CASE NO.: Appeal (civil) 4002 of 2007 PETITIONER: Aggarwal & Modi Enterprises Pvt.Ltd. & Anr RESPONDENT: New Delhi Municipal Council DATE OF JUDGMENT: 31/08/2007 BENCH: Dr. ARIJIT PASAYAT & S.H. KAPADIA JUDGMENT:
J U D G M E N T
CIVIL APPEAL NO. 4002 OF 2007
(Arising out of SLP (C) No. 21183 of 2005)
Dr. ARIJIT PASAYAT, J.
1. Leave granted.
2. Challenge in this appeal is to the order passed by a
Division Bench of the Delhi High Court dismissing the Letters
Patent Appeal filed by the appellants. Challenge before the
Division Bench was to the order passed by a learned Single
Judge dismissing the Writ Petition filed by the appellants.
Challenge in the Writ Petition was to the order dated
13.11.2001 passed by the respondent-New Delhi Municipal
Council (in short ‘NDMC’). By the said order, the appellants
were held to be unauthorized occupants of the premises in
dispute namely, that of Chanakya Cinema Complex situated in
Diplomatic Enclave, New Delhi. Prayer was also to set aside the
letter dated 22.1.2002 issued by the NDMC seeking the vacant
and peaceful possession of the aforesaid complex. The
resolution passed by the NDMC dated 28.8.2001 was also
impugned to the extent it allowed the appellants to continue in
possession from 1st October, 2000 to 30th September, 2003
only. Prayer was also made for renewal of the lease/licence of
the appellants with the usual option for renewing the
lease/licence on appropriate terms and conditions. It is to be
noted that appellant No.1 (hereinafter referred to as the
‘company’) was the original lessee while appellant No.2 is the
shareholder of appellant No.1-Company. The writ petition was
filed by the company through one of its Directors Shri Rajesh
Khanna.
3. Learned Single Judge noted that whatever may have been
the situation in the past, the basic issue was whether the terms
of lease permitted the tenancy beyond 30th September, 2003 as
contended by the appellants. It was held that the appellants’
case was that renewal due in 2000 was to be effective from 1st
October, 2000 on mutually agreed terms. Since the terms have
not been mutually arrived at, in essence parties have not agreed
to renewal in 2000. Undisputedly, the appellants’ case was a
lease for fixed terms. The earlier two renewals were therefore of
no consequence. The licence granted to appellant No.1 was from
time to time and without premium. Specific periods were
indicated in the terms of licence itself. The writ application was
accordingly dismissed. The order was questioned before the
Division Bench.
4. After analyzing the basic issue formulated for the dispute,
the Division Bench found no merit in the LPA and dismissed the
same. The following observations were made by the Division
Bench.
“27. No formal licence deed was also executed
and there was no unqualified acceptance to
the offer contained in the NDMC’s letter dated
2nd December, 1991. Therefore, in the eyes of
law, no valid licence was granted for the third
block i.e. 1st October, 1990 to 30th September,
2000.
28. Be as it may, vide order dated 25th May,
2001 stay granted in CWP No. 3244/1992 was
also vacated on the ground that even the
period of third block had come to an end. This
petition was also dismissed as withdrawn on
20th May, 2002. Even otherwise the NDMC’s
letter dated 2nd December, 1991 did not
contain any renewal clause. Therefore,
contractually there was no entitlement to seek
renewal after 30th September, 2000 and in fact
there was no such lease in operation under
which this right could be exercised. However,
while vacating the stay vide order dated 25th
May, 2001 since the Division Bench observed
that request of the appellants for renewal of
the licence agreement for further period be
considered, the NDMC adverted to this aspect.
Request of the appellants included allowing
them to convert the cinema complex into a
multiplex. Again, it was not in terms of lease
that the question of ‘extension’ of lease period
was considered. But it was the request of the
appellants which was to be considered, and
NDMC agreed to bestow its consideration in
view of the observations of this court in its
order dated 25th May, 2001. As consideration
of this request was to take some time, the
Council first passed resolution dated 28th
August, 2001 extending the lease for a period
of three years i.e. from 1st October, 2000 to
30th September, 2003 pending final decision
on the proposal of the appellants to redevelop
the complex as multiplex-cum-commercial
center. This proposal was, thereafter,
considered and vide impugned order dated 13th
November, 2001 rejected the offer”.
5. It was noted that though offer of further renewal beyond
1st October, 1990 (third block) was initiated by NDMC letter
dated 2nd December, 1991, the response dated 5.12.1991 was
not an acceptance in the eyes of law and no further licence
deed/agreement was executed although offer dated 2nd
December, 1991 clearly stipulated that the same was subject to
execution of fresh agreement. The offer itself was challenged by
the appellants by filing CWP No.3244/1992 clearly meaning
thereby that it did not accept the said offer. They continued in
possession because of stay orders granted in the writ petition;
and in this manner without a contract. Even the third block
contained in the offer dated 2nd December, 1991 expired on 30th
September, 2000. In that sense, there was no agreement in
existence and there was no subsisting lease or agreement
written or oral which gave any right to the appellants to seek
further renewal under the lease.
6. Though many points were urged in support of the appeal,
primary stand was that true scope and ambit of Section 141(2)
of the NDMC Act, 1994 (in short the ‘Act’) has not been kept in
view and the manner in which NDMC is interpreting it, goes
against the intended legislative object. In any event, the
appellants have been ousted or discriminated or subjected to
hostile treatment as in no other case purported intention of
public auction has been resorted to.
7. The appellants had themselves suggested that they should
be permitted to develop the property on the basis of the
consultant’s report. NDMC owns various properties but the
complex in question is the only cinema hall it has.
8. For the purpose of renewal, the parameters are different
and it cannot only be restricted to public auction. Appellants
have been in occupation for long period. If ultimate object is
development, the present occupants would have preference. If
the scheme is acceptable to the occupants its offers should be
accepted.
9. The consideration for which any immovable property may
be sold, leased or otherwise transferred shall not be less than
the value at which such immovable property could be sold,
leased or otherwise transferred in normal and fair competition
10. In essence, it means that the lease amounts should not be
less than the market value. The expression in the renewal
clause on which great emphasis is led speaks of “terms and
conditions to be mutually agreed upon”. According to the
appellants it cannot mean that one of the parties can stipulate
unreasonable terms and conditions. In essence, the terms and
conditions have to be fair. While determining the fair value the
amount is what the existing tenant is required to pay. NDMC
itself had required payment of Rupees two crores per year. The
requirements of Section 141 (2) cannot apply to a case of
renewal. It is submitted that the appellants have been spent
more than rupees three crores after 2000. Though there has
been no renewal the High Court noted that discriminatory
treatment is being meted out to the appellants and, therefore, it
had directed the respondent-NDMC to give instances where
public auction had been resorted to.
11. In essence, it is submitted that the appellants should be
given an opportunity first to pay the fair price and not the
public auction price. The public body cannot resort to public
auction just with profit making motive.
12. Learned counsel for the NDMC on the other hand
submitted that initially there was a licence deed containing
renewal clause. For the subsequent tenures also there was such
a deed with renewal clause. After that no agreement or lease
had been actually executed. For 18 years beginning from 1981-
82 the appellants were indulging in litigation and the prayer
was to set aside the licence deed. In fact, in the plaint originally
filed in the suit, it was averred that the deed was executed
under coercion. Similar was the plea in the subsequent suits. It
is pointed out that there was no pre-emptive right. One of the
objectives of NDMC was to have retail mall cum multi-plex. The
financial capacity of the appellants is not sufficient, they have
no expertise in the intended activities. At the most, they have
some experience in running a uniplex. There was no
unconditional acceptance of terms offered in 1990 and no
licence or agreement was executed after 1990. The writ petition
was filed in 1992.
13. Several factors need to be noticed before we deal with the
scope and ambit of Section 141(2).
14. What in essence the appellants are seeking for is specific
performance of the purported contract without filing a suit.
Admittedly, there is no renewal since long and in any event if
appellants’ case is accepted there is no agreement after 2003. In
that sense, the auction would be the first time exercise.
Undisputedly, NDMC is proposing to have multiplexes whereas
the present arrangement is one of uni-plex. The reason as to
why NDMC wanted to have resort to public auction is spelt out
in the resolution dated 30th August, 2000. Para 2 of the
resolution reads as follows:
“During the period of Asian Games, Ministry of
Urban Development transferred some plots of
land to NDMC for construction and
commissioning of Hotels on certain terms and
conditions and later on NDMC licensed these
premises for above purposes to eminent
companies for long periods of 99 years subject
to renewal of license fees after every 30 years.
Likewise, there are other establishments, like
cinema in Chankya Complex where the land
was transferred long back by the Ministry of
Urban Development to NDMC for developing
multiplex buildings. The premises have been
transferred on license for particular periods.
Above premises had been licensed before the
enactment of NDMC Act 1994.”
15. Similarly, in respect of specified group of premises with
the Ministries/Government Departments, renewal was to be
done at enhanced rate of 10% p.a. or the Central PWD
enhanced rates, whichever is higher.
16. Strong reliance has been placed by learned counsel for the
appellants on a decision of this Court in Jamshed Hormusji
Wadia v. Board of Trustees, Port of Mumbai and Anr. (2004 (3)
SCC 214), more particularly, para 14. The same reads as
follows:
“The Bombay Port Trust is an instrumentality
of State and hence an “authority” within the
meaning of Article 12 of the Constitution. (See
Dwarkadas Marfatia and Sons v. Board of
Trustees of the Port of Bombay). It is amenable
to writ jurisdiction of the court. This position
of law has not been disputed by either party.
The consequence which follows is that in all its
actions, it must be governed by Article 14 of
the Constitution. It cannot afford to act with
arbitrariness or capriciousness. It must act
within the four corners of the statute which
has created it and governs it. All its actions
must be for the public good, achieving the
objects for which it exists, and accompanied by
reason and not whim or caprice.”
17. Undisputedly, there was no provision like Section 141 (2)
involved in that case. The parameters of limitation in Section
141 (2) relate to public auction. Undisputedly, the appellants
have participated in the public auction originally. In Wadia’s
case (supra) the tenancy continued but in the present case
there is fresh auction.
18. For appreciating the true scope and ambit of Section
141(2), it is to be noted that by nature of the proposed changes
it has to be treated as fresh transaction particularly when not
only the nature of property changes but also the lease has
expired. Though strong reliance was placed on a resolution
dated 18.3.1999 by the appellants, it is to be noted that the
said resolution has practically no effectiveness in 2006.
19. In the order of Chairman, NDMC dated 13.11.2001 it was
noted as follows:
“Chanakya Cinema complex is one of the
prestigious buildings owned by the NDMC,
which is located in Chanakyapuri area on a
part of land parcel measuring several acres
wherein prestigious buildings such as Akabar
Hotel etc. are situated.
Licence was given for running the cinema
to M/s Aggarwal & Modi Enterprises (Cinema
Project) Pvt. Ltd., hereinafter referred to as the
Company vide Agreement dated 03.10.1967
which was renewed from time to time and
which finally expired on 30.9.2000. The
licence fee last paid was fixed at Rs.
15,15,000/- per annum.
The Company is, however, still in
occupation of the aforesaid premises and has
sublet various portions of the Chanakya
Cinema complex to others such as Nirulas
Hotel, Jewellery shops besides permitting
advertisement even inside the cinema complex
to other parties at huge premiums. Besides
this, they have also leased out parking lot
inside and outside cinema complex. The
company has also been in constant litigation
with NDMC in all these years primarily
questioning licence fee though it was fixed in
accordance with terms of the agreement
initially entered into between the parties and
as per the policies of the NDMC laid down by
the Council from time to time. In any event,
the licence fee stands paid by company till
30.9.2000 though two matters are still pending
which pertain to the revision of the licence fee.
During the course of litigation, the courts had
been passing interim order restraining the
NDMC from taking any action against the
company to dispossess them from the cinema
complex but the said orders were vacated on
25.05.2001 subject to the condition that
NDMC will consider the representation made
in the meanwhile by company giving certain
proposals to redevelop cinema complex and/or
continuation of licence in their favour for
running the cinema.
In a meeting of Council held on 30th
August, 2000, a decision has already been
taken that the present term of licences of
hotels/cinemas and other similar commercial
complexes, shall not be renewed on the expiry
of the present term and fresh licence shall be
as per the provisions of Section 141(2) of
NDMC Act, 1994.
With a view to comply the directions of
the Hon’ble High Court, feasibility of
developing the property as Multiplex as
proposed by the company was also considered
by NDMC. We also decided to give personal
hearing to an authorized representative of the
company before disposing of their
representation dated 05.04.2000 and
14.03.2001. Shri Aditya Khanna & Vikas Jalan
appeared before me personally on 17.10.2001
and reiterated the submissions made in the
representations i.e.
1. To renew the licence of the cinema complex
on the existing terms and/or;
2. To permit the company to develop the
cinema complex in a Multiplex by investing
their own funds and assured the Council that
they will be in a position to pay Rs.1.80 crores
per annum as licence fee.
20. It is to be noted that the lease deed prior to 1994 was to be
renewed in the light of 1994 Act. That being so, the resolution
dated 30.8.2000 as quoted above has certain significant
relevance.
21. Section 141(2) of the Act reads as follows:
“(2) The consideration for which any
immovable property may be sold, leased or
otherwise transferred shall not be less than
the value at which such immovable property
could be sold, leased or otherwise transferred
in normal and fair competition.”
22. The mandate of Section 141(2) is that any immovable
property belonging to NDMC is to be sold, leased, licensed or
transferred on consideration which is not to be less than the
value at which such immovable property could be sold, leased,
or transferred in fair competition. The crucial expression is
“normal and fair competition”. In other words, NDMC is
obligated to adopt the procedure by which it can get maximum
possible return/consideration for such immovable property. The
methodology which can be adopted for receiving maximum
consideration in a normal and fair competition would be the
public auction which is expected to be fair and transparent.
Public auction not only ensures fair price and maximum return
it also militates against any allegation of favouritism on the
part of the Government authorities while giving grant for
disposing of public property. The courts have accepted public
auction as a transparent mean of disposal of public property.
(See State of UP v. Shiv Charan Sharma (AIR 1981 SC 1722),
Ram and Shyam Company v. State of Haryana (1985 (3) 267),
Sterling Computers Ltd. v. M & N Publications Ltd. (1993 (1)
SCC 445), Mahesh Chandra v. Regional Manager, UP Financial
Corporation (1993 (2) SCC 279), Pachaivappa’s Trust v. Official
Trustee of Madras (1994 (1) SCC 475), Chairman and M.D.
SIPCO, Madras v. Contromix Pvt. Ltd. (1995 (4) SCC 595), New
India Public School v. HUDA (AIR 1996 SC 3458), State of
Kerala v. M. Bhaskaran Pillai (1997 (5) SCC 432) and Haryana
Financial Corporation v. Jagdamba Oil Mills (2002 (3) SCC
496).
23. Disposal of public property partakes the character of trust
and there is distinct demarcated approach for disposal of public
property in contradiction to the disposal of private property i.e.
it should be for public purpose and in public interest. Invitation
for participation in public auction ensures transparency and it
would be free from bias or discrimination and beyond reproach.
24. Above being the position, the judgments of learned Single
Judge as affirmed by the Division Bench do not suffer from any
infirmity to warrant interference. The appeal is sans merit,
deserves dismissal which we direct. However, considering the
long period of occupation, which is presently without legal
sanction, the appellants are granted time till 31st December,
2007 to deliver vacant possession to the respondent-NDMC.
25. We have not expressed any opinion on the aspect relating
to dues of the appellants to the NDMC, as they are stated to be
pending adjudication in other disputes.