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High Court of Judicature at Madras
THE HONOURABLE MR. JUSTICE K.P. SIVASUBRAMANIAM
D. Packiaraj and Another, Appellans - Appellant
Versus
P. Kulanthaivel Nadar and Another - Respondents
Second Appeal Nos. 401 and 402 of 1996
Decided On : 22 September 2000
Specific Performance - Lease Renewal - Burmah Shell (Acquisition of Undertakings in India) Act, 1976 - Section 5(2), 7(3) - The court held that the sub-lease in favor of the Corporation was permissible under the lease deed and enforceable under the Act. However, the court found that the respondents failed to comply with the statutory requirements under Section 5(2) of the Act, which was necessary for the renewal of the lease. The court also concluded that the renewal clause in the lease deed was vague and uncertain, and not enforceable without mutual agreement on the terms of renewal. Therefore, the respondents were not entitled to resist the suit for possession or claim specific performance.
Fact of the Case:
The case involved two suits filed by the lessee and the Corporation for specific performance of a lease agreement and an injunction to prevent breach of the obligation to renew the lease. The lessors filed a suit to recover possession of the property and for mesne profits. The lessees contended that the lease was permanent and contained a covenant for renewal, while the lessors denied the right of renewal and the validity of the sub-lease to the Corporation.
Finding of the Court:
The court found that the sub-lease in favor of the Corporation was permissible under the lease deed and enforceable under the Act. However, the court concluded that the respondents failed to comply with the statutory requirements under Section 5(2) of the Act, which was necessary for the renewal of the lease. The court also held that the renewal clause in the lease deed was vague and uncertain, and not enforceable without mutual agreement on the terms of renewal. Therefore, the respondents were not entitled to resist the suit for possession or claim specific performance.
Issues: 1. Validity of the sub-lease to the Corporation. 2. Right of the lessee to claim specific performance and renewal of the lease. 3. Compliance with statutory requirements under the Burmah Shell (Acquisition of Undertakings in India) Act, 1976 for lease renewal.
Ratio Decidendi: The court's decision was based on the finding that the respondents failed to comply with the statutory requirements under Section 5(2) of the Act, which was necessary for the renewal of the lease. Additionally, the court concluded that the renewal clause in the lease deed was vague and uncertain, and not enforceable without mutual agreement on the terms of renewal. Therefore, the respondents were not entitled to resist the suit for possession or claim specific performance.
Final Decision: Both Second Appeals were allowed, and the judgment and decree of the trial Court in both suits were restored. The respondents were directed to hand over vacant possession within a period of six months from the date of the judgment.
Both the appeals arise out of two suits filed by the respective opposite parties. The suit in O.S. No. 350 of 1988 on the file fo the District Munsif, Kuzhithurai, was filed jointly by one Kulandaivel nadar hereinafter called the lessee, and Bharat Petroleum Corporation Ltd. hereinafter called the Corporation or the Government Company against one D. Packiaraj and D. Packiadas hereinafter called the lessors, praying for specific performance of the contract dated 29-6-1968 by directing the defendants to execute a lease deed in respect of the plaint x schedule property in favour of the first plaintiff and an order of permanent injunction to prevent the breach of the obligation to renew the lease existing in favour of the first plaintiff under the lease dated 29-6-1968.
2. The suit in O.S. No. 524 of 1988 was filed by the lessors against the lessee and the Corporation praying for a decree to recover vacant possession of the plaint 'A' schedule property, for removal of the plaint 'B' schedule structures, if the defendants fail to remove them before they are dispossessed, a sum of Rs. 600/- towards arrears of rent till the date of the suit and for recovery of mesne profits from the date of the suit till the date of recovery of possession.
3. In the suit in O.S. No. 350 of 1988, the lessees/plaintiffs contended that the property originally belonged to the defendants and their brother Ghanasikhamony. Ghanasikhamony died without issues and his rights devolved on his brothers, the defendants. On 29-6-1968 the defendants demised the plaint schedule property on lease to the first plaintiff in continuation of an earlier lease granted for a portion of the property. The lease was for the purpose of building and the first plaintiff was in possession of the schedule property as lessee on a monthly rent of Rs. 360/- per month. The rent was being paid regularly. The first plaintiff had already constructed buildings and had erected a petrol pump for the sale of petrol and petroleum porducts. In the lease granted on 29-6-1968 more area was included than what was granted in the earlier lease and the total area in the possession of the first plaintiff includes the area granted under the lease dated 29-6-1968. The first plaintiff thereafter granted a lease of nine cents out of the total area in his possession to the Burmah Shell Oil Company for the erection and sale of petrol and petroleum products and the second plaintiff/Corporation is in joint possession with the first plaintiff. A fresh lease was executed by the first plaintiff in respect of nine cents in his possession as required under the provisions of the Burmah Shell (Acquisition of undertakings in India) Act, 1976, (hereinafter called "the Act") in favour of Bharat Refineries Ltd. The lease granted in favour of the first plaintiff was a permanent lease and the parties never intended that the first plaintiff should vacate the property at the end of the lease period. The lease deed also contained a covenant for renewal and the renewal clause was explicit. By a reply letter dated 20-11-1987 to the suit notice and also by a notice dated 18-2-1988 the first plaintiff had informed the defendants of their willingness and option to continue as lessee and demanding execution of the renewal deed. But by their reply dated 19-3-1988 the defendants denied the right of the plaintiffs to get a further renewal. It was further stated that the Bharat Refineries Limited was an undertaking of the Union Government and in terms of the Act, the lease granted to Burma Shell shall be deemed to have been transferred and vested with the Central Government. Such lease shall be renewed on the said terms and conditions. Therefore, the defendants have to execute the sale for a further period of 20 years.
4. In the writ statement by the lessors/defendants in the suit , it was contended that though the lease was admitted the lease was not for the building purpose. The lease was given for the purpose of erecting a
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