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Supreme Court Of India
Bharat Petroleum Corpn.Ltd - Appellant
Versus
Maddula Ratnavalli - Respondent
Decided On : 04/27/2007
Burmah Shell - Acquisition of Undertakings in India - 1976 Act, Section 2A(c), 3, 5, 7 - The judgment discusses the Burmah Shell (Acquisition of Undertakings in India) Act, 1976 and its provisions including the transfer of title, right, and interest, renewal of lease, and the statutory rights of the Government company. The court emphasizes the need for the State to act fairly and reasonably, and the requirement for objective criteria in exercising statutory powers.
Fact of the Case:
The appellant, a Government company, sought renewal of a lease under the Burmah Shell (Acquisition of Undertakings in India) Act, 1976. The respondents refused, leading to a suit for eviction. The trial court dismissed the suit, but the appellate court allowed it. The High Court upheld the appellate court's decision. The appellant appealed to the Supreme Court.
Finding of the Court:
The Supreme Court held that the appellant's desire for lease renewal must be based on objective criteria and must conform to the doctrine of fairness. The court emphasized the need for the State to act fairly and reasonably, even when exercising statutory powers. The court also noted that the possession of the leaseholding had already been delivered to the respondents.
Issues: The issues revolved around the appellant's statutory right to lease renewal, the requirement for the State to act fairly and reasonably, and the delivery of possession to the respondents.
Ratio Decidendi: The court emphasized the need for the State to act fairly and reasonably, and the requirement for objective criteria in exercising statutory powers. The court also noted that possession of the leaseholding had already been delivered to the respondents, leading to the dismissal of the appeals.
Final Decision: The appeals were dismissed with costs, and the possession of the leaseholding had already been delivered to the respondents.
JUDGMENT:
S.B. Sinha, J.
1. Leave granted.
2. Appellant is a Government company. The Parliament enacted the Burmah Shell (Acquisition of Undertakings in India) Act, 1976 (The said Act), inter alia, to provide for acquisition and transfer of the title, right and interest in the "Burmah Shell Oil Storage and Distributing Company of India Ltd." to Bharat Petroleum Corporation Limited. The said Act came into force on 24.01.1976 which was the appointed day fixed within the meaning of Section 2A(c) of the Act. By reason of Section 3 of the said Act the right, title and interest of Burmah Shell stood transferred to and vested in the Central Government. Section 5 of 1976 Act provides that the Central Government shall be deemed to be the lessee or tenant under the circumstances specified therein. Sub-section (2) of Section 5 which is relevant for our purpose reads thus :
"On the expiry of the terms of any lease or tenancy referred to in sub-section (1) such lease or tenancy shall if so desired by the Central Government be renewed on the same terms and conditions on which the lease or tenancy was held by Burmah-Shell immediately the appointed day."
3. It is not in dispute that the Central Government in exercise of its power conferred upon it under section 7 of the said Act directed that the undertaking of the Burmah-shell shall vest in the appellant herein which is a Government company; the consequences, inter alia, wherefor is laid down in sub-section (3) thereof which reads as under :
"The provisions of sub-section (2) of section 5 shall apply to a lease or tenancy, which vests in a Government company, as they apply to a lease or tenancy vested in the Central Government and reference therein to the "Central Government" shall be construed as a reference to the Government company."
4. Burmah-shell, the predecessor-in-interest of the appellant was a lessee for a period of 30 years by virtue of a deed of lease which was executed on or about 25.07.1959 by the respondent. The stipulated rent was Rs.50/- per month. On expiry of the period of lease on 30.08.1985, the appellant exercised its purported right of renewal by issuing a notice on or about 24.05.1989 stating :
"On 1st August, 1977, another fresh certificate of incorporation was issued under the same section of the Companies Act, 1956, effecting the change in the name of the Company from Bharat Refineries Ltd., to Bharat Petroleum Corporation Ltd., which change as before does not affect any rights or obligations of the Company.
This is to advise you that in terms of Section 5 and Section 7(3) of the Burmah-Shell (Acquisition of Undertaking in India) Act, 1976, extract of which is enclosed for your reference, we desire to renew the lease for a further period of 30 years commencing from
25.7.1989 on the same terms and conditions on which the lessee abovementioned viz. Burmah-Shell Oil Storage & Distributing Co. of India Ltd., held the lease immediately before the appointed day viz. 24th January, 1976.
May we therefore, request you to let us know when it will be convenient for you to have the lease registered on terms similar to those existing in the current lease. On receipt of your advice in this matter, we shall take further action."
5. Respondents did not agree thereto. They, on the other hand, by a letter dated 26.08.1990 stated that as the rent in respect of the said land has not been paid and the provisions of the said Act have no application, the tenancy shall stand terminated with effect from 24.09.1990. Appellant was called upon to vacate and deliver possession of the said premises stating :
"Please therefore take notice that if you fail to vacate and deliver vacant possession of the said property immediately after 24.09.1990 paying damages for use and occupation at Rs.5,000/- per month and the costs of this notice to my clients, they will be constrained to file a suit against you for appropriate reliefs and that you will also be liable for all my clients cost."
6. Despite s
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