1983 Supreme(Del) 31

High Court Of Delhi
EDWARD KEVENTERS (SUCCESSORS) PRIVATE LIMITED - Appellant
Versus
UNION OF INDIA - Respondent
Decided On : 02/07/1983

The Government Grants Act, 1895, applies to all grants or other transfers of land or of any interest therein heretofore made or hereafter to be made (by or on behalf of the State) to, or in favour of any person, whomsoever, but every such grant or transfer shall be construed and take effect as if the Transfer of Property Act, 1882 had not been passed.

Headnote:

PERPETUAL LEASE - BREACH OF COVENANTS - FORFEITURE - WAIVER - DAMAGES - MALA FIDES - REGULARISATION OF BREACHES - CONDITIONS - WRIT PETITION - MAINTAINABILITY.

Fact of the Case:

The petitioners were granted a perpetual lease in 1920 for the purpose of constructing a dairy farm. The lease contained covenants prohibiting the lessee from erecting or suffering to be erected on any part of the premises any buildings other than the dairy farm buildings, making any alteration in the plan or elevation of the dairy or attached buildings, or carrying on or permitting to be carried on the said premises any trade or business other than that of a dairy farm. The petitioners constructed sheds and made deviations from the approved plan. The respondents issued notices alleging breaches of the covenants and demanding payment of damages. The petitioners paid damages for some of the breaches and submitted plans for alterations and additions. The respondents, however, refused to regularize the breaches and issued a notice of re-entry. The petitioners filed a writ petition challenging the validity of the notice of re-entry and the orders of eviction passed by the Estate Officer and the Additional District Judge.

Finding of the Court:

The court held that the lease was governed by the Government Grants Act, 1895, and not by the Transfer of Property Act, 1882. The court further held that the writ petition was maintainable as the petitioners were challenging the arbitrary and capricious manner in which the respondents had acted. On the merits, the court held that the structures complained of constituted breaches of the covenants of the lease. However, the court also held that the breaches had been condoned by the respondents' conduct in accepting rent and negotiating for regularization of the breaches. The court further held that the damages demanded by the respondents were excessive and unreasonable. The court also found that the respondents had acted mala fide in issuing the notice of re-entry and the orders of eviction. The court, therefore, quashed the impugned orders and directed the respondents to regularize the breaches on payment of reasonable damages.

Issues: 1. Whether the lease was governed by the Government Grants Act, 1895, or by the Transfer of Property Act, 1882? 2. Whether the writ petition was maintainable? 3. Whether the structures complained of constituted breaches of the covenants of the lease? 4. Whether the breaches had been condoned by the respondents' conduct? 5. Whether the damages demanded by the respondents were excessive and unreasonable? 6. Whether the respondents had acted mala fide in issuing the notice of re-entry and the orders of eviction?

Ratio Decidendi: 1. The Government Grants Act, 1895, applies to all grants or other transfers of land or of any interest therein heretofore made or hereafter to be made (by or on behalf of the State) to, or in favour of any person, whomsoever, but every such grant or transfer shall be construed and take effect as if the Transfer of Property Act, 1882 had not been passed. 2. A writ petition is maintainable to challenge the arbitrary and capricious manner in which the Government has acted, even in cases of contracts and leases. 3. The structures complained of constituted breaches of the covenants of the lease as they were not covered by the definition of 'building' in the lease deed. 4. The breaches had been condoned by the respondents' conduct in accepting rent and negotiating for regularization of the breaches. 5. The damages demanded by the respondents were excessive and unreasonable as they were calculated on the basis of the commercial rates prevailing for the time being and not on the basis of the actual damages suffered by the respondents. 6. The respondents had acted mala fide in issuing the notice of re-entry and the orders of eviction as they had not given the petitioners a reasonable opportunity to rectify the breaches.

Final Decision: The court quashed the impugned orders and directed the respondents to regularize the breaches on payment of reasonable damages.