12.8.1960 continued to enjoy the status
of lessee. Learned senior counsel relied upon Section 116 of
the Transfer of Property Act and the judgment of this Court in
DamodharTukaram Mangalmurti v. State of Bombay AIR 1959
F SC 639 and argued that failure of the Corporation to resume
the plot after paying market value of the structure leads to an
irresistible inference that the Corporation had decided to renew
the lease and, as a matter of fact, Resolution dated 29.10.1975
was passed to that effect. Shri Naphade laid considerable
G emphasis on the fact that in terms of Clause 8 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.
H 6. Before dealing with the arguments of the learned
SAROJ SCREENS PVT. LTD. v. GHANSHYAM 163
[G.S. SINGHVI, J.]
counsel, we consider it necessary to make the following A
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. 8
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.
c
(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 D
3 of C.A. No.1246of1991 filed by the appellant in First Appeal
No. 95 of 1980, which reads as under:
"3. However, during the pendency of the present appeal,
it is learnt, that the appellants have assigned their lease
E
hold rights in Plot no.5 in favour of one Shri
Ghayanshamdas Mohta and Smt. Kamla Devi Mohta of
Akola under a registered Indenture of Transfer dated 2nd
September 1985 and as such the present appellants have
no right, title or interest in the suit property. A
F
communication dated 23.9.1985 received by the
respondent no.2 from the said assignees is appended
herewith."
That apart, what is most surprising is that neither party has
produced copies of assignment deeds dated 2.9.1985. G
7. With the aforesaid handicap, we shall proceed to
consider whether the High Court committed an error by
quashing Resolution dated 28.8.1991 passed by the
Corporation and the sanction accorded by the State H
164 SUPREME COURT REPORTS [2012] 5 S.C.R.
A Government under Section 70(5) of the Act.
8. A reading of lease deed dated 28.10.1944 shows that
the Committee had leased out the plot to Gopaldas Mohta for
a period of 30 years commencing from 17.3.1944 with a clear
8 stipulation that at the end of 30 years' period it will have an
option to retake the structure by paying the prevailing market
value or renew the lease on revised ground rent for a further
term of 30 years by incorporating the covenants, provisions and
conditions contained in deed dated 28.10.1944 with a
C stipulation for further renewal of the lease. By lease deed dated
10.9.1947, Gopaldas Mohta transferred all the rights and
interests vested in him including the one relating to renewal of
the lease to the appellant, who was also given an option to pay
to the lessor, i.e. Gopaldas Mohta a sum of Rs.90,000/- during
the first five years of the lease and purchase all his rights from
D the Committee. An option was also given to the appellant to
acquire the interest of the lessor on payment of the same price
during the last year before expiry of the lease by efflux of time.
The appellant did exercise option for renewal of lease by
sending letter dated 15.1.1973 to Parmanand Mundhada
E subject to the condition of renewal of lease by the Corporation.
After some time, the appellant filed Special Civil Suit No.96/
1974 for specific performance, which was decreed by the trial
Court vide judgment dated 28.4.1980. However, the appellant's
joy proved to be short-lived because in the appeals filed by the
F heirs of 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
G 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
H rely upon the terms and conditions of lease deed dated
SAROJ SCREENS PVT. LTD. v. GHANSHYAM 165
[G.S. SINGHVI, J.]
10.9.1947 for contending that the Corporation was bound to A
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 8
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 or rescinded and C
during the subsistence of that resolution, neither the
Corporation could have renewed the lease in favour of the
appellant for 30 years commencing from 16.3.1991 nor the
State Government could have granted sanction under Section
70(5) of the Act for such renewal. D
(ii) Before passing the resolution for renewal of the lease
in favour of the appellant for a period of 30 years, the
Corporation did not obtain sanction of the State Government,
which was sine qua non for any such action /decision.
E
(iii) It, however, appears that by taking advantage of the
fact that it continued to have possession of the plot, the
appellant induced the functionaries of the Corporation to enter
into a clandestine compromise for forwarding a proposal to the
State Government to grant post facto sanction for renewal of F
the lease for 30 years from 16.3.1991 and the latter accorded
sanction without realizing that alienation of any right or interest
in a public property in favour of any person without following a
procedure consistent with the doctrine of equality is
impermissible. G
10. The issue deserves to be considered from another
angle. Section 70 of the Act which contains provisions
governing the disposal of municipal property or property vesting
in or under the management of the Corporation reads thus:
H
166 SUPREME COURT REPORTS [2012) 5 S.C.R.
A "70. Provisions governing the disposal of municipal
property or property vesting in or under the
management of Corporation.
(1) No nazul lands, streets, public places, drains or
irrigation channels shall be sold, leased or otherwise
B
alienated, save in accordance with such rules as the State
Government may make in this behalf.
(2) Subject to the provisions of sub-section (1 ), -
c (a) the Commissioner may, [in his discretion], grant a lease
of any immovable property belonging to the Corporation
including any right of fishing or of gathering and taking fruit,
flowers and the like, of which the premium of rent, as the
case may be, does not exceed [One Lakh] rupees for any
D period not exceeding twelve months at a time :
[Provided that every such lease granted by the
Commissioner other than a lease of a class in respect of
which the Standing Committee has by resolution exempted
the Commissioner from compliance with the requirements
E of this proviso, shall be reported by him to the Standing
Committee within fifteen days after the same has been
granted;]
(b) With the sanction of the Standing Committee the
F 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;
G (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 -
H
SAROJ SCREENS PVT. LTD. v. GHANSHYAM 167
[G.S. SINGHVl,,J.]
[(a) ...................... ] A
(b) with the sanction of the Standing Committee,
dispose of by sale or otherwise any moveable
propertybelonging to the Corporation:
(c) with the sanction of the Corporation, sell or 8
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 c
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:
D
Provided that -
(i) no property vesting in the Corporation in a trust shall
be leased, sold or otherwise conveyed in a E
manner that islikely to affect the trust subject to
which such property is held;
(ii) no land exceeding [five lakh] rupees in value shall
be sold, leased or otherwise conveyed without
the previoussanction of the State Government and F
every sale, lease orother conveyance of property
vesting in the Corporationshall be deemed to be
subject to the conditions andlimitations imposed
by this Act or by any otherenactment for the time
being in force. G
(6) Notwithstanding anything contained in this section
the Commissioner may, with the sanction of the
Corporation and with the approval of the State
Government, grant a lease, for a period not exceeding H
•
168 SUPREME COURT REPORTS [2012] 5 S.C.R.
A thirty years, of a land belonging to the Corporation which
is declared as a slum area under the provisions of the
Maharashtra Slum Area (Improvement, Clearance and
Redevelopment) Act, 1971 to a co-operative society of
slum dwellers, at such rent, which may be less than the
B market value of the premium, rent or other consideration,
for the grant of such lease, and subject to such conditions
as the Corporation may impose.
The approval of the State Government under this sub-
section may be given either generally for any class of such
c lands or specially in any particular case of such land:
Provided that, the Commissioner may, in like manner
renew, from time to time, the lease for such period and
subject to such conditions as the Corporation may
D determine and impose."
Though, the exercise of power by the Corporation under
the aforesaid section is not hedged with any particular condition
except that in a case like the present one, the alienation could
not have been made without the previous sanction of the State
E Government, but in our constitutional scheme compliance of the
doctrine of equality enshrined in Article 14 of the Constitution
has to be read as a condition precedent for exercise of power
by the State Government and the Corporation, more so, when
it relates to alienation of public property or any right or interest
F therein. In this context, it is necessary to emphasis that the
Corporation holds the property as a trustee of the public and
any alienation of such property or any right or interest therein
otherwise than by way of auction or by inviting bids would
amount to breach of that trust.
G
11. The concept of the '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
H of simply as a coercive machinery wielding the thunderbolt of
•
SAROJ SCREENS PVT. LTD. v. GHANSHYAM 169
[G.S. SINGHVI, J.]
authority. Now the Government is a regulator and dispenser of A
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 B
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. c
In V. Punanan Thomas v. State of Kera/a 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. Whatever
its activities, the Government is still the Government and D
will be subject to the restraints inherent in its position in a
democratic society. A democratic Government cannot lay
down arbitrary and capricious standards for the choice of
persons with whom alone it will deal."
E
12. The traditional view that the executive is not answerable
in the matter of exercise of prerogative power has long been
discarded. Prof. H.W.R. Wade in his work 'Administrative Law'
6th Edition highlighted distinction between the powers of public
authorities and those of private persons in the following words:- F
" ... The common theme of all the authorities so far
mentioned is that the notion of absolute or unfettered
discretion is rejected. Statutory power conferred for public
purposes is conferred as it were upon trust, no absolutely
- that is to say, it can validly be used only in the right and G
proper way which Parliament when conferring it is
presumed to have intended. Although the Crown's lawyers
have argued in m1merous cases that unrestricted
permissive language confers unfettered discretion, the truth
is that, in a system based on the rule of law, unfettered H
170 SUPREME COURT REPORTS [2012] 5 S.C.R.
A governmental discretion is a contradiction in terms.
The whole conception of unfettered discretion is
inappropriate to a public authority, which possesses
powers solely in order that it may use them for the public
good.
B
There is nothing paradoxical in the imposition of such legal
limits. It would indeed be paradoxical if they were not
imposed. Nor is this principle an oddity of British or
American law; it is equally prominent in French law. Nor
c is it a special restriction which fetters only local authorities:
it applies no less to ministers of the Crown. Nor is it
confined to the sphere of administration: it operates
wherever discretion is given for some public purpose, for
example where a judge has a discretion to order jury trial.
D It is only where powers are given for the personal benefit
of the person empowered that the discretion is absolute.
Plainly this can have no application in public law.
For the same reasons there should in principle be no such
thing as unreviewable administrative discretion, which
E
should be just as much a contradiction in terms as
unfettered discretion. The question which has to be asked
is what is the scope of judicial review, and in a few special
cases the scope for the review of discretionary decisions
may be minimal. It remains axiomatic that all discretion is
F 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
G 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,
H Lord Reid observed:-
SAROJ SCREENS PVT. LTD. v. GHANSHY~M 171
[G.S. SINGHVI, J.] .
"Parliament must have conferred the discretion with the A
intention that it should be used to promote the policy an,p
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 <!raw a hard and B
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
persons aggrieved were not entitled to the protection of c
the court."
14. In Breen v. Amalgamated Engineering Union (1971)
2 QB 175, Lord Denning MR observed:-
"The discretion of a statutory body is never unfettered. It D
is a discretion which is to be exercised according to law.
That means at least this: the statutory body must be guided
by relevant considerations and not by irrelevantly. It its
decision is influenced by extraneous considerations which
it ought not to have taken into account, then the decision E
cannot stand. No matter that the ·statutory body may have
acted in good faith; nevertheless the decision will be set
aside. That is established by Padfield v. Minister of
Agriculture, Fisheries and Food which is a landmark in
modern administrative law." F
15. The question whether the State and I or its agency I
instrumentality can transfer the public property or interest in
public property in favour of a private person by negotiations or
in a like manner has been considered and answered in
negative in several cases. In Akhil Bhartiya Upbhokta G
Congress v. State of Madhya Pradesh (2011) 5 SCC 29, this
Court was called upon to examine whether the Government of
Madhya Pradesh could have allotted 20 acres land to Shri
Kushabhau Thakre Memorial Trust under the M. P. Nagar Tatha
Gram Nivesh Adhiniyam, 1973 read with M. P. Nagar Tatha H
172 SUPREME COURT REPORTS [2012] 5 S.C.R.
A Gram Nivesh Vikasit Bhoomiyo, Griho, Shavano Tatha Anya
Sanrachanao K Vyayan Niyam, 1975. After noticing the
provision of the Act and the Rules, as also those contained in
M.P. Revenue Book Circular and the judgments of this Court
in S. G. Jaisinghani v. Union of India AIR 1967 SC 1427,
B Ramana Dayaram Sheffy v. International Airport Authority of
India (1979) 3 SCC 489, Erusian Equipment and Chemicals
Ltd. v. State of WB. (1975) 1 SCC 70, Kasturi Lal Lakshmi
Reddy v. State of J&K (1980) 4 SCC 1, Common Cause v.
Union of India (1996) 6 SCC 530, Shrilekha Vidyarthi v. State
C of U. P. (1991) 1 SCC 212, UC v. Consumer Education &
Research Centre (1995) 5 SCC 482, New India Public School
v. HUDA (1996) 5 SCC 510, the Court culled out the following
propositions:
"What needs to be emphasised is that the State and/or its
D
agencies/instrumentalities cannot give largesse to any
person according to the sweet will and whims of the
political entities and/or officers of the State. Every action/
decision of the State and/or its agencies/instrumentalities
to give largesse or confer benefit must be founded on a
E 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
F 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
G 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
H
SAROJ SCREENS PVT. LTD. v. GHANSHYAM 173
[G.S. SINGHVI, J.]
made by individuals, bodies, organisations or institutions A
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 of largesse the State
cannot exclude other eligible persons from lodging B
competing claim. Any allotment of land or grant of other
form of largesse by the State or its agencies/
instrumentalities by treating the exercise as a private
venture is liable to be treated as arbitrary, discriminatory
and an act of favouritism and/or nepotism violating the soul c
of the equality clause embodied in Article 14 of the
Constitution."
16. The factual matrix of this case shows that before
granting 30 years' lease of the plot in favour of the appellant,
the Corporation neither issued any advertisement nor followed D
any procedure consistent with the doctrine of equality so as to
enable the members of the public to participate in the process
of alienation of public property. Therefore, the conclusion
reached by the High Court, though for different reasons, that
Resolution dated 28.8.1991 and the sanction accorded by the E
State Government vide letter dated 12.6.2000 are legally
unsustainable does not call for interference by this Court.
17. We are also convinced that even though the lease
granted to Gopaldas Mehta was renewed in favour of f
Parmanand Mundhada vide Resolution dated 29.10.1975,
respondent Nos.1 and 2 cannot derive any benefit from the said
renewal merely because the Corporation did not cancel or
rescind the resolution. It was neither the pleaded case of
respondent Nos.1 and 2 nor any material was produced by G
them before the High Court to show that Parmanand Mundhada
had taken any action in furtherance of Resolution dated
29.10.1975 and fresh lease deed was executed in his favour.
The only plea taken by them was that Parmanand Mundhada
had filed an appeal under Section 397(3) read with Section 411 H
against increase in the ground rent and the imposition of
174 SUPREME COURT REPORTS [2012] 5 S.C.R.
A penalty. However, nothing has been said about the fate of that
appeal. If Parmanand Mundhada, his heirs or respondent Nos.1
and 2 felt that the disposal of the appeal has been unduly
delayed then they could have filed a writ for issue of a
mandamus directing the appellate authority to decide the
B appeal within a specified period but no such step is shown to
have been taken by either of them. Therefore, we are
constrained to take the view that Resolution dated 29.10.1975
had become redundant and the same can no longer be relied
upon by respondent Nos.1 and 2 for claiming any right or
c interest in the plot.
18. The ratio of the judgment in Damodhar Tukaram
Manga/murti 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
D 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
E 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 Rs. 3-8-
F 0 to Rs. 21-14-0 in accordance with Clause Ill 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
G in favour of the plaintiff and his view was confirmed by the lower
appellate Court. When the matter was taken up before the High
Court, the Division Bench consisting of the Chief Justice and
Mudholkar, J expressed divergent views. The third Judge to
whom the matter was referred agreed with the learned Chief
H Justice that the Civil Court did not have jurisdiction in the
SAROJ SCREENS PVT. LTD. v. GHANSHYAM 175
[G.S. SINGHVI, J.]
matter. By majority of 2:1, this Court reversed the judgment of A
the High Court. Speaking for the majority, S. R. Das, J made
the following observations:
"We consider that the words" fair and equitable 'must be
given their due meaning and proper effect. The question B
then asked is - what meaning is to be given to the words
"such ... as the lessor shall determine". It is indeed true that
these words constitute an adjectival clause to the
expression "fair and equitable enhancement", but we
consider that the meaning of the adjectival clause is merely
this: the lessor must first determine what it considers to be C
fair and equitable enhancement; but if in fact it is not so, it
is open to the lessee to ask the court to determine what
is fair and equitable enhancement. We do not think that
on a proper construction of the clause, the intention was
to oust the jurisdiction of the court and make the D
determination of the enhancement by the lessor final and
binding on the lessee."
19. In the present case, we are not concerned with the
question whether the decision of the Corporation to increase E
the rent was legally correct and justified because, as mentioned
above, the appeal allegedly filed by Parmanand Mundhada
under Section 397 (3) read with Section 411 of the Act was
not pursued to its logical end and in the writ petitions filed by
them, respondent Nos.1 and 2 did not question ten times F
increase in the rent payable by the lessee.
20. The argument of Shri Shekhar Naphade, learned
senior counsel for respondent Nos.1 and 2 that the Corporation
is bound to renew the lease granted to his clients in terms of
Section 116 of the Transfer of Property Act, 1882 because the G
plot in question remained in their possession through the
appellant also merits rejection. The reason for this conclusion
is that no evidence was produced before the High Court to
show that the appellant was continuing in possession with tile
consent of Parmanand Mundhada, his heirs or respondent H
176 SUPREME COURT REPORTS [2012] 5 S.C.R.
A Nos.1 and 2. Rather, it was their pleaded case that after expiry
of the period specified in lease deed dated 10.9.1947, the
appellant did not have any right to continue in possession.
21. We are also of the view that Resolution dated
29.10.1975 though passed in consonance with Clause 10 of
8
lease dated 28.10.1944, has to satisfy the test of
reasonableness, equality and fairness. Though, the initial lease
was granted to Gopaldas Mohta before coming into force of
the Constitution, while considering the issue of renewal of lease
the Corporation was duty bound to take action and decision
C strictly in consonance with the constitutional principles and
decision to renew the lease in favour of Parmanand Mundhada
could not have been taken except after following a procedure
consistent with the equality clause, which was not done.
D 22. In the result, the appeals are dismissed. The appellant
shall hand over possession of the plot to the Corporation within
a period of three months. After taking possession of the plot,
the Corporation shall alienate the same by sale, lease, or
otherwise by auction or by inviting tenders and after following
E a procedure consistent with Article 14 of the Constitution. The
Corporation shall pay market value of the structure, as obtaining
on the date of the order of the High Court to the appellant.
B.B.B .. Appeals dismissed.
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