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SUPREME COURT OF INDIA
MADAN B. LOKUR, DEEPAK GUPTA, JJ.
Kundla Press and Oil Mill Pvt. Ltd. – Appellant(s)
Versus
State of Gujarat & Ors. – Respondent(s)
CIVIL APPEAL NO.4536 OF 2017 (Arising out of Special Leave Petition (Civil) No.30727 of 2016)
Decided On : 28-03-2017
(b) Property law – Public property – Lease – Granted for setting up oil mill at a very meager rent – Appellant not setting up oil mill – The land could not be utilized for a purpose other than the purpose of lease – Instead of setting up oil mill appellant constructing commercial complex – Earning crores of rupees but paying only a few hundred rupees to Municipality – Not permissible. (Para 10)
Facts of the case:
28,176 square metres of land in Savarkundla was given on lease to the appellant Company in the year 1922 for a period of 30 years for running an oil mill. The lease expired in the year 1952. Thereafter, fresh lease deed was executed in favour of the appellant by the Administrator of the Savarkundla Municipality on 18.09.1956 for a further period of 30 years and it was to expire in the year 1982.
In the meanwhile, the Savarkundla Municipality issued two notices to the appellant company in the year 1976 asking the appellant company to handover the land to the Municipality. A dispute arose which was referred to Arbitration. The Arbitrator made the award in favour of the company on 11.03.1978. Decree in terms of the Award had also been passed.
However the Collector, Savarkundla cancelled the lease deed on the ground that the appellant was trying to raise construction on the land in question. Thereafter, the appellant filed a Writ Petition which was allowed and the order of the Collector was set aside.
Thereafter also, no lease deed was executed since the Municipality did not have the power to execute the lease deed for more than 10 years. Finally, on 23.10.1991, the Government of Gujarat issued an order that the lease deed may be renewed for a further term of 30 years from 01.04.1982. This lease deed was made effective for a period of 30 years from 01.04.1982 till 31.03.2012.
Finding of the Court:
The appellant is not entitled to claim that lease deed must be renewed in his favour.
Result: Appeal dismissed.
JUDGMENT
DEEPAK GUPTA, J.
Leave granted.
2. This Civil Appeal is directed against the judgment dated 06.09.2016 delivered in Letters Patent Appeal No. 797 of 2016 whereby the appeal filed by the appellant was dismissed and the judgment of the learned Single Judge passed in Special Civil Application No. 352 of 2013 was upheld.
3. The facts necessary for decision of the case are that 28,176 square metres of land in Savarkundla was given on lease to theappellant Company in the year 1922 for a period of 30 years for running an oil mill. The lease expired in the year 1952. Thereafter, fresh lease deed was executed in favour of the appellant by the Administrator of the Savarkundla Municipality on 18.09.1956. In this lease deed it was mentioned that on this leased area, there are factories, residential units, warehouse (godown), press factory, expeller and office buildings etc. which were constructed by the appellant. The lease deed was granted for a further period of 30 years. Relevant portion of the lease deed reads as follows:
"The Deed of Lease would be renewed on expiry of the same. And based on the conditions prevailing at that time changes in the amount of rent may be made by the Municipality. The Municipality will have the right to do so"
The aforesaid lease deed was to expire in the year 1982.
4. It appears that, in the meanwhile, the Savarkundla Municipality issued two notices to the appellant company in the year 1976 asking the appellant company to handover the land to the Municipality. A dispute arose since the company did not handover the possession of the leased property. Thereafter, this dispute was referred to the Arbitration. The Arbitrator made theaward in favour of the company on 11.03.1978. The Arbitrator held as follows:
"....The Company can carry out any sort of construction it may deem fit and for any purpose it may find useful for. And the Municipality is liable to grant permission for construction without laying any condition. In this regard, as stated above, the Company has the right to renew the Deed of Lease and so the only question that arises is that whether the Company can carry out construction on the aforesaid land or not. This land has been given this land for its business (sic). Therefore the Company can carry out construction over this land for its business........"
5. The operative portion of the Award reads as follows:
"3. The Company can carry out on the land construction which it deems proper and for such use as it deems proper. Since the Municipality is an autonomous body and the Rent Act is not applicable to the land owned by a local autonomous institution. In case of such properties the Rights of Tenants and Property Owners are as per the provisions of the Transfer of Properties Act. The Municipality is responsible to grant the permission for construction as per the permission of construction granted by the Company."
The Arbitrator held that the appellant company was entitled to renewal of the lease deed and was also entitled to make construction on the land in question connected with its business. This Award was made Rule of the Court on 26.04.1978.
6. Though the Award was passed in favour of the company and the Decree in terms of the Award had also been passed, the Collector, Savarkundla cancelled the lease deed on the ground that the appellant was trying to raise construction on the land in question. Thereafter, the appellant filed a Writ Petition being Special Civil Application No. 845 of 1978. This Writ Petition was allowed and the order of the Collector was set aside. Thereafter also, no lease deed was executed since the Municipality did not have the power to execute the lease deed for more than 10 years. Finally, on 23.10.1991, the Government of Gujarat issued an order that the lease deed may be renewed for a further term of 30 years from 01.04.1982. In actual fact, this lease deed was only executed on 12.04.2007. However, this lease deed was made effective for a period of 30 years from 01.04.19
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