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Rampur Engineering Co. Ltd. Vs. State and ors. - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtAllahabad High Court
Decided On
Case NumberSecond Appeal No. 1458 of 1974
Judge
Reported inAIR1981All396
ActsTransfer of Property Act, 1882 - Sections 105
AppellantRampur Engineering Co. Ltd.
RespondentState and ors.
Appellant AdvocateB.D. Mandhyan, Adv.
Respondent AdvocateA.P. Singh, Standing Counsel
DispositionAppeal allowed
Excerpt:
.....by state without consideration is - not a lease - act not application to the transaction. (ii) renewal of lease agreement - section105 of transfer of property act,1882 - for renewal of lease parties are to be governed by terms of agreement - if lessee has right to renewal of lease agreement lessor cannot deny renewal. - - ' according to the learned district judge :rather the fact that in the subsequent portion it has been specifically mentioned that it was at the option of the lessee shows that if option for renewal of the lease was also to be given to the lessee, it could have been easily mentioned in the earlier part of this clause as well, as was done when it was so desired in the subsequent portion. ' 6. having heard learned counsel for the parties i find that the two courts..........by j. k. gas plant manufacturing company rampur limited and j. k. food products limited, rampur state now owned and possessed by the lessee will be deemed to have constructed with the consent of the lessor and the lessee has the right to construct other buildings which may be required for the development of the lessee's work. (4) that the plot leased out will be utilized by the lessee for its requirements without any interference on the part of the lessor. (5) that the lessee with the consent of the lessor can transfer its lease-hold rights for the unexpired period of lease but the sub-lessee will also be bound by the terms and conditions hereby agreed by the parties. (6) that on the expiry of the period of lease it can be renewed for a further period of 30 years on the same.....
Judgment:

Deoki Nandan, J.

1. This is a plaintiff's second appeal in a suit for a decree directing the defendants to renew the lease of certain land specified at the foot of the plaint for a further period of 30 years with effect from 10th May, 1972. Although the defendants were three in number, the real defendant is only one, namely, the State of Uttar Pradesh, the other two defendants being surplusage, and indeed the name of the third defendant-respondent Sri N. C. Saxena, Secretary to the Government of Uttar Pradesh was deleted from the array of the parties in this Court.

2. The earstwhile princely State of Rampur entered into an agreement dated 28th October, 1974 with M/s. Juggi Lal Kamlapat Singhania agreeing to grant certain land on certain terms. The plaintiff company came to acquire the rights of M/s. Juggi Lal Kamlapat under that agreement with certain modifications in a series of transactions which it is not material to detail in this judgment, inasmuch, as the then Government of Rampur made the grant of 39.08 acres of land to the plaintiff by an instrument dated 29th June, 1949, a copy of which is Ext. 2 on the record. The instrument, after setting forth the earlier transactions shows that the plaintiff company, referred to as the lessee in the agreement 'is now in possession of 39.08 acres and whereas the lessee has requested the lessor (Government of Rampur) to execute the deed of lease in favour of the lessee to which the lessor has agreed, it is hereby mutually agreed and declared as under:--

'(1) That the lease will operate from 10-5-1942 and will terminate on 9th May, 1972.

(2) That the said land of 39.08 acres which is now in possession of the Company will be held by the lessee free of rent during the continuance of this lease.

(3) That it is definitely understood and agreed that all the buildings, bungalows factory, godowns, out-houses, offices and other erections and fixtures whether permanent or temporary, boundary walls, chimmeys, tube-wells, roads trolly lines and other appurtenances constructed by J. K. Gas plant Manufacturing Company Rampur Limited and J. K. Food Products Limited, Rampur State now owned and possessed by the Lessee will be deemed to have constructed with the consent of the Lessor and the Lessee has the right to construct other buildings which may be required for the development of the Lessee's work.

(4) That the plot leased out will be utilized by the Lessee for its requirements without any interference on the part of the lessor.

(5) That the lessee with the consent of the lessor can transfer its lease-hold rights for the unexpired period of lease but the sub-lessee will also be bound by the terms and conditions hereby agreed by the parties.

(6) That on the expiry of the period of lease it can be renewed for a further period of 30 years on the same terms and conditions. After the lapse of 60 years from the date of registration 10th May. 1942 of J. K. Gas plant Manufacturing Company Limited the Company shall have the option to acquire the full ownership of the said land of 39.08 acres on payment of a sum of Rs. 19,500/- to the lessor.

(7) That the lessee will not commit such acts in respect of the said land which will deteriorate the present value of the land.

(8) That in the event of the lease not being renewed on the expiry of the period of the lease, the Lessee will be entitled to sell or remove the buildings, plant, machinery, fittings and fixtures installed thereon unless the State pays to the lessees compensation at a figure to be mutually agreed upon.'

3. These are all the terms of the so-called lease and I have quoted them in extenso because the decision of the case turns upon their interpretation. The few more facts relevant for the purposes of the decision of this case are that when the plaintiff applied for the renewal of the lease to the Government of UttarPradesh, which had in the meanwhile come to acquire all the rights and the liabilities of the lessor under the said grant, on the merger of princely State of Rampur in the Union of India, the Government of Uttar Pradesh informed the plaintiff, by letter dated 30th March, 1972, that the Governor had been pleased to decide not to renew the lease, without assigning any reason therefor, the suit was then filed after serving a notice under Section 80 of the Civil P. C. The defence was that the land was originally let out by the princely State of Rampur for the purposes of promoting industrial development in the area but that object was never achieved and the Company was not functioning properly in spite of the help rendered by the Government of Rampur and by the Government of the State of U. P. The reasons pleaded by it to justify the refusal to renew the lease would appear to be those contained in paragraphs 13, 14 and 15 of the written statement. They run as follows:--

'13. That in the meanwhile the industrial activity of the company came to a virtual standstill and ultimately the company gave up its industrial activity altogether. All the machinery was dismantled and removed, the factory was shut down, and the office shifted, and the very object of granting the facilities, incentives, concessions to the plaintiff, for generating employment and industrial production, was set at nought by the plaintiff company itself.

14. That thus the very nexus of the lease granted by the defendant No. 1, predecessor to the plaintiff has been lost and the plaintiff has no right to renewal of the same.

15. That the plaintiff is not entitled to any renewal of the lease for the simple reason that the lease was without consideration. The major consideration in the mind of the predecessor of the State Government and of the defendant No. 1 itself, viz., generation of employment and industrial production, has come to an end, and the defendant No. 1 has heavily suffered in the process financially in the form of each (sic cash) assistance and interest etc.'

It has been added in paragraph 18 that the State of Uttar Pradesh never objected to the removal of its building by the plaintiff from the land nor did it seek any extension of time for doing so. It is then said that the plaintiff ceased to have anyrights in the buildings. Lastly it was averred in paragraph 23 of the written statement that the State of Uttar Pradesh had already taken proceedings under the U. P. Public Premises (Eviction of Unauthorised Occupants) Act, 1972 and 'all the rights of the parties if any shall be decided in those proceedings' and that the present suit was, therefore, not maintainable,

4. The following were the issues framed by the trial Court:--

1. Whether the lease in question was made only for the purpose of and to encourage, the industries in Rampur?

2. Whether the plaintiff's company stopped permanently all industrial activities at Rampur, if so its effect?

3. Whether the plaintiff can force the defendant to renew the lease in his favour for 30 years in terms of the lease deed.

4. Whether the court fee paid is insufficient?

5. To what relief if any is the plaintiff entitled?

On the fourth issue, which was taken up first, the trial Court held that the court fees paid was sufficient. On issue No. 1, its finding was that from the circumstances and the other conditions of the lease it is obvious that the lease was made for the purposes of encouraging industries at Rampur although it was not specifically mentioned in the lease.' On issue No. 2 the trial court held that 'the plaintiff has sublet a major portion of the building also to Sri Hans Raj Gupta and Company; that it had ceased to carry on any industrial activity at Rampur, that the result is that the plaintiff is not entitled to get the lease renewed'; and that 'under the terms of lease the plaintiff could sublet the land only with the consent of the defendant'; that admittedly the plaintiff had not sought permission of the defendant before making a sub-lease in favour of M/s. Hans Raj Gupta and Company', and that, therefore, the plaintiff had 'violated the terms of lease and thereafter lost its rights of renewal of lease if any,' On the third issue the finding of the trial Court was 'obviously the plaintiff is not entitled to get the lease renewed for 30 years more under the agreement dated 29-6-1949 Ext. 2.' In view of the said findings the trial Court held on issue No. 5, that the plaintiff was not entitled to any relief and dismissed the suit.

5. On appeal before the learned District Judge, Rampur, the only point whichappears to have been convassed was that the view of the trial Court 'that the lease was not to be renewed at the option of the plaintiff' was erroneous. The Learned District Judge referred at the outset to the decision of the Supreme Court in Raja Rajinder Chand v. Sukhi, (AIR 1957 SC 286) and after quoting from para. 11 of the report thereof, he held as follows :--

'On a plain reading of this clause it would appear that the renewal clause for a further period of 30 years is not specifically reserved at the option of the lessee. There is qualification as to how this renewal for this period can take place. So the ordinary rule of renewal of contract would apply viz. that a renewal can take place only when both parties of the agreement so desire.'

With regard to the contentions raised before him by the learned counsel for the plaintiff, the learned District Judge was of the view that the subsequent provision 'merely points out that in case the lease continues for 50 years then the lessee shall have such an option' and that 'it does not show as to how the renewal for another 30 years was to take place.' According to the learned District Judge : 'Rather the fact that in the subsequent portion it has been specifically mentioned that it was at the option of the lessee shows that if option for renewal of the lease was also to be given to the lessee, it could have been easily mentioned in the earlier part of this clause as well, as was done when it was so desired in the subsequent portion.'

6. Having heard Learned counsel for the parties I find that the two courts below have mis-interpreted the terms of the grant dated 29th June, 1949. It is a misnomer to call it a lease In the sense in which that expression is defined in the Transfer o'f Property Act as the transfer of a right to enjoy immoveable property made for a certain time, express or implied, or in perpetuity, in consideration of a price paid or promised or of money, a share of crops, service or any- other thing of value, to be rendered periodically or on specified occasions to the transferor by the transferee, who accepts the transfer on such terms. The terms of the grant do not show that any premium of rent was paid or was payable under the so-called lease. If the Transfer of Property Act applied to the princely State of Rampur or to the grants made by the ruler of Rampur in exercise of his sovereign rights the grant in question could not have been termed a lease but probably no one ever thought that the Transfer of Property Act was applicable to the transaction, for even if the same law as was in force in British India at that time was assumed to have been applied in the princely State of Rampur also. The Transfer of Property Act must not have been applicable to such grants by the sovereign, inasmuch as even under the 'Crown' Grants Act, 1895, now the Government Grants Act. 1895, Transfer of Property Act was made inapplicable. I have made these observations not because the matter was raised before me but because the main ground pleaded in paragraph 15 of the written statement quoted above was that the lease was without consideration. That point does not seem to have been pressed at the trial in that form. So far as the 'major' consideration said to have been in the mind of the Government of Rampur, is concerned that could not have been a consideration for a lease in the sense in which it is defined by Section 105 of the Transfer of Property Act, for the consideration contemplated by that provision is money or any other thing of value, and not such considerations like the generation of employment and industrial production which a welfare State may have in mind for promoting the welfare of its subjects,

7. Be that as it may, the validity of the instrument does not seem to have been challenged at the trial on the ground of want of consideration in the sense in which it is required for lease as defined by Section 105 of the Transfer of Property Act and this aspect of the matter need detain me no longer.

8. If the grant was a valid grant of immovable property by the princely State of Rampur, the terms thereof do unmistakably show that initially the grant was a rent free grant for 30 years; that on the expiry of the first 30 years, it was for the plaintiff to decide whether to ask for a renewal for a further term of 30 years and if it did so, it could continue to use the land for a further period of 30 years without payment of rent; that on the expiry of 60 years, the plaintiff could acquire rights of full ownership in the land on payment of Rs. 19,500/-. The last clause provided that in case the lease was not renewed which, in my opinion, could be the case only if the plaintiff did not ask for a renewal, the plaintiff became entitled to sell or remove the buildings, plants, machinery fittings and fixtures installed thereon, unless, that is to say except in case, the Government paid compensation to the plaintiff at a mutually agreed upon figure. The term 'that on expiry of the period of lease it can be renewed for a further period of 30 years on the same terms and conditions,' unequivocally conferred upon the plaintiff the right to have the lease renewed for a further period of 30 years on the same terms and conditions, after the expiry of the first period of 30 years. The right conferred on the plaintiff by this clause was indefeasible and if the plaintiff asked for the renewal, the Government could not refuse it The plaintiff did ask for the renewal. The defendant State acted illegally in refusing to renew the grant for a further period of 30 years from 10th May 1972.

9. I must here also deal with another point which was not raised before the lower appellate Court but which stares one on the face on a perusal of the judgment of the trial Court. The trial Court found that the plaintiff had lost the right to a renewal of the lease on account of having made a lease in favour of M/s. Hansraj Gupta and Company. The point of sub-lease was not raised under issue No. 2, for the only question raised by that issue was whether the plaintiff-Company had stopped all industrial activities at Rampur. May be the plaintiff Company had stopped all industrial activities at Rampur but under Clause 4 of the terms of the grant it was said that the land 'will be utilized by the lessee for its requirement without any interference on the part of the lessor.' That did not impose any restriction on the nature or the kind of use of the land by the plaintiff.

10. As to the question of subletting, Clause 5 provided that 'the lessee with the consent of the lessor can transfer its lease-hold rights for the un-expired period of lease but the sub-lessee will also be bound by the terms and conditions hereby agreed by the parties.' Now, the letting out of some buildings to M/s. Hansraj Gupta and Company was not a transfer of all its lease-hold rights by the plain-tiff for the un-expired period of lease. Even so the entire transaction by and between the plaintiff and M/s. Hansraj Gupta and Company was with the approval and active consent of the defendant State of Uttar Pradesh as would appear from paragraphs 9, 10 and 11 ofits written statement. I do not, therefore, see any justification for finding recorded by the trial Court that the plaintiff's right to renewal of the lease was lost by its act of subletting some buildings to M/s. Hansraj Gupta and Company.

11. In the result the appeal succeeds and is allowed with costs. The defendant State of Uttar Pradesh shall grant the land having an area of 39-08 acres specified at the foot of the plaint to the plaintiff Company for a further period of 30 years from 10th May, 1972 on the same terms and conditions as are contained in Ext. 2. The necessary instrument of grant shall be executed and registered within three months from the date on which the plaintiff signifies to the defendant State of Uttar Pradesh through the Collector Rampur and through the Chief Secretary to the Government of Uttar Pradesh at Luckow, its readiness and willingness to take the grant on payment of the necessary expenses on the execution and registration of the same in its favour, which it must do within three months from to-day. The plaintiff shall be entitled to its costs throughout from defendant-respondent No. 1.


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