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1997 Supreme(Sikk) 2
HIGH COURT OF SIKKIM
M. SENGUPTA
BRIJ RAJ OBEROI - Appellant
Versus
STATE OF SIKKIM - Respondents
W. P. 3 Of 1997
Decided On : March 24, 1997
A.K.UPADHYAYA, G.P.ROY, J.B.Pradhan, R.BANERJI, S.K.KAPOOR, S.P.WANGDI
The Government's decision to call for tenders for the hotel's management was not mala fide, arbitrary, or unreasonable, and Oberoi's contractual rights were not violated because the Government had not yet made a final decision on the lease renewal.
Headnote:
CONTRACTUAL RIGHTS - JUDICIAL REVIEW - PUBLIC LAW AND PRIVATE LAW RIGHTS - ARBITRATION - TENDER PROCESS - PUBLIC INTEREST - MALA FIDE - LEGITIMATE EXPECTATION - WRIT JURISDICTION - HOTEL LEASE RENEWAL - Sikkim Norkhil Hotel Lease Renewal Dispute:
Fact of the Case:
The Sikkim Government leased out the Norkhil Hotel to K. C. Oberoi in 1976 for 20 years, with a provision for renewal. After K. C. Oberoi's death, his son B. R. Oberoi took over the management and entered into a fresh lease agreement in 1986 for 10 years. Before the lease expired, B. R. Oberoi requested a 30-year lease extension, but the Government decided to call for tenders for the hotel's management for 24 years. Oberoi filed a writ petition challenging the Government's decision, arguing that he had a contractual right to the first offer of renewal.
Finding of the Court:
The Court held that the Government's action in calling for tenders was not mala fide, arbitrary, or unreasonable. The Government had a legitimate interest in obtaining the best possible value for the hotel lease, and the tender process was a reasonable way to achieve this. The Court also held that Oberoi's contractual rights were not violated because the Government had not yet made a final decision on the lease renewal. Oberoi could still participate in the tender process and, if successful, would be offered the lease.
Issues: 1. Whether the Government's decision to call for tenders for the hotel's management was mala fide, arbitrary, or unreasonable. 2. Whether Oberoi's contractual rights were violated by the Government's decision.
Ratio Decidendi: 1. The Court held that the Government's decision to call for tenders was not mala fide, arbitrary, or unreasonable. The Government had a legitimate interest in obtaining the best possible value for the hotel lease, and the tender process was a reasonable way to achieve this. 2. The Court held that Oberoi's contractual rights were not violated because the Government had not yet made a final decision on the lease renewal. Oberoi could still participate in the tender process and, if successful, would be offered the lease.
Final Decision: The Court dismissed Oberoi's writ petition, holding that the Government's decision to call for tenders was not mala fide, arbitrary, or unreasonable and that Oberoi's contractual rights were not violated.
( 1 ) IT is an application under Article 226 of the Constitution of India asking for writs in the nature of mandamus, certiorari, prohibition and also other reliefs in the form of injunctions.
( 2 ) A hotel, possibly the best of its kind within the State of Sikkim, is the subject matter of the writ petition. The hotel is styled as 'norkhil Hotel' situating within the township of Gangtok. It was constructed in 1961 by the Government on Government land and the TCI was entrusted with the management of the hotel. Since the management was for from satisfactory, the Government decided to lease out the same to a private individual on long term basis.
( 3 ) K. C. Oberoi, now deceased, was a recognised hotelier. He was picked up by the State for the aforesaid purpose. A lease deed was executed in favour of K. C. Oberok who started to run the hotel from 1-10-1976. The lease was for a period of twenty years with provision for enhancement of rents from Rs. 50,000/- per annum to Rs. 60,000/- per annum after every 5 years' period. Unfortunately, before the expiry of the tenure of lease K. C. Oberoi expired. His son Shri B. R. Oberoi, also an experienced hotelier, was entrusted by the Government to run the hotel. A fresh lease deed/agreement was entered into on 9-9-1986 and the totel was leased out for a term of 10 years from 1-10-1986. Under the lease the new lessee was to pay Rs. 1. 1 lakh per annum for the first five years and Rs. 1. 5 lakhs per annum for the next five years. The lease was to expire on 31-9-1996.
( 4 ) BEFORE the lease tenure expired Shri B. R. Oberoi, the new lessee approached the Government on 7-11-1995 with a prayer for renewal and extension of the lease for a further period of thirty years, mainly on the ground that he and his father laboured hard andspent enormous amount to raise the standard of the hotel and ultimately to get it categorised as Delux Four Star by the Government of India. Talks went on between the parties but the Government did not agree to the proposal straightaway. The tenure of lease was extended temporarily only up to 31-3-1997 and by a letter dated 29-11-1996 it was intimated to the lessee that the Government decided to call for tender for running of the hotel for the next twenty-four years. In the said letter the lessee was advised to participate in the open tender. The lessee again approached the Government by a letter dated 16-1-1997 to reconsider his prayer and to drop the idea of calling for any tender for running of the hotel. Since the Government did not pay any heed to such representation, the instant writ petition has been filed by the lessee, Shri B. R. Oberoi on 18-2-1997.
( 5 ) BEFORE the matter came up on the board, tender notice was issued on 22-2-1997 in all India dailies inviting offers for Norkhil Hotel with indication that the lease would be for twenty-four years. The last date for submission of tender has been fixed on 24-3-1997.
( 6 ) THE main point raised on behalf of the petitioner is that under the terms of the lease/agreement it is obligatory on the part of the Government that after expiry of the present lease, the first offer of leasing out the said premises should be made to the present lessee on such terms and conditions and for such period as may be mutually agreed upon between the lessor and the lessee. In case of non-acceptance of the lessor's proposal, the lessor shall be entitled to deal with the same in any other manner and be entitled to let out the same to any other person. In the instant case without making any offer to the lessee, the lessor (State) has been attempting to lease out the same on the basis of open tender. It is contrary to the term of agreement.
( 7 ) THE contention of the State is that since the petitioner wants to exercise his so-called contractual rights, this Court cannot invoke its extraordinary writ jurisdiction. It has also been pleaded that there is no mala fide on the part of the State in the matter of steps having been ta
