# SAROJ SCREENS PVT. LTD v. GHANSHYAM AND OTHERS

- **Citation:** [2012] 5 S.C.R. 141
- **Court:** Supreme Court of India
- **Decided:** 2012-03-26
- **Case number:** Civil Appeal Nos. 3107- 3108 of 2012
- **Bench:** G.S. Singhvi, Sudhansu Jyoti Mukhopadhaya
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/saroj-screens-pvt-ltd-v-ghanshyam-and-others-28439
- **Pages:** 36

## Headnote

A
B
Municipalities - The City of Nagpur Corporation Act,
1948 - s. 70(5) -Right/interest in public property - Alienation C
of - Resolution dated 28-8-1991 passed by Municipal
Corporation of the City of Nagpur for renewal of lease in favour
of appellant and sanction accorded by the State Government
u/s. 70(5) - Quashed by the High Court - Validity - Held:
Resolution passed by the Corporation for renewal of lease in
D
favour of appellant and consequential action taken for
execution of lease deed dated 4-9-1991 were ex facie i/legal
- High Court did not commit any error by quashing the same
because, (i) the earlier Resolution dated 29-10-1975 passed
by the Corporation for renewal of lease in favour of 'P' had
E
not been cancelled or rescinded and during subsistence of
that resolution, neither the Corporation could have renewed
the lease in favour of the appellant nor the State Government
could have granted sanction u/s. 70(5) for such renewal; (ii)
before passing resolution for renewal of lease in favour of the
F
appellant, the Corporation did not obtain sanction of the State
Government, which was sine qua non for any such action/
decision; and (iii) the State Government accorded post facto
sanction for renewal of the lease without realizing that
alienation of any right or interest in a public property in favour
G
of any person without following a procedure consistent with the
doctrine of equality is impermissible - The Corporation holds
the property as a trustee of the public and any alienation of
such property or any right or interest therein otherwise than
141
H
142
SUPREME COURT REPORTS
[2012] 5 S.C.R.
A by way of auction or by inviting bids would amount to breach
of that trust - Also, the concept of the 'State' has undergone
drastic change in recent years - Today, the State cannot be
conceived of simply as a coercive machinery wielding the
thunderbolt of authority - The Government cannot give or
B withhold largesse in its arbitrary discretion or according to its
sweet-will - The Government cannot now say that it will transfer
the property (land etc.) or will give jobs or enter into contracts
or issue permits or licences only in favour of certain
individuals - In the instant case, before granting 30 years'
c lease of the plot in question in favour of the appellant, the
Corporation neither issued any advertisement nor followed
any procedure consistent with the doctrine of equality so as
to enable the members of the public to participate in the
process of alienation of public property - Appellant directed
0 to hand over possession of the plot to the Corporation -
Corporation to alienate the same by sale, lease, or otherwise
by auction or by inviting tenders and after following a
procedure consistent with Article 14 of the Constitution -
Constitution of India, 1950 - Article 14.
E
The High Court, vide the impugned judgment,
quashed Resolution dated 28-8-1991 passed by
Municipal Corporation of the City of Nagpur for renewal
of lease in favour of the appellant in respect of a plot of
land as also sanction accorded by the State Government
F under Section 70(5) of the City of Nagpur Corporation Act,
1948. The High Court held that during the subsistence of
an earlier Resolution dated 29-10-1975 in favour of one
'P', the Municipal Corporation could not have granted
lease in favour of the appellant and the State Government
G had no right to validate such grant.
H
The question which arose for consideration in the
instant appeals was whether the High Court committed
an error by quashing Resolution dated 28.8.1991 passed
by the Corporation and the sanction accorded by the
SAROJ SCREENS PVT. LTD. v. GHANSHYAM
143
State Government under Section 70(5) of the City of A
Nagpur Corporation Act, 1948.
Dismissing the appeals, the Court
HELD: 1. The resolution passed by the Corporation
B
for renewal of lease in favour of the appellant and the
consequential action taken for the execution of lease
deed dated 4.9.1991 were ex facie illegal and the H

## Text

_Characters 0–39,973 of 68,261. This is a partial read: ask again with offset=39973 for what follows._

[2012] 5 S.C.R. 141
SAROJ SCREENS PVT. LTD.
v.
GHANSHYAM AND OTHERS
(Civil Appeal Nos. 3107- 3108 of 2012)
MARCH 26, 2012
[G.S. SINGHVI AND SUDHANSU JYOTI
MUKHOPADHAYA, JJ.]
A
B
Municipalities - The City of Nagpur Corporation Act,
1948 - s. 70(5) -Right/interest in public property - Alienation C
of - Resolution dated 28-8-1991 passed by Municipal
Corporation of the City of Nagpur for renewal of lease in favour
of appellant and sanction accorded by the State Government
u/s. 70(5) - Quashed by the High Court - Validity - Held:
Resolution passed by the Corporation for renewal of lease in
D
favour of appellant and consequential action taken for
execution of lease deed dated 4-9-1991 were ex facie i/legal
- High Court did not commit any error by quashing the same
because, (i) the earlier Resolution dated 29-10-1975 passed
by the Corporation for renewal of lease in favour of 'P' had
E
not been cancelled or rescinded and during subsistence of
that resolution, neither the Corporation could have renewed
the lease in favour of the appellant nor the State Government
could have granted sanction u/s. 70(5) for such renewal; (ii)
before passing resolution for renewal of lease in favour of the
F
appellant, the Corporation did not obtain sanction of the State
Government, which was sine qua non for any such action/
decision; and (iii) the State Government accorded post facto
sanction for renewal of the lease without realizing that
alienation of any right or interest in a public property in favour
G
of any person without following a procedure consistent with the
doctrine of equality is impermissible - The Corporation holds
the property as a trustee of the public and any alienation of
such property or any right or interest therein otherwise than
141
H
142
SUPREME COURT REPORTS
[2012] 5 S.C.R.
A by way of auction or by inviting bids would amount to breach
of that trust - Also, the concept of the 'State' has undergone
drastic change in recent years - Today, the State cannot be
conceived of simply as a coercive machinery wielding the
thunderbolt of authority - The Government cannot give or
B withhold largesse in its arbitrary discretion or according to its
sweet-will - The Government cannot now say that it will transfer
the property (land etc.) or will give jobs or enter into contracts
or issue permits or licences only in favour of certain
individuals - In the instant case, before granting 30 years'
c lease of the plot in question in favour of the appellant, the
Corporation neither issued any advertisement nor followed
any procedure consistent with the doctrine of equality so as
to enable the members of the public to participate in the
process of alienation of public property - Appellant directed
0 to hand over possession of the plot to the Corporation -
Corporation to alienate the same by sale, lease, or otherwise
by auction or by inviting tenders and after following a
procedure consistent with Article 14 of the Constitution -
Constitution of India, 1950 - Article 14.
E
The High Court, vide the impugned judgment,
quashed Resolution dated 28-8-1991 passed by
Municipal Corporation of the City of Nagpur for renewal
of lease in favour of the appellant in respect of a plot of
land as also sanction accorded by the State Government
F under Section 70(5) of the City of Nagpur Corporation Act,
1948. The High Court held that during the subsistence of
an earlier Resolution dated 29-10-1975 in favour of one
'P', the Municipal Corporation could not have granted
lease in favour of the appellant and the State Government
G had no right to validate such grant.
H
The question which arose for consideration in the
instant appeals was whether the High Court committed
an error by quashing Resolution dated 28.8.1991 passed
by the Corporation and the sanction accorded by the
SAROJ SCREENS PVT. LTD. v. GHANSHYAM
143
State Government under Section 70(5) of the City of A
Nagpur Corporation Act, 1948.
Dismissing the appeals, the Court
HELD: 1. The resolution passed by the Corporation
B
for renewal of lease in favour of the appellant and the
consequential action taken for the execution of lease
deed dated 4.9.1991 were ex facie illegal and the High
Court did not commit any error by quashing the same
because, (i) Resolution dated 29.10.1975 passed by the
Corporation for renewal of lease in favour of 'P' for a
C
period of 30 years had not been cancelled or rescinded
and during the subsistence of that resolution, neither the
Corporation could have renewed the lease in favour of
the appellant for 30 years commencing from 16.3.1991
nor the State Government could have granted sanction
D
under Section 70(5) of the Act for such renewal; (ii)
Before passing the resolution for renewal of the lease in
favour of the appellant for a period of 30 years, the
Corporation did not obtain sanction of the State
· Government, which was sine qua non for any such
action /decision; (iii)lt,however, appears that by taking
advantage of the fact that it continued to have
possession of the plot, the appellant induced the
functionaries of the Corporation to enter into a
clandestine compromise for forwarding a proposal to the
State Government to grant post facto sanction for
renewal of the lease for 30 years from 16.3.1991 and the
latter accorded sanction without realizing that alienation
E
F
of any right or interest in a public property in favour of
any person without following a procedure consistent with
G
the doctrine of equality is impermissible. [Para 9] [165-AG]
Damodhar Tukaram Mangalmurti v. State of Bombay
AIR 1959 SC 639: 1959 Suppl. SCR 130 - held inapplicable.
H
144
SUPREME COURT REPORTS
[2012] 5 S.C.R.
A
O.F.O., South Kheri v. Ram Sanehi Singh (1971) 3 SCC
864 and S.J. S. Enterprises (P) Ltd. v. State of Bihar (2004) 7
SCC 166: 2004 (3) SCR 56 - referred to.
2. Section 70 of the City of Nagpur Corporation Act,
8 1948 contains provisions governing the disposal of
municipal property or property vesting in or under the
management of the Corporation. Though, the exercise of
power by the Corporation under the aforesaid section is
not hedged with any particular condition except that in a
C case like the present one, the alienation could not have
been made without the previous sanction of the State
Government, but in our constitutional scheme
compliance of the doctrine of equality enshrined in Article
14 of the Constitution has to be read as a condition
precedent for exercise of power by the State Government
D and the Corporation, more so, when it relates to alienation
of public property or any right or interest therein. In this
context, it is necessary to emphasise that the
Corporation holds the property as a trustee of the public
and any alienation of such property or any right or
E interest therein otherwise than by way of auction or by
inviting bids would amount to breach of that trust. [Para
1 O] [165-G-H; 166-A; 168-D-F]
3. The concept of the 'State' as it was known before
F the commencement of the Constitution and as it was
understood for about two decades after 26.1.1950 has
undergone drastic change in recent years. Today, the
State cannot be conceiv~d of simply as a coercive
machinery wielding the thunderbolt of authority. Now the
G Government is a regulator and dispenser of special
services and provides to the large public benefits
including jobs, contracts, licences, quotas, mineral rights
etc. The law has also recognised changing character of
the governmental functions and need to protect individual
H interest as well as public interest. The discretion of the
SAROJ SCREENS PVT. LTD. v. GHANSHYAM
145
Government has been held to be not unlimited. The
A
Government cannot give or withhold largesse in its
arbitrary discretion or according to its sweet- will. The
Government cannot now say that it will transfer the
property (land etc.) or will give jobs or enter into contracts
or issue permits or licences only in favour of certain
B
individuals. [Para 11] [168-H; 169-A-C]
V. Punanan Thomas v. State of Kera/a, AIR 1969 K~r.
81 - referred to.
4. The traditional view that the executive is not C
answerable in the matter of exercise of prerogative power
has long been discarded. The question whether the State
and/or its agency/instrumentality can transfer the public
property or interest in public property in favour of a
private person by negotiations or in a like manner has
D
been considered and answered in negative in several
cases. [Paras 12, 15] [169-E; 171-F-G]
Akhil Bhartiya Upbhokta Congress v. State of Madhya
Pradesh (2011) 5 sec 29: 2011 (5) SCR 77 - relied on.
E
S.G. Jaisinghani v. Union of India AIR 1967 SC 1427:
1967 SCR 703; Ramana Dayaram Shetty v. International
Airport Authority of India (1979) 3 SCC 489 : 19('9 (3) SCR
1014; Erusian Equipment and Chemicals Ltd. v. State of W B.
(1975) 1 SCC 70: 1975 (2) SCR 674; Kasturi Lal Lakshmi
F
Reddy v. State of J&K (1980) 4 SCC 1: 1980 (3) SCR 1338;
Common Cause v. Union of India (1996) 6 SCC 530: 1996(6)
Suppl. SCR 719; Shrilekha Vidyarthi v. State of U. P. (1991)
1 SCC 212: 1990 (1) Suppl. SCR 625; UC v. Consumer
Education & Research Centre (1995) 5 SCC 482 : 1995 (1)
G
Suppl. SCR 349 and New India Public School v. HUDA
(1996) 5 SCC 510: 1996 (3) Suppl. SCR 597 - referred to.
Padfield v. Minister of Agriculture, Fishery and Food
146
SUPREME COURT REPORTS
[2012] 5 S.C.R.
A (1968) A.C. 997 and Breen v. Amalgamated Engineering
Union (1971) 2 QB 175 - referred to.
'Administrative Law' 6th Edition by Prof. H.W.R. Wade
- referred to.
B
5. The factual matrix of the instant case shows that
before granting 30 years' lease of the plot in favour of the
appellant, the Corporation neither issued any
advertisement nor followed any procedure consistent
with the doctrine of equality so as to enable the members
C of the public to participate in the process of alienation of
public property. Therefore, the conclusion reached by the
High Court, though for different reasons, that Resolution
dated 28.8.1991 and the sanction accorded by the State
Government vide letter dated 12.6.2000 are legally
D unsustainable does not call for interference by this Court.
[Para 16] [173-D-E]
6.1. However, even though the lease was renewed in
favour of 'P' vi de Resolution dated 29.10.1975,
E respondent Nos.1 and 2 cannot derive any benefit from
the said renewal merely because the Corporation did not
cancel or rescind the resolution. It was neither the
pleaded case of respondent Nos.1 and 2 nor any material
was produced by them before the High Court to show
that 'P' had taken any action in furtherance of Resolution
F dated 29.10.1975 and fresh lease deed was executed in
his favour. The only plea taken by them was that 'P' had
filed an appeal under Section 397(3) read with Section 411
of the Act against increase in the ground rent and the
imposition of penalty. However, nothing has been said
G about the fate of that appeal. If 'P', his heirs or respondent
Nos.1 and 2 felt that the disposal of the appeal has been
unduly delayed then they could have filed a writ for issue
of a mandamus directing the appellate authority to decide
the appeal within a specified period but no such step is
H shown to have been taken by either of them. Therefore,
SAROJ SCREENS PVT. LTD. v. GHANSHYAM
147
Resolution dated 29.10.1975 had become redundant and A
the same can no longer be relied upon by respondent
Nos.1 and 2 for claiming any right or interest in the plot.
[Para 17] [173-E-H; 174-A-C]
6.2. The argument of the counsel for respondent 8
Nos.1 and 2 that the Corporation is bound to renew the
lease granted to his clients in terms of Section 116 of the
Transfer of Property Act, 1882 because the plot in
question remained in their possession through the
appellant also merits rejection. The reason for this C
conclusion is that no evidence was produced before the
High Court to show that the appellant was continuing in
possession with the consent of 'P', his heirs or
respondent Nos.1 and 2. Rather, it was their pleaded case
that the appellant did not have any right to continue in
possession. [Para 20] [175-G-H; 176-A]
D
6.3. Also, the Resolution dated 29.10.1975 though
passed in consonance with Clause 10 of initial lease
dated 28.10.1944, has to satisfy the test of
reasonableness, equality and fairness. Though, the initial E
lease was granted before coming into force of the
Constitution, while considering the issue of renewal of
lease the Corporation was duty bound to take action and
decision strictly in consonance with the constitutional
principles and decision to renew the lease in favour of F
'P' could not have been taken except after following a
procedure consistent with the equality clause, which was
not done. [Para 21] [176-A-C]
7. The appellant shall hand over possession of the
plot to the Corporation within a period of three months. G
After taking possession of the plot, the Corporation shall
alienate the same by sale, lease, or otherwise by auction
or by inviting tenders and after following a procedure
consistent with Article 14 of the Constitution. The
Corporation shall pay market value of the structure, as H
A
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c
D
E
F
G
H
148
SUPREME COURT REPORTS
[2012] 5 S.C.R.
obtaining on the date of the order of the High Court to
the appellant. [Para 22] (176-D-E]
Case Law Reference:
(1971) 3 sec 864
referred to
Para 3.17
2004 (3) SCR 56
referred to
Para 3.17
1959 Suppl. SCR 130
held inapplicable
Para 5
AIR 1969 Ker. 81
referred to
Para 11
(1968) A.C. 997
referred to
Para 13
(1971) 2 QB 175
referred to
Para 14
2011 (5) SCR 77
relied on
Para 15
1967 SCR 703
referred to
Para 15
1979 (3) SCR 1014
referred to
Para 15
1975 (2) SCR 674
referred to
Para 15
1980 (3) SCR 1338
referred to
Para 15
1996 (6) Suppl. SCR 719 referred to
Para 15
1990 (1) Suppl. SCR 625 referred to
Para 15
1995 (1) Suppl. SCR 349 referred to
Para 15
1996 (3) Suppl. SCR 597 referred to
Para 15
CIVIL APPELLATE JURISDICTION : Civil Appeal Nos.
3107-3108 of 2012.
From the Judgment & Order dated 16.10.2009 of the High
Court of Judicature at Bombay, Napur Bench in Writ Petition
No. 1613 of 1992 and Writ Petition No. 3661 of 2001.
Gagan Sanghi, Rameshwar Prasad Goyal for the
Appellant.
SAROJ SCREENS PVT. LTD. v. GHANSHYAM
149
Shekhar Naphade, Ashok Shrivastav, Manish Pitale, G.K.
A
Sarda, Chander Shekhar, Ashri, Somnath Padhan, Satyajit A.
Desai, Sanjay V. Kharde for the Respondents.
The Judgment of the Court was delivered by
G.S. SINGHVI, J. 1. Leave granted.
2. These appeals are directed against judgment dated
16.10.2009 of the Bombay High Court, Nagpur Bench whereby
B
the writ petitions filed by respondent nos. 1 and 2 were partly
allowed, Resolution dated 28.8.1991 passed by Municipal
C
Corporation of the City of Nagpur (for short, 'the Corporation')
for renewal of lease in favour of the appellant in respect of Plot
No.5, Circle No.19/27, Division I, Old Sarai Road, Geeta
Ground Layout, Nagpur as also sanction accorded by the State
Government under Section 70(5) of the City of Nagpur
D
Corporation Act, 1948 (for short, 'the Act') were quashed and
a direction was issued to Civil Judge (Senior Division), Nagpur
to decide Special Civil Suit No. 1135 of 1993 latest by
31.12.2010.
FACTS:
3. On an application made by Gopaldas Mohta (father of
respondent No. 1 - Ghanshyam Mohta and father-in-law of
respondent No. 2 - Smt. Kamla Devi), Municipal Committee
E
of Nagpur (for short, 'the Committee') passed resolution dated
F
17 .3.1944 for grant of lease to him in respect of the plot
described herein above for a period of 30 years. In furtherance
of that resolution, lease deed dated 28.10.1944 was executed
in favour of Gopaldas Mohta. The tenure of lease commenced
from 17.3.1944. For the sake of convenient reference, Clauses
G
6 and 8 of the lease deed are extracted below:
"6. The lessee shall upon every assignment of the said land
or any part thereof within a calendar month thereafter
deliver to the lessor or to such person as he may appoint
in this behalf a notice of such assignment putting forth the
H
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c
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SUPREME COURT REPORTS
[2012) 5 S.C.R.
names and description of the parties thereto and the
particulars and effect thereof.
8. The Municipal Committee i.e. the lessor will have the
option to retake structure at end of the term of 30 years
hereby granted by paying the then market value of the
structure or to renew the lease on the revised ground rent,
fair and equitable, for a further term of 30 years or more.
Provided also that every such renewed lease of the land
shall contain such of the covenants provisions and
conditions in these presents contained as shall be
applicable and shall always contain a covenant for further
renewal of the lease."
3.1 After about 3 years, Gopaldas Mohta leased out the
D plot to the appellant for a period of 27 years (from 28.3.1947
to 16.3.1974). The relevant portions of deed dated 10.9.1947
executed between Gopaldas Mohta and the appellant read as
under:
E
F
H
"THIS DEED OF LEASE made on the 10th day of
September, 1947, between DIWAN BAHADUR Seth
Gopaldas Mohta, resident of Akola (hereinafter called the
Lessor) of the ONE PART, and Messrs Saroj Screens
Ltd., Amraoti, a joint stock company with limited liability,
represented by Mr. Anandrao son of Yadararo, Managing
Director, resident of Amraoti, Taluq and District Amraoti,
(hereinafter called the Lessees) of the SECOND PART.
WITNESSETH AS FOLLOWS:
1. The Lessor holds and is in possession of a plot of land,
situated in the locality popularly known as ''The Geeta
Ground", in Sitabuldi of Nagpur city in the Central
Provinces and more particularly described in the scheduled
statement herewith below, which he holds under a lease
dated 17th March, 1944, granted by the Municipal
SAROJ SCREENS PVT. LTD. v. GHANSHYAM
151
[G.S. SINGHVI, J.]
Committee Nagpur, and on this plot, the Lessor has
A
constructed a plinth for construction of a Cinema Theatre,
as per plans, sanctioned and approved by the said
Municipal Committee. Over this plot, certain building
materials, such as sand, stones, metal and other iron and
wooden material etc., belonging to the Lessor, have been
B
collected and are lying. The Lessor hereby lessee the said
plot including the plinth and above mentioned materials
which have already been delivered into the possession of
the Lessees by the Lessor), to the Lessees, for a period
commencing from 28.3.1947 till 16th March, 1974, which c
is the entire unexpired period of the Lease which the
Lessor holds under the Municipal Committee, Nagpur.
The main lease in favour of the lessor, contains a clause
for renewal under which the lessor shall be entitled to have
the lease renewed in his favour, for a further period on the
D
expiry of the present lease. This right of the lessor, is
however, retained by the lessor, for his own benefit and
the lessees shall have no claim to the interest thereby
created.
PROVIDED HOWEVER, if the lessees acquire the
interests of the lessor, as provided in Clause (5) below,
the lessees shall be entitled to all the rights and interest
E
of the lessor under the said clause for renewal, together
with all other interests which the lessor may have under the
F
lease before mentioned, dated 17th March, 1944 including
the right of renewal, therein mentioned.
5. The lessees shall have the option to pay to the lessor a
sum of Rs. 90,000/- (Rupees Ninety Thousand only) at any
time during the first five years of the lease and to purchase
G
all the rights of the Lessor under said Head Lease from·
the Municipal Committee, Nagpur, together with his rights
over the plinth and the material and on this amount being
paid as per this conditions, the lessor shall be bound to
execute the necessary assignment or other assurance in
H
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SUPREME COURT REPORTS
r2012] -5 S.C.R.
favour of the lessees at the cost and expenses of the
lessees. The lessees shall have also the option to acquire
the said interest from the lessor at any time, on payment
of the same price, namely Rs. 90,000/- only during the last
year before the expiry of the lease by afflux of time.
10. On expiry of the lease in due course, the lessees shall
hand over the possession of the premises leased together
with the structures thereon to the lessor who shall
thereupon be entitled to take over the structure after valuing
them in the manner hereinbefore provided. In case, he pays
the value of that part of the structure which the lessees
have constructed to the lessees, then the entire structure
will thereafter belong to the lessor. In case, the lessor does
not elect to take over the materials and in case, the
lessees fail to exercise the option of acquiring the leased
premises from the lessor as provided, then in that event,
the lessees may remove that part of the structure which he
may have constructed at his cost within reasonable time
of two months and on his failure to do so, the structure shall
thereafter belong to the Lessor and the lessees will have
no right to the same or price thereof."
3.2. In 1959, there was a partition in the family of Gopaldas
Mohta and the plot in question came to the share of his wife
Smt. Gangabai. She assigned the same to Parmanand
F Kisandas Mundhada of Calcutta by executing deed dated
12.8.1960. Thereafter, the name of Parmanand Mundhada was
entered in the records of the Committee along with that of Smt.
Gangabai. After 12 years, the appellant sent letter dated
15.1.1973 to Parmanand Mundhada indicating therein that it
G was ready to pay Rs.90,000/- and purchase the interest created
in favour of Gopaldas Mohta vide lease deed dated
· 28.10.1944. The appellant also requested Parmanand
Mundhada to approach the Corporation, which had succeeded
the Committee, for renewal of the lease after 16.3.197 4.
H
3.3. Parmanand Mundhada submitted application dated
SAROJ SCREENS PVT. LTD. v. GHANSHYAM
153
[G.S. SINGHVI, J.]
7.3.1974 to the Corporation for renewal of lease for a period
A
of 30 years. However, without waiting for the Corporation's
response, the appellant filed Special Civil Suit No.96 of 1974
against Parmanand Mund~ada, Gopaldas Mohta, Gangabai
and the Corporation for the specific performance of agreement
dated 10.9.1947 executed by Gopaldas Mohta. During the
B
pendency of the suit, Parmanand Mundhada died and his legal
representatives were brought on record.
3.4. The suit filed by the appellant was decreed by Civil
Judge, Senior Division, Nagpur (hereinafter referred to as, 'the
C
trial Court') vide judgment dated 28.4.1980 but the same was
reversed by the High Court in First Appeal Nos. 95of1980 and
96 of 1980 filed by the heirs of Parmanand Mundhada and
respondent No.2 and the Corporation respectively. The relevant
portions of the High Court's judgment dated 25. 7.1991 are
extracted below:
D
"20. To this letter (Exh. 98) a reminder was sent on 15th
February 1974 after a gap of one year. That letter is Exh.
99. That letter is addressed to defendant no. 1 Parmanand
by the Counsel of the plaintiff. It makes an interest reading.
E
It is hence extracted as a whole. It reads as under:-
Dear Sir,
Under instructions of my clients M/s Saroj Screens
Pvt. Ltd., I have to invite your attention to their
F
registered letter dated 15.1.1973 received by your
on 19.1.1973. My client has not received any reply
so far.
2.
Please let me know whether you have applied to
G
the Municipal Corporation, Nagpur for renewal of the
lessor whether you want to apply for renewal of the
lease. If you have applied, what is the result of your
application.
3.
My client has been ever ready and willing to perform
H
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[2012] 5 S.C.R.
his part of the contract under the Indenture dated
10.9.1947 with Diwan Bahadur Seth Gopaldas
Mohta, by which you are bound.
4.
Please note that if you do not sent any satisfactory
reply within ten days of the receipt of this letter, my
client will take it that you do not want to get the lease
dated 28.10.1944 renewed and to perform your part
of the contract and thereby you have committed
breach thereof. In that event my client will be free
to take such steps as he may be advised and in
the event of litigation you will be held liable for costs
and consequences. Please take notice.
Yours faithfully,
Sd/-
Advocate
Counsel for M/s. Saroj Screens Pvt. Ltd.
The letter is self explanatory. It clearly calls upon the
defendant no. 1 to get the legal renewed and on failure to
perform that part of contract it would result in breach of the
contract of his part. Therefore, the readiness or willingness
on the part of the plaintiff was made subject to renewal of
the lease which condition was never agreed upon. This is
more glaring when we peruse the reliefs claimed in the
plaint. In prayer clause (a) the plaintiff claimed a decree
that the defendant no. 1 do obtain from the defendant no.
2 a renewed lease of the original (Exh. 120) on rent which
is fair and equitable, and in clause (aa) the relief claimed
was that on deposit of Rs. 79,000/- in Court the defendant
no. 1 do execute in favour of the plaintiff a deed of transfer
of all rights in the renewed lease granted to him by the
defendant no. 2. The pleadings and the evidence are
restricted to the allegations made in the two letters Exh.
98 and 99 only.
21. Therefore, no doubt is left in our mind that the plaintiff
came forward seeking implementation of a different
SAROJ SCREENS PVT. LTD. v. GHANSHYAM
155
[G.S. SINGHVI, J.]
contract than the one agreed between the parties.
A
Apparently the plaintiff had no desire to pay the amount
of Rs. 90, 0001- till such time the lease is renewed. There
was neither readiness or willingness on the part of the
plaintiff to implement the contract. We hence answer the
point at issue in the negative. The learned Court below had e
completely misdirected itself in coming to a contrary
conclusion not warranted by the facts on record."
(emphasis added)
3.5. During the pendency of the suit filed by the appellant,
C
the Corporation passed Resolution No.162 dated 29.10.1975
for renewal of lease in favour of Parmanand Mundhada for a
period of 30 years subject to the condition of payment of ground
rent at the rate of Rs.13, 120/- per annum and penalty of
Rs.3,000/- for breach of the conditions embodied in lease deed
D
dated 28.10.1944. The relevant portions of Resolution dated
29.10.1975 are reproduced below:
"Resolution No. 162: The term of the 30 years lease of plot
no. 5 situated on Geeta Ground, Sitabuldi, where upon
Anand Talkies is situate has expired on 16.3.197 4. The
present owner of that plot viz Shri Parmananddas
Kisandas Mundhada, resident of 55/58 lsra Street,
Calcutta, having made an application on 7 .3.197 4 for
renewal or lease for further 30 years, the house took into
consideration the said request.
xxx
xxx
xxx
E
F
With regard to the subject under consideration, the Hon'ble
Members have made a request that the House should
G
give information to them regarding the notes made by way
of amendment by the Municipal Commissioner.
The Hon'ble Mayor has suggested that the Municipal
Commissioner should clarify about the amended notes.
Accordingly the Hon'ble Municipal Commissioner made
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A
clarification about his notes made on 17 .10.1975 in details.
B
c
D
E
F
G
xxx
xxx
xxx
After that discussion, as mentioned in the notes of the
Hon'ble Municipal Commissioner dated 17.10.1975, the
House has taken unanimous decision to renew the lease
on other conditions for further 30 years by charging per
year Rs. 13, 120/- as ground rent, and the previous lease
having committee breach of two minor conditions, by
penalizing him Rs. 1500/- for each breach, total Rs.
3000/-, as shown in the concerned file.
The term of 30 years lease of Municipal Plot No. 5 situate
in Geeta Ground, Sitabuldi, on which Anand Talkies is
situate, having expire on 16.3.1974 and the present owner
of the plot Parmananddas having his residence at 55/58
lsra Street, Calcutta having made an application for further
renewal of the plot for further 30 years, as also considering
the notes prepared by the Hon'ble Municipal Commissioner
dated 17.10.1975 for the case has been renewed for
further 30 'sanctioned', 'sanctioned', on the following
conditions.
(1) Considering the fact that the present market price in
comparison to old price, which is 10 times more, it being
proper to enhance the ground rent in ratio by 10 times, it
was suggested that the ground rent of that plot should be
fixed at Rs. 13120/- per annum.
(2) The previous lessee of the lease deed have committed
breach of two conditions, Rs.1500/- for each breach, total
Rs. 3000/-should be recovered by way of fine from him.
(3) Other conditions will be as before."
3.6. Parmanand Mundtiada is said to have filed an appeal
under Section 397(3) read with Section 411 of the Act
H questioning the decision of the Corporation to increase the
SAROJ SCREENS PVT. LTD. v. GHANSHYAM
157
[GS. SINGHVI, J.]
ground rent and to impose penalty. However, the pleadings filed
A
before this Court do not show whether Parmanand Mundhada
and/or his heirs pursued the appeal and the same was decided
by the Competent Authority.
3.7. After the judgment of the High Court, respondent nos.1
8
and 2 submitted application dated 1.8.1991 to the
Commissioner of the Corporation for entering their names in
the municipal records by asserting that the heirs of Parmanand
Mundhada had assigned the leasehold rights of the plot in their
favour by registered deeds dated 2.9.1985 and this fact had
C
been brought to the notice of the Corporation vide letter dated
23.9.1985. However, instead of taking action on the request of
respondent nos. 1 and 2, the Corporation passed Resolution
No. 137 dated 28.8.1991 for renewal of lease in favour of the
appellant for a period of 30 years commencing from 16.3.1991
subject to the condition of payment of ground rent at the rate
D
of Rs.20,000/- per annum. That resolution reads as under:
"Resolution No. 137: Since Messrs Saroj Screen Private
Limited has been paying from time to time ground rent of
the land and the land and building thereon are in
E
possession of the Saroj Screen Private Limited, there
should be no objection for mutation of the land in their
name. Messrs Saroj Screen Private Limited, has by written
letter guaranteed to pay Rs. 15,000/- per year by way of
ground rent of the land. Therefore, as by way of resolution
F
dated 29.10.1975, bearing no. 162, the Nagpur Municipal
Corporation has fixed the ground rent at Rs. 13, 120/- per
year and Rs. 15,000/- by way of ground rent is being paid,
which is more than ground rent of Rs. 13, 120/- which is
fixed, there will be no kind of financial loss of the
G
Corporation. M/s Saroj Screen Private Limited had paid
the amount of ground rent of Rs. 2, 12,529.60 for the period
16.3.1984 to 25.3.1991. Therefore, the House has taken
into consideration the resolution renewal of lease for 30
years from 16.3.1991 at the ground rent of Rs. 15,000/-
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A
per annum and as per resolution no. 162 dated 29.10.197;5
fix the ground rent at Rs. 15,000/- after making recovery
of arrears according to that resolution and recommended
for acceptance. It also proposed that in stead of ground
rent of Rs. 13, 120/- in future ground rent of Rs. 20,000/-
8
should be recovered, which suggestion was made by
Hon'ble Member Shri Atalbahadur Singh. This suggestion
was unanimously sanctioned by the voice of acceptance."
3.8. In furtherance of the aforesaid resolution, lease deed
dated 4.9.1991 was executed between the Commissioner of
C the Corporation and the appellant.
3.9. Respondent Nos. 1 and 2 challenged the decision of
the Corporation to grant lease to the appellant in Writ Petition
No. 1613of1992 and prayed that Resolution dated 28.8.1991
D may be quashed and a direction be issued for registration of
lease deed in their favour because the heirs of Parmanand
Mundhada had assigned leasehold rights in their favour. They
pleaded that in view of Resolution dated 29.10.1975 vide which
the Corporation renewed lease in favour of Parmanand
E Mundhada for a period of 30 years, the subsequent resolution
was liable to be declared as nullity, more so, because while
deciding First Appeal Nos. 95 and 96 of 1980, the High Court
had found that the appellant was not ready and willing to
perform its part of agreement dated 10.09.1947.
F
3.10. In the written statement filed by the appellant, it was
pleaded that respondent nos. 1 and 2 do not have the locus
standi to challenge Resolution dated 28.8.1991 because the
plot had been assigned by Smt. Gangabai to Parmanand
Mundhada. It was further pleaded that the assignment deeds
G dated 2.9.1985 executed by the heirs of Parmanand Mundhada
had no sanctity in the eyes of law because tenure of the initial
lease granted to Ghanshyam Mohta had ended in 1974.
Another plea taken by the appellant was that Resolution dated
29.10.1975 passed by the Corporation for extending the term
H of lease in favour of Parmanand Mundhada had became
SAROJ SCREENS PVT. LTD. v. GHANSHYAM
159
[G.S. SINGHVI, J.]
infructuous because he did not pay the enhanced ground rent
A
and penalty.
3.11. In the written statement filed on behalf of the
Corporation, an objection was taken to the maintainability of
the writ petition on the ground that the issues raised therein are
purely contractual and the same cannot be decided by the High
Court under Article 226 of the Constitution. On merits, it was
pleaded that assignment deeds dated 2.9.1985 are not binding
B
on the Corporation because it had not been apprised about the
transfer of leasehold rights by the heirs of Parmanand
Mundhada in favour of respondent nos. 1 and 2.
C
3.12. At this stage, it will be appropriate to mention that
during the pendency of Writ Petition No.1613 of 1992,
respondent nos.1 and 2 filed Special Civil Suit No.1135 of
1993 for eviction of the appellant, possession of the suit o
property and recovery of damages by alleging that Resolution
dated 28.8.1991 was illegal and without jurisdiction and lease
deed dated 4.9.1991 executed in favour of the appellant did
not create any rights in its favour.
3.13. After filing the written statement in Writ Petition
No.1613 of 1992, the Corporation passed Resolution dated
22.7.1996 and cancelled the lease granted to the appellant on
the ground that previous sanction of the State Government had
E
not been obtained as per the requirement of Section 70(5) of
the Act. The appellant questioned this action of the Corporation
F
in Writ Petition No.1786 of 1996. By an interim order dated
14.8.1996, the High Court directed that status quo be
maintained regarding possession of the plot. After 1 year and
about 8 months, the Corporation sent letter dated 27.4.1998
to the appellant and gave an assurance for restoration of the
G
lease subject to the condition that it shall have to withdraw the
writ petition. Thereupon, the appellant filed an application dated
6.5.1998 with a prayer that it may be allowed to withdraw the
writ petition. The same remained pending till 18.10.2001, on
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A which date the High Court dismissed Writ Petition No.1786 of
1996 as withdrawn.
3.14. In the meanwhile, the State Government accorded
sanction for grant of lease to the appellant for a period of 30
years, i.e., from 16.3.1991 to 15.3.2021. This was
8 communicated to the Corporation vide letter dated 12.6.2000.
3.15. On coming to know of the aforesaid decision of the
State Government, respondent nos.1 and 2 filed Writ Petition
No.3661 of 2001 and prayed that communication dated
C 12.6.2000 be quashed by contending that during the pendency
of Writ Petition Nos.1613 of 1992 and 1786 of 1996, there was
no justification for according sanction under Section 70(5) of
the Act. Another plea taken by respondent nos.1 and 2 was that
the decision of the State Government and the Corporation was
o violative of Article 14 of the Constitution inasmuch as public
property was transferred to the appellant without conducting
auction or inviting tenders so as to enable the members of
public to participate in the process of grant of lease.
3.16. In its reply, the appellant controverted the allegation
E of favoritism and pleaded that respondent nos. 1 and 2 cannot
question the sanction accorded by the State Government under
Section 70(5) of the Act because their predecessor had not
complied with the conditions incorporated in Resolution dated
29.10.1975. It was further pleaded that the sanction accorded
F by the State Government is not retrospective and the
Corporation is required to execute a new lease which would
be effective from 1991. Another plea taken by the appellant
was that respondent nos. 1 and 2 had not come to the Court
with clean hands inasmuch as they have suppressed the fact
G that the suit filed by them was pending before the Civil Court.
H
3.17. The Division Bench of the High Court overruled the
preliminary objections raised by the appellant and the
Corporation to the maintainability of the writ petition by relying
SAROJ SCREENS PVT. LTD. v. GHANSHYAM
161
[G.S. SINGHVI, J.]
upon the judgments of this Court in D.F. 0., South Kheri v. Ram
A
Sanehi Singh (1971) 3 SCC 864 and S.J. S. Enterprises (P)
Ltd. v. State of Bihar (2004) 7 SCC 166. The Division Bench
held that when a public authority is said to have acted in violation
of the statutory provisions, the Court can grant relief to the
aggrieved person and the availability of the alternative remedy
B
does not operate as a bar. The Division Bench further held that
respondent nos. 1 and 2 cannot be held guilty of suppressing
the factum of filing suit for eviction because the first writ petition
had been instituted much before filing the suit. While dealing
with the challenge to Resolution dated 28.8.1991 and the c
decision of the State Government to accord sanction under
Section 70(5), the Division Bench opined that during the
subsistence of Resolution dated 29.10.1975, the Corporation
could not have granted lease in favour of the appellant and the
State Government had no right to validate such grant. However,
D
the prayer of respondent nos. 1 and 2 for issue of a direction
to the Corporation to implement Resolution dated 29.10.1975
was rejected on the premise that the issue was pending
consideration before the trial Court.
4. Shri Gagan Sanghi, learned counsel for the appellant
E
argued that the reasons assigned by the High Court for nullifying
the decision taken by the State Government and the
Corporation to grant lease in favour of the appellant are legally
unsustainable and the impugned judgment is liable to be set
aside because Resolution dated 29.10.1975 passed by the
F
Corporation for renewal of lease in favour of Parmanand
Mundhada had not been acted upon. Learned counsel
submitted that respondent nos. 1 and 2 had not produced any
evidence before the High Court to substantiate their assertion
that Parmanand Mundhada had filed an appeal under Section
G
397(3) read with Section 411 of the Act questioning Resolution
dated 29.10.1975 to the extent of enhancement of ground rent
and imposition of penalty and argued that even if such an
appeal had been filed, the same did not entitle the beneficiary
of the resolution to claim renewal of lease without fulfilling the
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A conditions incorporated therein. Learned counsel argued that
the Corporation did not commit any illegality by passing
Resolution dated 28.8.1991 and executing lease deed dated
4.9.1991 in favour of the appellant because Parmanand
Mundhada and his heirs did not come forward for the execution
B of lease deed in terms of Resolution dated 29.10.1975. He
further argued that sanction accorded by the State Government
under Section 70(5) of the Act was legally correct and the High
Court committed an error by nullifying the same on the specious
ground that during the subsistence of Resolution dated
c 29.10.1975, the Corporation could not have granted lease to
the appellant.
5.