IN THE HIGH COURT OF DELHI AT NEW DELHI

IN THE HIGH COURT OF DELHI AT NEW DELHI

SUBJECT: PUBLIC PREMISES ACT

WP (C) NO. 1031 OF 1981

Date of decision : 18.11.2004

M/S. JAGAT TALKIES DISTRIBUTORS & ORS. ... PETITIONERS

Through : Mr. Keshav Dayal, Senior Advocate with

Mr. Arun Beriwal, Advocate for

petitioners No. 1 and 2.

Mr. Jayant Bhushan, Senior Advocate with

Mr. R.K. Varshneya, Advocate for

L.R.s of petitioner No. 3.

- VERSUS -

UNION OF INDIA & ORS. ... ...... RESPONDENTS

Through : Mr. Rajiv Shakdhar, Advocate for

respondent No. 1.

Mr. Vinay Sabharwal with Mr. Nitin Aggarwal,

Advocates for respondents No. 2 and 3.

HON'BLE MR. JUSTICE SANJAY KISHAN KAUL (Oral)

1) The petitioners have impugned the notices dated 14.04.1981 issued under sub-section (1) of Section 4 of the Public Premises (Eviction of Unauthorised Occupants) Act, 1971 ( hereinafter to be referred to as, `the said Act' ) in respect of premises / land measuring 1389 sq. yds. of Nahar Sadat Khan, Delhi and the structure constructed thereon. The third notice of the same date issued under Section 7(3) of the said Act in respect of damages has also been impugned.

2) The matter was admitted in terms of the Order dated 02.09.1981 and interim orders were granted in favour of the petitioners staying the proceedings before the Estate Officer noticing that it is the petitioners' case that the lease has come to an end by efflux of time, but the petitioners dispute that they are in unauthorised occupation within the meaning of the said Act. While admitting the matter, it was directed that the same should be heard by a Full Bench. On an application of early hearing filed by the respondents, the matter was taken up on 24.09.2004 by the Full Bench. The Full Bench noticed that the matter was possibly directed to be heard by the Full Bench in view of the disputes raised at the relevant stage of time. However, in view of the subsequent decision of the Supreme Court in Ashoka Marketing Limited & Anr. v. Punjab National Bank & Ors., AIR 1991 SC 855, the challenge to vires of provisions of the said Act no longer survived. The matter was directed to be listed before the concerned Court as per roster. Thereafter, the matter has been listed for final hearing.

3) It may be noticed that at the stage of filing of the writ petition while challenging the impugned notices, vires of provisions of the said Act, especially Sections 4 and 5 were challenged. The vires has been upheld in the aforesaid judgment of the Supreme Court in Ashoka Marketing Ltd.'s case (supra).

4) The petitioner filed an application being CM 12786/2004 seeking to urge certain additional pleas, which was allowed by the Order dated 01.11.2004 subject to payment of costs, which are stated to have been paid.

5) In view of the aforesaid, at the inception of hearing, it was put to learned senior counsel for the petitioners as to what was the challenge, which would survive for consideration in view of the fact that principally the writ petition was directed towards challenging the provisions of the said Act as ultra vires though the aforesaid three notices had also been impugned. Learned senior counsel for petitioners No. 1 and 2 sought to contend that there were certain material aspects which had not been considered in Ashoka Marketing Ltd.'s case (supra). A submission was sought to be advanced that the earlier judgment of the Constitutional Bench of the Supreme Court consisting of seven Hon'ble Judges in Dhanpal Chettier v. Yasodai Ammal, AIR 1979 SC 1745 would apply and the said judgment had not been properly appreciated in Ashoka Marketing Ltd.'s case (supra).

6) I am unable to accept the aforesaid plea advanced by learned senior counsel for petitioners No. 1 and 2 on account of the fact that the judgment in Dhanpal Chettier's case (supra) has been considered and noticed in the subsequent judgment of the Constitutional Bench of five Hon'ble Judges in Ashoka Marketing Ltd.'s case (supra) and, thus, is it not open for the petitioners to plead before this Court that the judgment in Ashoka Marketing Ltd.'s case (supra) would not apply.

7) In Ashoka Marketing Ltd.'s case (supra), it was held that provisions of the said Act would override the provisions of the Delhi Rent Control Act, 1958 ( hereinafter to be referred to as, `the Rent Act' ) and the persons in unauthorised occupation of the public premises cannot invoke protection of the Rent Act.

8) It may, however, be noticed that the plea advanced by learned senior counsel for petitioners No. 1 and 2 was that the Rent Act came into force on 09.02.1959 while the said Act came into force w.e.f. 16.09.1958 and, thus, was prior in time to the Rent Act. It was, thus, sought to be contended that the premises owned by local municipal authorities are not exempted from the provisions of the Rent Act. In the alternative, it was pleaded that provisions of the said Act would only apply to premises which had been allowed to occupy by the municipality for the first time after 1971 while the petitioners had been in possession of the premises since 1935. Reliance was also placed on Section 14 of the Rent Act containing a non-abstante clause to contend that this would imply that the same would govern any future legislations and contracts. A reference was also made by learned senior counsel for petitioners No. 1 and 2 to the provisions of Section 2(g) of the said Act defining "unauthorised occupation" to contend that the said definition applies to cases of earlier authorised occupation which have now become unauthorised and the two Acts should be harmoniously construed. These provisions have been referred to since learned senior counsel for petitioners No. 1 and 2 expressed an apprehension that in case of further challenge being made by the petitioners, it may be said that they had not raised these issues before this Court.

9) Learned senior counsel for petitioners No. 1 and 2 also sought to contend that the doctrine of legitimate expectation and the principle of promissory estoppel would arise in favour of the petitioners. This plea is based on the fact that the petitioners came into possession in 1935 and thereafter the lease has been renewed from time to time valid up to 31.03.1980 and over these facts, there is no dispute. Thus, it was sought to be contended that the previous extension would give rise to an expectation to the petitioners that there would be further extension.

10) I am unable to accept the aforesaid contention since no representation was ever made by the respondents that there would be such a further extension. In fact, the last lease dated 28.08.1968 made it clear that the same was for a period of 10 years with extension for a further period of 10 years applicable from 1960. That is how the lease period expired in the year 1980.

11) Learned senior counsel for petitioners No. 1 and 2 sought to challenge issuance of the notice dated 26.12.1979 and the subsequent notices dated 14.04.1981. The notice dated 26.12.1979 was issued to the petitioners informing them of the fact that the lease was coming to an end on 31.03.1980. It was, thus, sought to be contended that this notice had not been properly issued under Section 106 of the Transfer of Property Act, 1882 ( hereinafter to be referred to as, `the T.P. Act' ). This plea, in my considered view, is not sustainable since the present case is one of the lease coming to an end by efflux of time. In fact, while granting interim orders on 02.09.1981, it was noticed that the petitioners were not even disputing the fact, but was disputing that he was in unauthorised occupation within the meaning of the said Act. This plea arose from the challenge to provisions of the said Act in view of the provisions of the Rent Act.

12) It may be noticed that learned counsel for respondent No. 1 UOI has relied upon judgment of the learned Single Judge of this Court in Delhi State Industrial Development Corpn. Ltd. v. K.C. Bothra & Ors., 108 (2003) DLT 447 holding that provisions of the said Act would have overriding effect over the provisions of the T.P.Act.

13) Learned senior counsel for petitioners No. 1 and 2 also made an attempt to challenge the notice dated 14.04.1981 on the ground that it has not been properly issued in accordance with law. However, there is no such plea raised in the petition and this is clearly an after thought. In fact, this plea has not even been raised in the additional grounds urged by the interim application, which had been allowed.

14) The additional ground urged by the petitioners was only in respect of the notice dated 26.12.1979 and the plea arising from Section 106 of the T.P. Act.

15) The second additional ground urged was that no permission had been sought before initiation of the proceedings under the said Act, though the same was required under Section 19 of the Slum Areas (Improvement and Clearance) Act, 1956 ( hereinafter to be referred to as, `the Slum Act' ).

16) The aforesaid plea is, however, not sustainable in view of the pronouncement of the Supreme Court in M/s. Jain Ink Manufacturing Company v. Life Insurance Corporation of India & Anr., AIR 1981 SC 670 where it was held that Section 19 of the Slum Act is in direct conflict with provisions of the said Act and provisions of the said Act being subsequent and again being a special Act having very limited sphere must necessarily override the provisions of the Slum Act. Once again, learned senior counsel sought to contend that this judgment was not good law in view of the subsequent judgment of the Supreme Court in Ashoka Marketing Ltd. case (supra). The judgment of the Supreme Court in M/s. Jain Ink Manufacturing Company's case (supra) has been specifically noticed in para 45 of the judgment in Ashoka Marketing Ltd.'s case (supra) and that the same had been assailed by learned counsel for the petitioners therein. The judgment was not overruled and certainly not on the aspect of the Slum Act.

17) It may be noticed that the lease in respect of the land is in favour of petitioners No. 1 and 2 and in respect of the superstructure in favour of petitioner No. 3 with the condition that the superstructure may be sublet by petitioner No. 3 in favour of petitioner No. 1. Petitioner No. 1 is a partnership firm of which petitioner No. 2 is a partner. The original petitioner No. 3 (now represented through legal representatives) was the son of the sister of the father of petitioner No. 2.

18) Learned senior counsel for the L.R.s of petitioner No. 3 contended that apart from the pleas raised by learned senior counsel for petitioners No. 1 and 2, the respondent being the Municipal Corporation of Delhi and a public body cannot act as any other landlord motivated only by profit motive. In this behalf, learned senior counsel referred to judgment of the Supreme Court in Jamshed Hormusji Wadia v. Board of Trustees, Port of Mumbai & Anr., (2004) 3 SCC 214 where it was observed as under:

" 16. The position of law is settled that the State and its authorities including instrumentalities of States have to be just, fair and reasonable in all their activities including those in the field of contracts. Even while playing the role of a landlord or a tenant, the State and its authorities remain so and cannot be heard or seen causing displeasure or discomfort to Article 14 of the Constitution of India.

17. It is common knowledge that several rent control legislations exist spread around the country, the emergence whereof was witnessed by the post-World War scarcity of accommodation. Often these legislations exempt from their applicability the properties owned by the Government, semi-government or public bodies, Government-owned corporations, trusts and other instrumentalities of State. What is the purpose? Do the legislatures intend to leave such entities absolutely unbridled and uncontrolled as landlords from the operation of the rent control legislation or do they do so with some hope and trust in such institutions? In Dwarkadas Marfatia and Sons, (1989) 3 SCC 293 a few decisions and authorities were cited before this Court. The observations of Chief Justice Chagla (as His Lordship then was) in Rampratap Jaidayal v. Dominion of India, (1952) 54 Bom LR 927 were quoted with approval stating that while enacting rent control legislations, the Government seeks to achieve the object of protecting the tenants and preventing the rent from being increased and people from being ejected unreasonably; then it cannot be assumed that the very Government would itself be indulging in those very activities which it was proposing to prevent by enacting such laws. The underlying assumption behind granting exemption from the operation of the rent control legislations was that the Government would not increase rents and would not eject tenants unless it was necessary to do so in public interest and a particular building was required for the public purpose. It was also pointed out that the Government or local authority or the Board would not be actuated by any profit-making motive so as to unduly enhance the rents or eject the tenants from their respective properties as private landlords are or are likely to do. This Court in Baburao Shantaram More v. Bombay Housing Board, AIR 1954 SC 153 recognised that the basis of differentiation in favour of public authorities like the Bombay Port Trust, was on the ground that they would not act for their own purpose as private landlords do but would act for public purposes. The Court held in Dwarkadas Marfatia that the public authorities which enjoy the benefit without being hidebound by the requirements of the Rent Act, must act for public benefit and where they fail to do so they render themselves amenable to adjudication under civil review jurisdiction of the Court. A Division Bench of the Bombay High Court presided over by Mrs. Sujata Manohar, J. (as Her Lordship then was) held in Ratti Palonji Kapadia v. State of Maharashtra, 1992 Bom LR 1356 that the exemption from the provisions of the rent control law casts an obligation on the State and its instrumentalities and authorities to comply with the public policy of ensuring a fair return of investments without charging exorbitant rates based on the prevalent market prices of land, which would be of utmost relevance to any other landlord. The State Government in order to justify a steep increase in rent, cannot plead exploitative increases in prices of lands. Reference in this connection may also be made to Kumari Shrilekha Vidyarthi v. State of U.P., (1991) 1 SCC 212 wherein this Court held that while acting in the field of contractual rights the personality of the State does not undergo such a radical change as not to require regulation of its conduct by Article 14. It is not as if the requirements of Article 14 and contractual obligations are alien concepts which cannot coexist. Our Constitution does not envisage or permit unfairness or unreasonableness in State action in any sphere of activities contrary to the professed ideals in the Preamble. Exclusion of Article 14 in contractual matters is not permissible in our constitutional scheme. In P.J. Irani v. State of Madras, AIR 1961 SC 1731 the Constitution Bench observed that a tenant in a building owned by the State or its instrumentality is not liable to eviction solely because the tenancy has terminated. The existence of rent control legislation, though not applicable to such building, is suggestive of the State's policy of protecting tenants because of the great difficulty of their obtaining alternative accommodation.

18. In our opinion, in the field of contracts the State and its instrumentalities ought to so design their activities as would ensure fair competition and non-discrimination. They can augment their resources but the object should be to serve the public cause and to do public good by resorting to fair and reasonable methods. The State and its instrumentalities, as the landlords, have the liberty of revising the rates of rent so as to compensate themselves against loss caused by inflationary tendencies. They can - and rather must - also save themselves from negative balances caused by the cost of maintenance, payment of taxes and costs of administration. The State, as the landlord, need not necessarily be a benevolent and good charitable Samaritan. The felt need for expanding or stimulating its own activities or other activities in the public interest having once arisen, the State need not hold its hands from seeking eviction of its lessees. However, the State cannot be seen to be indulging in rack-renting, profiteering and indulging in whimsical or unreasonable evictions or bargains.

19. A balance has to be struck between the two extremes. Having been exempted from the operation of rent control legislation, the courts cannot hold them tied to the same shackles from which the State and its instrumentalities have been freed by the legislature in their wisdom and thereby requiring them to be ruled indirectly or by analogy by the same law from which they are exempt. Otherwise, it would tantamount to defeating the exemption clause consciously enacted by the legislature. At the same time the liberty given to the State and its instrumentalities by the statute enacted under the Constitution does not exempt them from honouring the Constitution itself. They continue to be ruled by Article 14. The validity of their actions in the field of landlord-tenant relationship is available to be tested not under the rent control legislation but under the Constitution. The rent control legislation are temporary, if not seasonal; the Constitution is permanent and an all-time law."

19) The plea, thus, advanced is that the respondent has failed to disclose any purpose for which the property is sought to be put to use, which is in the nature of larger public good and, thus, the respondent cannot be permitted to only use the termination of the lease to let out the premises at higher amount in view of the aforesaid observations.

20) In my considered view, the aforesaid observations of the Hon'ble Supreme Court must be appreciated in the context in which they were made. There can be no doubt that the legislature while giving protection to tenants under the rent legislations did not deem it appropriate that such protection should be available to public premises. The presumption was the Government would act in a reasonable and fair manner and be governed by the rules of Article 14 of the Constitution of India. Thus, it was held that a balance had to be struck between the two extremes. In the present case, it may be noticed that there is no specific plea in this behalf advanced in the writ petition, though learned senior counsel for the petitioners sought to rely on the grounds (H) to (K). However, that is really challenge to the absence of guidelines as to the circumstances in which the lease deed of an unauthorised occupant may be terminated and not to permit the Government to take advantage of the provisions of the T.P. Act. No occasion, thus, arose for the respondents to issue clarifications in this behalf or submit necessary affidavit.

21) Learned counsel for respondents No. 2 and 3 / MCD categorically stated that there is no proposal to re-let out the premises after getting the same vacated and that he has obtained specific instructions in this behalf. It is stated that what is being proposed is a road-widening and a multilevel parking or similar other use for public purpose. Thus, the plea of learned senior counsel for L.R.s of petitioner No.3 cannot be sustained.

22) There is also another aspect to the matter arising from the fact that provisions of the Rent Act themselves were amended to incorporate Section 3(c) whereby the premises whose monthly rent exceeds Rs.3,500/- have been taken outside the purview of the Rent Act. Thus, the Legislature in its wisdom has recognised the change of circumstances in the balance between the landlord and the tenant and deemed it appropriate to remove protection of the Rent Act from premises having rental of more than Rs.3,500/-. There is no exception to this rule in case of a Government premises. Thus, assuming that provisions of the said Act would not be applicable as on date, the Rent Act protection would also not be available to the petitioners after the aforesaid amendment was carried out in the year 1988. This is only to emphsise that observations of the Supreme Court in Jamshed Hormusji Wadia's case (supra) have to be appreciated in the context of the facts and the legal position applicable to the case.

23) Learned counsel for respondents No. 2 and 3, however, sought to contend that though rental for the land as in 1980 was Rs.5,600/-, but for the superstructure only Rs.490/- was being paid. This would not make any difference since the leases were co-terminus for the land and the superstructure and it is not that the superstructure had to be taken away and placed elsewhere.

24) In the end, it may be noticed that the premises were being used as a cinema hall, but it is stated that the same is lying closed for two years. No rent / damages have been paid since the year 1980, though learned senior counsel for the petitioners stated that it has been averred in the petition that the respondents were not accepting any rent / damages.

25) In view of all the aforesaid facts and circumstances, I see no merit in the writ petition and the same is dismissed leaving the parties to bear their own costs.

26)The petitioners to appear before the Estate Officer on 13.12.2004 at 11.00 a.m. for further proceedings in terms of the three impugned notices.

November 18, 2004 SANJAY KISHAN KAUL, J