Sayaji Hotels Ldt vs Indore Development Authority & Anr

The petitioner before this Court has filed the present petition being aggrieved by order dated 29-11-2017 / 20-122017 passed by the Indore

Development Authority cancelling the lease deed granted in favour of the petitioner.

The facts of the case reveal that the petitioner before this Court - Sayaji Hotels Limited is a limited company registered under the Companies Act,

1956 submitted a bid in response to NIT floated by the Municipal Corporation, Indore (Annexure R/3) dated 03/03/1993. The terms and conditions of

NIT are also on record as Annexure R/2. The NIT was exclusively issued for 3/4/5 Star Hotel plot at Indore. The petitioner's company being

successful bidder was allotted the plot in question and a lease deed of the said plot was executed in favour of the petitioner company by Indore

Development Authority on 19/06/1994.

The facts of the case further reveal that a complaint was received by Indore Development Authority in respect of division of plot and sale of shops

in the shopping arcade constructed by the petitioner's company and a show cause notice was issued, for the first time, on 07/09/2007 (Annexure P/15)

to the petitioner alleging violation of the terms and conditions of lease deed and it was stated in the show cause notice that the petitioner's company

has violated Clause 4 and 6 of the lease deed. Clause 4 and 6 of the lease deed reads as under:-

“4-Hkw[kaM dk mi;ksx dsoy gksVy ds fy;s gksxk rFkk mlds mi;ksx esa ifjorZu ugha fd;k tk;sxk ,oa Hkw[kaM dk foHkktu ugha fd;k tk ldsxkA

Hkw[kaM ij ,slk dksbZ mi;ksx fdlh ,sls m|ksx ds fy, ugha fd;k tk ldsxkA ftlesa dksbZ mRiknu fd;k tkos rFkk okrkoj.k nwf""kr gksA

6- yhtx`ghrk dks og IykV Lo;a ds Hkou fuekZ.k gsrq yht ij fn;k x;k gSA vr% tc rd bl IykV ij Hkou fuekZ.k ugha gks tkrk] rc rd ;g IykV fdlh dks Hkh

fdlh :i esa gLrkarj.k ugha dj ldsxkA ;fn og Hkou fuekZ.k djus esa vleFkZ gS rks IykV izkf/kdkjh dks lefiZr djsxkA ,slh gkyr esa izhfe;e dh tks jde tek

dh xbZ gS] mlesa ls 5 izfr'kr ;k /kjksgj dh jde tks Hkh vf/kd gks] jde dkVdj 'ks""k jde okil dh tkosxhAâ€​

The petitioner's company did submit a reply and it was stated by the petitioner's company that the shopping arcade has been constructed, keeping in

view the need of the travellers staying in the hotel and it is not a division of plot as alleged by the Indore Development Authority. Before this Court

also an attempt was made to demonstrate that there was no violation of any terms/condition of the lease deed. It has also been argued before this

Court that in similar circumstances the Indore Development Authority has compounded the lapses committed by the other plot owners. However no

single document of any specific case has been filed by the petitioner to establish that such a compounding has taken place in any identical case.

In the present case, the undisputed facts of the case reveal that the plot was allotted by Indore Development Authority to petitioner's company

exclusively for constructing a hotel. The petitioner's company in its reply has admitted construction of a shopping arcade, apart from constructing a

hotel. It has also been stated that shops have been constructed, a bank is functioning in the shops, shops of the property dealer are in existence in the

shopping arcade. But at the same time, it has been argued by Mr. Asudani, learned counsel for the petitioner that out of 36 shops, 33 shops have been

repurchased, and therefore, there is no violation of Clause 4 as alleged by the Indore Development Authority and the matter can be compounded.

On the other hand, Ms. Mini Ravindran, leanred counsel for the respondent has argued before this Court that the petitioner's company is not

permitting IDA to finalize the proceedings in respect of show cause notice issued on 07/09/2007. The Indore Development Authority was able to pass

a final order only on 29/11/2017.

This case certainly is having a chequered history. Against the show cause notice and the order passed by the Indore Development Authority, a writ

petition was preferred i.e. WP No.8128/2015 and this Court has passed the following order:-

“This writ petition has been filed by the petitioner challenging the Resolution of the respondent Indore Development Authority dated 28/10/2015 in

respect of cancellation of lease of petitioner Sayaji Hotels Ltd.

In brief, the case of the petitioner is that the plot in question was leased out to it by the Indore Development Authority vide lease deed dated 19/6/1994

and after due permission the petitioner had constructed hotel building as also a shopping arcade at basement, ground and first floor. Thereafter in the

year 2001, the petitioner was granted permission by the Municipal Corporation for construction of shopping plaza at the hotel by the name of Sayaji

Plaza on an area 3406.37 sq.mtr which was about 12% of the total area and the shops so constructed were sold out to the respective purchasers.

Further case of the petitioner is that on 26/8/2014 a show cause notice was issued to the petitioner for constructing shops in violation of the lease

conditions. The reply dated 3/12/2014 was filed with a request to provide an opportunity of personal hearing. On 17/9/2015 a brief history of the case

was submitted by the petitioner. The grievance of the petitioner is that no opportunity before the Board was thereafter provided and straight away the

Resolution has been passed for canceling the lease.

A reply has been filed by the respondent taking the plea that since the petitioner has constructed the shop in violation of the lease conditions, therefore,

decision has been taken to cancel the lease.

Learned counsel for petitioner submits that the petitioner has not violated the terms of the lease and construction of the shopping complex is part of the

business of the petitioner, which is five star hotel, since it is required for providing ancillary facilities. He further submits that before the Board, the

petitioner had sought adjournment on the ground of illhealth but the matter has been proceeded ex-parte without giving proper opportunity.

Learned counsel for respondent has opposed the writ petition submitting that the proper remedy available to the petitioner is to file a civil suit and

establish the factual plea which he is raising. He further submits that cancellation of lease is a legislative function and no opportunity of hearing is

required.

I have heard the learned counsel for parties and perused the record.

The record reflects that for the alleged violation of the lease conditions after filing of reply to show cause notice dated 26/8/2014; the notice of

personal hearing dated 24th September 2015 was issued by the respondent Indore Development Authority to the petitioner to appear before the Board

on 29/9/2015 and present their case. Undisputedly, the meeting of the Board did not take place on 29/9/2015 and the matter was adjourned. Thereafter

the notice dated 3rd October, 2015 was issued to appear before the Board for personal hearing on 7/10/2015. The petitioner well in advance, on

6/10/2015, had submitted an application before the respondent for adjournment on the ground of ill-health of the Director Mr. Raoof R. Dhanani who

was stated to be well versed with the facts and other details of the matter. The application was duly supported by the medical certificate, but on

7/10/2015 without assigning any proper reasons, the application for adjournment was rejected. The application for adjournment was not rejected either

on the ground that on the false pretext the adjournment was sought or that the medical certificate was fabricated, but it has been simply rejected on

the ground that in the notice to the petitioner, it was stated that in case of non appearance, ex-parte proceedings will be taken. Such an action of the

respondent is a mechanical action which suffers from the non application of mind. Once the respondent had taken a decision to give opportunity of

hearing, then the one adjournment which the petitioner was seeking on the bona-fide ground ought to have been granted especially when the stand of

the petitioner is that he has not violated the lease conditions.

On the issue of entitlement of the petitioner for opportunity of hearing, counsel for petitioner has pointed out the judgment of the supreme court in the

matter of Canara Bank and others Vs. Shri Debasis Das and others reported in AIR 2003 SC 2041 and Smt. Maneka Gandhi Vs. Union of India and

another reported in AIR 1978 SC 597 .

In view of the aforesaid position, the stand of the counsel for respondent that no opportunity of hearing was required to be given while terminating the

lease u/S.111(g) of the Transfer of Properties Act cannot be accepted. Even in the judgment in the matter of State of T.N. And Another Vs.

P.Krishnamurthy and others reported in (2006)4 SCC 517 relied upon by the counsel for respondent, it has been held that for premature termination of

the mining lease, a notice and hearing is obvious since exercise of power of termination has civil consequence adversely affecting the interest of the

lease holders.

Counsel for respondent has relied upon the division bench judgment of this court in the matter of Sajni d/o Dwarkadas Bajaj Vs. Indore Development

Authority and others reported in 2012 (1) MPLJ 53 wherein it has been held that the challenge to the order cancelling the lease involves the question

which cannot be decided in writ petition and these questions require trial either in the regular civil proceedings or in a proceeding for eviction. But, in

the present case the sole question is about violation of the principles of natural justice for which writ petition is a proper remedy, therefore, the benefit

of the aforesaid division bench judgment cannot be granted to the respondent.

Hence, I am of the opinion that the respondent's have passed the impugned Resolution in respect of the cancellation of the lease of the petitioner

without following the principles of natural justice, therefore, the impugned Resolution dated 28/10/2015 cannot be sustained and is hereby set aside.

The proceedings dated 7/10/2015 by which the petitioner's prayer for adjournment was declined also cannot be sustained and is hereby set aside with

a direction to the respondent to give an opportunity of hearing to the petitioner and take fresh decision in accordance with law.

The writ petition is accordingly disposed off.â€​

Thereafter, second writ petition was preferred i.e. WP No.17997/2017 and this Court has passed the following order:-

“By this writ petition the petitioner has challenged the proceeding dated 25/10/2017 of Chief Executive Officer of respondent no.2.

The grievance of petitioner is that the matter relating to cancellation of lease is to be heard and decided by the Board of respondent no. 2 authority and

Chief Executive Officer is not competent to decide this issue.

Though learned counsel for respondent no. 2 has supported the impugned order but he has fairly stated that there is no objection in considering and

deciding the petitioner’s grievance by the Board of respondent no. 2 authority.

The record reflects that in the earlier round of litigation the matter was being considered by the board itself and the order of board dated 28/10/2015

was subject matter of challenge in WP No. 8128/15 and this court by order dated 18/12/2015 had set aside the order and directed the respondents to

give an opportunity of hearing to petitioner and take fresh decision in accordance with law.

On perusal of the lease deed Annexure P-2 it is noticed that in terms of clause 21 of the lease deed, the decision of the authority on any dispute is

final.

Rule 21 of Madhya Pradesh Vikas Pradhikarano Ki Sampatiyon Ka Prabandhan Tatha Vyayan Niyam, 2013 also provides that the authority has

power to cancel the lease of the

property and has right to re-entry on cancellation of lease. Rule 2 (b) of Rules defines “authority†to mean Town and Country Development

Authority or Special Area Development Authority constituted under Section 38 and 64 of the Act, respectively. Section 40 of Nagar Tatha Gram

Nivesh Adhiniyam provides for constitution of Town and Country Development Authority and composition thereof.

Having regard to the aforesaid and considering the earlier order as also the lease condition, I am of the opinion that in order to settle the controversy,

once for all, it would be appropriate that the issue is decided by the board itself.

Hence the present writ petition is disposed off with a direction to respondent no. 2 to place the matter before the Board for taking appropriate decision

in accordance with law. It is made clear that no unnecessary adjournment will be granted to the petitioner in the proceeding before theâ€​

Thereafter, as prayed by the petitioner, the matter was heard by the Board and detailed and exhaustive Resolution has been passed by the Board

cancelling the lease.

Keeping in view the aforesaid, this Court is of considered opinion that the petitioner's company has been given an opportunity of hearing by the

Board. The grounds raised by the petitioner have been looked into and thereafter, a detailed Resolution has been passed, considering the grounds as

has been raised by the Indore Development Authority.

The petitioner's company has certainly not at all repurchased all the shops and there is a violation committed by the petitioner's Company, and

therefore, in the considered opinion of this Court, the Indore Development Authority was justified in cancelling the lease deed as there was a violation

committed by the petitioner in dividing the plot and selling the shops constructed over the plot to the strangers who are not a part of the company, by

receiving consideration, hence this Court does not have any reason to interfere with the order passed by the Indore Development Authority.

Accordingly, the present petition stands dismissed.

Certified copy as per rules.