Sri Moogambikai Enterprises vs Dharmapuri District Development Corporation Limited and Another

K.A. Swami, C.J.—W.A. No. 902 of 1995 is preferred against the order dated 29.3.1995 passed by the learned single Judge in W.P. No.

12917 of 1994, whereas W.A. No. 1032 of 1995 is preferred against the order dated 8.8.1995 passed by the learned single Judge in W.P. No.

2236 of 1995. These two writ appeals though arise out of different orders in two different writ petitions by two different single Judges, were heard

together in view of the fact that the parties to both the writ petitions are common and the lease that has been relied on is also common. In W.P.

No. 12917 of 1994, the petitioner has sought for issue of a writ of mandamus in the nature of directing the second respondent to reckon the lease

period by ten years from 17.1.1986 with regard to Anna Gandhi Mani Mandapam situated in Survey Nos. 716 to 718/2 of Boganapalli Village,

Krishnagiri Taluk to and in favour of the petitioner by quashing the proceedings of the second respondent bearing Letter No. 4665/93/A. 5, dated

31.3.1994, whereas in W.P. No. 2236 of 1995 the same petitioner has sought for issue of a writ in the nature of a mandamus directing the

respondents to renew the lease to and in favour of the petitioner with regard to the property (Apsara Cinema Theatre) situated in S. Nos.716 to

718, Boganapalli Village, Krishnagiri Taluk, Dharmapuri District for a period of three years by enhancing the present lease amount by 15%.

W.P. No. 12917 of 1994 has been dismissed by the learned single Judge on the ground that the relief sought for by the petitioner cannot be

granted on the following grounds:

The petitioner also states that it wrote to the respondents during January, 1986 to treat that 34 months as holiday period and to reckon from

17.1.1986. However, it is not disputed that the rents have been paid from 31.1.1985. The lease is governed by the terms which are incorporated

in the lease deed which has been executed and it provides for a lease of the demised property for a period of ten years commencing from the date

on which the property is handed over. That event occurred in the years 1984. However, because of the petitioner''s request for treating the period

prior to 31.1.1985 as holiday period having been accepted by the respondents, the period of ten years provided for in the lease can be reckoned

from 31.1.1985. Therefore, it has to end by the end of January, 1995. The reasons put forward by the petitioner that there was some delay on the

part of the corporation for giving permission for approving the planning cannot be a ground for treating the lease deed as one effective from the

date on which the petitioner commenced exhibiting films. Had that been the intention, the lease deed would have provided for it when the petitioner

took on lease, he knew very well the requirements regarding permission for corporation for running the theatre and agreed to take the building on

lease for ten years, knowing full well that actual exhibition of films can commence only after permission had been obtained.

The petitioner, therefore cannot now claim a right to reckon the ten years period as commencing from the date when it commenced exhibiting films.

The ten years period can only be reckoned from 31.1.1985. The reliefs sought for by the petitioner cannot be granted. Counsel for the petitioner,

however submits that the respondent corporation only intends to auction the right to manage the theatre and does not intend using of itself. Counsel

for the respondents disputes the correctness of this assertion. If the respondent-Corporation does not intend using it for its own purpose, but

intends to let it out, the respondents may consider the petitioner''s request. The petitioner however cannot claim any relief in this petition and this

petition has to be dismissed and accordingly it is dismissed.

W.P. No. 2236 of 1985 has been rejected on the following grounds:

The only point now to be considered is whether the petitioner will be entitled to the benefit of G.O.Ms. No. 285, Municipal Administration and

Water Supply Department, dated 29.4.1985. So far as G.O.Ms. No. 285 is concerned, it is specifically mentioned therein that the question of

leasing out of Municipal building stall, lands, shops, banks etc. beyond 31.3.1985 was under consideration. The Government has decided to

continue the lease for one year from 1.4.1985 to 31.3.1986 subject to the condition of the existing leaseholders agreed to pay during the period

from 1.4.1985 to 31.3.1986 an increased lease amount of 15% over and above the lease amount for the period 1984-85. As the buildings etc.,

belonging to the Municipality was auctioned every year, the Government was of the opinion that the auctioning of the property every year causes

hardship to the tenants as well as to the Municipalities and hence for that particular year they permitted the leaseholders to pay the increased lease

amount of 15% and continue the lease thereafter. The Government decided to auction the leasehold right once in three years. The lease amount will

be fixed for the first year at the rate of highest bid in the public auction. The lease amount for the second year shall be at 15% more than the

amount for the first year and for the third year in addition to the amount for the second year. Hence, if that principle is to be applied, the petitioner

cannot claim by way of right for renewal after getting into possession of the property 12 years back. The respondents are entitled to auction the

leasehold right at this stage and it is open to the petitioner to take part in the public auction. In case if he is a successful bidder for the next year, he

may claim for renewal by paying 15% excess of the bid amount. Moreover, G.O.Ms. No. 285 will be applicable only to the lease of short term

and not for the lease of long terms as in the present case. As already stated, the petitioner has no vested right to claim for the renewal. The

respondents have already shown enough concessions to them and inspite of the expiry of the lease by 31.1.1995, the petitioner had enjoyed the

lease for another six months without paying any rent. Taking into consideration of the conduct of the petitioner in the irregular payment of rent, I am

of the view that the petitioner is not entitled by way of right to claim renewal.

The points that arise for consideration in these writ appeals are as follows:

(1) Whether G.O.Ms. No. 285, dated 29.4.1985 is applicable to the lease in question?

(2) Whether in the facts and circumstances of the case the rights claimed by the petitioner under the lease dated 14.8.1983 can be enforced in a

petition under Article 226 of the Constitution of India?

Point No. 1: G.O.Ms. No. 285, dated 29.4.1985 reads thus:

The Government have carefully considered the question of leasing out the Municipal buildings, stalls, lands, shops, bunks, etc. beyond 31.3.1985.

They have decided all the existing leaseholders to continue in the premises for one more year (i.e.) from 1.4.1985 to 31.3.1986 subject to the

condition that the existing leaseholders agree to pay, during the period from 1.4.1985 to 31.3.1986 at an increased lease amount at 15% (fifteen

per cent) over and above the lease amount for the year 1984-85, in addition to the lease amount for 1984-85. The Government also direct that the

Municipal Councils resort to public auction of the lease once in every three years and that the system of public auction of the Municipal properties

mentioned above shall be implemented from 1.4.1986. A successful bidder shall not be allowed to take part in the public auction, at the most, for

more than two times. The lease amount will be fixed for the first year at the rate of highest bid in the public auction. The lease amount for the

second year shall be at 15% more than the amount for the second year in addition to the amount for the second year. The Co-operative

Organisations, Government Departments and Government undertakings can take the municipal properties on lease paying the rates fixed by the

Public Works Department, without participating in the public auction.

In continuation of the instructions issued in Government Letter No. 12667, MVT/35-1, N.A.E.M.S. dated 21.3.1995, the Government direct that

the existing leases in respect of the properties mentioned above shall be extended for the year 1985-86 and the lease amount shall be collected for

1985-86 at an increased rate at 15% more than the lease amount for 1984-85, in addition to the lease amount for that year. In conformity with the

instructions issued in Government Memo No. 29300 MVII, 76-2 RD & LA dated 27.3.1976 and in accordance with the orders in the preceding

paragraphs, the Government have decided to amend rule 12 of the Tamil Nadu District Municipalities Rules issued under Tamil Nadu District

Municipalities Act, 1920, relating to receipts and expenditure of Municipal Councils.

The Notification appended to these orders shall be published in an Extraordinary issue of the Tamil Nadu Government Gazette.

A reading of the aforesaid Government order makes it clear that it is not applicable to the buildings belonging to the companies. The Project

Officer and the Managing Director of the first respondent in both the appeals have stated in the counter-affidavit filed on behalf of the 1st

respondent that the 1st respondent is a public sector undertaking fully owned by the Government of Tamil Nadu and it is incorporated under the

Companies Act, 1956. Therefore, the first respondent cannot be considered to be either the Municipal Council or the local authority. It is a

company registered under the Companies Act even though wholly owned by the State Government. Hence, the petitioner/appellant cannot take

advantage of the aforesaid Government Order in respect of the lease granted by the 1st respondent leasing its property.

Even otherwise, the aforesaid Government Order cannot be construed as applicable to long term lease such as the one in question, with a

further provision for renewal under certain circumstances. When the parties agree and enter into a written lease containing the terms and conditions

for renewal, they are bound by it. The Government Order in question cannot have the effect of altering the bilateral contracts. Point No. 1 is

answered in the negative.

Point No. 2: There is a registered lease entered into between the petitioner/appellant and Dharmapuri District Development Corporation Limited

which as we have already pointed out, is a public sector undertaking wholly owned by the State Government, incorporated under the Companies

Act. A copy of the lease deed has been produced in the typed set of papers by the appellant. The lease deed provides for several matters and

prescribes several conditions. The term of the lease is ""for 10 years from the date of handing over of the building and to hold the same unto lease

for a term of ten years commencing from the date of handing over."" Regarding the renewal of the lease, the deed provides thus: ""and an option of

the lessor''s part to have the term lease extended for a further period of the same terms purely at the discretion of the lessor, considering the

additional expenditure incurred by the lessee to alter the building in such a way to perform the Cinema Theatre, and also the extension of lease

period purely based on merits, market rates and healthy co-operation prevailed between lessee and lessor at the time. The lessee cannot claim the

extension of lease period solely reserved by the Dharmapuri District Development Corporation itself for Moogambikai Enterprises D. Gunaseelan

Managing Partner M.S. Srinivasan Managing Director, Dharmapuri District Development Corporation Limited, Dharmapuri - II"". The lease deed

further provides, among other things, (i) the rent and the manner of payment of rent; (ii) the consequences of default in payment of rent; (iii)

payment of compensation for any of the damages caused to the building during the period of lease; (iv) to use the premises only as a cinema theatre

and not for any other purpose of trade; (v) not to assign, sub-let or part with the possession of the premises or any part thereof without first

obtaining the written consent of the lessor or his authorised officers and (vi) the deposit of Rs. 1.00 lakh to be made by the lessee, which will be

refundable after the expiry of the lease period, subject to handing over of the premises in good tenantable condition. The lease deed further

provides that ""if the lessor shall desire to determine the present demise he shall give to lessee three calendar months previous notice in writing of

such adesire then immediately on the expiration of the three calendar months, the present demise and everything herein contained shall cease and

be void.

It cannot be disputed and it is not disputed before us that it is a lease under the Transfer of Property Act. There is a provision for the termination

of the lease, after issuing a notice for a period stated in the ""lease deed"". However, it is strenuously urged by learned Counsel for the appellant that

the lease in question is a statutory lease, therefore, this Court can exercise the power of judicial review under Article 226 of the Constitution of

India. Learned Counsel has not been able to lay his hand on any provision of law. It is further contended that the corporation in question is created

under the statute, therefore its actions are amenable to judicial review under Article 226 of the Constitution. However, no provision of any statute

is brought to our notice. In the presence of specific and categorical statement contained in the counter-affidavit of the Project Officer and

Managing Director of the first respondent to which we have already adverted to, it is not possible to accept the submission of learned Counsel for

the appellant that the first respondent Corporation is a statutory body. A company registered under the Companies Act cannot be considered to

be a statutory body created under the statutes. We may also point out that it is open to the Government as well as the statutory corporation to

enter into non-statutory contracts under the ordinary law. In that event, such contracts do not become or cannot be construed as statutory

contracts, though one of the parties to the contract may be a State or may be considered as falling in the category of local or other authorities for

the purposes of Part III of the Constitution as contemplated under Article 12 of the Constitution.

A Division Bench of this Court to which one of us was a party (K.A. Swami, C.J.) after referring to the decisions of the Supreme Court in

dealing with the lease granted by the Municipal Corporation has held in The Commissioner, Nagapattinam Municipality Vs. P. Palanivelu and

Others, as follows:

Before us, several contentions are urged, but we are of the view that only one contention that deserved to be considered is, that the lease in

question being a non-statutory contract though one of the contracting parties falls within the definition of ""State"" as defined under Article 12 of the

Constitution of India, the relief under Article 226 of the Constitution of India is not available to the aggrieved party for enforcement of non-

statutory and purely contractual right which are governed by the terms of the contract. In this case, it is not in dispute that the lease in question does

not fall under any one of the provisions of the Tamil Nadu District Municipalities Act with which the Municipality in question is governed. The

travellers bungalow belonging to the Municipality in question has been leased to the 1st respondent for a period of three years. It is a non-statutory

contract. If the termination is not in accordance with the terms of the lease and the provisions of the Transfer of Property Act, there is a remedy

open to the 1st respondent to approach a civil Court. Apart from availability of an alternative remedy which by itself is sufficient to decline the

exercise of jurisdiction under Article 226 of the Constitution of India in a matter relating to nonstatutory concluded contract like the one in question;

the jurisdiction under Article 226 of the Constitution cannot be exercised as the rights of the parties being purely contractual are governed by the

terms of the contract. In Bareilly Development Authority and Another Vs. Ajay Pal Singh and Others, , it has been held that in a case like this

exercise of jurisdiction under Article 226 of the Constitution is not warranted. The relevant portion of the judgment is as follows:

There is a line of decision where the contract entered into between the State and the persons aggrieved is non-statutory and purely contractual and

the rights are governed only by the terms of the contract, no writ or order can be issued under Article 226 of the Constitution of India so as to

compel the authorities to remedy a branch of contract pure and simple; Radhakrishna Agarwal and Others Vs. State of Bihar and Others, , Premji

Bhai Parmar and Others Vs. Delhi Development Authority and Others, and Divisional Forest Officer Vs. Bishwanath Tea Co. Ltd., . In view of

the authoritative judicial pronouncements of this Court in the series of cases dealing with the scope of interference of a High Court while exercising

its writ jurisdiction under Article 226 of the Constitution of India in cases of non-statutory concluded contracts like the one in hand, we are

constrained to hold that the High Court in the present case has gone wrong in its finding that there is arbitrariness and unreasonableness on the part

of the appellants herein in increasing the cost of the houses flats and the rate of monthly instalments and giving directions in the writ petitions as

prayed for.

Following the aforesaid decision, we are of the view that the order passed by the learned single Judge has to be interfered with. Accordingly, the

appeal is allowed and the order passed by the learned single Judge on 22.4.1993 in W.P. No. 6283 of 1993 is set aside. The writ petition is

dismissed. However, in the facts and circumstances of the case, there will be no order as to costs.

Further, Mr. Karuppan, learned Counsel placed reliance on the three decisions of the Supreme Court which we will consider now. In

Dwarkadas Marfatia and Sons Vs. Board of Trustees of the Port of Bombay, , the Board of Trustees of Bombay Port had let out the premises.

The eviction proceedings were taken out by the Board of Trustees of Bombay Port against the tenant in respect of the premises let out. The trial

court dismissed the suit holding that the appellant was admittedly using the plot for a rice mill for over 50 years to the knowledge of the respondent

and it would be legitimate to infer that the letting was for a manufacturing purpose. However, the trial court did not deal with the mala fides. The

appellate Court reversed the decision and held that the issue of mala fides or arbitrariness was not relevant to consider the question as to legality of

the proceedings. Aggrieved by the decision of the appellate court, the party moved the High Court in a petition under Article 227 of the

Constitution of India. The High Court dismissed the writ petition and upheld the eviction. The High Court accepted the finding of the appellate

court and held that notice of ejectment was valid and there was no waiver of notice. The Supreme Court held that the High Court was right on this

aspect and in any event under Article 227 of the Constitution of India the High Court could not have gone into this question. Several observations

have been made in the judgment as to the scope of judicial review of actions of the authorities falling under Article 12 of the Constitution of India.

In this regard the following passage is relevant:

Our attention was drawn to the observations of this Court in Radhakrishna Agarwal and Others Vs. State of Bihar and Others, . Reliance was also

placed on the observations of this Court in Life Insurance Corporation of India Vs. Escorts Ltd. and Others, , in support of the contention that the

public corporations dealing with tenants is a contractual dealing and it is not a matter for public law domain and is not subject to judicial review.

However, it is not the correct position. The Escorts'' decision reiterated that every action of the State or an instrumentality of the State, must be

informed by reason. Indubitably, the respondent is an organ of the State under Article 12 of the Constitution. In appropriate cases, as was

observed in the last mentioned decision, actions uninformed by reason may be questioned as arbitrary in proceedings under Article 226 of Article

32 of the Constitution. But it has to be remembered that Article 14 cannot be construed as a charter for judicial review of State action, to call upon

the State to account for its actions in its manifold activities by stating reasons for such actions.

[Italics supplied]

From the italicised portion it is apparent that the Supreme Court did not lay down as an unflexible proposition of law that the jurisdiction under

Article 226 of the Constitution of India should always be exercised in such cases. In appropriate cases it is open to the High Court to exercise its

jurisdiction. Similarly, in Mahabir Auto Stores and others Vs. Indian Oil Corporation and others, in paragraph 13 it has been specifically observed

that exercise of the power of judicial review however depends upon the nature and the right involved in the facts and circumstances of the

particular case. This was a case wherein the Indian Oil Corporation, even though there was no written contract between the parties, was supplying

for sale and distribution of all types of lubricants for a period of more than 18 years to Mahabir Auto Stores. On that basis Mahabir Auto Stores

had made vast investments and expanded its business. Suddenly the Indian Oil Corporation stopped the supply. It was under these circumstances,

the Supreme Court inferred that the contract between the parties was for supply of all types of lubricants for sale and distribution and found that

the action of the Indian Oil Corporation was arbitrary and was amenable to judicial review. The facts of the present case and the facts involved in

Mahabir Auto Stores and others Vs. Indian Oil Corporation and others, are quite different. The facts and circumstances of the case on hand

clearly point out that this is a case in which a registered lease had been entered into between the parties under the Transfer of Property Act

containing several terms, the breach or compliance or enforcement of these terms have to be gone into in the background of the intention of the

parties at the time when they entered into the contract of lease and their conduct are to be considered and this in turn would depend upon the oral

and documentary evidence. As such, the controversies between the parties cannot appropriately be decided in a proceeding under Article 226 of

the Constitution.

The last case Kumari Shrilekha Vidyarthi and Others Vs. State of U.P. and Others, relates to administrative law, termination of service of

Government counsel. The action falling under administrative law falls under a different category and it is always amenable to judicial review, and as

such the decision of the State of Authority falling under administrative law cannot be considered on par with the actions of the parties to non-

statutory contracts relating to immovable properties. Therefore, this decision has no application to the case on hand.

Thus, we are of the view that this is a case in which exercise of jurisdiction under Article 226 of the Constitution of India is not warranted.

Therefore, the writ petitions ought to have been dismissed without going into the merits of the contentions and all the contentions should have been

left open to be agitated before the competent civil court in an appropriate suit. Therefore, the second point is answered in the negative.

For the reasons stated above, the writ appeals are allowed in part. The orders dated 29.3.J995 and 8.8.1995 passed in W.P. No. 12917 of

1994 and W.P. No. 2236 of 1995 respectively are set aside and the writ petitions are dismissed on the ground that in, the facts and circumstances

of these cases exercise of jurisdiction under Article 26 of the Constitution of India is not warranted. We accordingly dismiss both the writ petitions

keeping open all the contentions of both sides, reserving liberty to both the sides to agitate before appropriate forum in accordance with law. No

costs.