{"id":57802,"date":"2007-08-31T00:00:00","date_gmt":"2007-08-30T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/aggarwal-modi-enterprises-vs-new-delhi-municipal-council-on-31-august-2007"},"modified":"2018-05-30T04:18:35","modified_gmt":"2018-05-29T22:48:35","slug":"aggarwal-modi-enterprises-vs-new-delhi-municipal-council-on-31-august-2007","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/aggarwal-modi-enterprises-vs-new-delhi-municipal-council-on-31-august-2007","title":{"rendered":"Aggarwal & Modi Enterprises … vs New Delhi Municipal Council on 31 August, 2007"},"content":{"rendered":"
Supreme Court of India<\/div>\n
Aggarwal & Modi Enterprises … vs New Delhi Municipal Council on 31 August, 2007<\/div>\n
Author: . A Pasayat<\/div>\n
Bench: Dr. Arijit Pasayat, S.H. Kapadia<\/div>\n
           CASE NO.:\nAppeal (civil)  4002 of 2007\n\nPETITIONER:\nAggarwal & Modi Enterprises Pvt.Ltd. & Anr\n\nRESPONDENT:\nNew Delhi Municipal Council\n\nDATE OF JUDGMENT: 31\/08\/2007\n\nBENCH:\nDr. ARIJIT PASAYAT & S.H. KAPADIA\n\nJUDGMENT:\n<\/pre>\n
J U D G M E N T <\/p>\n
CIVIL APPEAL NO.   4002            OF 2007
\n(Arising out of SLP (C) No. 21183 of 2005)<\/p>\n
Dr. ARIJIT PASAYAT, J.\n<\/p>\n
1.\tLeave granted.\n<\/p>\n
2.\tChallenge in this appeal is to the order passed by a
\nDivision Bench of the Delhi High Court dismissing the Letters
\nPatent Appeal filed by the appellants. Challenge before the
\nDivision Bench was to the order passed by a learned Single
\nJudge dismissing the Writ Petition filed by the appellants.
\nChallenge in the Writ Petition was to the order dated
\n13.11.2001 passed by the respondent-New Delhi Municipal
\nCouncil (in short ‘NDMC’). By the said order, the appellants
\nwere held to be unauthorized occupants of the premises in
\ndispute namely, that of Chanakya Cinema Complex situated in
\nDiplomatic Enclave, New Delhi. Prayer was also to set aside the
\nletter dated 22.1.2002 issued by the NDMC seeking the vacant
\nand peaceful possession of the aforesaid complex. The
\nresolution passed by the NDMC dated 28.8.2001 was also
\nimpugned to the extent it allowed the appellants to continue in
\npossession from 1st October, 2000 to 30th September, 2003
\nonly. Prayer was also made for renewal of the lease\/licence of
\nthe appellants with the usual option for renewing the
\nlease\/licence on appropriate terms and conditions. It is to be
\nnoted that appellant No.1 (hereinafter referred to as the
\n‘company’) was the original lessee while appellant No.2 is the
\nshareholder of appellant No.1-Company. The writ petition was
\nfiled by the company through one of its Directors Shri Rajesh
\nKhanna.\n<\/p>\n
3.\tLearned Single Judge noted that whatever may have been
\nthe situation in the past, the basic issue was whether the terms
\nof lease permitted the tenancy beyond 30th September, 2003 as
\ncontended by the appellants.  It was held that the appellants’
\ncase was that renewal due in 2000 was to be effective from 1st
\nOctober, 2000 on mutually agreed terms. Since the terms have
\nnot been mutually arrived at, in essence parties have not agreed
\nto renewal in 2000. Undisputedly, the appellants’ case was a
\nlease for fixed terms. The earlier two renewals were therefore of
\nno consequence. The licence granted to appellant No.1 was from
\ntime to time and without premium. Specific periods were
\nindicated in the terms of licence itself. The writ application was
\naccordingly dismissed. The order was questioned before the
\nDivision Bench.\n<\/p>\n
4.\tAfter analyzing the basic issue formulated for the dispute,
\nthe Division Bench found no merit in the LPA and dismissed the
\nsame. The following observations were made by the Division
\nBench.\n<\/p>\n
“27.  No formal licence deed was also executed
\nand there was no unqualified acceptance to
\nthe offer contained in the NDMC’s letter dated
\n2nd December, 1991. Therefore, in the eyes of
\nlaw, no valid licence was granted for the third
\nblock i.e. 1st October, 1990 to 30th September,
\n2000.\n<\/p>\n
28. \tBe as it may, vide order dated 25th May,
\n2001 stay granted in CWP No. 3244\/1992 was
\nalso vacated on the ground that even the
\nperiod of third block had come to an end. This
\npetition was also dismissed as withdrawn on
\n20th May, 2002. Even otherwise the NDMC’s
\nletter dated 2nd December, 1991 did not
\ncontain any renewal clause. Therefore,
\ncontractually there was no entitlement to seek
\nrenewal after 30th September, 2000 and in fact
\nthere was no such lease in operation under
\nwhich this right could be exercised. However,
\nwhile vacating the stay vide order dated 25th
\nMay, 2001 since the Division Bench observed
\nthat request of the appellants for renewal of
\nthe licence agreement for further period be
\nconsidered, the NDMC adverted to this aspect.
\nRequest of the appellants included allowing
\nthem to convert the cinema complex into a
\nmultiplex. Again, it was not in terms of lease
\nthat the question of ‘extension’ of lease period
\nwas considered. But it was the request of the
\nappellants which was to be considered, and
\nNDMC agreed to bestow its consideration in
\nview of the observations of this court in its
\norder dated 25th May, 2001. As consideration
\nof this request was to take some time, the
\nCouncil first passed resolution dated 28th
\nAugust, 2001 extending the lease for a period
\nof three years i.e. from 1st October, 2000 to
\n30th September, 2003 pending final decision
\non the proposal of the appellants to redevelop
\nthe complex as multiplex-cum-commercial
\ncenter. This proposal was, thereafter,
\nconsidered and vide impugned order dated 13th
\nNovember, 2001 rejected the offer”.\n<\/p>\n
5.\tIt was noted that though offer of further renewal beyond
\n1st October, 1990 (third block) was initiated by NDMC letter
\ndated 2nd December, 1991, the response dated 5.12.1991 was
\nnot an acceptance in the eyes of law and no further licence
\ndeed\/agreement was executed although offer dated 2nd
\nDecember, 1991 clearly stipulated that the same was subject to
\nexecution of fresh agreement. The offer itself was challenged by
\nthe appellants by filing CWP No.3244\/1992 clearly meaning
\nthereby that it did not accept the said offer. They continued in
\npossession because of stay orders granted in the writ petition;
\nand in this manner without a contract. Even the third block
\ncontained in the offer dated 2nd December, 1991 expired on 30th
\nSeptember, 2000. In that sense, there was no agreement in
\nexistence and there was no subsisting lease or agreement
\nwritten or oral which gave any right to the appellants to seek
\nfurther renewal under the lease.\n<\/p>\n
6.\tThough many points were urged in support of the appeal,
\nprimary stand was that true scope and ambit of Section 141(2)
\nof the NDMC Act, 1994 (in short the ‘Act’) has not been kept in
\nview and the manner in which NDMC is interpreting it, goes
\nagainst the intended legislative object. In any event, the
\nappellants have been ousted or discriminated or subjected to
\nhostile treatment as in no other case purported intention of
\npublic auction has been resorted to.\n<\/p>\n
7.\tThe appellants had themselves suggested that they should
\nbe permitted to develop the property on the basis of the
\nconsultant’s report. NDMC owns various properties but the
\ncomplex in question is the only cinema hall it has.\n<\/p>\n
8.\tFor the purpose of renewal, the parameters are different
\nand it cannot only be restricted to public auction.  Appellants
\nhave been in occupation for long period. If ultimate object is
\ndevelopment, the present occupants would have preference. If
\nthe scheme is acceptable to the occupants its offers should be
\naccepted.\n<\/p>\n
9.\tThe consideration for which any immovable property may
\nbe sold, leased or otherwise transferred shall not be less than
\nthe value at which such immovable property could be sold,
\nleased or otherwise transferred in normal and fair competition <\/p>\n
10.\tIn essence, it means that the lease amounts should not be
\nless than the market value. The expression in the renewal
\nclause on which great emphasis is led speaks of “terms and
\nconditions to be mutually agreed upon”. According to the
\nappellants it cannot mean that one of the parties can stipulate
\nunreasonable terms and conditions. In essence, the terms and
\nconditions have to be fair. While determining the fair value the
\namount is what the existing tenant is required to pay. NDMC
\nitself had required payment of Rupees two crores per year. The
\nrequirements of Section 141 (2) cannot apply to a case of
\nrenewal. It is submitted that the appellants have been spent
\nmore than rupees three crores after 2000. Though there has
\nbeen no renewal the High Court noted that discriminatory
\ntreatment is being meted out to the appellants and, therefore, it
\nhad directed the respondent-NDMC to give instances where
\npublic auction had been resorted to.\n<\/p>\n
11.\tIn essence, it is submitted that the appellants should be
\ngiven an opportunity first to pay the fair price and not the
\npublic auction price. The public body cannot resort to public
\nauction just with profit making motive.\n<\/p>\n
12.\tLearned counsel for the NDMC on the other hand
\nsubmitted that initially there was a licence deed containing
\nrenewal clause. For the subsequent tenures also there was such
\na deed with renewal clause.  After that no agreement or lease
\nhad been actually executed. For 18 years beginning from 1981-
\n82 the appellants were indulging in litigation and the prayer
\nwas to set aside the licence deed. In fact, in the plaint originally
\nfiled in the suit, it was averred that the deed was executed
\nunder coercion. Similar was the plea in the subsequent suits. It
\nis pointed out that there was no pre-emptive right. One of the
\nobjectives of NDMC was to have retail mall cum multi-plex. The
\nfinancial capacity of the appellants is not sufficient, they have
\nno expertise in the intended activities.  At the most, they have
\nsome experience in running a uniplex. There was no
\nunconditional acceptance of terms offered in 1990 and no
\nlicence or agreement was executed after 1990. The writ petition
\nwas filed in 1992.\n<\/p>\n
13.\tSeveral factors need to be noticed before we deal with the
\nscope and ambit of Section 141(2).\n<\/p>\n
14.\tWhat in essence the appellants are seeking for is specific
\nperformance of the purported contract without filing a suit.
\nAdmittedly, there is no renewal since long and in any event if
\nappellants’ case is accepted there is no agreement after 2003. In
\nthat sense, the auction would be the first time exercise.
\nUndisputedly, NDMC is proposing to have multiplexes whereas
\nthe present arrangement is one of uni-plex.  The reason as to
\nwhy NDMC wanted to have resort to public auction is spelt out
\nin the resolution dated 30th August, 2000. Para 2 of the
\nresolution reads as follows:\n<\/p>\n
“During the period of Asian Games, Ministry of
\nUrban Development transferred some plots of
\nland to NDMC for construction and
\ncommissioning of Hotels on certain terms and
\nconditions and later on NDMC licensed these
\npremises for above purposes to eminent
\ncompanies for long periods of 99 years subject
\nto renewal of license fees after every 30 years.
\nLikewise, there are other establishments, like
\ncinema in Chankya Complex where the land
\nwas transferred long back by the Ministry of
\nUrban Development to NDMC for developing
\nmultiplex buildings. The premises have been
\ntransferred on license for particular periods.
\nAbove premises had been licensed before the
\nenactment of NDMC Act 1994.”\n<\/p>\n
15.\tSimilarly, in respect of specified group of premises with
\nthe Ministries\/Government Departments, renewal was to be
\ndone at enhanced rate of 10% p.a. or the Central PWD
\nenhanced rates, whichever is higher.\n<\/p>\n
16.\tStrong reliance has been placed by learned counsel for the
\nappellants on a decision of this Court in Jamshed Hormusji
\nWadia v. Board of Trustees, Port of Mumbai and Anr.<\/a> (2004 (3)
\nSCC 214), more particularly, para 14. The same reads as
\nfollows:\n<\/p>\n
“The Bombay Port Trust is an instrumentality
\nof State and hence an “authority” within the
\nmeaning of Article 12 of the Constitution. (See
\nDwarkadas Marfatia and Sons v. Board of
\nTrustees of the Port of Bombay). It<\/a> is amenable
\nto writ jurisdiction of the court. This position
\nof law has not been disputed by either party.
\nThe consequence which follows is that in all its
\nactions, it must be governed by Article 14 of
\nthe Constitution. It cannot afford to act with
\narbitrariness or capriciousness. It must act
\nwithin the four corners of the statute which
\nhas created it and governs it. All its actions
\nmust be for the public good, achieving the
\nobjects for which it exists, and accompanied by
\nreason and not whim or caprice.”\n<\/p>\n
17.\tUndisputedly, there was no provision like Section 141 (2)
\ninvolved in that case. The parameters of limitation in Section
\n141 (2) relate to public auction. Undisputedly, the appellants
\nhave participated in the public auction originally. In Wadia’s
\ncase (supra) the tenancy continued but in the present case
\nthere is fresh auction.\n<\/p>\n
18.\tFor appreciating the true scope and ambit of Section
\n141(2), it is to be noted that by nature of the proposed changes
\nit has to be treated as fresh transaction particularly when not
\nonly the nature of property changes but also the lease has
\nexpired. Though strong reliance was placed on a resolution
\ndated 18.3.1999 by the appellants, it is to be noted that the
\nsaid resolution has practically no effectiveness in 2006.\n<\/p>\n
19.\tIn the order of Chairman, NDMC dated 13.11.2001 it was
\nnoted as follows:\n<\/p>\n
“Chanakya Cinema complex is one of the
\nprestigious buildings owned by the NDMC,
\nwhich is located in Chanakyapuri area on a
\npart of land parcel measuring several acres
\nwherein prestigious buildings such as Akabar
\nHotel etc. are situated.\n<\/p>\n
Licence was given for running the cinema
\nto M\/s Aggarwal & Modi Enterprises (Cinema
\nProject) Pvt. Ltd., hereinafter referred to as the
\nCompany vide Agreement dated 03.10.1967
\nwhich was renewed from time to time and
\nwhich finally expired on 30.9.2000.  The
\nlicence fee last paid was fixed at Rs.\n<\/p>\n
15,15,000\/- per annum.\n<\/p>\n
The Company is, however, still in
\noccupation of the aforesaid premises and has
\nsublet various portions of the Chanakya
\nCinema complex to others such as Nirulas
\nHotel, Jewellery shops besides permitting
\nadvertisement even inside the cinema complex
\nto other parties at huge premiums. Besides
\nthis, they have also leased out parking lot
\ninside and outside cinema complex. The
\ncompany has also been in constant litigation
\nwith NDMC in all these years primarily
\nquestioning licence fee though it was fixed in
\naccordance with terms of the agreement
\ninitially entered into between the parties and
\nas per the policies of the NDMC laid down by
\nthe Council from time to time. In any event,
\nthe licence fee stands paid by company till
\n30.9.2000 though two matters are still pending
\nwhich pertain to the revision of the licence fee.
\nDuring the course of litigation, the courts had
\nbeen passing interim order restraining the
\nNDMC from taking any action against the
\ncompany to dispossess them from the cinema
\ncomplex but the said orders were vacated on
\n25.05.2001 subject to the condition that
\nNDMC will consider the representation made
\nin the meanwhile by company giving certain
\nproposals to redevelop cinema complex and\/or
\ncontinuation of licence in their favour for
\nrunning the cinema.\n<\/p>\n
In a meeting of Council held on 30th
\nAugust, 2000, a decision has already been
\ntaken that the present term of licences of
\nhotels\/cinemas and other similar commercial
\ncomplexes, shall not be renewed on the expiry
\nof the present term and fresh licence shall be
\nas per the provisions of Section 141(2) of
\nNDMC Act, 1994.\n<\/p>\n
With a view to comply the directions of
\nthe Hon’ble High Court, feasibility of
\ndeveloping the property as Multiplex as
\nproposed by the company was also considered
\nby NDMC. We also decided to give personal
\nhearing to an authorized representative of the
\ncompany before disposing of their
\nrepresentation dated 05.04.2000 and
\n14.03.2001. Shri Aditya Khanna & Vikas Jalan
\nappeared before me personally on 17.10.2001
\nand reiterated the submissions made in the
\nrepresentations i.e.<\/p>\n
1. To renew the licence of the cinema complex
\non the existing terms and\/or;\n<\/p>\n
2. To permit the company to develop the
\ncinema complex in a Multiplex by investing
\ntheir own funds and assured the Council that
\nthey will be in a position to pay Rs.1.80 crores
\nper annum as licence fee.\n<\/p>\n
20.\tIt is to be noted that the lease deed prior to 1994 was to be
\nrenewed in the light of 1994 Act. That being so, the resolution
\ndated 30.8.2000 as quoted above has certain significant
\nrelevance.\n<\/p>\n
21.\tSection 141(2) of the Act reads as follows:\n<\/p>\n
“(2)\tThe consideration for which any
\nimmovable property may be sold, leased or
\notherwise transferred shall not be less than
\nthe value at which such immovable property
\ncould be sold, leased or otherwise transferred
\nin normal and fair competition.”\n<\/p>\n
22.\tThe mandate of Section 141(2) is that any immovable
\nproperty belonging to NDMC is to be sold, leased, licensed or
\ntransferred on consideration which is not to be less than the
\nvalue at which such immovable property could be sold, leased,
\nor transferred in fair competition. The crucial expression is
\n“normal and fair competition”. In other words, NDMC is
\nobligated to adopt the procedure by which it can get maximum
\npossible return\/consideration for such immovable property. The
\nmethodology which can be adopted for receiving maximum
\nconsideration in a normal and fair competition would be the
\npublic auction which is expected to be fair and transparent.
\nPublic auction not only ensures fair price and maximum return
\nit also militates against any allegation of favouritism  on the
\npart of the Government authorities while giving grant for
\ndisposing of public property. The courts have accepted public
\nauction as a transparent mean of disposal of public property.
\n(See State of UP v. Shiv Charan Sharma (AIR<\/a> 1981 SC 1722),
\nRam and Shyam Company v. State of Haryana (1985 (3) 267),
\nSterling Computers Ltd. v. M & N Publications Ltd.<\/a> (1993 (1)
\nSCC 445), Mahesh Chandra v. Regional Manager, UP Financial
\nCorporation<\/a> (1993 (2) SCC 279), Pachaivappa’s Trust v.  Official
\nTrustee of Madras (1994 (1) SCC 475), Chairman and M.D.
\nSIPCO, Madras v. Contromix Pvt. Ltd. (1995 (4) SCC 595), New
\nIndia Public School v. HUDA (AIR<\/a> 1996 SC 3458), State of
\nKerala v. M. Bhaskaran Pillai<\/a> (1997 (5) SCC 432) and Haryana
\nFinancial Corporation v. Jagdamba Oil Mills<\/a> (2002 (3) SCC\n<\/p>\n
496).\n<\/p>\n
23.\tDisposal of public property partakes the character of trust
\nand there is distinct demarcated approach for disposal of public
\nproperty in contradiction to the disposal of private property i.e.
\nit should be for public purpose and in public interest. Invitation
\nfor participation in public auction ensures transparency and it
\nwould be free from bias or discrimination and beyond reproach.\n<\/p>\n
24.\tAbove being the position, the judgments of learned Single
\nJudge as affirmed by the Division Bench do not suffer from any
\ninfirmity to warrant interference. The appeal is sans merit,
\ndeserves dismissal which we direct. However, considering the
\nlong period of occupation, which is presently without legal
\nsanction, the appellants are granted time till 31st December,
\n2007 to deliver vacant possession to the respondent-NDMC.\n<\/p>\n
25.\tWe have not expressed any opinion on the aspect relating
\nto dues of the appellants to the NDMC, as they are stated to be
\npending adjudication in other disputes.<\/p>\n","protected":false},"excerpt":{"rendered":"
Supreme Court of India Aggarwal & Modi Enterprises … vs New Delhi Municipal Council on 31 August, 2007 Author: . A Pasayat Bench: Dr. Arijit Pasayat, S.H. Kapadia 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 […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[30],"tags":[],"class_list":["post-57802","post","type-post","status-publish","format-standard","hentry","category-supreme-court-of-india"],"yoast_head":"\nAggarwal & Modi Enterprises ... vs New Delhi Municipal Council on 31 August, 2007 - Free Judgements of Supreme Court & High Court | Legal India<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.legalindia.com\/judgments\/aggarwal-modi-enterprises-vs-new-delhi-municipal-council-on-31-august-2007\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Aggarwal & Modi Enterprises ... vs New Delhi Municipal Council on 31 August, 2007 - 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