G.S. Patel, J.
1. The 1st Petitioner is a Government Company (âOriental Insuranceâ) as defined under Section 617 of the Companies Act, 1956. It is engaged in the business of General Insurance and was established under the General Insurance Business (Nationalisation) Act, 1972. It owns substantial properties in Mumbai and elsewhere. Among these are two buildings known as Oriental Mansion and Oriental Mansion (Extension) on Plot No. 14, Wellington Lines Estate at Nathalal Parekh Road and Madame Cama Road, Mumbai. The built up area of these structures is about 80,000 sq.ft.
2. The plot on which these buildings stand is a leasehold plot. The original indenture of lease was dated 29th June 1909 and was for a period of 99 years. Oriental Insurance claims to be a lessee of this plot.
3. In March 2003 the Respondent No. 1, the Municipal Corporation of Greater Mumbai (âMCGMâ) sought to revise the lease rent in respect of Oriental Insurances at Wellington Lines Estate. Oriental Insurance filed Writ Petition No. 3028 of 2004. That Writ Petition was disposed of on 7th February 2005, when this Court recorded the statement made on behalf of the MCGM that the impugned demand letter of the lease rent differences would not be acted upon until a further decision was taken by the Appropriate Authority. The MCGM, however, insisted that Oriental Insurance continue paying the lease rent at the existing old rates. As this satisfied Oriental Insurance, the Petition was not pressed and was disposed of.
4. Oriental Insurance now contends, in this Writ Petition under Article 226 of the Constitution of India, that for some years now, i.e., since 2009/10, the MCGM has stopped accepting lease rent from it. There was some correspondence between Oriental Insurance and the MCGM on this matter. On 13th September 2011 the MCGM wrote to Oriental Insurance saying that its lease had expired on 4th December 2000, and that by the MCGMs letter dated 18th November 2009 Oriental Insurance had been asked to submit a bond to pay such lease as might be fixed and demanded by the MCGM. As that had not been done, the MCGM had refused to accept Oriental Insurances lease rent cheques. The MCGM once again called upon Oriental Insurance to submit a bond within 15 days, failing which its lease would not be renewed. Further correspondence ensued. Representatives of Oriental Insurance met those of the MCGM. In November 2011 Oriental Insurance was asked to execute and submit an undertaking on Stamp Paper, following which the MCGM would accept further rent from it. A draft of this undertaking sought by the MCGM was given to Oriental Insurance, and a copy of that undertaking is annexed to the Petition (Page 85, part of Ex. âIâ).
5. This Petition impugns the draft undertaking. Oriental Insurance contends that the State Government has not yet finalized any policy for lease rent differences, and that while Oriental Insurance is willing to pay the old existing rent, it cannot be asked to execute any bond or undertaking which binds it to pay enhanced rent from the date of expiry of the previous lease.
6. We have heard Mr. Nakhawa, learned counsel for the Petitioners, and have, with his assistance, considered the Written Submissions he submitted. Mr. Nakhawa relies on the decision in MariammaRoy v/s. Indian Bank and Others (2009) 16 Supreme Court Cases 187)in support of the proposition that the Respondents have not given any personal hearing to Oriental Insurance. He also relies on the unreported decision of this Court in case of MahendraJ. Vora V/s. The Municipal Corporation of Greater Bombay (Writ Petition No. 166 of 1997)decided on 15th February 2011 along with the order of the Honble Supreme Court passed on 12th September 2011 in Special Leave Petition preferred in that decision. There can be no denying that the Petitioners have a right to be heard before the lease rent is fixed (MariammaRoy, supra). However, the issue in MahendraJ. Vora (supra)related to the charging of a premium for transfers and assignments of leases. No such issue arises in this case. The reliance on that decision is, in our view, totally misplaced.
7. We have also carefully considered the draft undertaking that the MCGM insists the Petitioners execute. The undertaking recites that following an amendment to Section 91B of the Mumbai Municipal Corporation Act, leasehold lands, on expiry of their tenure, re-vest in the Government, and the MCGM is now empowered to renew these leases for another 30 years on specified terms and conditions. In effect, the amendment permits the MCGM to renew leases and collect lease rent, and the MCGM must then pay 50% of the rent so collected to the government. Another condition relates to a periodic increases in lease rent. The MCGM is said to have formulated its own policy and this contains a formula for fixing the lease rent on renewal. However, the State Governments own policy dated 5th October 1999 on lease renewals was withdrawn following certain orders of this court. The undertaking itself notes that the State Government has yet to fix or finalize its lease renewal policy; and a letter dated 7th June 2007 from the State Government to the MCGM so says. However, the MCGM has been directed to take undertakings and bonds from lessees binding them to paying the entire difference between the existing lease rent and the revised rent, as and when that is finalized. Renewals are permitted subject to this undertaking.
8. It seems to us unreasonable to expect any person to execute an undertaking in terms as broad as this. No one yet knows what form the State Government policy on lease renewals might take. The MCGM certainly has no idea. No principle of administrative law can permit so complete an effacing in praesenti of claims, demands, rents and policies yet to be fixed in futuro. That is wholly arbitrary and unreasonable.
9. With his usual fairness, Mr. Kumbhakoni, Learned Counsel for the MCGM, drew our attention to two orders that ought, rightly, to have been cited by Mr. Nakhawa. An identical issue arose in Tata Sons Ltd and Anr. vs State of Maharashtra and Ors., (Writ Petition No.1372 of 2012) and this Court passed two orders in that case. In the first, ad-interim order of 11th May 2012, a Division Bench stayed an impugned notice by which the MCGM had demanded an undertaking in terms identical to the present case. It observed that prima-facie, the MCGM could not insist on a blanket undertaking requiring any amount that may be fixed in future irrespective of a determination of its legal effect. By Clause 3 of that order, the court granted an injunction pending admission on the petitioners undertaking to pay the amount as per the policy to be fixed in future, together with interest, but subject to orders that may be passed in regard thereto in any proceedings that the Petitioners might file in regard to such policy. That case was then finally disposed of by an order dated 21st March 2013. Another Division Bench (A.S. Oka and Mrs. Mridula Bhatkar, JJ) echoed the view taken at the ad-interim stage. The court noted, as we have, that the the undertaking itself records that the State Government has not finalized its policy on revised lease rent rates. The undertaking would, the court held, have to be modified. The Petitioners agreed to submit an undertaking incorporating the terms of the injunction order. The Division Bench therefore directed that the undertaking required by the MCGM would stand modified in terms of clause 3 of the ad-interim order dated 11th May 2012.
10. The facts in this case are identical. We see no reason to differ from the view taken in Tata Sons. Oriental Insurance shall submit the required undertaking to the MCGM with the following modification, viz., that they shall pay the enhanced lease rent under the policy that may be fixed in future together with interest, subject to orders that may be passed in regard thereto in any proceedings that Oriental Insurance may file in regard to such policy. The MCGM shall also afford the Oriental Insurances representatives an adequate opportunity of being heard before the lease rent has been fixed.
11. There is, however, one other aspect that we believe we must address. It is singularly unfortunate that Oriental Insurance, a government company, imputes mala fides to the MCGM. It accuses the MCGM of using âarm twisting methodsâ. Even more peculiar is the assertion that since Oriental Insurance is an instrumentality of the State within the meaning of Article 12 of the Constitution of India, it âcannot be treated like a laymanâ. We fail to understand what this is supposed to mean. Oriental Insurance stands on no higher footing than any individual citizen in this regard. It can claim no special benefits or privileges in matters of fixing of lease rent. We note that Oriental Insurance claims to be liable only to pay the âold rentâ, the suggestion or implication being that it has not only a legal but a Constitutional entitlement to a continuance and renewal of its lease at the old rates. We are unable to understand how and on what basis any government corporation can claim any such right or seek such special dispensations. It is not out of place to mention Oriental Insurance, as the owner or lessee of several immovable properties in Mumbai, is itself a landlord and lets out its properties on a commercial, market basis. So do many other corporations like Oriental Insurance. All these government corporations seek protection under the Public Premises (Eviction of Unauthorised Occupants) Act, 1971 and claim not to be bound by the provisions of Rent Act even in matters of rent control. It seems to us manifestly inequitable that Oriental Insurance should claim to be entitled to a fixed, old rent for a very substantial property in south Mumbai while simultaneously claiming to be itself exempt from rent control vis-Ã -vis its own tenants, lessees and licensees. Non-arbitrariness applies as much to Oriental Insurance as it does to the MCGM. We expressly reject Oriental Insurances contention that it is entitled to continue paying only the old rent fixed for the now-expired lease. We clarify that, in any hearing before the MCGM, it shall not be open to Oriental Insurance to raise or take any such plea, although it may make submissions on what should be a reasonable increase in its rent.
12. Petition is disposed of in these terms. No order as to costs.