IMPORTANT POINTS
Legitimate expectation means that the expectation must be legitimate or valid.
A decree does not bind parties not parties to the suit.
Mortgage of a leased Nazul property without prior sanction of the State Government is bad in law.

Headnote:(a) Administration of Justice – Suppression of fact – Appellant Bank filing suit in Calcutta suppressing the fact that the suit property belongs to State of UP – Mortgage decree passed in terms of the settlement – State of UP not a party – The mortgage decree not binding on State of UP – Even the decree states that it will be binding on the parties to the settlement only. (Para 19)
       (b) Government Grants Act, 1895 – Sections 2 and 3 r/w Forms 2 and 3, Nazul Rules – Lessee ABP mortgaging the lease property to appellant Bank without any prior written sanction from the lessor State of UP Government – Mortgage bad in law – Appellant Bank not having any right in the Nazul property – Appellant Bank had no right auction the Nazul property for recovering its dues from the lessee ABP. (Para 38, 39)
       (c) Doctrine of Legitimate expectation – High Court of Allahabad giving the direction to convert leasehold interest as freehold interest in favour of the Bank – Mortgage done by the ABP in favour of appellant Bank itself being bad in law, expectation of the appellant Bank was invalid – High Court erred in applying the doctrine and giving the direction. (Para 40, 41, 44)
       (2006) 8 SCC 381; (2009) 1 SCC 180 – Relied upon
       Facts of the case:
       The property in question i.e. Bungalow no.19, Clive Road, Allahabad was initially leased out to one Ms. Mortha Anthony on 11.8.1887 for 50 years and the said period expired on 11.8.1937. On 7.4.1945, the lease was renewed in favour of Miss Verna Anthony and Miss Leena Anthony for another 50 years by the Collector Allahabad, for the Governor of United Provinces, which was made effective from 1.9.1937, and as such, the said lease was valid up to 31.8.1987. Subsequently, on 22.10.1945, the lease was transferred in favour of M/s. Amrita Bazar Patrika Pvt. Ltd.. A lease deed was executed on 25.07.1949 by the State of Uttar Pradesh in favour of the ABP Company for 50 years from the first day of September 1937 in pursuance of G.O. No.1286/XI-780/45 dated 22.03.1947.
       The United Bank of India had advanced loan and credit facilities to M/s ABP Pvt. Ltd. for which the company alleged to have mortgaged their immovable properties at Calcutta and Allahabad, including leasehold property situated at 19, Clive Road, Allahabad.
       For recovery of its dues, the Bank had filed a Suit at Calcutta High Court in the capacity of mortgagee of the various properties of the said Company including 19, Clive Road, (25 and 25-A Chikatpur Nasibpur Bakhtiyara), Allahabad, which was held by the said Company as lessee.
       In the meanwhile, the Additional District Magistrate (F & R) Allahabad issued a show cause notice dated 19.12.1998 to the Company M/s. ABP Pvt. Ltd. as to why their lease right over 19, Clive Road, may not be terminated. M/s ABP Pvt. Ltd. did not challenge the notice. The appellant on the basis of the mortgage decree challenged the notice by filing Writ Petition. The Bank further requested for conversion of lease land into free hold.
       When the decretal amount was not paid to the Bank by the mortgagor-ABP Company, the Bank filed an application in the Calcutta High Court for transfer of execution applications to the Debt Recovery Tribunal for issuance of recovery certificates.
       On the basis of consent of the parties the Debt Recovery Tribunal passed an order pursuant to which an auction sale notice was published inviting prospective purchasers to participate in the auction sale of the property allegedly mortgaged to the appellant United Bank of India.
       The offer of Jvine Development Pvt. Ltd. was finally accepted. Although the said Jvine Development Pvt. Ltd. deposited the 25 % amount, it did not deposit the remaining amount. The Jvine Co. then asked the Bank to first get the said property converted into freehold or have a transferable right in respect of the said property. Thereafter, a show cause notice was issued by the Bank upon the Jvine Development Pvt. Ltd. A writ petition was filed by the Company before the High Court and the High Court stayed the show cause notice.
       The District Magistrate, Allahabad rejected the application of the Bank for grant of free hold right in respect of the land in question i.e. 19, Clive Road, Allahabad. The Bank made a representation to the State Government.
       The Division Bench of the High Court allowed the writ petitions preferred by the Bank and M/s. Jvine Development Pvt. Ltd.
       Finding of the Court:
       Appellant Bank does not have any right or interest in the Nazul property in question.
       Result: Civil Appeal No. 5254 of 2010 allowed and Civil Appeal Nos. 1969-1970 of 2010, 4688 of 2010 and 2462 of 2010 dismissed.

JUDGMENT

M.Y. Eqbal, J.:

Since all these appeals arise out of a common judgment and order dated 3.11.2009, they have been heard together and disposed of by this common judgment.

2. By the impugned judgment dated 3.11.2009 passed by a Division Bench of the Allahabad High Court, the writ petition filed by the writ petitioner United Bank of India was allowed and necessary directions were issued. Aggrieved by those directions, the appellants have come to this Court.

3. In the writ petition No.775 of 1999, the writ petitioner namely United Bank of India sought the following reliefs:

“a) issue a writ, order or direction in the nature of certiorari quashing the impugned show cause notice dated 19.12.1998 contained in Annexure ‘6’ to this writ petition.

b) issue a writ, order or direction in the nature of prohibition restraining the respondents from canceling the lease with regard to property no.19, Clive Road, Allahabad.

c) issue a writ, order or direction in the nature of prohibition restraining the respondents from converting the lease of property no.19, Clive Road, Allahabad, into free hold in favour of any other person.

d) issue a writ, order or direction in the nature of mandamus directing the respondents nos.1 to 4 to accept the application and money for conversion of lease hold rights with regard to property no.19, Clive Road, Allahabad, into free hold, as per Government order dated 4.12.1998, contained in Annexure ‘7’ to this writ petition in favour of the petitioner bank.

e) issue a writ, order or direction in the nature of mandamus directing respondents nos.1 to 4 to renew the lease in respect of the premises No.19, Clive Road, Allahabad, and to execute the necessary lease deed with reference to the decretal rights of the petitioner bank.

f) Issue any other suitable writ, order or direction which this Hon’ble Court may deem just and proper in the circumstances of the case.”

4. The facts of the case in brief as narrated in the writ petition are that the property in question i.e. Bungalow no.19, Clive Road, Allahabad was initially leased out to one Ms. Mortha Anthony on 11.8.1887 for 50 years and the said period expired on 11.8.1937. On 7.4.1945, the lease was renewed in favour of Miss Verna Anthony and Miss Leena Anthony for another 50 years by the Collector Allahabad, for the Governor of United Provinces, which was made effective from 1.9.1937, and as such, the said lease was valid up to 31.8.1987. Subsequently, on 22.10.1945, the lease was transferred in favour of M/s. Amrita Bazar Patrika Pvt. Ltd. (in short, “the ABP Company”) by means of a registered deed. On the basis of the said transfer deed, a lease deed was executed on 25.07.1949 by the State of Uttar Pradesh in favour of the ABP Company for 50 years from the first day of September 1937 in pursuance of G.O. No.1286/XI-780/45 dated 22.03.1947. Consequent thereupon, the name of the Company was mutated as lessee in respect of the property situated at 19, Clive Road, Allahabad in the Nazul property register. The ABP Company, having its registered office in Calcutta, its Managing Director has been carrying on two businesses of publishing newspapers from Calcutta as well as from Allahabad and other regional offices all over the country. The Company owns two properties at Allahabad being premises no.19, Clive Road, Allahabad and premises no.10, Edmonston Road, Allahabad.

5. Further the case of the appellant is that the United Bank of India (in short, “the Bank”) had advanced credit facilities to the Company M/s ABP Pvt. Ltd. and the said Company had taken loan for the purposes of giving salaries to their staff as well as to modernize its printing technology for which the company alleged to have mortgaged their immovable properties at Calcutta and Allahabad, including leasehold property situated at 19, Clive Road, Allahabad by means of deposit of title deeds. Since the Company became irregular in paying the loan instalments, the Bank issued a demand notice calling upon the

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2015 Supreme(SC) 1071

IMPORTANT POINTS Legitimate expectation means that the expectation must be legitimate or valid. A decree does not bind parties not parties to the suit. Mortgage of a leased Nazul property without prior sanction of the State Government is bad in law.

Cases Referred (2)

IMPORTANT POINTS
Legitimate expectation means that the expectation must be legitimate or valid.
A decree does not bind parties not parties to the suit.
Mortgage of a leased Nazul property without prior sanction of the State Government is bad in law.