Bhupendra Villa Premises Co-operative Society Limited v. The Union of India

16. Simultaneously, NOCs were obtained from the Executive Engineer (Traffic Planning) on 9th February 2016 and Chief Fire Officer on 15th February 2016.

17. By letters dated 18th February 2016 and 7th March 2016, the Architect of the Petitioners forwarded further documents to Respondent no.2.

18. Owing to the inaction on the part of the Respondent no.2 in processing the Application of the Petitioners for a NOC, multiple reminder letters were sent on behalf of the Petitioners to Respondent no.2 calling upon him to issue the said NOC.

19. Thereafter, Respondent no.5 addressed a letter dated 8th November 2018 to Respondent no.4 advising Respondent no.4 to examine the Petitioner no.1 Society’s Application for NOC and to take necessary Mohite wp2291-22.docx 6/33 action. In furtherance of the said letter dated 8th November 2018 issued by Respondent no.1, the Architect of the Petitioners addressed a detailed letter dated 29th November 2018 to Respondent no.5 outlining the clauses of the said Indenture of Lease which enables Petitioner no.1 Society to develop the said land and further apprised Respondent no.5 about the prevailing circumstances.

20. Respondent no.3, by a letter dated 14th December 2018, declined to issue a NOC to the Petitioner no.1 Society for redevelopment of the said land. The said letter did not give any reasons for declining the issuance of a NOC. It merely stated that the issuance of a NOC was not in consonance with the original lease agreement.

21. Being aggrieved by the non-issuance of a NOC, representations were made by Petitioner nos.[1] and 2 respectively to the Minister of Railways on 21st January 2019 and 2nd December 2019.

22. Further, being aggrieved by the refusal to grant a NOC, and the lack of intervention by the Minister of Railways, the Petitioners filed a Writ Petition in this Court, being Writ Petition No.1578 of 2021, questioning the legality, validity and propriety of the said letter dated 14th December 2018. By an Order dated 27th September 2021 passed by this Court, the said letter dated 14th December 2018 was quashed and set aside as being in violation of the principles of natural justice and Respondent nos.[2] and 3 were directed to take a fresh decision regarding the grant of NOC after Mohite wp2291-22.docx 7/33 giving an opportunity of hearing to Petitioner nos.[1] and 2.

23. Pursuant to the said Order dated 27th September 2021, an opportunity of hearing was given to the Petitioner nos.[1] and 2 on 13th January 2021 and 15th November 2021. Petitioner no.1 also filed written submissions. By a letter dated 1st February 2022, (“the impugned letter”) Respondent no.2 rejected the Application of the Petitioners for the reasons mentioned in the said letter.

24. Being aggrieved by the said impugned letter, the Petitioner filed the present Writ Petition.

25. Heard the learned counsel for the parties and perused the documents on record.

26. In the impugned letter, Respondent no.2 has given various reasons for rejecting the NOC sought by the Petitioners. We will have to examine each of these reasons in order to consider the legality and validity of the impugned letter.

27. The first reason given by Respondent no.2 is in paragraph 2 (A)(i) of the impugned letter. The said reason will be considered by us subsequently in this judgement.

28. The second reason is given in paragraph 2(A)(ii) of the impugned letter, which reads as under: “2A(ii) Apart from the above, clause 2 (l) the said Principal lease stipulates that “whenever during the said term any building on the said land or any part there of should be Mohite wp2291-22.docx 8/33 destroyed or damaged whether by fire or hurricane OR OTHERWISE, the lessee will “REINSTATE” the same under the direction and to the approval of the Several Sanctioning Authorities & will continue to...…” From which it is significant to note that the word "REINSTATE" implies "To return something to its previous position or status" which necessarily mean that in the event the building is damaged/destroyed or dilapidated, it has to be reinstated to its' original position and certainly not the G+17 Floor new Building as is proposed to be constructed for which now NOC is sought, and thus, the proposed development is in deviation of the Original/ Lease.”

29. Clause 2(l) of the said Indenture of Lease, on which Respondent no.2 has placed reliance, only provides that, if a building on the said land is destroyed or damaged by fire or hurricane or otherwise, the lessee is under an obligation to reinstate the same. In our view, nowhere does Clause 2(l) of the said Indenture of Lease state that, if a building on the said land is dilapidated due to the age of the building, the same cannot be demolished and reconstructed. There is no such embargo in Clause 2(l) as sought to be read by Respondent no.2.

30. Further, there are various clauses in the said Indenture of Lease which permit the lessees of the said land to construct a new building on the said land or redevelop a building. Clause 2(d) of the said Indenture of Lease provides that, in the completion of any building in the course of erection and in the erection of any new building and in the alteration of any building in the future, the lessee would not only observe the conditions as are contained in Clause 2(c) but would also observe all the other conditions and restrictions relating to the building as contained in the said Mohite wp2291-22.docx 9/33 Indenture of Lease. This clause clearly contemplates the construction of a new building or demolition of an old building and redevelopment thereof. Clause 2(j) of the said Indenture of Lease provides that the lessee would not, without the previous consent in writing of the Several Sanctioning Authorities (which are defined in the said Indenture of Lease), use or permit the said premises or any part thereof to be used for any purpose, whatsoever, other than for residential buildings for the upper and middle classes only. This clause clearly shows that the lease of the said land was mainly for providing for residential buildings for upper and middle class persons. That being the purpose of the said lease, it cannot, by any stretch of imagination, be stated that the same would not include construction of a new building or redevelopment of an old building.

31. Further, clause 3 of the said Indenture of Lease also provides the covenants which the lessee is bound to follow, in compliance with Clause 2(d), for completion of a building in the course of erection, for erection of any new building and for the alteration of any building. The same also clearly demonstrates that the said Indenture of Lease clearly contemplated construction of new buildings and redevelopment of old buildings. For all the aforesaid reasons, we are unable to accept the reasons given by Respondent no.2 in paragraph 2(A)(ii) for refusing to grant NOC to the Petitioners.

32. The next reason given by Respondent no.2 for refusing the NOC is Mohite wp2291-22.docx 10/33 found in paragraph 2(A)(iii) of the impugned letter, which reads as under: “2A(iii) It is apparent from the tenor of the Lease that the Lease is not only of the Land but also of the Buildings thereon and by reason of the same, the ownership of the land alongwith the buildings thereon vested on the Railways and as is the intention of the parties as can be gathered from clause (1) of the Lease Deed read with clause 2(m) & clause 7 which inter-alia asserts that the Lease is of the Land & buildings standing thereon, the delivery of demised premises together with buildings standing thereon expiry/termination of lease and thereafter, vesting the rights in the Governor General to collect rents.. etc from the tenants. Further, Clause 2(n) of the Original Lease stipulates that the Lessee shall not mortgage by way of under lease and shall not assign the hereby demised premises, charge or in any manner part with the possession thereof without the consent in writing of Governor General first obtained. Particular reference is drawn to para 7 of the Agreement of Development executed between you and the proposed Developers dated 20.08.2014 which reads that "2028 sqft of carpet area will be allotted to the original 19 Members of the Society and the Developers shall be entitled to the balance surplus carpet area in lieu of the Fungible FSI for free sale on OWNERSHIP BASIS". Also para 28 of the said Agreement interalia reads that "this agreement is executed to record the terms agreed between the parties and pursuant thereto make necessary application to the appropriate Authorities for the redevelopment on the terms and conditions mentioned in these Agreement which includes Developers right to sale the Flats in the open market”.

33. A perusal of the aforesaid reason given by Respondent no.2 shows that, primarily, it is the contention of Respondent no.2 that, under the said Indenture of Lease, it is not only the ownership of the said land that vested in the Respondents but also the ownership of the building on the said land vested in the Respondents. It is also the contention of Respondent no.2 that certain terms of the Development Agreement dated 20th August 2014 entered into between Petitioner no.1 and Petitioner no.2 militated against the said ownership of the Respondents of the said land and Mohite wp2291-22.docx 11/33 building thereupon.

34. The contents of paragraph 2(A)(iii) show that Respondent no.2 has relied upon Clauses 1, 2(m), 2(n) and 7 to hold that the Respondents are the owners of the building constructed on the said land. In our view, none of these clauses show that the Respondents are the owners of the building constructed on the said land. Clause 1 of the said Indenture of Lease describes the land that is being leased and only provides that what was being leased to the Petitioners was the said land together with any building thereon. However, the Schedule to the said Indenture of Lease refers only to the said land and does not refer to any building standing on the said land. This shows that what was leased in 1940 was only the said land and no building.

35. Clause 2(m) of the said Indenture of Lease only provides that, at the expiration or sooner determination of the said lease, the lessee would have to deliver up the demised premises together with all buildings standing thereon. In our view, this Clause also does not indicate that the Respondents are the owners of the building on the said land. Clause 2(n) only provides that the lessee cannot assign the leased premises without the consent in writing of the Respondents. Again, this clause does not show that the ownership of the building on the said land vests in the Respondents. Further, clause 7 of the said Indenture of Lease provides that, in the event of determination of the said Lease by efflux of time or Mohite wp2291-22.docx 12/33 otherwise, the sub-tenants on the leased premises would become the tenants of the lessor and would attorn their tenancy to the lessor. Again, the said clause does not indicate that the Respondents are the owners of the building on the said land.

36. Further, in India, dual ownership of land and building is recognized. In the present case, as is demonstrated by the Schedule to the said Indenture of Lease, the said land was leased and not any building standing thereupon. The building on the said land has been constructed by the lessees of the said land from their own funds. In these circumstances, if it was intended that the said buildings constructed by the lessee with its own funds, would be owned by the lessor, then the said Indenture of Lease should have specifically provided for the same. However, there is no such specific provision in the said Indenture of Lease which makes the lessor the owner of the building constructed on the said land. It is obvious that, if there was such a provision, it would provide for compensation being paid by the lessor to the lessee for getting ownership of the said building, which is also missing from the terms of the said Indenture of Lease. In our view, for the aforesaid reasons, the terms of the said Indenture of Lease do not show that the lessors, i.e. the Respondents, are the owners of the building on the said land.

37. The aforesaid will apply with even greater force to the said Indenture of Lease as, by the said Indenture of Lease, a lease has been Mohite wp2291-22.docx 13/33 granted for a period of 999 years, which, as held by the following judgements, is permissible, and virtually amounts to sale of the said land: a. Lavasa Corporation Limited vs. Jitendra Jagdish Tulsiani and Anr.[1] Paragraph Nos. 47 to 51 of the said judgement are relevant and read as under:

38. For all the aforesaid reasons, we are of the view that the terms of the said Indenture of Lease do not show that the Respondents are the owners of the building constructed on the said land.

39. Further, apart from the same, the past conduct of the Respondents also shows that they did not consider themselves as the owners of the building on the said land.

40. From 1940 to 1973, when the said building with 16 flats was built and the said flats were sold to third parties, who later on became members of the Petitioner no.1 Society, despite being aware of the same, no objection was taken by the Respondents contending that the same was not 3 (2014) SCC OnLine Mad 872 Mohite wp2291-22.docx 17/33 in consonance with the terms of the said Indenture of Lease. This past conduct of the Respondents also shows that they did not consider themselves as being the owners of the building on the said land.

41. For all the aforesaid reasons, we are unable to accept the reasons given by Respondent no.2 in paragraph 2(A) (iii) of the impugned letter for refusing an NOC to the Petitioners.

42. The third reason given by Respondent no.1 is found in paragraph 2(A)(iv) of the impugned letter, which reads as under: “2A (iv) Thus there is no term in the Lease Deed either implied or express permitting transfer of any premises on ownership basis. It is also to be noted that the Subsequent Assignments of License and consent executed between President of India and BHAI HARSHADLAL DOONGERSEY & OTHERS on dated 17.03.1973 were specifically on the stipulation mentioned in first para states that, "PROVIDED that this License is restricted to the particular assignments hereby authorized and save as aforesaid the covenant in the said Lease contained against the assignment, under-letting, or parting with the possession, shall remain in full force and effect" whereas the Redevelopment is proposed for construction of a building comprising of 17 Floors by way of transferring the FSI benefits available on the demised premises to the Developer as a consideration for the construction of a New Building, and by this transfer of FSI benefits, a vested right is created in favour of the Developer to sell the surplus Flats in the Open Market on absolute ownership basis which is not in consonance with the terms of Original Lease nor does the Development agreement is within the bounds of the Original Lease Agreement and also injurious to the rights of the Owners i.e. Railway Administration, particularly considering the fact that the consideration & the premium as originally fixed in the lease deed was with reference to the various factors such as the extent projection of the building and the limited rights of the Lessees and the assignees thereof.” Mohite wp2291-22.docx 18/33

43. To summarize, the reasons given in the aforesaid paragraph state that there is no term in the said Indenture of Lease permitting transfer of any premises on ownership basis. Further, they state that the terms of the Development Agreement between Petitioner no.1 and Petitioner no.2, whereby FSI benefits are transferred to Petitioner no.2 and right to sell flats in the open market is created in favour of Petitioner no.2, are not in consonance with the terms of the said Indenture of Lease, and are injurious to the rights of the Respondents considering the fact that the consideration and the premium as originally fixed in the said Indenture of Lease was with reference to various factors such as the extent projection of the building and the limited rights of the lessees and the assignees thereof.

44. Again, we are unable to accept the reasons given in the said paragraph 2(A)(iv) of the impugned letter for refusing the NOC. In our view, the question, of there being any such term in the said Indenture of Lease permitting transfer of any premises on ownership basis, does not arise. For all the reasons given above, the Petitioner no.1 is the owner of the building. Further, in the past, when the ownership of the said building was transferred to Petitioner no.1 by the erstwhile owners of the building, there was no objection from the Respondents. The Respondents had accepted the erstwhile owners as owners and did not object to Petitioner no.1 Society becoming the owners. In these circumstances, the Mohite wp2291-22.docx 19/33 Respondents cannot have any such objection to Petitioner no.1, as the owner of the building, redeveloping the same.

45. Further, there is nothing on record to show that the consideration originally fixed in the said Indenture of Lease was not at the market rate due to the reasons mentioned in paragraph 2(A)(iv). For this reason alone, the said objection cannot be accepted. Further, in the context of the said objection, it is important to note that, as held above, a lease for a duration of 999 years is like a sale, and, therefore, the lessee would have the right to get redeveloped the building standing on the said land in respect of which the said lease is given. In any case, the alleged low consideration and premium cannot be a ground for refusing the NOC. At the highest, the Respondents would be entitled, while granting the NOC, to levy such charges as they have levied on other lessees in the vicinity of the said land to whom they have granted an NOC for redevelopment of their building on the land leased by the Respondents.

46. Further, Respondent No.2 has given reasons in paragraphs 2(A)(v) and (vi), which are a repetition of the earlier reasons given by Respondent No.2, and, therefore, they are not being set out herein. These reasons are again based on the premise that the Respondents are the owners of the building standing on the said land and, therefore, the Petitioners are not entitled to redevelop the said land, especially by constructing a building of ground plus 17 floors. As held by us hereinabove, Petitioner No.1 is the Mohite wp2291-22.docx 20/33 owner of the said building standing on the said land and, therefore, is entitled to get the said redeveloped. Petitioner no.1 is required under the terms of the said Indenture of Lease to seek permission of the Respondents as lessor for the said redevelopment but it is settled law that such permission cannot be unreasonably withheld by the Respondents. This is especially so, as, in the present case, the said Indenture of Lease grants a lease for a period of 999 years, which is akin to a sale.

47. Further paragraph 2(A)(vi) states that an Opinion of a Retired Judge of this Court is of no relevance. Since, we have not based our findings in this judgement on the said Opinion, we are not dealing with the said Opinion and the conclusions of Respondent no.2 in respect of the said Opinion.

48. The reasons in Paragraph 2(A) (vii) of the impugned letter refer to the judgement of this Hon'ble Court in Vinobha Bhave Nagar Godavari Adhyapak Co-operative Housing Society Ltd. & Anr. vs. Central Railway & Ors.[4] In paragraph 2A (vii), Respondent No.2 has held that the said judgement is not of any relevance as the facts in the said case are different from the facts of the present case. Again, since we have not referred to the said judgement in Vinobha Bhave Nagar Godavari Adhyapak Cooperative Housing Society Ltd. & Anr. (Supra) whilst arriving at our findings in this judgement, we do not feel the need to deal with the same 4 (2021) 1 BOM C.R. 257 Mohite wp2291-22.docx 21/33 in this judgement.

49. This leaves us to deal with the reason given by Respondent No.2 in paragraph 2(A)(i) of the impugned letter, which reads as under: “2A(i) 2 (e): that “She will not during the continuance of this lease make or allow any projection beyond the building line originally sanctioned for any building” which necessarily mean basic projection line as per the sketch attached therewith has to be maintained. To further elaborate, the drawing/Building plan/sketch which is part of the Indenture of Lease indicated the alignment of the building and or projection line of the building as per which the extant of offset available between the Building Line and the Railway Land Boundary as follows viz:

6.10 m on the West Side

6.10 m on the North Side

3.05 m on the East Side &

6.10 m on the South Side Whereas, examination/scrutiny of the Building Plan/layout Plan submitted by you alongwith your Application reveals that the extent of offset that would be available between the Building Line and the Railway Land Boundary as follows viz:

1.50 m on the West Side

6.0 m on the North Side

1.50 m on the East Side &

2.65 m on the South Side This would clearly show that the proposed building line as depicted in the building plan, the building projection line is beyond the originally approved existing building line and as such the same would be in violation of the terms of the Original Indenture of Lease dated 14-11-1940.”

50. In the aforesaid paragraph, it is the contention of Respondent no.2 that, as per the building plans submitted by the Petitioners, the projection is beyond the originally approved existing building line and, therefore, the same would be in violation of Clause 2(e) of the said Indenture of Lease. Whilst challenging this finding of Respondent No.2, the Petitioners have Mohite wp2291-22.docx 22/33 submitted that Respondent No.2 has misconstrued Clause 2(e) of the said Indenture of Lease and the building line sanctioned in 1940 is sought to be labelled as sacrosanct. It is the submission of the Petitioners that such an interpretation would tantamount to substituting the expression "the building line originally sanctioned for any building" with the expression "the building line as shown in the plan annexed to the Indenture of Lease". The Petitioners submitted that Clause 2(e) restricts the projection of a structure beyond the building line originally sanctioned for any building that may be constructed during the subsistence of the lease in compliance with Clause 2(c) read with Clause 3(c) and (d). The Petitioners further submitted that Respondent no.2 had not considered that Clause 2(d) contemplates the erection of any new building and alteration of any building in future.

51. We are unable to accept the submission of the Petitioner. Clause 2(e) of the said Indenture of Lease reads as under: - “2(e) That she will not during the continuance of this Lease make or allow any projection beyond the building line originally sanctioned for any building.”

52. If the Petitioners’ arguments are accepted, the same would render otiose the word "originally" in Clause 2(e). What Clause 2(e) requires is that, during the continuance of the lease, the lessee would not make or allow any projection beyond the building line originally sanctioned for any Mohite wp2291-22.docx 23/33 building i.e. the building line as shown in the plan annexed to the said Indenture of Lease. In these circumstances, we agree with Respondent no.2 that the building plans, as proposed, would violate Clause 2(e) of the said Indenture of Lease. However, in our opinion, the same cannot be a ground to refuse an NOC to the Petitioners for redevelopment of the said land. In our view, the Respondents would have to grant an NOC to the Petitioners to redevelop the said building on the said land subject to the condition i.e. that, whilst redeveloping the building, there can be no projection beyond the building line as shown in the plan annexed to the said Indenture of Lease.

53. Finally, before concluding, we will also have to deal with the objection of the Respondents that the present Writ Petition ought not to be entertained as it involves interpretation of terms of a contract. The Respondents submit that the interpretation and implementation of clauses in a contract cannot be the subject matter of a Writ Petition filed under Article 226 of the Constitution of India. Since the present Writ Petition involves interpreting the terms of the said Indenture of Lease, the same should not be entertained and the Petitioner should be relegated to the remedy of filing a Civil Suit. In support of the said submission, the Respondents have relied upon paragraph nos.[8] and 10 of the judgment of the Hon'ble Supreme Court in Kerala State Electricity Board and Another Mohite wp2291-22.docx 24/33 vs. Kurien E. Kalathil and Others,[5] which read as under:

54. In response to this submission, the Petitioners have relied on paragraphs 16 to 19, 27 and 51 to 53 of the judgement of the Hon'ble Supreme Court in ABL International Ltd. and Anr. vs. Export Credit Guarantee Corporation of India Ltd. and Others[6] which read as under:

55. The legal position which emerges from the aforesaid judgements is as follows:

(i) If a contract is violated, ordinarily, the remedy is not a Writ

(ii) In a given case, a Writ Court can consider disputed questions of fact, and there is no bar for entertaining a Writ Petition under Article 226 of the Constitution of India even if the same arises out of contractual obligations and involves some disputed questions of fact.

(iii) If a question of interpretation of contract is raised in a Writ

Petition, and the same does not require any external aid or internal aid or oral evidence for interpretation, the Writ Court can decide the same if the facts of the case permit the same.

(iv) Further, when an instrumentality of the State acts contrary to the public good and public interest, unfairly, unjustly and unreasonably in its contractual, constitutional or statutory obligations, it really acts contrary to the constitutional guarantee found in Article 14 of the Constitution. In such a situation, neither the High Court or the Hon'ble Supreme Court is inhibited from Mohite wp2291-22.docx 31/33 granting the relief sought for by the Petitioner.

56. Although the present case involves a question of interpretation of the terms of the said Indenture of Lease, in our view, this is not a case where the Petitioners should be relegated to a Civil Suit. As can be seen from the discussion above, no external aid or internal aid or oral evidence is required to interpret the terms of the said Indenture of Lease.

57. Further, in our view, the refusal by the Respondents of the NOC to the Petitioners for redeveloping the building standing on the said land is unfair, unjust and unreasonable. The aforesaid findings given by us show that the Respondents have acted in an arbitrary manner while refusing the said NOC, and, therefore, have violated the rights guaranteed to the Petitioners under Article 14 of the Constitution of India. Therefore, in our view, this is not a case where the Petitioner should be relegated to a Civil Suit. In our view, this is a case where the Writ Court, in exercise of its jurisdiction under Article 226 of the Constitution of India, is entitled to grant reliefs to the Petitioner.

58. In the aforesaid circumstances, and for the aforesaid reasons, we pass the following Orders: a. The impugned letter dated 1st February 2022 issued by Respondent No.2 is hereby quashed and set aside, except for the reasons given in paragraph 2(A)(i) thereto. Mohite wp2291-22.docx 32/33 b. The Respondents are ordered and directed to issue an NOC for the redevelopment of the building on the said land subject to the condition that there shall not be any projection beyond the building line originally sanctioned for any building i.e. the building line shown in the plan annexed to the said Indenture of Lease. c. Whilst granting NOC to the Petitioner, the Respondents are at liberty to levy such charges as charged to other lessees in the vicinity of the said land whilst granting them NOC for redevelopment of the buildings standing on the lands leased to them by the Respondents. d. Rule is made absolute in the aforesaid terms. e. In the facts and circumstances of the case, there will be no order as to costs. (FIRDOSH P. POONIWALLA, J.) (A.S.CHANDURKAR, J.)

59 At this stage, learned counsel appearing for the Respondents seek stay of operation of the Judgment for a period of four weeks. This request is opposed by the learned counsel for the Petitioners. In the facts of the case, the Judgment shall operate after a period of four weeks from today. (FIRDOSH P. POONIWALLA, J.) (A.S.CHANDURKAR, J.)