JUDGMENT
M. Karpaga Vinayagam, C.J.
1. The Tata Iron & Steel Company Ltd., the petitioner herein was asked to pay a sum of Rs. 5.97 crore by the order dated 23.01.1996 as additional interest on rent and other dues by the Certificate Officer in respect of the lands leased out to the petitioner by the Government. Seeking for quashing of the same, the petitioner has filed this writ of certiorari.
2. The short facts are as follows:
(i) The petitioner entered into a lease agreement with the State Government in respect of the lands situated at Jamshedpur acquired under Land Acquisition Act.
(ii) By this agreement, the State Government agreed to lease those lands to the petitioner company on the terms and conditions mentioned therein in pursuance of the provisions of Section 7D and 7E of the Bihar Land Reforms Act.
(iii) This agreement was executed on 01.08.1985 and the same was registered on 06.08.1985.
(iv) The said lease was granted for 40 years with effect from 01.01.1956.
(v) There are two clauses namely, Clause xii and Clause xv, which obliged the petitioner company to make payment of rent dues for the period 01.01.1956 to 31.03.1984.
(vi) Clause xii is with respect to the token rent due from the company with regard to main factory, other building and structures maintained by the Company from 01.01.1956 to 31.03.1984.
(vii) Clause xv is with regard to the other lands where the Company can have Hats, Bazars, Melas etc. and the rent on the said land between 01.01.1956 and 31.03.1984.
(viii) Clause xii provides for the payment of dues and interest at the rate of 9.5% for the period 01.01.1956 to 31.12.1974 and at the rate of 13% for the period from 01.01.1975 to 31.03.1984. Clause (xv) provides for the payment of dues and the interest per annum at the rate of 9.5% for the period 01.01.1956 to 31.12.1974 and at the rate of 13% for the period from 01.01.1975 to 31.03.1984.
(ix) On 11.09.1985, calculating the lump sum interest at the rate of 9.5% for the period 01.01.1956 to 31.12.1974 and interest at the rate of 13% for the period 01.01.1975 to 31.03.1984 in respect of lands in Clause (xii) in conformation of Section 7D, the Company was asked to pay Rs. 1.95 crore.
(x) On 18.10.1985 the authority asked the Company to pay a sum of Rs. 2.19 crore with reference to the other lands in Clause (xv) which the Company had leased out to various individuals, societies, associations, institutions etc. for holding Hats, Bazars, Melas etc. This included interest per annum at the rate of 9.5% for the period from 01.01.1956 to 31.12.1974 and interest at the rate of 13% for the period 01.01.1975 to 31.03.1984 as mentioned in the agreement. It is in conformity with Section 7E of the Bihar Land Reforms Act.
(xi) Thus, the total amount that was paid by the Company towards the rent and interest is 4.14 crore.
(xii) After lapse of 7 years, the Senior Officer of the Department formed an opinion that arrears in respect of Clause xii also should be charged with the interest per annum like that of Clause xv and not on the basis of the lumpsum collected earlier. Accordingly, the Senior Officer directed Deputy Commissioner to calculate interest in respect of both the clauses, namely, Clause xii and Clause xv on “per annum” basis and collect the balance amount from the Company. This was on 29.10.1993.
(xiii) In pursuance of the said direction, on 10.05.1994, the Certificate Officer sent a demand notice making a new calculation and demanded additional interest of Rs. 5.97 crore on the basis of per annum interest for the arrear of rent provided in Clause xii.
(xiv) Challenging the same, the petitioner filed a writ petition before the High Court, which in turn, dismissed the same and directed the Company to file objection for the demand notice before the Certificate Officer.
(xv) Company-petitioner filed a Letters Patent Appeal against this order before the Division Bench. While dismissing the Letters Patent appeal, the Division Bench directed the Certificate Officer to decide about the objection uninfluenced by any of the observations made by the learned Single Judge in the writ petition.
(xvi) Accordingly, the petitioner filed a detailed objection before the Certificate Officer, denying its liability to pay the amount demanded.
(xvii) On consideration of the said objection and after hearing the parties, the Certificate Officer rejected the objection by the order dated 23.01.1996 and confirmed the demand notice by holding that as Clause xv provides for interest to be calculated on “per annum” basis it should be presumed that it would apply to Clause xii as well.
(xviii) This order of rejection of objection and confirmation of the demand notice for additional interest has been challenged before this Court in this writ petition by the petitioner seeking for a writ of certiorari.
3. The petitioner has raised mainly two points challenging the order impugned, dated 23.01.1996:
(i) Under Clause xii of the lease agreement dated 04.08.1984 executed between the Tata Iron and Steel Company Limited, the petitioner, and the State Government, the interest can be calculated only on “lump sum basis” not “per annum basis” as there is no use of words “per annum” in Clause xii, whereas the word “per annum” is used in Clause xv alone, and therefore, the impugned demand for interest per annum in respect of Clause xii is illegal.
(ii) The impugned demand is not a public demand within the meaning of Section 3(6) of the Bihar & Orissa Public Demands Recovery Act and hence the demand is not realizable by certificate proceeding.
4. To substantiate the above two points, the learned Senior counsel for the petitioner has made the following contentions.
(i) The gist of the contentions with reference to the first point is as follows:
In the agreement for lease to which both petitioner and the State are bound, contains 27 clauses. Out of these clauses, the Clause xii and Clause xv provide for making payment with respect to the rent and interest dues for the period from 01.01.1956 to 31.03.1984. Clause xii says the rent and interest at the rate of 9.5% for the period 01.01.1956 to 31.12.1974 and at the rate of 13% for the period from 01.01.1975 to 31.03.1984. But Clause xv says the rent and interest in respect of other lands, which the petitioner company was allowed to get the profit by holding Melas, Hats, Bazars etc. has to be calculated on the “per annum” basis. Thus, both these clauses speak of interest in different words. The State Government collected 4.14 crore on the correct calculation in respect of the factories situated in the lands under Clause xii on the basis of “lump sum” and in respect of the area of the land under Clause xv on the basis of “per annum” as mentioned in the agreement. Seven years later, i.e., 29.10.1993, the Secretary, Revenue directed the Subordinates to calculate the interest in respect of Clause xii on “per annum” basis instead of “lump sum” basis for the period 01.01.1956 to 31.03.1984. Accordingly the demand for the payment of Rs. 5.97 crore by way of additional interest on “per annum” basis through the letter dated 07.01.1994 was made. Despite objections pointing out the variations between Clause xii and Clause xv with reference to the agreed interest, the order impugned had been passed demanding Rs. 5.97 crore. It is absolutely the domain of the agreeing parties, namely, the petitioner and the State who are the equal partners to fix any rate of interest. Therefore, the terms and conditions of the lease as contained in the agreement have to be interpreted from the context of the words used. The said terms and conditions cannot be modified by any one of the parties to the lease agreement without giving importance to the intention of the parties at the time of execution of the agreement. The variations between Clause xii and Clause xv with reference to the fixing of interest is apparently clear from the wordings contained in these two clauses. Therefore, fixing the additional rate of interest by giving its own interpretation and modifying the tone and tenor of the terms and conditions cannot be construed to be in accordance with the law. Hence, the order impugned is illegal. Interest is a matter of contract and unless governed by any provision of statute, calculation of interest will be according to the terms of the contract. When the contract is reduced in writing the said calculation will be governed by the express words used therein. Admittedly, in the Clause (xii) of the lease deed the omission of the words “per annum” clearly imply that the parties intended that the interest must be charged on lump sum basis. The demand in respect of interest must be governed by the clear language used in the said clause
(ii) The gist of the contentions relating to the second point is as follows:
As per Section 3(6) of the Bihar & Orissa Public Demands Recovery Act, the word “Public Demand” is defined as any arrear or money mentioned or referred to in Schedule I and includes any interest which may be chargeable by law up to the date the certificate is signed. This means if the arrears of money due from any one has to be coupled with statutory interest under any law only such kind of interest can be recovered. The agreement was entered into or entered upon on the basis of Section 7D and 7E of the Bihar Land Reforms Act. The said provisions would not indicate that interest is charged. No other law including the Interest Act or the Bihar & Orissa Public Demands Recovery Act would provide for the statutory interest to be included. Therefore, the interest, which is being claimed cannot be said to be an interest which is charged either under the Interest Act or the Bihar & Orissa Public Demands Recovery Act or under the provisions of Section 7D and 7E of the Bihar Land Reforms Act. In this case, whatever the arrears was there as per Clause xii, has already been calculated with the interest as per the terms of the agreement even though not chargeable under law. As the main ingredient of the definition “public demand” is absent, the additional interest cannot be claimed as a “public demand”. Therefore, the order of demand is illegal.
5. The details of the reply made by the learned Advocate General to the above two points are as follows:
(i) The gist of the reply, with regard the contentions urged by the counsel for the petitioner in respect of the first point, is given below:
In Clause xii it is mentioned that interest is to be calculated for two different periods, i.e., 01.01.1956 to 31.12.1974 and 01.01.1975 to 31.03.1984 at different rates. Therefore, the same has to be calculated every year on arrears of rent and not on “lump sum” basis. The fact that the interest is to be calculated at two different rates for two different periods would show that the interest is not to be calculated for the entire period as “lump sum”, but the same is to be calculated on per annum basis. Non-use of the words “per annum” in Clause xii is inconsequential because the language of Clause xii shows that interest has to be calculated from 01.01.1956 to 31.03.1984 on every year basis. In other words once a period is indicated, the interest has to be necessarily calculated on per year basis. Of course, the use of the word “per annum” in Clause xv has not been mentioned in Clause xii, but it is not a deliberate omission. Though it is differently worded, both the clauses convey the same basis by which the interest is to be calculated and paid. Therefore, the present calculation is correct.
(ii) The gist of the reply in regard to the second point is as follows:
The “Public Demand” means any arrears mentioned in Schedule I and includes any interest chargeable under any law. Clause 7 of the Schedule I would indicate that any demand is payable by a person holding any interest in the land, when such demand is a condition of use and enjoyment of such land. So, the demand of interest on the use of land is also included in Clause 7 of the Schedule I. Under Bihar Land Reforms Act, the word ‘rent’ has not been defined. Under Section 2(5) of the said Act any word not defined in the Act is defined in the Bihar Tenancy Act or Chhotanagpur Tenancy Act, the same meaning has to be taken. The word ‘rent’ has been defined under Sub-clause (xiii) of Clause 3 of the Chota Nagpur Tenancy which remains that any amount lawfully payable by a tenant to his landlord on account of the use or occupation of the land held by the tenant and includes all dues which are recoverable under any enactment for the time being in force. So this definition of rent includes rent by any enactment for the time being in force. Therefore, the definition of “public demand” is attracted in this case.
6. Let us go into the merits of each one of the points. The first point involves the true and correct interpretation of Clause xii and Clause xv. Before entering into the process of finding out true interpretation of those two clauses, let us now refer to the various decisions of the Supreme Court in relation to the guidelines in the matter of interpretation of the words found in the lease agreement.
(i) (20th Century Finance Corporation Ltd. v. State of Maharastra) (para 12)
It is well settled principle of interpretation of contracts that the contract must be construed as a whole. When and where such a deemed sale, under Sub-clause (d) takes place is a question of fact which has to be decided on the facts and circumstances of each case, including the terms and conditions of the contract evidencing the transaction.
(ii) (Delhi Devpt. Authority v. Durga Chand)(para 19 and 21)
There the First General Rule of Interpretation formulated is: “The meaning of the document or of a particular part of it is therefore to be sought for in the document itself. That is, undoubtedly, the primary rule of construction to which Sections 90 to 94 of the Indian Evidence Act give statutory recognition and effect, with certain exceptions contained in Sections 95 to 98 of the Act. Of course, “the document” means “the document” read as a whole and not piecemean.
(iii) (Union of India v. Shiv Dayal Soin and Sons (P) Ltd.)
The lessee under the abovesaid terms of lease deed is in fact precluded from using the house for any purpose other than residential purpose. This interpretation would be further supported by the phraseology of the relevant Clause I(vii) of Appendix XIII, cited above, which contains no reference to the word “residential”. As a canon of statutory interpretation, expression unius est exclusion alterius, what is expressly mentioned in one place but not in another must be taken to have been deliberately omitted. The argument raised by the learned Counsel for the appellant proceeds on the assumption that a house by its meaning and definition is capable of being used exclusively for residential purposes and not for non-residential purposes which is not a correct interpretation of Sub-clause (vii) of Clause I of Appendix XIII.
(iv) (Provash Chandra Dalui v. Biswanath Banerjee)
In construing a contract the Court must look at the words used in the contract unless they are such that one may suspect that they do not convey the intention correctly. If the words are clear, there is very little the Court can do about it. In the construction of a written instrument it is legitimate in order to ascertain the true meaning of the words used and if that be doubtful it is legitimate to have regard to the circumstances surrounding their creation and the subject matter to which it was designed and intended they should apply.
7. The crux of the guidelines given by the above decisions are as follows:
(i) It is a well settled principle of interpretation of contract that the contract must be construed as a whole.
(ii) The meaning of the words contained in the contract has to be found out on the facts and circumstances of each case in the light of the terms and conditions of the contract.
(iii) The meaning of the document is to be found out in the document itself. The document means the document read as a whole and not piece meal.
(iv) As a cannon of statutory interpretation the expression words expressly mentioned in one place but not in another place must be taken to have been deliberately omitted.
(v) In construing the contract, the Court must look into the words used in the contract unless they are such that one may suspect that they do not convey the intention correctly.
(vi) If the words are clear, there is very little the Court can do about it.
(vii) If there is any doubt to correctly ascertain the true meaning of the words, it is legitimate to have regard to the circumstances surrounding the creation of the contract.
8. In the light of the above guidelines, let us now deal with the merits of the first point and find out the true meaning of the Clause (xii) of the lease deed by applying the above method of interpretation.
9. According to the petitioner, both the parties understood clearly that under Clause xii of the lease deed, the interest has to be paid by the petitioner on lump sum basis and accordingly, the respondents raised demand of rent with interest as per Clause xii on lump sum basis and as per the demand on correct calculation, the petitioner has already paid Rs. 4.14 crore; the words “per annum” was specifically and intentionally omitted to be mentioned in Clause xii of the lease deed because it was agreed between the parties that the interest has to be paid only on lump sum basis; therefore, making such demand of additional interest to the tune of Rs. 5.97 crore and odd calculating the interest on annual basis, that too after a period of seven years, is not sustainable.
10. According to the respondents, the rate of interest is generally and always calculated on annual basis and therefore, it was mentioned in Clause xv of the lease deed that interest should be paid on annual basis, but inadvertently in Clause xii, the word “per annum” was left out and therefore, Clause xii and Clause xv be laid in consonance with each other and as such the petitioner company was liable to pay interest on annual basis under Clause xii of the lease deed.
11. The main question for consideration in this case is as to whether the payment of interest on rent and other dues as per Clause (xii) of the lease deed has to be made on lump sum basis or per annum basis. In order to find out the answer for the same, we shall refer to the two relevant clauses of lease agreement, namely, Clause (xii) and Clause (xv).
Clause xii is reproduced below:
(xii) That in respect of the period from 1.1.1956 to 31st March, 1984 all rents and dues from the Company to the Government particularly in respect of Sub-clauses (i), (ii), (iii), (v), (vi), (ix) and (x) hereinmentioned before shall be paid in three equal annual instalments with interest, the first of such instalments being paid on or before 31.12.1984. Interest will be calculated at the rate of 9.5% from 1.1.1956 to 31.12.1974 and at the rate of 13% from 1.1.1975 to 31.3.1984.
12. According to this clause, the rents and dues shall be paid to the Government in respect of the properties mentioned in Clauses (i), (ii), (iii), (v), (vi), (ix) and (x) in three equal annual installments with interest and the interest will be calculated at the rate of 9.5% for the period from 01.01.1956 to 31.12.1974 and at the rate of 13% for the period from 01.01.1975 to 31.03.1984.
13. Let us now refer to Clause (xv) of the lease agreement, which reads as under:
(xv) That the existing hats, Melas, bazaars, Jalkars, fisheries and other Sairats shall be settled by the Government with the Company on a fixed Jama for a period of five years at a time and the Company shall carry on the management and administration thereof on payment of the entire amount of the fixed Jama to the State Government by the Company. Provides that the State Government shall have the right to revise the fixed Jama for such settlements after every three years. The entire amount realized towards such items by the Company since 1.1.1956 upto 31.3.1984 shall be paid to the Government in three equal annual instalments, the first of such instalments being paid on or before 31st December, 1984 and alongwith the last instalment, interest on such dues at the rate of 9.5% per annum for the period 1.1.1956 to 31.12.1974 and at the rate of 13% per annum from 1.1.1975 to 31.3.1984 shall be paid.
14. The above Clause (xv) would indicate in respect of the other lands, i.e., existing Hats, Bazars, Melas, Jalkars, fisheries and other Sairats settled by the Government with the Company on a fixed Jama for a period of five years at a time and the Company shall carry on the management and administration in respect of those lands on payment of the entire amount realized from such items by the Company since 01.01.1956 to 31.03.1984 in three equal installments along with interest on such dues at the rate of 9.5% per annum for the period from 01.01.1956 to 31.12.1974 and at the rate of 13% per annum for the period from 01.01.1975 to 31.03.1984.
15. The reading of the above two clauses would clearly reveal that both the clauses, namely, Clause (xii) and Clause (xv) would oblige the petitioner Company to make payment with respect to the rent and dues for the period from 01.01.1956 to 31.03.1984. The Clause (xii) is with respect to the rent due with interest from the Company with regard to the main factory, other buildings structures ordinarily used for production, storage, marshalling etc., residential houses meant for the workers, officers etc. whereas Clause (xv) is with respect to rents and dues with interest per annum for lands of Hats, Bazars, melas etc. which the Government given to the Company in lieu of fixed Jama for a specified period.
16. On a plain reading of Clause (xii), it appears that the said clause does not provide for payment of interest on “per annum” basis, whereas Clause (xv) of the lease deed specifically provides for calculation of interest on “per annum” basis.
17. In other words, as per Clause (xii) the rent dues plus interest at the rate of 9.5% for the period from 01.01.1956 to 31.12.1974 and at the rate of 13% for the period from 01.01.1975 to 31.03.1984 have to be paid to the Government. On the other hand, in Clause (xv) it is mentioned that rent dues plus interest “per annum” have to be paid at the rate of 9.5% from 01.01.1956 to 31.12.1974 and at the rate of 13% per annum from 01.01.1975 to 31.03.1984 shall be paid.
18. It is clear from the above wordings as contained in both the Clauses that the words “per annum” along with interest is omitted in Clause (xii) whereas the word “per annum” is specifically mentioned at two places in Clause (xv) along with the rate of interest.
19. If all the clauses of the lease deed, in entirety, are carefully looked at, it is clear that they are in two parts. Clauses (i) to (xi) are description of such lands, buildings, structures, roads, civic amenities, hospitals, residential houses etc. which were created by the petitioner company. Naturally, when the State had not done anything in either installing the factories or creating a township, a token rent was being charged from 01.01.1956, it had to be only one time interest on the dues. That is the reason the word “per annum” has not been used in Clause (xii).
20. On the other hand, Clause (xv) speaks of such rights, which the State Government created in TISCO, by allowing it to hold melas, hats, bazaars etc. on a fixed Jama for a period of five years only. Here the petitioner company has been allowed to earn something because of the grace of the State Government. That was the reason as to why the word “per annum” was used in Clause (xv). The petitioner is bound to pay arrears with interest per annum.
21. Strangely, on the basis of the opinion formed at by the Senior Officer, seven years later, additional interest is sought to be demanded on the per annum basis for Clause (xii) like that of Clause (xv) even though the Clause (xii) did not provide for interest to be paid per annum basis. This is sought to be justified by the respondents, contending that it was an inadvertent mistake and it shall be presumed that “per annum” basis would apply to Clause (xii) as well as in the case of Clause (xv).
22. We are here concerned with interpretation of these two clauses. According to the respondents, it must be presumed that Clause (xii) also would attract interest “per annum” even though the said words “per annum” have not been added to the said clause. We feel that there cannot be any basis to raise such a presumption. The wordings in Clause (xii) would clearly indicate that interest must be calculated with reference to the factory and other buildings, structures etc. which are already available, constructed by the Company on a token rent. Similarly, the wordings in Clause (xv) clearly indicate that the interest per annum must be calculated with respect to other lands where the petitioner has been allowed to earn something out of subletting the lands to be used for Melas, Hats, Bazars, etc. Therefore, both the provisions would indicate different interests on two different reasons.
23. In law State is statutory obliged to execute lease. Through this agreement the petitioner company has been accepted as an equal partner. Once the deed of lease is executed, the State is given liberty to determine fair and equitable rent. No statutory interest is chargeable on the arrears of rent determined by the State of Bihar under the provisions of Section 7D or 7E of the Bihar Land Reforms Act. Therefore, it is absolutely the domain of the agreeing parties, namely, the petitioner and the State to fix any rate of interest.
24. Admittedly the lands were acquired for the Company and conveyed to them and everything visible on land belonged to the Company or to its sublessees. The token rent, as stated in the agreement, was fixed only to satisfy the words that “The land deemed to have been vested in the State”. It is clear from the reading of Clause (xii) that the same has been consciously worded which stipulates arrears along with interest thereon will be calculated at different rates for different periods. Since the interest has to be calculated for two different periods at two different rates, it says that 9.5% and 13% for the two periods. No contrary intention can be read into the said clause.
25. The Certificate Officer in the impugned demand did not correctly interpret the meaning of Clause (xii) in its liberal sense, particularly when the language of Clause (xii) specially omitted the use of word “per annum” where the language of Clause (xv) specially added the words “per annum” in two places.
26. When the agreement was entered into, the question of the nature of interest with reference to Clause (xii) and Clause (xv) was clearly in the minds of parties and they agreed to interest “per annum” in respect of dues under Clause (xv) and not in respect of dues under Clause (xii).
27. There is no dispute that the present lease deed has been entered into in terms of Sections 7D and 7E of the Bihar Land Reforms Act; therefore, this is a statutory lease and parties are strictly bound by the terms of lease. Neither party is entitled to add, substract or modify any of the terms of the lease unilaterally and without there being mutual consent.
28. When the word “per annum” is not mentioned in Clause (xii) of the lease deed, which is a statutory lease and when the word “per annum” is used only in Clause (xv), it is to be taken to mean that the parties at the time of agreement had intentionally agreed for the different types of interest in respect of the said two clauses.
29. Therefore, the terms and conditions of the lease, as contained in the agreement, have to be interpreted from the context of the words used. The said terms and conditions cannot be modified by any one of the parties to the lease agreement without giving importance to the intention of the parties at the time of execution of the agreement. The variations between Clause (xii) and Clause (xv) with reference to the fixing of interest is apparently clear from the wordings contained in these two clauses. Therefore, fixing the additional rate of interest by giving its own interpretation and modifying the tone and tenor of the terms of conditions cannot be construed to be in accordance with law. When the contract is reduced in writing, the calculation of interest will be governed by the express words used therein. The omission of the words “per annum” in Clause (xii) of the lease deed would clearly imply that the parties intended that the interest must be charged on lump sum basis.
30. As indicated above, the principles of interpretation of contracts is that contract must be construed as a whole. In considering a contract or lease agreement, the Court must look to the words used in the contract unless they are such that one may suspect that they do not convey the intention correctly. If the words are clear, there is very little the Court can do about it.
31. If the above principles are applied to the present lease deed, the meaning of Clause (xii) and (xv) is very clear and there is no doubt at all as the rate of interest, as mentioned in Clause (xii), which means only interest and the rate of interest mentioned in Clause (xv) which specifically included the word “per annum”. Perusal of these two clauses would make it clear that the interest in Clause (xii) must be on the basis of lump sum and the interest in Clause (xv) must be on the per annum basis.
32. Further, in the present case the terms or conditions of the lease deed, particularly, Clause (xii) have not been varied or modified with the consent of the parties; therefore, the plea by the respondents that omission of the words “per annum” in the Clause (xii) is mere mistake and as such it must be presumed that the rate of interest would be calculated on annual basis in respect of Clause (xii) is unsustainable and so it cannot be accepted as the State cannot travel beyond the terms and conditions of the said lease deed. The first point is answered accordingly in favour of the petitioner.
33. Let us now deal with the second point. The second point relates to the question whether the impugned demand is a “public demand”?
34. According to the counsel for the petitioner, the impugned demand is not a “public demand” within the meaning of Section 3(6) of the Bihar and Orissa Public Demands Recovery Act. As the ingredients of the definition of the word “public demand” are absent in this case, so the demand is illegal.
35. According to the learned Counsel for the respondents, the demand of rent on the use of land is included in Clause VII of the Schedule I and the word ‘rent’ has been defined under the Chhotanagpur Tenancy Act, which means any amount, which is lawfully payable by a tenant to his landlord on account of the use of the land held by the tenant and as these lands are in occupation of the petitioner, the definition of the “public demand” is attracted in this case.
36. in the light of the above pleas made by the respective parties, let us now see the definition of the word “public demand” under Section 3(6) of the Bihar and Orissa Public Demands Recovery Act.
3. Definitions….
(6) “Public demand” means any arrear or money mentioned or referred to in Schedule I, and includes any interest which may, by law, be chargeable thereon upto the date on which a certificate is signed under Part II;
37. The above section provides the “public demand” means any arrear or money mentioned or referred to in Schedule I and includes any interest which may by law is chargeable thereon up to the date the certificate is signed under part II. So we have to see if any interest which may by any law is chargeable. The agreement was entered into on the basis of Section 7D and 7E of the Bihar Land Reforms Act.
Section 7D reads as under:
7D. Land and buildings, etc. acquired for an industrial undertaking and utilized for providing civic amenities, namely, health, housing, welfare, power house and educational facilities to be deemed settled with it by the State. – (1) If any land has been acquired for an industrial undertaking under the Land Acquisition Act, 1894 (Act I of 1894) so much of such land and buildings and structures thereon in possession of the industrial undertaking as are being utilized for providing civic amenities, namely, health, housing, welfare, power house and education facilities to its employees and so much of the remaining portion of such land and building and structures thereon as are found essential on enquiry by the State Government for production processes of the industrial undertaking shall be deemed to have been leased out by the State Government with the owner of the industrial undertaking for period as determined by the State Government subject to payment of such fair and equitable rent as determined by the State Government.
(2) The provisions of Sub-section (1) shall have effect notwithstanding anything contained in Section 4(a) and shall be without prejudice to the exemptions granted or concession given to intermediaries under Sections 5, 6, 7, 7A, 7B and 7C.
(3) If the claim of the industrial undertaking as to possession over the lands, buildings and structures thereon, referred to in Sub-section (1) or to the extent of such lands, buildings and structures is disputed by any person within three months of the commencement of the Bihar Land Reforms (Amendment) Act, 1972, the Collector shall make such inquiries in the matter as he deems fit and pass order as may appear to him as just and fair.
(4) The provisions of Sub-section (1) shall be deemed to have been inserted in this Act from the commencement thereof.
Section 7E reads as under:
7E. Land and building, etc., acquired for an industrial undertaking and leased out by it to another industrial undertaking for its expansion by establishing new industry or to an individual to be deemed as leased with it by State Government on same terms.- (1) If any portion out of the land acquired for an industrial undertaking under the Land Acquisition Act, 1894 (Act 1 of 1894) has been leased out by the industrial undertaking before the 22nd June, 1970 to another industrial undertaking for establishment of a new industry or its expansion or to any individual or society or association for residential, commercial or for such other purpose, the whole of such land, buildings or structures covered by such lease shall with effect from the commencement of this Act, be deemed to be leased to the industrial undertaking for such period as may be determined by the State Government subject to payment of fair and equitable rent as determined by the State Government and the association to whom lease has been granted by the industrial undertaking shall be deemed to be the sub-lessee of the original industrial undertaking and the provisions of Clauses (g) and (h) of Section 4 shall not be effective with respect to such land or buildings or structures thereon.
(2) The terms and conditions of the lease granted under Sub-section (1) shall be determined by the State Government:
Provided that if the period of sub-lease expires before the expiry of the lease granted under Sub-section (1) then in that condition at the time of renewal of the sub-lease, the State Government shall have power to revise the amount of rent payable to State government by the lessee.
38. The reading of the above provisions in Section 7D or Section 7E would not provide for the interest. Here the interest as being claimed in certificate proceeding is not the interest, which is chargeable either under Interest Act or under the Bihar & Orissa Public Demands Recovery Act.
39. Section 3(6) of the Bihar & Orissa Public Demands Recovery Act is very clear. It indicates only arrear or money and interest which is chargeable under any law can be realized as a “public demand”.
40. In this case, the rate of interest has been mentioned as per Clause (xii) and does not specifically say that interest is chargeable under any law. It is only interest mutually agreed upon by the parties.
41. Admittedly, the interest referred to in the lease deed under Clause (xii) are not such interest which are chargeable by any law. As indicated above, neither Section 7D nor Section 7E provides that when the State will execute a lease deed, it will have a statutory interest chargeable compoundable. Even Interest Act does not provide so. The rate of interest in the manner in which was to be paid was determined in the terms of the lease.
42. If the arrear or money due from any one has to be coupled with statutory interest under any law, only such kind of interest is to be included.
43. It is an admitted position under the law that the State is statutorily obliged to execute the lease deed. It is not the discretion of the State. The Company has been accepted as an equal partner through the lease deed. Once the deed of lease is executed the State is given liberty to determine the fair and equitable rent. As per Clause (xii) of the lease deed, rate of interest has been fixed for the specified period. Therefore, no interest is chargeable on the arrears of rent under the provisions of Section 7D and Section 7E of the Bihar Land Reforms Act or any other Act, but it is chargeable only as per the lease deed.
44. The impugned demand is not a public demand within the meaning of the Bihar & Orissa Public Demands Recovery Act inasmuch as the said demand is purely contractual. The contention of the other side that the impugned demand is a public demand on the basis of the reliance of Article 7 of Schedule I and the definition of rent is wholly misconceived as we are not concerned with the definition of the same since the demand in the instant case has neither been made on the basis of the rent defined under the Chhotanagpur Tenancy Act nor on the basis of reliance on Article 7 of Schedule I, but on the basis of the contractual rate of interest as agreed upon by both the parties as mentioned in Clause (xii) of the lease agreement.
45. In respect of the first point, the State Government has taken a stand that the Clause (xii) also conveys the meaning as interest per annum like that of Clause (xv). Strangely, the State has taken different stand in respect of second point without referring to the interest chargeable in Clause (xii) to the effect that it is a public demand on the rent defined in the Chhotanagpur Tenancy Act. These two different stands are mutually contradictory.
46. As already indicated above, we have given a clear interpretation in Clause (xii) that the word interest contained in the Clause (xii) in the absence of the words “per annum” would mean that interest has to be paid on “lump sum” basis and not “per annum” basis. Therefore, interest in this case is not chargeable under any law, but is only chargeable as per the terms and conditions contained in Clause (xii) of the lease agreement. Therefore, this cannot be termed to be a “public demand” as defined under Section 3(6) of the Bihar & Orissa Public Demands Recovery Act.
47. In view of the above discussion, the second point also is answered in favour of the petitioner.
48. To sum up:
(i) The wordings contained in Clause (xii) and Clause (xv) would clearly convey the meaning that Clause (xii) would indicate that interest in respect of the said Clause can be calculated only on “lump sum” basis and not “per annum” basis as there is no use of words “per annum” in Clause (xii) like that of Clause (xv) and therefore, the impugned demand for interest “per annum” in respect of Clause (xii) is illegal.
(ii) The impugned demand is not a “public demand” within the meaning of Section 3(6) of the Bihar & Orissa Public Demands Recovery Act as the demand in question is concerned with the interpretation of Clause (xii) and hence the demand is not realizable in certificate proceedings.
49. In view of the above conclusion, the writ petition is allowed. Consequently, the impugned demand order dated 23.01.1996 is quashed.
Amareshwar Sahay, J.
50. I agree.