1. Both the Letters Patent Appeals arise out of judgment and order dated 20-4-2000 by a learned Single Judge of this Court in CWJC No. 1479 of 1999. In view of the nature of the case, both the appeals have been heard together in detail at the stage of admission itself and are being disposed of by this common order.
2. LPA No. 914 of 2000 has been preferred by the writ petitioners against that part of the judgment under appeal by which prayer for a direction to the respondents which include Hindustan Petroleum Corporation Limited (hereinafter referred to as 'the Corporation'), a Government company, to vacate the premises in question has been refused. This was sought as a consequential relief after the main relief for quashing of letter dated 28-12-1998 (Annexure-5) issued by the Corporation in terms of Section 5(2) read with Section 7(3) of the ESSO (Acquisition of Undertakings in India) Act, 1974 (hereinafter referred to as 'the Act') was allowed by the learned Single Judge. LPA No. 933 of 2000 has been preferred by the Corporation and its official against the grant of aforesaid relief to the writ petitioners.
3. Since the issue in LPA No. 933 of 2000 relates to the main relief hence, the same has to be considered first and only if this appeal fails then the issue relating to consequential relief raised in LPA No. 914 of 2000 shall have to be considered.
4. The dispute relates to a ploy of land measuring 8000 sq. ft. on Dak Bungalow Road in the town of Patna. Writ petitioner No. 1 as Karta of the family owning the said land, created a lease over the said land through a registered deed of lease dated 11-10-1966 in favour of ESSO Standard Eastern Inc. an American company, for a period of 3 years from 1-3-1966 at a monthly rental of Rs. 600/-. The lease agreement further provided that after the expiry of 3 years, the lessee shall have the option of renewal for a further period of 10 years at the rate of Rs. 600/- per month and thereafter, a further option of renewal for 10 years at the rate of Rs. 650/- per month and thereafter, a last option of further renewal for another term of 10 years at the rate of Rs. 700/- per month.
5. By virtue of Section 3 of the Act, the right, title and interest of ESSO in relation to its undertakings in India stood transferred to and vested in the Central Government with effect from 13-3-1974, the appointed day. Thereafter, through a notification by Government of India under Section 7 of the Act, the undertakings of ESSO in India vested in a Government company, the Corporation.
6. For the purpose of deciding the controversies between the parties in these appeals, at this juncture, it is useful to take note of Sections 5 and 7 of the Act which are as follows:
5. Central Government, to be lessee or tenant under certain circumstances.-(1) Where any property is held in India by ESSO under any lease or under any right of tenancy, the Central Government shall, on and from the appointed day, be deemed to have become the lessee or tenant, as the case may be, in respect of which property, as if the lease of tenancy in relation to such property had been granted to the Central Government, and thereupon all the rights under such lease or tenancy shall be deemed to have been transferred to and vested in the Central Government.
(2) On the expiry of the term of any lease or tenancy referred to in subsection (1), such lease or tenancy shall, if so desired by the Central Government, be renewed on the same terms and conditions on which the tease or tenancy was held by ESSO immediately before the appointed day.
7. Power of Central Government to direct vesting of the undertakings of ESSO in a Government company.-(1) Notwithstanding the Central Government may, if it is satisfied that a Government company is willing to comply, or has complied, with such terms and conditions as that Government may think fit to impose direct, by notification, that the right, title and interest and the liabilities of ESSO in relation to any undertaking in India shall instead of continuing to vest in the Central Government, vest in the Government company either on the date of notification or on such earlier or later date (not being a date earlier than the appointed day) as may be specified in the notification.
(2) Where the right, title and interest and the liabilities of ESSO in relation to its undertakings in India vest in a Government company under Sub-section (1) the Government company shall, on and from the date of such vesting, be deemed to have become the owner, tenant or lessee, as the case may be, in relation to such undertaking, and all the rights and liabilities of the Central Government in relation to such undertaking shall, on and from the date of such vesting be deemed to have become the right and liabilities, respectively, of the Government company.
(3) The provisions of Sub-section (2) of Section 5 shall apply to lease or tenancy, which vests in a Government company, as they apply to lease or tenancy vested in the Central Government and reference therein to the 'Central Government' shall be construed as a reference to the Government Company.
7. On a combined reading of Sections 5 and 7, it is clear that as a Government company, the Corporation became the lessee in respect of land in question, stepping into shoes of ESSO by virtue of statutory provisions. The facts disclose that the Corporation not only availed the full term of first 10 years, i.e. from March 1969 to February 1979 on a monthly rental of Rs. 600/- per month but also availed lease/ tenancy at the rental of Rs. 650/-per month for next 10 years, i.e. from March 1979 to February 1989 and for a further period of 10 years from March 1989 to February 1999 at the monthly rental of Rs. 700/-. When the right of availing further lease for two terms of 10 years each available to the Corporation by virtue of Section 5(1) read with Section 7(2) was over and the final and last lease was nearing completion, the Corporation issued the impugned letter dated 28-12-1998 (Annexure-5 to the writ application) seeking to exercise a right for renewal of lease for a further period of 33 years commencing from 1st March, 1999 on the same terms and conditions on which the lessee held the lease immediately before 13th March, 1974. This right was claimed in terms of Sections 5 and 7(3) of the Act. The writ petitioners challenged Annexure-5 through writ petition bearing CWJC No. 1479 of 1999 filed on 9-2-1999 leading to the judgment under appeal.
8. The learned Single Judge agreed with submissions advanced on behalf of the writ petitioners that the impugned order is beyond the scope and purpose of Section 5(2) of the Act. On the basis of a Division Bench judgment of Orissa High Court reported in : AIR1994Ori103 (Dolly Das v. Hindustan Petroleum Corporation Ltd.) which was affirmed by the Supreme Court vide judgment reported in : (1999)4SCC450 (Hindustan Petroleum Corporation Ltd. v. Dolly Das) and a judgment of Madras High Court reported in [AIR 2000 Mad 83] (M. Rose v. Hindustan Petroleum Corporation Ltd.), it was held that the provisions of Sections 5(2) and 7(3) of the Act were enacted to give breathing time to organise their affairs and such provisions would not be available to the Government company if the transition from private ownership to Government ownership has already been effected and long period of time has passed thereafter. Learned Counsel for the Corporation assailed the aforesaid finding and submitted that Section 5(2) read with Section 7(3) of the Act does not contain any limitation of time within which a right of renewal has to be exercised and, therefore, the right of renewal would arise on the expiry of the term of a lease referred to in Sub-section (1) and if desired by the Government company, the expired lease has to be renewed on the same terms and conditions on which lease or tenancy was held by ESSO immediately before the appointed day.
9. No doubt, there is no express limitation in Section 5(2) of the Act but it is clear that the provisions in question are transitory in nature and hence, must be interpreted in a manner which can fulfil the object of the Act without causing unnecessary hardship or injustice to innocent third parties who had leased their properties to ESSO before the appointed date. Learned Single Judge, in this connection has adopted the views of Orissa High Court in the case of Dolly Das (supra). The Supreme Court in that very case while disposing of the appeal vide judgment reported in (1994)4SCC 450, held in paragraph 12 that the Corporation in terms of Section 7 of the Act could seek renewal only for a period of one term as originally granted. Even in that view of the matter, since the period of lease on 13-3-1974 was for 10 years hence, on expiry of the then lease period in February 1979, the Corporation could have invoked its power of renewal under Section 5(2) read with Section 7(3) of the Act only for one term of 10 years expiring in February 1989. Since such a course open under Section 5(2) was not to the advantage of the Corporation hence, it appears to have adopted for exercising the right of renewal in exercise of rights available under Section 5(1) of the Act so as to enjoy a lease up to February 1999. Having done so, it cannot be permitted to exercise the option of renewal of the lease that had already expired in February 1989 and in which the monthly rental was Rs. 650/-. The subsequent and last lease for 10 years at the rate of Rs. 700/- per month was a later lease not referred to in subsection (1) of Section 5 and hence, the Corporation must be deemed to have forgone its right under Section 5(2) of the Act for renewal of a lease referred to in Section 5(1). It is further clear from Section 5(2) of the Act that the renewed lease should be on same terms and conditions on which the lease was held by ESSO, immediately before the appointed day. In this case, on the appointed day the lease for 10 years was at a rental of Rs. 650/- per month but thereafter the Corporation availed another lease by way of renewal on rental of Rs. 700/- per month and, therefore, on expiry of this lease it does not appear proper and reasonable that the law would permit renewal at the rate of Rs. 650/- per month. Hence, on such considerations also we find no force in the submissions of learned Counsel for the Corporation the conclusions of learned Single Judge regarding the impugned order contained in Annexure-5 to the writ application are, therefore, affirmed and LPA No. 933 of 2000 is found to be without any merit.
10. Coming to LPA No. 914 of 2000, it is worthwhile to notice that after setting aside the impugned order contained in Annexure-5 to the writ application the learned Single Judge rejected the consequential relief by holding that continuance of respondent-Corporation under the lease agreement even after expiry of the lease and determination of the sale is a contractual matter lying outside the field of public law and hence, not liable to review under writ jurisdiction. Therefore, parties were left free to agitate the issue in Civil Court.
11. Learned Counsel for the appellants-writ petitioners has submitted that the aforesaid view is erroneous and in the facts of the case when main relief for quashing of Annexure-5 has been granted against a Government company which admitted-in Annexure-5 that the lease in its favour shall expire of 28th February, 1999, then denial of consequential relief for a direction to vacate the land in question should not have been left for decision by Civil Court. It was further submitted that there was no contractual relationship between the writ petitioners and the Corporation with regard to tenancy/lease in question because the lease agreement was with ESSO and the Corporation stepped into shoes of ESSO, by virtue of operation of the Act. According to him, since the Act, particularly Section 5(1), transferred upon the Corporation only the rights which were available to ESSO and notrjing more hence, being a Government company and having taken advantage of provisions of the Act, it cannot be permitted to Act arbitrarily and to continue in possession after expiry of the lease in February 1999. Such a right of further continuance was not conferred upon the Corporation by the Act or any other law and hence, the learned single Judge ought to have followed the Orissa High Court Judgment as well as that of Supreme Court in the case of Dolly Das (supra) and should have directed the Corporation to hand over vacant possession of the land in question to the writ petitioners within fixed time. A perusal of the aforesaid judgments shows that the High Court of Orissa directed the Corporation to deliver vacant possession of the premises in question and the Apex Court did not interfere with such direction but only fixed the time period for vacating the premises, as per request made by the Corporation.
12. Learned Counsel for the appellants-writ petitioners further contended that learned Single Judge should not have been guided by the decisions of the English Courts on the question regarding public law and private law in view of observation of the Supreme Court of India in paragraph 101 of the Escorts case reported in AIR 1936 SC 1370 (LIC of India v. Escorts Ltd.) wherein it was observed thus:
We also desire to warn ourselves against readily referring to English cases on questions of Constitutional Law, Administrative Law and Public Law as the Iaw in India in these branches has forged ahead of the law in England, guided as we are by our Constitution and uninhibited as we are by the technical rules which have hampered the development of the English law.
13. Reliance was also placed on behalf of the appellants-writ petitioners on the judgment of the Supreme Court in the case of M/s Dwarkadas Marfatia & Sons. v. Board of Trustees, Bombay Port : [1989]2SCR751 , to submit that action of a public Corporation dealing with tenants was found to be one amenable to judicial review if such action is devoid of reason or is arbitrary.
14. On the other hand, learned Counsel for the Corporation submitted that the expiry of lease can only be a ground for bringing a civil action for eviction and hence, on such ground no direction should be issued for handing over possession, in exercise of power under Article 226 of the Constitution of India. It was suggested that the Corporation should be left free to take all the usual defences which a party is free to take in a suit for eviction on ground of expiry of lease. However, on specific query, no defence was pointed out which could be examined to find out whether such a defence merits determination only in a civil suit.
15. After the hearing of these appeals at the admission stage itself was concluded, the Court wanted learned Counsel for the Corporation to take instructions as to what would be the reasonable time the Corporation may require to vacate the premises, in case this Court did not agree with the submissions raised on behalf of the Corporation noticed above. For this purpose, when the matter was listed for orders then learned Counsel for the Corporation expressed inability on the part of the Corporation to indicate any time frame. On behalf of the Corporation reliance was placed on two more judgments of the Supreme Court in the case of L/C of India v. Escorts Ltd. (supra) and in the case of Express Newspapers Pvt. Ltd. v. Union of India : AIR1986SC872 to support the earlier submission that the writ petitioners should be left free to take steps for eviction of the Corporation through a suit for eviction before the Civil Court. For this purpose, reliance was placed upon paragraph 102 of the judgment in the case of LIC of India v. Escorts Ltd. (supra)and paragraphs 196, 201, 202 and 205 of the judgment in the case of Express Newspapers Pvt. Ltd. v. Union of India (supra). We have already considered paragraph 101 of judgment in the case of LIC of India v. Escorts Ltd. and paragraph 102 only emphasises the principle that it is impossible to draw the line to demarcate the frontier between the public law domain and the private law field and that such question must be decided in each case with reference to the particular action and a host of other relevant circumstances. In that case, the State was found to be acting as a share-holder in seeking to change the management of a company in question. In the present case, the Corporation has stepped into the shoes of a lessee by virtue of statutory provisions of the Act. In the case of Express Newspapers Pvt. Ltd. v. Union of India (supra), the petitioner succeeded in getting the impugned notice quashed through petitions under Article 32 of the Constitution of India and there was no further relief sought by the petitioner falling for consideration before the Court. It was with regard to plea of the Union of India, a respondent in that case, for claims for recovery of conversion charges that the Court granted a liberty to claim the same by a duly-constituted suit. In that case such civil rights of the parties were found to flow from the lease deed and not from any statutory provision. Hence, the aforesaid judgments are of no help to the Corporation.
16. Having considered all the submissions as well as the relevant aspects of the case, we find substance in the submissions advanced on behalf of the appellants- writ petitioners. No doubt, a Government company or Corporation may enter into a purely contractual relationship and on such consideration judicial review of such matter may be denied under Article 226 of the Constitution of India. However, in the present case, the relationship between the parties is governed largely by the provisions of the Act and once it is found that the Corporation has no right under the Act to continue as a tenant after the expiry of lease in February 1999, Corporation's contained possession and its reluctance to vacate the premises must be held as arbitrary and unreasonable. In such circumstances, play of Article 226 is not only permitted but is desirable.
17. For all the aforesaid reasons, LPA No. 933 of 2000 is dismissed and LPA No. 914 of 2000 is allowed. Since even after inquiry the Corporation refused to indicate any reasonable time within which it could vacate the premises hence, it is directed to hand over vacant possession of the premises to the petitioners within a period of six months from today. In the facts of the case, the parties are directed to bear their own cost throughout.