Permod Kohli, J.
1. This Letters Patent Appeal arises out of the judgment dated 15th of February, 2006, passed by a learned Single Judge in W.P. (C) No. 4667 of 2005, whereby the writ petition, filed by the Respondent No. 1 herein, has been allowed and the said respondent is permitted to establish Petrol Pump over the land subject matter of dispute in this writ petition. The State of Jharkhand, the appellant before us, has challenged the legality and propriety of the impugned judgment, inter alia, on the following grounds:
(i) That the learned Single Judge has failed to appreciate that the principal lease is going to expire in the year 2009 and still permitted the writ petitioner to establish the Petrol Pump on the basis of a memorandum of understanding, whereunder the Respondent No. 1, writ petitioner was allowed to hold the leased land for a period of thirty years i.e. beyond the period of original lease.
(ii) That the learned Single Judge has allowed the occupation of leased property without permission of the State Government, the lessor.
(iii) That the Petrol Pump has been allowed to be established without a valid license under the provisions of the Petroleum Act.
(iv) That no valid sub-lease has been created by any legal instrument and in absence of there being any sub-lease, respondent No. 1 is not entitled to occupy the land and establish the petrol pump.
2. We have heard the learned Advocate General on behalf of the appellant-State and Mr. Delip Jerath, learned Counsel appearing for the Respondent No. 1, the writ petitioner.
3. Before proceeding to examine the validity of the impugned judgment, it may be useful to briefly narrate the admitted facts.
4. The State of Bihar granted the lease of a land bearing Plot No. 169, Area 37 decimals and Plot No. 170, Area 3.63 Decimals, both comprising Khata No. 164, situated at Kadru Road, P.S. Argora, District-Ranchi for a period of 30 years at an yearly rental of Rs. 18,000/- calculated @ Rs. 4500/- per acre by lease dated 24th March, 1979 to the Bihar State Food & Civil Supply Corporation Ltd., Patna. This lease is to expire in the year 2009. The Bihar State Food & Civil Supply Corporation Ltd. i.e. the Respondent No. 2, herein, entered into a memorandum of understanding dated 7th December, 2004 with the respondent No. 1 i.e. the Bharat Petroleum Corporation Ltd. a Government of India enterprises for establishment of a retail Petroleum outlet and offered a part of the lease property, measuring 13983 sq. ft. comprising plot No. 169, Khata No. 164 on payment of a monthly occupancy charges of Rs. 35,000/-. One of the stipulations in the memorandum of understanding was obtaining permission/sanction from the Collector/Deputy Commissioner for creation of a sub-lease. This stipulation was in view of the Clause 2 of the lease instrument dated 24th March, 1979, whereunder sub-lease could be granted by the lessee with the previous sanction of the Collector in writing. Respondent No. 1 approached the Collector for grant of permission, which was granted vide Collectorate's letter dated 31st March, 2005. On grant of this permission, respondent No. 2, herein permitted the respondent No. 1 to set up the Petrol Pump and commence the construction work. Respondent No. 1 had earlier approached the Collector on 16th of December, 2004 for grant of N.O.C. for setting up of the Petrol Pump. This N.O.C. was also granted on 23rd March, 2005 followed by a revised-N.O.C., dated 22nd June, 2005 at the request of the respondent No. 1 as per the requirements of Explosive Department. Respondent No. 1 was also issued license by the Explosive Department under the provisions of the Petroleum Act on 07.07.2005 enabling it to establish the Petrol Pump and carry on its operations. While the Respondent No. 1 was in the process of establishing the Petrol Pump, the Deputy Commissioner, Ranchi vide his Memo. No. 2132 dated 30th of July, 2005 cancelled the no objection earlier granted. Being aggrieved of the cancellation vide Memo No. 2132 referred to above, Respondent No. 1 filed C.W.J.C. No. 4677 of 2005 challenging the same. A learned Single Judge of this Court vide order impugned allowed the writ petition and permitted Respondent No. 1 to establish a Petrol Pump and in the meanwhile asked it to make an application to the State of Jharkhand within four weeks for renewal of the lease. Writ Court also directed the State of Bihar, State of Jharkhand and the Respondent No. 2, Corporation, to give effect to the agreement arrived at on the division of the assets and liabilities of the Corporation.
5. The main thrust of the argument of the learned Advocate General is that the respondent No. 2 was not competent to grant lease without the approval of the State of Jharkhand as the property in question falls within its territory. We have perused the copy of the original lease deed dated 24th March, 1979 placed on record. Respondent No. 2, i.e. the Bihar State Food & Civil Supply Corporation Ltd., was granted lease for a period of 30 years, which is to expire in March, 2009. Clause 2 of the lease agreement permit grant of sub-lease subject to permission from the Collector. In the present case, admittedly the Collector has granted permission and there is a clear finding to this effect by the learned Single Judge. This finding has not been disputed before us. During the subsistence of the lease and with the covenant permitting creation of sub-lease with the sanction of Collector, the lessor's permission is not required. The learned Advocate General has further argued that in view of the re-organization Act and particularly Section 42 thereof, the property within the territory of the State of Jharkhand, belongs to the State of Jharkhand. There seems to be no dispute about this. By virtue of Section 42 the State of Jharkhand may have become the owner of the land within its territory. However, the State of Jharkhand is bound by the lease deed executed by the erstwhile State of Bihar being a successor State unless the lease instrument is cancelled in accordance with law.
6. As far the question of non-existence of sub-lease is concerned, it is observed hereinabove that the Respondent No. 2, Corporation was entitled to create a sub-lease subject to permission from Collector. The permission having been granted by the Collector, it had the competence to grant sub-lease. Though there is no instrument creating sub-lease, however, in view of the provisions of Section 107 of the Transfer of Property Act, there is no necessity of a formal instrument for creation of sub-lease or lease. Section 107 of Transfer of Property Act, prescribes the mode of creation of lease and reads as under:
107. Leases how made. - A lease of immovable property from year to year, or for any term exceeding one year, or reserving a yearly rent, can be made only by a registered instrument.
All other leases of immovable property may be made either by a registered instrument or by oral agreement accompanied by delivery of possession.
Where a lease of immovable property is made by a registered instrument, such instrument or, where there are more instrument than one, each such instrument shall be executed by both the lessor and the lessee:
Provided that the State Government may, from time to time, by notification in the Official Gazette, direct that lease of immovable property, other than leases from year to year or for any term exceeding one year, or reserving a yearly rent, or any class of such leases, may be made by unregistered instrument or by oral agreement without delivery of possession.
7. Section 107 permits creation of lease by oral agreement followed by a delivery of possession except a lease from year to year or for any term exceeding one year, or reserving a yearly rent, which can be made only by a registered instrument.
8. It is not in dispute that vide memorandum of understanding, respondent No. 1 has been permitted to occupy the property for a period of 30 years. This is subject to the permission of the State Government/extension of the lease and execution of a formal instrument. It is only when an instrument is reduced into writing for creating the lease for one of the categories provided under Section 107 that a registered document is compulsory. Non-execution of a formal instrument of lease and non-registration thereof would only mean that lease in question will not be considered to be a lease from year to year or a term exceeding one year. It will be a lease falling in other categories i.e. month to month lease. The memorandum of understanding clearly indicate the creation of a lease. We have examined the record of the writ court. There is a document dated 16th of February, 2005 (Annexure- A 7 at Page 45), whereby the possession of demised property was handed over to the Respondent No. 1 by Respondent No. 2. Since, oral lease with handing over of the possession is permissible under law, non-execution of a formal instrument for creation of sub-lease will have no impact on the right of the respondent No. 1 to occupy the property and use it at least on month to month basis and in any case not exceeding the period of the principal lease. The contention of the appellant that the learned Single Judge has allowed the lease for a period of 30 years has no basis. The memorandum of understanding is an agreement between the principal lessee and the sub-lessee for creation of a lease of 30 years. This agreement does not bind the appellant-State after the expiry of principal lease. Otherwise also there is clear stipulation in the memorandum of understanding to approach the Government of Jharkhand for extension of the lease. Even the learned Single Judge has also issued directions permitting respondent No. 1 to approach the State of Jharkhand within four weeks seeking extension of the lease beyond the existing period of the principal lease. There is no merit in this contention of the appellant. It is also urged on behalf of the appellant that the learned Single Judge has permitted establishment of the Pump without there being any license and the prayer of the appellant for a direction to the Explosive Department having not been allowed the judgment is liable to be set aside. Suffice it to say that no person can store, sell or transport petroleum products beyond the prescribed quantity without a valid license under the provisions of the Petroleum Act. Therefore, the right of the respondent No. 1 to establish and operate the Petrol Pump is always subject to the requirements of law. In any case the learned Single Judge has not issued any direction permitting respondent No. 1 to operate the Pump without valid license required under the law.
9. Observation of Learned Single Judge that Section 42 of the Reorganisation Act is subject to Section 65 of the said Act are however required to be modified in view of findings that the assets and liabilities of Corporation (respondent No. 2) stand distributed in the meeting held on 22.07.2005 between State of Jharkhand, State of Bihar and the Corporation with the approval of the Central Government.
10. In view of the observations made hereinabove, the judgment of the learned Single Judge shall stand modified to that extent. This appeal is, accordingly, dismissed with above observations.