M/s Northern India Caterers Pvt. Ltd. vs The District Judge, Chandigarh and others

Gokal Chand Mittal, J.—The Punjab Government constructed Mountview Hotel, Chandigarh, and with effect from 25th September, 1953, the same was leased out to M/s. Northern India Caterers Private Limited (hereinafter called the ''Lessee'') for a period of six years at an annual rent of Rs. 72,000/-. Later on, on the request of the lessee, the annual rent was reduced to Rs. 50,000/-. Formal lease deed was executed on 21st March, 1959. On 27th August, 1959, the Punjab Government offered to sell the Hotel to the lessee for Rs. 12,000/-. Since the negotiations were going on, the lease was extended up to 31st December, 1959 However, the negotiations for the sale of the Hotel failed because the lessee did not agree to pay Rs. 12,00 000/-. Since on the expiry of the lease, the lessee did not vacate the premises, the Estate Officer, cum-Collector Capital Project, Chandigarh, started the proceedings for eviction under the Punjab Public Premises and Land (Eviction and Rent Recovery) Act, 1959. Those proceedings were challenged on the ground that the relevant provisions of that Act were unconstitutional being violative of Article 14 of the Constitution of India. The lessee''s plea failed in the High Court, though he succeeded in the Supreme Court. (See Northern India Caterers Private Ltd. and Another Vs. State of Punjab and Another, This judgment was rendered on 4th April, 1967, While the appeal was still pending in the Supreme Court, on 1st November, 1966. Chandigarh was declared to be a Union Territory and the properties belonging to the Punjab Government became the properties of the Central Government by virtue of the States Reorganisation Act, 1966 and consequently the Hotel came to be owned by the Central Government. On 15th June, 1967, Chandigarh Administration again offered the Hotel to the lessee for purchase at Rs. 12,00,000/- plus interest at the rate of 6 per cent on the aforesaid price with effect from 27th August, 1959, i.e. from the date of first offer still payment under the completed sale. However, the matter was not finalised and the sale did not take place.

By Parliament Act No. 32 of 1968, the Public Premises (Eviction of Unauthorised Occupants) Act, 1958, (hereinafter referred to as the Act), which was applicable to the properties held by the Central Government, was amended. By the Amending Act, Section 10-E was introduced which provided that Civil Court will not have jurisdiction to entertain a suit or proceedings in respect of eviction of any person who was in authorised occupation of any public premises or for the recovery of arrears of rent or damages, with the result, the vice of discrimination, which was pointed out in AIR 1961 SC 1581 (Supra) was taken away. In view of the amendment, fresh proceedings were started by Chandigarh Administration by issue of notice (Annexure ''P-1'') dated 18th November, 1968, under sections 4 and 7 of the Act for eviction and for recovery of damages amounting to Rs. 4,28,000/- at the rate of Rs. 4,000/- per month for the period from 1st January, 1960 to 30th November, 1968. In those proceedings, final order was passed by the Estate Officer on 14th Way, 1969 (Annexure''P-2'') whereby order for eviction as also for recovery of damages, as claimed, was passed. Against the aforesaid order, the lessee moved the District Judge in appeal. The lessee also filed an application in which it was stated that inspite of the amendment of 1968, the Act was ultra vires the Constitution of India, and therefore, prayed that the matter be referred to the High Court for determination of the vires of the Amendment Act. The prayer was declined by the District Judge and the petition filed by the lessee under Article 227 of the Constitution of India also failed before this Court on 25th February, 1970 Ultimately, SLP was filed in the highest Court. Before any interim order could be passed in the Special Leave Petition, the District Judge decided the appeal on 3rd February, 1971 and upheld the order of eviction but the order of damages was set aside and the matter was remitted to the Estate Officer for fresh determination of the compensation in accordance with law after recording a finding that the assessment of damages was not based on any material on the record Copy of the said order is Annexure ''P3'' Within a week thereafter, the SLP came up far hearing before the Supreme Court on 9th February, 1971, when the following order was passed :--

This SLP shall remain pending while the District Judge will dispose of the appeal pending before him. As regards stay, stay of dispossession shall continue on condition that the arrears of the amount payable are paid and also the monthly compensation equivalent to the rent is paid without prejudice to the rights of the parties. The arrears of compensation calculated on the basis of rent should be paid within four months from today. Assessment of compensation before the Estate Officer shall continue but no demand shall be made without the order of this Court.

In the meantime, some more notices were issued by the Estate Officer u/s 7 of the Act, which were either not proceeded with or were with drawn, but finally, notice dated 4th November, 1972 was issued u/s 7 of the Act proposing to levy damages for use and occupation with effect from 1st January, 1960 up-to-date at the rate of Rs. 10,000/- per month. While the proceedings were still pending before the Estate Officer, Chandigarh Administration made an application on 25th May, 1978 to amend their pleas that the damages should be awarded at the rate of Rs. 15,000/- per month. The amendment was opposed but was ultimately allowed. The lessee kept on opposing the application on various grounds. Ultimately by order dated 7th April 1981 (Annexure P-5) the Estate Officer assessed the damages at the rate of Rs. 10,000/- per month with effect from 1st January, 1960 till vacation of the premises. The lessee challenged the afore-said order in appeal before the District Judge, Chandigarh, which finally failed on 3rd November, 1981 copy of the said order is Annexure ''P-6''. The aforesaid order has been challenged before us in this petition under Articles 226 and 227 of the Constitution of India.

After hearing the learned counsel for the parties at length, we are of the view that there is not the least scone for interference with the well considered appellate order in writ jurisdiction. The following four points were raised before us : --

(1) That the assessment of damages for use and occupation was arbitrary.

(2) That even if the assessment was not arbitrary, for the period from 1st January, 1960 to 30th November, 1968 damages could not have been awarded at a rate higher than Rs. 4,000/- per month.

(3) That the recovery proceedings beyond three years were barred by limitation because the proceedings were in the nature of execution and not a suit and, therefore, limitation of 30 years would not apply.

(4) That even if the proceedings were within limitation, it was the State of Punjab alone who was entitled to damages for the period prior to 1st November, 1966 and not the Administration of the Union Territory, Chandigarh.

A look at the order of the Estate Officer, Annexure ''P-5'' as also of the Appellate Authority. Annexure ''P-6'', would show that while assessing damages the principles enunciated in Rule 8 framed under the Act, were taken into consideration and on the found facts it was concluded that Rs. 10,000/- per month were the reasonable damages. The learned counsel was not able to show that any one of the considerations relied upon by the authorities below, was not in accordance with law Accordingly, we repel the argument, that the assessment of damages was arbitrary.

Coming to the second point, we do not find any merit in the same either The sole basis of the argument is that when the proceedings were initiated on 18th November, 1968 for eviction and recovery of damages, the Chandigarh Administration had claimed damages at the rate of Rs. 4,000/- per month from 1st January, 1960 to 30th November 1968. Factually, the position is correct. However, the damages assessed at the rate of Rs. 4 000/-per month in those proceedings were set aside on appeal filed by the petitioners on the ground that it was not shown as to how the damages were calculated and on what basis. Thereafter, fresh proceedings were started when damages were claimed at the rate of Rs. 10,000/- per month. Therefore, the crucial paint before the autorities below was as to what rate of damagas the Chandigarh Administration was able to prove before them on the basis of evidence available on the principles enunciated under Rule 8 framed under the Act. Both the authorities below have recorded a concurrent finding of fact based on reliable evidence and have concluded that the damages for use and occupation with effect from 1st January, 1960 up to-date have been proved to be Rs. 10,000/- per month. In view of these facts the award of damages at the rate of Rs. 10,000/- per month cannot be said to be either not based on material available on the record or being without any basis. The mere fact that at an earlier instance, the damages were claimed at Rs. 4,000/- per month, would in no way preclude the Chandigarh Administration to claim higher damages and to prove the same. Neither on any principle, nor on any authority, the counsel for the petitioners has been able to show that the Chandigarh Administration was precluded to claim the damages which have been awarded by the authorities below. To our mind, the petitioners could take benefit of rule of estoppel provided it applied on the found facts of the case. If on the claim of Rs. 4,000/- per month, the petitioners had changed their position to their detriment, then certainly the Chandigarh Administration could have been estopped from claiming damages at a higher rate. But in the present case, no such situation has occurred. The petitioners sought to challenge the action of eviction and recovery on the basis that the provision under which it was sought to be done, was ultra vires and that the damages awarded were arbitrary --After it was held by the Supreme Court in Hari Singh and Others Vs. The Military Estate Officer and Another, that the provisions of the amended Act were valid, the proceedings for eviction and recovery of damages were started afresh Later on, the Supreme Court in Maganlal Chhaganlal (P) Ltd. Vs. Municipal Corporation of Greater Bombay and Others, , reversed the earlier decision in Northern India Caterers'' case (supra), and held that even the unamended Act was constitutionally valid. Therefore, once the Act has been held to be valid, the Chandigarh Administration was entitled to claim damages at a rate which they were able to successfully prove before the authorities. Hence even the rule of estoppel is not applicable and the claim made at the rate of Rs. 10,000/- per month, which has been proved on the evidence on the record, cannot be negatived merely because on an early occasion the damages for part of the period were claimed at the rate of Rs. 4,000/- per month Moreover, in the writ jurisdiction, we are not bound to interfere when we find that the petitioners have not paid damages for use and occupation for a period of over 20 years and enjoyed the use of the public property for their business purposes to run a hotel without paying a single penny Under the Act probably there is no provision for the award of interest on damages and if interest were to be awarded, then in 20 years period, the principal amount would have become more than three times even on the fixed deposit rates payable by the Scheduled Banks and four times if the interest payable by the private companies on fixed deposits were to be taken into consideration. Further the present claim for damages was made on 14th June, 1972 at the rate of Rs. 10,000/- per month, which claim was amended in 1976 to Rs. 15,000/- per month. It cannot be disputed that after the original claim of 1972 at the rate of Rs. 10,000/- per month the rates have increased by several folds, but the liability of the petitioner has been fixed only on Rs. 10,000/- per month If we were sitting in appellate jurisdiction, we might have allowed damages at the rate of Rs. 15,000/- per month from 1976 which stand substantiated from the material already present on the record. Similarly, we would have allowed 12 percent interest with half-yearly or yearly rest, on the arrears due. In this manner the total amount payable by the petitioner would have been more than that has now been awarded. In the absence of appeal by the Chandigarh Administration, we may not have been able to enhance the amount payable by the petitioner but would have certainly maintained the award at the rate of Rs. 10,000/- per month on this process of reasoning Therefore taking the totality of facts, we find it wholly inequitable to interfere in writ jurisdiction on the quantum of damages fixed by the authorities below.

Adverting to the third point, the matter is concluded by the decision of the highest court in New Delhi Municipal Committee Vs. Kalu Ram and Another, . There also the claim was made for the recovery of damages u/s 7 of the Act, a similar provision with which we are concerned in this case. The relevant passage deserves to be reproduced : --

If the person in arrears raised a dispute as to the amount, the Estate Officer in determining the amount payable, cannot ignore the existing laws. If the recovery of any amount is barred by the law of limitation, it is difficult to hold that the Estate Officer could still insist that the said amount was payable. When a duty is cast on an authority to determine the arrears of rent, the determination must be in accordance with law. Section 7 only provides a special procedure for the realisation of rent in arrears and does not constitute a source or foundation of a right to claim a debt otherwise time barred. Construing the expression ''any money due'' in Section 186 of the Indian Companies Act, 1913 the Privy Council held in Hans Raj Gupta v. Official Liquidators of the Dehradun-Mussorrie Electric Tramway Co. Ltd. 60 Ind. App 13 : (A.I.R. 1983 P.C. 63) that this meant money due and recoverable in a suit by the company, and observed :

It is a section which creates a special procedure for obtaining payment of moneys : it is not a section which purports to create a foundation upon which to base a claim for payment. It creates no new rights ''

We are clear that the word ''payable'' in Section 7, in the context in which it occurs means ''legally recoverable''. Admittedly a suit for to recover the arrears instituted on the day the order u/s 7 was made would have been barred by limitation. The amount in question was, therefore, irrecoverable.

A reading of the above would show that the Estate Officer u/s 7 can order payment of the damages if the claim made is otherwise not time barred. It is not disputed that if a suit for recovery of damages were to be filed by the Chandigarh Administration, the limitation was 30 years under Article 112 of the Limitation Act, 1963. The sole argument of the learned counsel for the petitioners is that the present proceedings are not a suit but an application and limitation of three years provided under Article 87 of the Limitation Act would be applicable. While Article 87 would apply to a suit by a plaintiff other than the State/Central Government, but for a similar suit by the State/Central Government the limitation would be 30 years in view of Article 112. Moreover, the underlined observations of the Supreme Court quoted above, clearly go to show that the limitation under the Law of Limitation has to be taken notice of and if a suit would be barred on the date an application u/s 7 is filed, then the arrears will become irrecoverable As a corollary, if a suit would be within time, then the claim cannot be denied merely because it is sought to be recovered u/s 7. Moreover, in calculating limitation, the period during which the stay obtained by the petitioners remained in operation, has to be excluded and in this manner also the suit, when application u/s 7 was filed, would have been clearly within limitation. Hence, the argument that the application is time barred, has no merit and is clearly covered against the petitioners by the afore said decision of the Supreme Court.

Coming to the last argument, the same has also been ably dealt with the District Judge as Appellate Authority and we are in full agreement with the reasons recorded by him. Ft is true that till before 1st November, 1963, the hotel premises vested in the State of Punjab and with effect from 1st November, 1966, the same continued to vest in the Union Territory Chandigarh The Punjab Reorganisation Act, 1966, clearly provides in Section 59 that it will be the new State which will have the exclusive jurisdiction to claim damages even for the period prior to 1st November, 1966. For all practical purposes, the newly created States were to be deemed to be in existence by fiction of law at all times and the rights of the former State of Punjab with regard to the Union Territory of Chandigarh, came to be vested in the Chandigarh Administration with all rights and liabilities including for the period prior to 1st November 1966. The learned counsel for the petitioners was wholly unable to point out any provision in the Punjab Reorganisation Act which authorised the newly formed State of Punjab to recover damages for the period prior to 1st November, 1966 It is not disputed that the former State of Punjab, which existed before 1st November, 1966, has ceased to exist and a new State of Punjab came into being from 1st November, 1966. If the argument raised before us were to be accepted, then the liability of the petitioners from 1st January, 1960 to 30th October, 1965, for a period of nearly seven years, would stand extinguished This was never the intention either of the Punjab Re-organisation Act or Of the Re-organisation of States, accordingly, this argument is also repelled.

For the reasons recorded above, this petition is devoid of merit and is dismissed with costs Counsel fee Rs. 1,000/-.

S.S. Sandhawalia, C.J.

I agree.