2007 JTR(SC) 904
2007 57 AIC 153 ; 2007 5 AIR(Bom)(R) 148 ; 2007 AIR(SCW) 4378 ; 2007 5 AllMR(SC) 495 ; 2007 9 JT 577 ; 2007 8 Scale 598 ; 2007 6 SCC 159 ; 2007 7 SCR 1061 ; 2007 2 WLC 715 ; 2007 KHC 3647 ; 2007 2 KLT(Online) 1171 ; 2007 5 Supreme 393
2007(5) Supreme 393
Supreme Court of india
(From Bombay High Court)
Dr. Arijit Pasayat & Altamas Kabir, JJ.
Depot Superintendent H.P.Corpn. Ltd. & Anr. — Petitioners
versus
Kolhapur Agri. Market Commtt. Kolhapur — Respondent
Appeal (civil) 2903 of 2007
(Arising out of SLP (C) No. 6841 of 2005)
Decided on : 20-06-2007
IMPORTANT POINT
Renewal u/s 7(3) of the Act is not automatic and there can be renewal only if it is so desired by the Central Government.
Act Referred :CALTEX ACQUISITION OF SHARES OF CALTEX REFINING INDIA LIMITED AND OF THE UNDERTAKINGS IN INDIA OF CALTEX INDIA LIMITED ACT : S.7(3)
(A) The dispute is governed by the Caltex (Acquisition of Shares of Caltex Refining India Limited and of the Undertakings in India of Caltex India Limited) Act, 1977, specifically Section 7(3), which provides for the renewal or continuation of a lease, tenancy, or arrangement after its expiry only if so desired by the Central Government on the same terms and conditions as the original grant. The provisions of the Acquisition Act, read with relevant rules, determine whether a statutory right of renewal arises and whether such renewal can be presumed or must be expressly exercised by the Government. The impugned order invokes Section 7(3) to clarify that no automatic renewal occurs in the absence of a Central Government desire, and that any renewal would require a fresh decision by the Government.
(B) Key legal principles include: (i) no automatic renewal of lease upon expiry under the Acquisition Act; (ii) renewal is contingent on a specific desire expressed by the Central Government; (iii) mere occupation or receipt of rent by the public authority does not amount to an agreement to extend the lease; (iv) an option of renewal under the Act must be expressly exercised in accordance with the statutory scheme; (v) where the Acts provisions are already in force, the benefit of a renewal option can only be availed if the statutory conditions are fulfilled; and (vi) in cases involving public authorities, litigation may be stayed or time extended where a bona fide dispute exists, subject to undertakings being filed.
Facts of the case:
The appellant was operating a retail petrol pump on leased premises under a lease deed executed in 1959 for 20 years with an option of renewal for ten years. The lease expired in December 1989. On 18 March 1989, the appellant purportedly exercised the renewal option under the Acquisition Act for a further 30 years. The respondent corporation accepted rent and was served a notice to vacate in 1977. A civil suit for possession was decreed in favor of the respondent. During appeals, an application to amend the plaint to assert a statutory right of renewal under Section 7 of the Acquisition Act was allowed, and the civil appeal was dismissed. The High Court dismissed the second appeal, holding that there was no automatic renewal and no material indicating Central Government desire for renewal, and noting that the benefit of Section 7(3) could not be claimed after the lease expiry without compliance.
Findings of Court:
The learned Single Judge and the High Court found that the appellant did not obtain Central Government approval for renewal after the expiry of the original lease. The court held that the option of renewal under the Act had been exercised in 1978 when the 1977 Act was already in force, and that any further extension would require a fresh desire expressed by the Central Government. No material was placed before the court demonstrating such desire, and the appellants conduct in receiving rent did not establish an agreement to renew. Consequently, the appeals were dismissed, and the appellant was directed to vacate the premises, with time extended until the end of June 2009 on the condition that an undertaking be filed.
Issues:
(i) Whether a lease under the Caltex Acquisition Act can be automatically renewed on expiry of the term. (ii) Whether the option of renewal under Section 7(3) can be exercised by the tenant without an explicit desire from the Central Government. (iii) Whether acceptance of rent by the respondent corporation amounted to an agreement to renew the lease. (iv) Whether the appellant was entitled to the benefit of Section 7(3) after the lease period had expired without any application or order for renewal. (v) Whether the provisions of the Act allow a second renewal beyond the original term in the absence of specific governmental desire.
Ratio Decidendi:
The court held that Section 7(3) of the Acquisition Act does not provide for automatic renewal of a lease upon expiry; renewal is possible only if the Central Government expressly desires it. In the absence of any material showing such desire, the appellant is not entitled to a statutory right of renewal, and mere occupation or receipt of rent does not create a tenancy at will. The option of renewal must be exercised in accordance with the Act, and the benefit of Section 7(3) cannot be claimed after the lease period has expired without a fresh decision by the Government. Thus, the appeals are devoid of merit.
Result:
The appeal is dismissed. The appellant is directed to vacate the premises by the end of June 2009, subject to filing an undertaking within two weeks; if the undertaking is not filed, this order shall not be operative.
(A) The dispute is governed by the Caltex (Acquisition of Shares of Caltex Refining India Limited and of the Undertakings in India of Caltex India Limited) Act, 1977, specifically Section 7(3), which provides for the renewal or continuation of a lease, tenancy, or arrangement after its expiry only if so desired by the Central Government on the same terms and conditions as the original grant. The provisions of the Acquisition Act, read with relevant rules, determine whether a statutory right of renewal arises and whether such renewal can be presumed or must be expressly exercised by the Government. The impugned order invokes Section 7(3) to clarify that no automatic renewal occurs in the absence of a Central Government desire, and that any renewal would require a fresh decision by the Government.
(B) Key legal principles include: (i) no automatic renewal of lease upon expiry under the Acquisition Act; (ii) renewal is contingent on a specific desire expressed by the Central Government; (iii) mere occupation or receipt of rent by the public authority does not amount to an agreement to extend the lease; (iv) an option of renewal under the Act must be expressly exercised in accordance with the statutory scheme; (v) where the Acts provisions are already in force, the benefit of a renewal option can only be availed if the statutory conditions are fulfilled; and (vi) in cases involving public authorities, litigation may be stayed or time extended where a bona fide dispute exists, subject to undertakings being filed.
Facts of the case:
The appellant was operating a retail petrol pump on leased premises under a lease deed executed in 1959 for 20 years with an option of renewal for ten years. The lease expired in December 1989. On 18 March 1989, the appellant purportedly exercised the renewal option under the Acquisition Act for a further 30 years. The respondent corporation accepted rent and was served a notice to vacate in 1977. A civil suit for possession was decreed in favor of the respondent. During appeals, an application to amend the plaint to assert a statutory right of renewal under Section 7 of the Acquisition Act was allowed, and the civil appeal was dismissed. The High Court dismissed the second appeal, holding that there was no automatic renewal and no material indicating Central Government desire for renewal, and noting that the benefit of Section 7(3) could not be claimed after the lease expiry without compliance.
Findings of Court:
The learned Single Judge and the High Court found that the appellant did not obtain Central Government approval for renewal after the expiry of the original lease. The court held that the option of renewal under the Act had been exercised in 1978 when the 1977 Act was already in force, and that any further extension would require a fresh desire expressed by the Central Government. No material was placed before the court demonstrating such desire, and the appellants conduct in receiving rent did not establish an agreement to renew. Consequently, the appeals were dismissed, and the appellant was directed to vacate the premises, with time extended until the end of June 2009 on the condition that an undertaking be filed.
Issues:
(i) Whether a lease under the Caltex Acquisition Act can be automatically renewed on expiry of the term. (ii) Whether the option of renewal under Section 7(3) can be exercised by the tenant without an explicit desire from the Central Government. (iii) Whether acceptance of rent by the respondent corporation amounted to an agreement to renew the lease. (iv) Whether the appellant was entitled to the benefit of Section 7(3) after the lease period had expired without any application or order for renewal. (v) Whether the provisions of the Act allow a second renewal beyond the original term in the absence of specific governmental desire.
Ratio Decidendi:
The court held that Section 7(3) of the Acquisition Act does not provide for automatic renewal of a lease upon expiry; renewal is possible only if the Central Government expressly desires it. In the absence of any material showing such desire, the appellant is not entitled to a statutory right of renewal, and mere occupation or receipt of rent does not create a tenancy at will. The option of renewal must be exercised in accordance with the Act, and the benefit of Section 7(3) cannot be claimed after the lease period has expired without a fresh decision by the Government. Thus, the appeals are devoid of merit.
Result:
The appeal is dismissed. The appellant is directed to vacate the premises by the end of June 2009, subject to filing an undertaking within two weeks; if the undertaking is not filed, this order shall not be operative.
JUDGMENT
Dr. ARIJIT PASAYAT, J. —
1.Leave granted.
2.Challenge in this appeal is to the order passed by a learned Single Judge of the Bombay High Court dismissing the Second appeal filed by the appellant. While issuing notice on 11.4.2005 it was indicated that the appellant has to indicate whether he is willing to accept the suggestions given by the High Court about vacating the premises by 2009.
3.Background facts in a nutshell are as follows:
Appellant is running a retail outlet Petrol Pump in the suit premises in Kolhapur for which a lease was executed on 28.12.1959 between the predecessor in interest of the appellant and the respondent for a period of 20 years with an option of renewal for a further period of ten years. The period expired in December, 1989. On 18.3.1989 i.e. prior to the expiry of the lease period, the appellant purportedly exercised the right of renewal of the lease deed for a period of 30 years in terms of Section 7 read with Section 9 of the Caltex (Acquisition of shares of Caltex) Oil Refining (I) Ltd. and of undertaking in India of Caltex (I) Ltd. Act, 1977 (hereinafter referred to as “the Acquisition Act”).
According to the appellant, the respondent by its conduct agreed to extend the lease by accepting rent on 2nd December, 1997. On 22nd October, 1997 respondents have been noticed by the appellant-Corporation calling upon the Corporation to vacate the suit land and hand over the possession to the respondent. Respondent filed Civil Suit No. 399 of 1998 with the Court of Civil Judge, Junior Division Kolhapur on 18.4.1998 inter alia praying for possession of the suit land and mesne profit on the ground that though the respondent served upon the appellant the notice of surrender of possession of land, the appellant avoided giving back the possession.
Learned Civil Judge decreed the suit and directed the appellants to hand over vacant possession. Appellants filed Regular Civil Appeal (Regular Civil Appeal No. 375 of 2000) before the learned District Judge Kolhapur. During pendency of the Civil Appeal appellant filed an application under Order Rule 17 of the Code of Civil Procedure, 1908 (in short the ‘CPC’) seeking inter alia the following amendment:
(i)By virtue of the Acquisition Act, and the provisions made thereunder, Caltex India Ltd. was converted into Hindustan Petroleum Corporation Ltd.
(ii)As per Section 7 of the Acquisition Act, the Corporation has legal right to renew the lease on the same terms and conditions after its expiry.
(iii)The Corporation by its letter dated 18.3.1989 had intimated to the plaintiff regarding its desire to renew the lease for a further period of 30 years. So automatically the lease period has been extended for 30 years.
(iv)The suit filed on the basis of the said notice has no legal force.
4.By order dated 2.11.2002 the amendment was allowed.
5.By order dated 4.10.2004 the Civil appeal was dismissed. Second appeal was filed by the appellant before the Bombay High Court. By the impugned order the High Court dismissed the second appeal.
6.During the hearing of the appeal to avoid litigation between two public bodies the High Court suggested that the appellants may be granted time to vacate the suit plot subject to filing of undertaking but the appellant refused to accept the situation. Under Section 7(3) as noted by the High Court there is no automatic renewal and there can be renewal if it is so desired by the Central Government. In the instant case the other crucial question was whether the company was entitled to second renewal. The High Court held that option of renewal was exercised in the year 1978 at that time the provisions of the Act of 1977 were already enforced.
7.During the pendency of the appeal the appellants contended that they are entitled to benefit of Section 7(3). That plea is unacceptable as no reply was sent to the notice of termination and/or by referring to such right in the written statement filed in the trial court. If in the year 1979 i.e. on the expiry of the lease period, even if lease was to be renewed in terms of Section 7(3), extension could have been granted in terms of original lease for a period of 20 years from the year 1979. It is to be noted that the appellants are not entitled to the protection of Maharashtra Rent Control Act, 1999. Accordingly, the High Court held that there was no merit in the appeal which was dismissed.
8.Stands before the High Court were reiterated in this appeal.
9.Section 7(3) reads as follows:
“7(3) On expiry of the term of any lease, tenancy or arrangement referred to in sub section (1) or sub section (2), such lease or tenancy or arrangement shall, if so desired by the Central Government, be renewed or continued, so far as may be, on the same terms and conditions on which the lease or tenancy or arrangement was originally granted or entered into.”
10.As rightly observed by the High Court that there is no automatic renewal and there can be renewal only if it is so desired by the Central Government. There is no material placed before the courts below that there was any desire in that regard by the Central Government. The appeal is, therefore, sans merit and deserves to be dismissed. But in terms of the notice dated 11.4.2005 time for handing over the possession is extended up to end of June, 2009. Undertaking in that regard shall be filed within two weeks from today. If the undertaking is not filed, this order shall not be operative.
11.The appeal is accordingly disposed of.
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