Hindustan Petroleum Corporation Ltd. v. Piroza Parvez Driver & Ors.

15. Mr.Godbole, Senior Advocate appearing for the Applicant / Original Defendant (HPCL) made his submissions.

16. Mr.Godbole submitted that the original Plaintiff had admitted that the Defendant was successor in title of M/s.Caltax (India) Limited and Lease Deed dated 24 July 1961 had been renewed by virtue of the provisions of Caltex (Acquisition of Shares of Caltex Oil Refining (India) Limited and of the Undertakings in India of Caltex (India) Limited), Ordinance, 1996 and subsequently by Act of 1977.

17. Mr.Godbole submitted that both the Courts did not consider the lease executed in 1961 was renewed, as the Defendant No.1 exercised its option to renew the lease by a letter in the year 1990.

18. Mr.Godbole submitted that the lease being permanent lease, was not capable of being determined and hence the question of notice dated 18 April 2001 of termination did not arise.

19. Mr.Godbole submitted that the notice to quit was invalid and hence the suit was not tenable.

20. Mr.Godbole further submitted that the Courts should have considered that the activities carried on in the suit premises were covered within the meaning of “manufacturing purpose”.

21. Mr. Godbole referred to the judgment in the case of Bharat Petroleum Corporation Ltd. vs. P. Kesavan & anr.[1]

22. Mr.Godbole hence submitted that both the Civil Revision Applications need to be allowed.

23. Ms. Benese appearing on behalf of the Respondents/landlords made her submissions:- 1 2004(9) SCC 772.

(i) Ms. Benese submitted that both the Courts have concurrently held that the defendants have lost protection under the Maharashtra Rent Act, 1999. The lease of the defenants is duly terminated by notice dated 18 April 2001. Hence the eviction decree should follow.

(ii) Ms. Benese further submitted that the lease deed was for a period of 20 years. The said lease period had expired on 15 April 1981. As per the renewal clause 3(f) the action of renewal of the Lease Deed can be for a period of 10 years, twice. Presuming without admitting that the lease was renewed for a further two terms, even then the lease would have come to an end on 15 April 2001. The termination notice was dated 18 April 2001, which was duly replied by the defendants on 8 June

2001. Hence, the defendants had no case.

(iii) Ms. Benese to buttress her submissions referred to the following judgments:-

(a) Hindustan Petroleum Corporation Limited vs. (b) Indian Oil Corporation Limited vs. Smt. Alka Agarwal.[3]

(c) Hindustan Petroleum Corporation Ltd. vs.

(d) Shalini Shyam Shetty and another vs. Rajendra

(e) Hindustan Petroleum Corporation Ltd. vs. (f) Bharat Petroleum Corporation vs. Miriam J. Batliwala[7] (g) Leelabai Gajanan Pansare and ors. vs. Oriental Insurance Co. Ltd. and ors.[8] (h) Hindustan Petroleum Corporation Limited vs.

ANALYSIS AND CONCLUSION

24. I have heard learned counsel for the parties and with their assistance, have perused the records and proceedings and the impugned judgments.

25. The Civil Revision Application No.406 of 2011 challenges concurrent finding recorded by the trial Court and Appellate Court of eviction.

26. It is a matter of record that the respondents had executed a lease deed dated 24 July 1961 for a period of 20 years in favour of the erstwhile company of the applicant at the rate Rs.400/- per month. The said lease deed contained a renewal clause 3(f).

27. The original lease deed was to expire on 15 April 1981. As per the renewal clause if the lease deed is extended for a period of 10 5 2010(6) Mh.L.J. 661

28. The termination notice is issued by the respondent on 18 April

2001. The said termination notice was duly replied by the applicant herein on 8 June 2001 and the eviction suit, under Section 41 of the Presidency Small Causes Court Act was filed in the month of July

2001. The respondent entered the witness box and examined their officer. The respondent (original plaintiff) brought on record the lease deed dated 24 July 1961, termination notice dated 18 April 2001 along with acknowledgment slip, reply of the applicant herein dated 8 June 2001, annual report of the applicant’s herein, so also, valuer’s report dated 18 February 2002. The said witness of the plaintiff was cross-examined by the applicant’s advocate. However, they were not able to shake the evidence given by the plaintiff. Though, the defendant entered the witness box, however, defendant could not bring anything on record to prove that they had exercised their option of renewal of the lease deed. Both the Courts below considered the evidence laid by both the parties and have concurrently held that the defendants should vacate the suit premises as the defendants had no protection under the Rent Act and the plaintiff had duly terminated the lease of the defendants, after expire of lease period.

29. It is my perception that action on the part of the defendant- HPCL should confirm to the ‘doctrine of fairness’ and in that view of the matter, I am of the opinion that the impugned judgment and decree cannot be interfered with.

30. The Burmah Shell (Acquisition of Undertakings in India) Act 1976, (ACT 2/1976), Similarly ESSO (Acquisition of Undertakings in India) Act (Act 14/1974) and Caltex Acquisition of Shares of Caltex Oil Refining (India) Limited and of the Undertakings in India of Caltex (India) Limited Act 1977 (Act 17/1997), were enacted in order to give effect to the directive principles contained in Article 39 (b) and (c) of the Constitution to secure the ownership and control of the production of nation's petroleum resources and to secure ownership and control of the undertakings carrying on the business of distributing and marketing of petroleum products which would sub-serve the common good. All three enactments the provisions are in pari materia.

31. Defendant-company is a 'State' within the meaning of Article 12 of the Constitution of India. It is therefore, enjoined with a duty to act fairly and reasonably. Just because it has been conferred with a statutory power, the same by itself would not mean that exercise thereof in any manner whatsoever will meet the requirements of law. The statute uses the words "if so desired by the Central Government". Such a desire cannot be based upon a subjective satisfaction. It must be based on objective criteria. Indisputably, the 1977 Act is a special statute. However, the action of the State must be judged on the touchstone of reasonableness.

32. The Supreme Court in the matter of Bharat Petroleum Corporation Ltd. vs. Maddula Ratnavalli & Others,10 have held that when the State is acting as the landlord or as tenant it is required to act bona fide and not arbitrary.

33. The observations made in Maddula Ratnavalli (supra) were after the Court having considered the effect of a three Judge Bench decision of the Supreme Court in Bharat Petroleum Corporation Ltd., Vs. P.Kesavan and Another. Paragraph no.13 and 16 of Maddula Ratnavalli (supra) read as under:- “13. The appellant-company is a 'State' within the meaning of Article 12 of the Constitution of India. It is, therefore, enjoined with a duty to act fairly and reasonably. Just because it has been conferred with a statutory power, the same by itself would not mean that exercise thereof in any manner whatsoever will meet the requirements of law. The statute uses the words "if so desired by the Central Government". Such a desire cannot be based upon a subjective satisfaction. It must be based on objective criteria. Indisputably, the 1976 Act is a special statute. It overrides the provisions of Section 107 of Transfer of Property Act. The action of the State, however, must be judged on the touchstone of reasonableness. Learned counsel for both the parties have relied upon a 3 Judge Bench decision of this Court in Bharat Petroleum Corporation Ltd. v. P. Kesavan & Anr. [(2004) 9 SCC 772] wherein this Court held:

10 2007(6) SCC 81 Central Government and consequently in the appellant Company. A lease of immovable property is also an asset and/or right in an immovable property. The leasehold right, thus, held by Burmah Shell vested in the appellant. By reason of sub- section (2) of Section 5 of the Act, a right of renewal was created in the appellant in terms whereof in the event of exercise of its option, the existing lease was renewed for a further term on the same terms and conditions. As noticed hereinbefore, Section 11 of the Act provides for a non obstante clause."

16. An executive action must be informed by reason. An unfair executive action can only survive for a potent reason. An action which is simply unfair or unreasonable would not be sustained. Objective satisfaction must be the basis for an executive action. Even subjective satisfaction on the part of a State is liable to judicial review. The 'State' acting whether as a 'landlord' or a 'tenant' is required to act bona fide and not arbitrarily, when the same is likely to affect prejudicially the right of others. (Emphasis supplied)

34. Apart from showing that the HPCL had acted statutorily, it should also show that it had acted fairly and reasonably.

35. Covenant for renewal contained in the lease does not ipso-facto extend the tenure or term of the lease but only entitles the lessee to obtain a fresh lease in accordance with and in due satisfaction of the law governing the making of leases.

36. Clause 3 (f) of Lease Deed provides for renewal of the lease on certain conditions and renewal could not be obtained in piecemeal and in violation of any part and portion and when an option is exercised under the said clause the entire provisions of the same must be followed and complied with.

37. In the present case, the claim for renewal of the lease was not followed up by execution of Deed and, therefore, lease had not been actually renewed. Mere submission of sending of a letter for renewal of lease would not create a lease to allow renewal of the same. The clause requires execution of the lease deed incorporating the terms and conditions which needs to be fulfilled when option for renewal is acted upon.

38. In the absence of a fresh Lease Deed, the Clause 3 (f) in the original deed cannot be said to be acted upon, though HPCL has put up a case that they had exercised its option of renewal by letter dated 8 December 1990. However, the said letter dated 8 December 1990 is not produced on record. And in any case the lease would come to an end after second renewal on 15 April 2001. The termination notice is dated 18 April 2001. Hence, the eviction decree passed taking into consideration the evidence on record, needs to be confirmed.

39. The respondents has referred to various authorities. However, since I am dismissing the Civil Revision Application taking into consideration the latest judgment of the Supreme Court in the case of Maddula Ratnavalli (supra), I am not discussing the authorities relied upon by the respondents.

MESNE PROFIT:-

40. As regards the Determination of the Mesne Profit is concerned, after the Eviction Decree was passed by the Trail Court and the permission was granted to the Plaintiff to prefer an appropriate Application for Determination of the Mesne Profit, the Plaintiff filed its Application for the Determination of the Mesne Profit at the rate of Rs.1,60,000/- p.m. from 1 June 2001. Since, the Termination notice is dated 18 April 2001.

41. The Trial Court had granted the Mesne Profit at the rate of Rs.93,272/- p.m., alongwith interest @ 6% p.a. The Appellate Court has confirmed the findings of the Trial Court as regards the Determination of the Mesne Profit. Hence, the Original Defendant has challenged the concurrent findings recorded by both the Courts on the issue of the “Determination the Mesne Profit”.

42. The Plaintiffs had led their evidence and had submitted Valuation Report dated 18 February 2002, so also an affidavit of Valuer was filed. The said Valuer was cross-examined in length. The Defendant had also filed the Valuation Report and an affidavit of its Valuer. The said Valuer was also cross-examined by the Plaintiff’s Advocate. After considering the evidence on record including the Valuer’s Report and the location of the suit premises and the area admeasuring 962.10 sq.mtrs., so also after considering the Ready Recknor of the year 2002 (since the termination notice dated 18 April 2001 and the suit being filed in the month of July 2001), the Trial Court had granted Mesne Profit at the rate of Rs.93,227/-p.m. The said rate has been confirmed by Appellate Bench of Small Causes.

43. I find no perversity in the findings recorded by the both the Courts in the Determination of the Mesne Profits. Hence, Civil Revision Application No.875 of 2011, requires to be dismissed.

44. As the Civil Revision Application No.875 of 2011 and Civil Revision Application No.406 of 2011 are dismissed, the respondents are permitted to withdraw the amounts deposited by the applicant in this Court, along with accrued interest. Pending Civil Application No.520 of 2013 is also disposed of as allowed. (RAJESH S. PATIL, J.)

45. At this stage, Mr. Godbole, learned Senior Advocate appearing on behalf of the applicant, seeks stay to the execution of this judgment for a period of eight (8) weeks and also seeks liberty to apply, if the applicant, who are running Petrol/Diesel Pump on the suit premises decide not to challenge this judgment.

46. Ms. Benese, learned counsel appearing for the respondents opposed this request made on behalf of Mr. Godbole.

47. This judgment is stayed for a period of eight (8) weeks from today with liberty to the applicant to apply in case they are not challenging this judgment, and they want to apply for sufficient time to vacate, since the applicant is running petrol pump on the suit premises. In the meanwhile the applicant not to create any third party interest in the suit premises. (RAJESH S. PATIL, J.) Designation: PS To Honourable Judge