IMPORTANT POINT
Having constructed a house on a lease of land given for its construction, the lessee did not contravene clause 1(vii) of lease merely because he let out 1st floor of the house for non-residential purpose.

JUDGMENT

Khare, CJI.-By lease deed dated December 10, 1952 executed by the appellants herein, a plot of land at A/25, Nizamuddin West, New Delhi was leased out for 99 years to the predecessor in-interest of Respondent No. 1. The aforesaid land was demised by the appellant herein under the Displaced Persons (Compensation and Rehabilitation) Act, 1954 (hereinafter referred to as the Act ).

2. The said lease was executed on terms and conditions stipulated in Appendix XIII of Rule 40(3) of the Rules framed under the Act. Clause 1(vii) of the lease deed runs as under:

"1. The lessee doth to the intent that the burden of the covenants may run with the said land and may bind any permitted assignee thereof hereby covenant with the lessor as follows:

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"(vii) not to use the said land and buildings that may be erected thereon during the said term for any purpose other than the purpose of constructing a house without the previous consent in writing of an officer appointed by the lessor in this behalf; provided that the lease shall become void if the land is used for any purpose other than that for which the lease is granted not being a purpose subsequently approved by the said officer."

3. It is not disputed that respondent No.1 herein constructed a house over the leased land. However, respondent No.1 let out the ground floor, the first floor and the second floor of the house to various tenants. The first floor of the house was leased out to the Life Insurance Corporation of India for non-residential purpose. Since the first floor was let out to Life Insurance Corporation of India, the appellant herein sent a notice dated July 3, 1970 to respondent No. 1 herein pointing out that the lease of first floor of the house to the Life Insurance Corporation of India being for a non-residential purpose, the respondent No. 1 has contravened clause 1 (vii) of the lease deed. By the said notice, the appellants demanded payment of penal charges for the contravention of terms of lease deed. By another letter dated December 14, 1972, for the aforesaid violation of the terms of the lease deed the charges were quantified by the appellant at a sum of Rs. 39,039.92. Respondent no. 1 herein replied to the aforesaid notice stating that he had not committed any breach of the terms of the lease deed and, therefore, was not obliged to pay any penal charges. Since no penal charges were paid by respondent no. 1 as demanded, the appellant withdrew the offer of the penal charges and respondent no. 1 was informed that further action to re-enter in the house or otherwise would be considered as per the relevant terms of the lease deed without any further notice. The appellant thereafter on August 18, 1973 sent a notice to respondent no. 1 informing him that since he has committed the breach of Clause 1 (vii) of the lease deed, therefore the appellant was constrained to exercise the right of re-entry. By the said notice, the respondent no. 1 was also informed that his right, title and interest in the premises are extinguished and the said premises stands vested in the President of India on account of the breach of the terms of lease deed committed by him. Respondent No. 1 was further asked to deliver the physical possession of the premises to the appellant. It is in this context respondent No. 1 filed a petition under Article 226 of the Constitution challenging the notice dated August 18, 1973 issued by the appellant. Before the High Court, respondent No. 1 inter alia contended that he has not contravened the terms of the lease deed, that he admittedly has constructed a house over the leased land and that its use for non-residential purposes is not a contravention of the terms of lease deed. These contentions of respondent No. 1 herein were accepted by the High Court. Consequently, the Writ Petition was allowed and the impugned notice was set aside. Aggrieved by t