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Rajandheer (India) Pvt. Ltd. Petitioner v. Delhi Development Authority
Structured Summary of the Opinion (Sanjay Kishan Kaul, J.)
Factual and Procedural Background
The Delhi Development Authority (DDA) determined a number of perpetual sub-leases of industrial plots in Mohan-Cooperative Industrial Estate on the ground that sub-lessees breached the terms of their sub-lease deeds. The alleged breaches principally included: (a) use of plots for commercial or trading activities (instead of manufacturing/industrial uses as prescribed by the Master Plan and Development Code), and (b) sub-letting of premises to third parties. Because common questions of law arose, the matters were heard together with CWP No. 2487 of 2003 as the lead matter.
The opinion reproduces and considers key clauses of the sub-lease deed, notably:
- Clause 6(a) — prohibition on selling, transferring, assigning or otherwise parting with possession of the whole or part of the industrial plot to a person who is not a member of the lessee;
- Clause 6(b) — restriction on sale/transfer to other members except with the lessor's written consent and a proviso for recovery of 50% of unearned increase on such transactions;
- Clause 13 — requirement of municipal/other sanction before erecting or altering buildings;
- Clause 14 — restriction that the sub-lessee shall not, without the lessor's written consent, use the industrial plot for residence or for carrying on trade or business, and that the plot is to be used only for manufacturing process or running industry as per the Master Plan (with limited exceptions and a proviso permitting change of user subject to the lessor's discretion and conditions, including payment of additional premium and rent).
The DDA relied on Development Code provisions and show-cause notices in pursuing determination of sub-leases. The petitioners disputed receipt of notices in many cases and asserted conformity with permitted uses under the Development Code.
Legal Issues Presented
- Whether the DDA validly determined the sub-leases on the ground of misuse where the properties were alleged to be used for trading/commercial activities rather than manufacturing, having regard to clause (14) of the sub-lease deed and the Master Plan/Development Code.
- What is the correct interpretation of clause (14) concerning permitted uses and whether ancillary/non-manufacturing uses permitted under the Development Code mean determination without inspection was justified.
- Whether clause (6)'s prohibition on "sale, transfer, assign or otherwise part with the possession" of the plot covers sub-letting (letting on rent), or whether letting on rent is outside that prohibition (including the relevance of Section 108 of the Transfer of Property Act, 1882).
- Whether the Government Grants Act, 1895 applies so as to displace provisions of the Transfer of Property Act or otherwise affect rights and remedies relating to sub-leases and sub-letting.
- Whether the respondent may impose and recover charges/fees for grant of permission to sub-let or to regularize parting with possession, and whether such a charge would amount to an unauthorized unilateral amendment of lease terms.
Arguments of the Parties
Petitioners' Arguments
- The petitioners contended that their uses were conforming to the Master Plan and Development Code; certain use-classes (e.g., storage, workshops, service centres, light industry, extensive industry) permit ancillary activities such as sales outlets, offices and limited residential accommodation, and those were relied upon as permitted activities.
- They argued that mere letting on rent (sub-letting) is not "parting with possession" within clause (6), and relied on Section 108 of the Transfer of Property Act (specifically sub-clause (B)(j)) to contend that a lessee, in absence of a contract to the contrary, may sublease or transfer his interest.
- Reference was made to a Single Judge decision (B. Banerjee v. Romesh Mahajan) holding that letting a house on rent is neither parting with possession nor sub-letting, and petitioners argued that letting on rent thus should not attract clause (6)'s prohibition.
- They further submitted that the sub-lease deeds did not use the word "sub-let" and that clauses should be read for intent; any restrictive implication should be construed narrowly (referring to interpretative principles).
- It was also argued that no fee could be charged by DDA for grant of permission unless expressly provided in the lease (relying on Sunil Vasudeva v. DDA).
- In at least one matter (CWP No. 2181 of 2003), petitioners argued there was no sub-letting but only a change of trading name/brand and dealership, supported by documents (change of name certificate, correspondence, certificates), and denial of receipt of show-cause notices.
Respondent (DDA)'s Arguments
- DDA contended that clause (14) is plain and restricts use to manufacturing/process industries as per the Master Plan and that trading/commercial uses alleged amounted to breach.
- On sub-letting, the respondent emphasised the phrase "otherwise part with possession" in clause (6)(a) and argued it covers parting with possession by means other than sale/transfer/assignment, including sub-letting.
- The respondent pointed out that the lessor may grant a bundle of rights in a lease selectively, and that the proviso for unearned increase and the power to impose terms/conditions authorises imposition of charges for parting with possession/sub-letting.
- DDA relied on policy/guidelines (as interpreted in Ruby Advertisers) that permitted sub-letting subject to terms, area limits and charges, and argued that charging for permission to sub-let is permissible and is not an unauthorized unilateral amendment of the lease.
- On the Grants Act point, DDA argued that the Grants Act (and its sections) operate to insulate government grants and transfers from other statutory provisions unless expressly provided, and that absence of an express provision for creation of such tenancies under the Grants Act was a material issue.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| B. Banerjee v. Romesh Mahajan (Single Judge) | Held that letting a house on rent is neither parting with possession nor sub-letting in the context of the Delhi Rent Control Act (Section 14(1)(e) read with Section 25B of the Rent Act). | The Court observed that this decision was rendered under the Rent Act and that it would have no application to the present matters concerning industrial sub-leases governed by their own terms; therefore the precedent was not applicable here. |
| Hazari Lal and Ram Babu v. Shri Gian Ram & Ors., 1972 RCR 74 (Division Bench) | Distinguished concepts of 'sub-let', 'assign' and 'otherwise parting with possession' as dealing with different concepts and circumstances (in the context of the Rent Act). | The Court relied on the principle that these expressions have distinct meanings to support the view that clause (6)'s phrase 'otherwise parting with possession' is wide enough to cover sub-letting. |
| Sunil Siddharthbhai v. Commissioner of Income Tax, Ahmedabad, AIR 1986 SC 368 (Supreme Court) | General exposition: "transfer of property" may involve passing some or all rights; transfer may involve entire bundle of rights or a part thereof; reduction of exclusive interest constitutes transfer. | The Court cited this passage to support the proposition that transfer can consist of parting with some rights (a "bundle of rights" concept) and to underpin the reasoning that different rights can be separately regulated or charged for. |
| Gulzara Singh v. The Collector, Ludhiana & Ors., JT 1995 (3) SC 26 (Supreme Court) | Authority for the proposition that the Government Grants Act can be applicable and may affect the applicability of the Transfer of Property Act. | The Court relied on this authority in considering whether the Grants Act displaced the applicability of the Transfer of Property Act to the leases in question, concluding the Grants Act point required attention though it was not fully developed in the counter affidavit. |
| Hajee S.V.M. Mhamed Jamaludeen Bros. & Co. v. Govt. of T.N., (1997) 3 SCC 466 (Supreme Court) | Explains that terms of a government grant are insulated from other statutory provisions and equitable principles to the extent inconsistent; grants confer discretion on Government to enforce conditions. | The Court cited the passage to explain the potential effect of the Grants Act (that terms of grants can be paramount), but noted that in these proceedings the Grants Act point was not properly pleaded in the counter affidavit and needed more consideration in context. |
| State of Mysore v. Swamy Satyanand Saraswati, AIR 1971 SC 1569 (Supreme Court) | Used to support the proposition that there should be express provision under the Grants Act for creation of certain tenancies; relevant to whether Grants Act applies. | The Court referred to this decision in the respondent's submissions to emphasise that creation of tenancies under the Grants Act requires express provision, and that such express provision was not apparent in the present case. |
| State of U.P. v. Zahoor Ahmad & Anr., AIR 1973 SC 2520 (Supreme Court) | Holds that mere fact that the State is the lessor does not automatically make a lease a Government grant under the Grants Act without supporting evidence. | The petitioners relied on this decision to argue that the leases were not necessarily "government grants" merely because DDA (a state entity) was lessor; the Court considered this in evaluating the Grants Act contention. |
| Chhajju Ram v. Neki & Ors., 1922 PC 112 at 115 | Interpretative principle: the phrase "any other sufficient reason" should be construed as meaning a reason sufficient on grounds at least analogous to those immediately specified. | The petitioners invoked the interpretative approach from this case to argue intent should guide construction of clauses and that words should be read in context; the Court noted this interpretive principle but construed clause (6) and (14) on their plain language. |
| Sunil Vasudeva & Ors. v. Delhi Development Authority, AIR 1988 Delhi 184 (Single Judge) | Held that DDA cannot recover a transfer levy while granting consent for sale or transfer of property under lease in case of a lease under the Grants Act unless such levy is provided in the lease. | The petitioners relied on this decision to argue no fee could be charged absent express provision. The Court distinguished this authority, finding that in the present leases there was a provision permitting imposition of terms/conditions and that charging under the industrial policy/guidelines was permissible. |
| Ruby Advertisers v. Delhi Development Authority (High Court; citation in text) | Considered scheme and guidelines for sub-letting of industrial premises; held charging for grant of permission to sub-let was permissible and set out detailed guidelines and a later liberalized policy (minimum/maximum areas, number of sub-lettees, required proofs, fees and rates, etc.). | The Court relied substantially on this judgment and the reproduced guidelines/policy to hold that the DDA can impose and recover charges for grant of permission to sub-let; the policy also guided the Court's view that such policy must be applied uniformly and that rectification on payment is available. |
Court's Reasoning and Analysis
The Court proceeded through the following analytical steps, based strictly on the material reproduced and arguments recorded in the opinion:
- Interpretation of Clause (14) (Permissible Use)
- The Court gave clause (14) a plain reading and held that it leaves no doubt that the plot and any structure thereon can be used only for purposes of manufacturing processes or running an industry as per the Master Plan, except as specifically permitted by the clause's proviso and the Master Plan's exceptions.
- However, the Development Code (reproduced parts) expressly permits certain ancillary uses in industrial use-zones (e.g., sales outlets, administrative & sales offices, limited residential accommodation for watch & ward/supervision), so that part of the premises can permissibly be used for non-manufacturing/incidental functions.
- Given these provisions, to determine whether there is a violation the DDA must inspect the premises to ascertain the extent and predominant purpose of use (i.e., whether non-manufacturing use predominates), because partial incidental permissible uses do not automatically render the whole lease in breach.
- The Court found that such inspections were not carried out in the impugned matters and therefore the determinations could not be sustained without inspection and factual verification of predominant user.
- On Show-Cause Notices and Petitioners' Conduct
- The Court noted that petitioners in many cases failed to respond to show-cause notices, and the petitioners are "to be blamed" for that; nevertheless, petitioners contested receipt of notices and procedural fairness required inspection and hearing before final determination.
- Interpretation of Clause (6) (Parting with Possession / Sub-letting)
- Petitioners argued that clause (6) deals with sale/transfer/assignment and does not prohibit mere letting on rent; they relied upon Section 108 of the Transfer of Property Act and the B. Banerjee case to contend letting on rent is not "parting with possession".
- The Court rejected the relevance of the B. Banerjee decision since it arose under the Rent Act, not the present sub-lease regime.
- The Court emphasised the phrase "otherwise part with possession" in clause (6) and read it as extending beyond sale/transfer/assignment to other modes of parting with possession, which would include sub-letting. The expression was not limited to the preceding words but was meant to capture other forms of ceding possession.
- The Court adopted the conceptual "bundle of rights" view (citing Sunil Siddharthbhai) to hold that different rights may be separately granted or charged for, and that the lessor could specify which rights to grant and impose conditions/charges for any further transfer of rights.
- On Section 108 of the Transfer of Property Act and Government Grants Act
- The petitioners relied on Section 108 T.P. Act (lessee's general right to sublease in absence of contract). The Court noted that Section 108 begins with "in the absence of a contract" and therefore a contractual restriction (the sub-lease clause) would prevail.
- The Court observed that the petitioners' plea presumed absence of a contractual restriction; but the sub-lease itself contained an express restriction on parting with possession, so Section 108 could not operate to defeat that contract term.
- The Grants Act argument raised by respondent (that grants terms may displace other law) was addressed: the Court noted authorities explaining that Government grants can be insulated (Hajee S.V.M. etc.), but also observed the petitioners had not raised the Grants Act sufficiently in pleadings and the sub-lease forms varied in their express reference to the Grants Act. The Court concluded the Grants Act issue was not fully argued on the record and that in any event the sub-lease restriction would control "in the absence of a contract" language of Section 108.
- On Charging Fees/Levy for Permission to Sub-let
- The Court examined prior High Court authority (Ruby Advertisers) reproducing DDA's guidelines and subsequent liberalised policy permitting sub-letting under conditions, including fee/charge structures and limits on area/number of sub-lettees.
- The Court held that charging fees for grant of permission to sub-let is permissible where the lease empowers imposition of terms/conditions and the proviso contemplates recovery (e.g., of unearned increase in sale cases) and the lessor's power to impose conditions.
- The Court rejected the submission that imposition of charges would be a unilateral amendment not authorised by the lease (contrary to Sunil Vasudeva), finding instead that the lease permitted imposition of terms/conditions and that the policy/guidelines furnish the basis for charging.
- Remedial and Procedural Observations
- Although DDA may validly impose charges and treat parting with possession (including sub-letting) as regulated, the present determinations were unsustainable because policies/guidelines were not applied uniformly and, crucially, no inspection-based assessment of predominant use was undertaken before determining leases.
- The Court held that matters are remediable: after inspection, DDA should uniformly apply the policy/guidelines and may allow rectification (i.e., regularisation) on payment of the proper charges where appropriate; quantum of charges should be intimated after physical verification.
- The Court dealt with CWP No. 2181/2003 on its particular facts and documents (change of corporate name, dealership, certificates) and found no acceptable basis to treat it as sub-letting on the record before it, although permissible user still required examination.
Holding and Implications
Holding: The Court issued a writ of mandamus quashing the impugned orders determining the sub-lease deeds and directed that each matter be re-examined after physical inspection of the properties, with consideration of the Master Plan and Development Code and the policy/guidelines for charging for sub-letting of industrial plots. Petitioners are to be given an opportunity of hearing; they must cooperate with inspections and furnish materials called for. The Rule was made absolute and parties were directed to bear their own costs.
Implications
- Direct effect: Determinations of the sub-lease deeds in the impugned orders are set aside and the DDA must re-examine each case by conducting inspections and then deciding afresh, applying the Master Plan/Development Code and the established policy/guidelines on sub-letting uniformly.
- Remedial outcome available to petitioners: Where parting with possession (including sub-letting) is found, DDA may permit rectification/regularisation on payment of charges consistent with policy; DDA must uniformly apply its policy and cannot selectively apply guidelines.
- The Court upheld the view that clause (6)'s phrase "otherwise part with possession" encompasses sub-letting and that the lessor may impose conditions/charges for grant of such permission; Section 108 T.P. Act does not override an express contractual restriction.
- No new legal rule or broad precedent was announced beyond the application of existing interpretative approaches, the accepted "bundle of rights" concept, and reliance on prior authorities and the reproduced policy; the decision directs re-application of existing policy and fact-based reconsideration in the affected matters.
Costs: Each party to bear its own costs as ordered by the Court.
Sanjay Kishan Kaul, J.:— The action of the respondent Delhi Development Authority (for short, ‘DDA’) in determining the sub-leases in respect of various plots located in Mohan-Cooperative Industrial Estate has given rise to these writ petitions. The impugned orders of determination allege that there has been breaches on the part of the sub-lessees of the terms and conditions of the sub-lease deeds. The sub-lease deeds in question specify the user to which the plot can be put to. In almost all the matters, the action has been taken on account of the fact that the petitioners are using the properties in question for commercial and trading activity while it is only the manufacturing and industrial activity which can take place on the plot and that too in terms of the prescribed user as per the Master Plan. In some of the cases, the action has also been taken on account of there being sub-letting by the sub-lessees-to third-parties.
2. In view of the fact that common questions of law had arisen, these matters were heard together with CWP No. 2487 of 2003 being treated as the lead matter.
3. In order to appreciate the rival contentions of the parties, it would be necessary to reproduce some of the salient terms and conditions of the sub-lease deeds, which are common in these matters and read as under:—
“(6) (a) The Sub-Lessee shall not sell, transfer, assign or otherwise part with the possession of the whole or any part of the industrial plot in any form or manner, benami or otherwise, to a person who is not a member of the Lessee.
6(b) The sub-lessee hall not sell, transfer, assign or otherwise part with the possession of the whole or any part of the industrial plot to any other member of the lessee except with the previous consent in writing of the lessor which he shall be entitled to claim and recover a portion of the unearned increase in the value (i.e The difference between the premium paid and the market value) of the industrial plot at the time of sale, transfer, assignment, or parting with the possession, the amount to be recovered being fifty per cent of the unearned increase and the decision of the lessor in respect of the market value shall be final binding.
... ... ... ...
(13) The sub-lessee shall not without the sanction or permission in writing of the proper municipal or other authority erect any building or make any alteration or addition to such building on the industrial plot.
(14) The sub-lessee shall not without the written consent of the lessor use or permit to be used the industrial plot or any building thereon for residence or for carrying on any trade or business whatsoever or use the same or permit the same to be used for any purpose other than that of carrying on the manufacturing process or running the industry of item as per Master Plan for Delhi except the industries emitting excessive smoke fume nuisance, cold storage, refrigeration, fruit canning and preservation food and allied products etc. or such other manufacturing process or industry as may be approved from time to time by the Chief Commissioner or do or suffer to the done therein any act or think whatsoever which in the opinion of the lessor may be a nuisance, annoyance or disturbance to the lessor, lessee and other sub-lessees and persons in the neighbourhood. Provided that, if the sub-lessee is desirous of using the said industrial plot or the building thereon for a purpose other than that of manufacturing process or industry as may be approved from time to time, the lessor may allow such change of user on such terms and conditions, including payment of additional premium and additional rent as the lessor may in his absolute discretion determine.”
4. The first aspect to be considered is the issue of misuser alleged by the respondent DDA in respect of different properties. DDA has taken a view that the activities being carried out by different persons are contrary to the Master Plan and are actually in the nature of trading of business activity rather than manufacturing processes. In this behalf, clause (14) of the sub-lease deed, which is quoted above, has to be interpreted. The first part of the clause puts a clear restriction, without written consent of the lessor, for putting the plot or the building constructed thereon for any use as a residence or carrying on any trade or business. This is followed up by the prescription that the plot and the building has to be used only for purposes of carrying on manufacturing process or running the industry as per the Master Plan of Delhi or such other manufacturing process or industry, as may be approved from time to time. In my considered view, a plain reading of the clause itself leaves no manner of doubt that the plot and the structure thereon can be used only for purposes of manufacturing process or running the industry as per the Master Plan. The contention advanced on behalf of the petitioners was that the industrial plots were, in fact, being put to conforming use in accordance with the Master Plan and a reference was made to Development Code of the Master Plan. Sub-clause 8(2) prescribes the permission of selected use premises in the use zones. The each use has been given a serial number ( for short, ‘S.No’) and it is prescribed in which use zones the same is permissible. S.No 036 is in respect of Industrial Plot - Light and Service Industry; S.No 037 is respect of Industrial Plot - Extensive Industry; S.No 027 is in respect of Motor Garage & Workshop; S.No 020 is in respect of Storage, Godown & Warehousing; and S.No 035 deals with Service Industry. These S.Nos have been further described in greater detail under sub-clause 8(3) giving the use/use activities permitted in use premises and the same are reproduced hereunder for ready reference.
“(3) USES / USE ACTIVITIES PERMITTED IN USE PREMISES
... ... ... ...
STORAGE, GODOWN & WAREHOUSING (020)
Storage, Godown & Warehousing, Watch & Ward Residence (Upto 20 sqm.), Wholesale Outlet, Administrative & Sales Office
... ... ... ...
MOTOR GARAGE AND WORKSHOP (027)
Motor Garage and Workshop, Retail Shop (Spare Parts), Soft Drink & Snack Stall.
... ... ... ...
SERVIVE CENTRE (035)
Retail, Repair & Personal Service Shop, Industry allowed in Service Centre as given separately, Gas Godown, Commercial Office.
LIGHT INDUSTRY PLOT (036)
Light industrial unit as per list given in Annexure-III, Administrative Office, Sales Outlet, Residential Flat to the extent of 5% of the floor space or 50 sqm. whichever is less for Watch & Ward and Supervision.
EXTENSIVE INDUSTRY PLOT (037)
Extensive Industry as per the list in Annexure-III, Administrative Office, Sales Outlet, Residential Flat (for maintenance for watch & ward and supervision staff) on 5 per cent of fllor space of 50 sqm. whichever is less.”
5. Annexure III to the Codes specifies the Classification of Industries and assembly and repair of electronic gadgets; electronic goods falls in Group A industries, while auto parts fall in Group B industries; and automobile service and repair workshop and battery charging fall in Group D industries. A reading of the use activities shows that apart from the manufacturing and industrial activities, a part of the premises can be kept for residential flats, administrative offices, sales outlets.
6. In view of the aforesaid, in order to-appreciate whether a particular property is being put to use contrary to the Master Plan, an inspection must take place to find out as to the extent of the premises being put to non-manufacturing and non-industrial use, since part of the premises can be put to such use. This has not been done in any of the cases. Really speaking, the test is of the predominant purpose of the use of the plot with permission to carry on the other incidental activities as prescribed in the use zones. There is also no doubt that mere carrying on of a trade or business is prohibited under the terms of the sub-lease without prior permission of the lessor. The respondent has filed a chart on the basis of the counter affidavits filed to show that show-cause notices were issued from time to time, but in most cases, there was no reply or the reply was not satisfactory.
7. In my considered view, the petitioners are also to be blamed for the position which has emerged in view of the fact that in a number of cases, there was no reply sent at all. However, the petitioners have disputed the receipt of the show-cause notices itself. This aspect has to be considered along with the obligation on the part of the respondent to inspect the premises to find out predominant user of the premises. The petitioners have justified the user as a recognised activity along with the corresponding Development Code.
8. In my considered view, it is, thus, necessary that the respondent must examine each of the cases after due inspection of the properties to reconsider the matter within the parameters of the Development Code before it comes to the conclusion whether the particular user in question is or is not in violation of the Master Plan and consequently in violation of the sub-lease deed. In view thereof, the impugned orders of determination of the sub-lease deeds cannot be sustained.
9. The matter, however, does not rest at this since another aspect has arisen for consideration which would also require adjudication by this Court. This arises from sub-letting of the premises. Clause (6) restricts the sale, transfer, assigning or parting with possession of the whole or any part of the industrial plot.
10. Learned counsel for the petitioners contended that a reading of the said clause clearly shows that the same really dealt with the sale, transfer and assigning of the property in question and, thus, the expression ‘or otherwise part with possession’ has to be read in that context. The submission, thus, was that mere sub-letting of the property on rent cannot amount to violation of the said term and condition of the sub-lease deed. In order to justify the stand, a reference was also made to clause (14) where the expression ‘use the same or permit the same to be used’ appears. It was, thus, contended that the additional words ‘permit to be used’ itself imply that someone else can use the property. In the alternative, the plea was raised that this aspect can be rectified and is remediable on payment of charges.
11. Learned counsel for the petitioners referred to the provisions of Section 108 of the Transfer of Property Act, 1882 ( hereinafter to be referred to as, ‘the T.P Act’) and more specifically sub-section (B)(j) dealing with the rights and liabilities of the lease. The said Section is as under
“ 108. Rights and liabilities of lessor and lessee.-In the absence of a contract or local usage to the contrary, the lessor and the lessee of immoveable property, as against one another, respectively, possess the rights and are subject to the liabilities mentioned in the rules next following, or such of them as are applicable to the property leased:—
... ... ... ...
(B) Rights and Liabilities of the Lessee
... ... ... ...
(j) the lessee may transfer absolutely or by way of mortgage or sublease the whole or any part of his interest in the property, and any transferee of such interest or part may again transfer it. The lessee shall not, by reason only of such transfer, cease to be subject to any of the liabilities attaching to the lease;
Notwithstanding in this clause shall be deemed to authorise a tenant having an untransferable right of occupancy, the farmer of an estate in respect of which default has ben made in paying revenue, or the lessee of an estate under the management of a Court of Wards, to assign his interest as such tenant, farmer or lessee;”
12. It was, thus, contended that in the absence of any contract, the right of a lessee includes the right to transfer absolutely or by way of mortgage or sub-lease the whole or any part of the interest in the proper ty. It was, thus, contended that so long as the sub-lessee has the right to displace possession of the tenant/occupant, it cannot be said that the sublessee has parted with the possession so as to be in violation of the terms of clause (6) of the sub-lease deed. In this context, reference was also made to proviso of the said clause requiring payment of 50% unearned increase in case of sale, transfer, assigning or parting with possession and it was contended that in case of such tenancy on a monthly rent, there could not be any concept of unearned increase since there is no premium paid nor is the aspect of market value attracted.
13. In the aforesaid context, a reference was made to judgment of the learned Single Judge of this Court in B. Banerjee… v. Romesh Mahajan…) 92 to support the plea that letting the building on rent is neither parting with possession nor sub-letting the plot. It may, however, be noticed at this stage itself that the said judg ment was rendered in the context of the Delhi Rent Control Act, 1958 ( hereinafter to be referred to as, ‘the Rent Act’) and in the context of the provisions of Section 14(1)(e) read with Section 25B of the Rent Act, it was held that letting the house on rent is neither parting with possession nor sub-letting. In my considered view, the same would have no application to the matter at hand.
14. Learned counsel for the petitioners also contended that the expression ‘sub-let’ was not used in any of the sub-lease deeds, but has ap peared only in the subsequent new leases, which are not in issue in the present case. It was, thus, contended that this aspect was rectified only subsequently and sub-letting cannot be introduced as a term in the earlier leases.
15. Another plea advanced on behalf of the petitioners is that clause (6) mentioned aforesaid does not refer to a building and it is only clause (5), which refers to a building and the requirement for construction within a stipulated time of execution of the sub-lease deed.
16. Learned senior counsel for the respondent, on the other hand, laid emphasis on the expression ‘otherwise part with possession’ used in clause (6)(a) to contend that the same refers to parting with possession other than by mode of sale, transfer or assigning. It was contended that under the sub-lease deeds, a bundle of rights can be given in respect of the land in question, but it is up to the lessor whether to give all of these rights or some of them. It was, thus, contended that the unearned increase was for each of the rights, which may be granted.
17. Learned senior counsel referred to the Division Bench judgment of this Court in Hazari Lal and Ram Babu v. Shri Gian Ram & Ors., 1972 RCR 74 where while discussing three expressions ‘sub-let’, ‘assign’ or ‘otherwise parting with possession’ in context of the Rent Act, it was held that these expressions deal with different concepts and apply to different circumstances.
18. Learned senior counsel also referred to judgment of the Supreme Court in Sunil Siddharthbhai v. Commissioner Of Income Tax, Ahmedabad, Gujarat., Ahmedabad, Gujarat, AIR 1986 SC 368 where it was observed as under:—
“11. In its general sense, the expression “ transfer of property” connotes the passing of rights in the property from one person to another.-In one case, there may be a passing of the entire bundle of rights from the transferor to the transferee. In another case, the transfer may consist of one of the estates only out of all the estates comprising the totality of rights in the property. In a third case, there may be a reduction of the exclusive interest in the totality of rights of the original owner into a joint or shared interest with other persons. An exclusive interest in property is a larger interest than a share in that property. To the extent to which the exclusive property is reduced is a transfer of interest.”
19. Learned senior counsel further submitted that the T.P Act would have no application since the properties in question were governed by the Government Grants Act, 1895 ( hereinafter to be' referred to as, the Grants Act'), which was a Code by itself. In that context, a reference was made to Section 2 of the Grants Act, which specified that nothing in the T.P Act would apply to the Grants Act. This plea was supported by reference to judgment of the Supreme Court in Gulzara Singh v. The Collector, Ludhiana & Ors., JT 1995 (3) SC 26.
20. In Hajee S.V.M Mhamed Jamaludeen Bros. & Co. v. Govt. of T.N, (1997) 3 SCC 466, it was observed in para 10 as under:—
“10. The combined effect of the above two sections of the Grants Act is that terms of any grant or terms of any transfer of land made by a Government would stand insulated from the tentacles of any statutory law. Section 3 places the terms of such grant beyond the reach of any restrictive provision contained in any enacted law or even the equitable principles of justice, equity and goods conscience adumbrated by common law if such principles are inconsistent with such terms. The two provisions are so framed as to confer unfettered discretion on the Government to enforce any condition or limitation or restriction in all types of grants made by the Government to any person. In other words, the rights, privileges and obligations of any grantee of the Government would be completely regulated by the terms of the grant, even if such terms are inconsistent with the provisions of any other law.”
21. Learned senior counsel for the respondent contended that there has to be an express provision under the Grants Act for creation of such tenancies, which was not so in the present case and in that context referred to judgment of the Supreme Court in The State of Mysore v. Swamy Satyanand Saraswati, AIR 1971 SC 1569.
22. The aforesaid plea was sought to be rebutted by learned counsel for the petitioners on the ground that pleas in respect of the Grants Act have never been raised in the counter affidavit. It was further contended that the leases in question are, in fact, not Government grants and in that behalf referred to judgment of the Supreme Court in The State of UP. v. Zahoor Ahmad & Anr., AIR 1973 SC 2520, where it was held that the mere fact that State is the lessor will not itself make it Government grant within the meaning of the Grants Act unless there is evidence in character of the land or in making of the lease or in context of the lease to support the plea that it was a Government grant.
23. Learned counsel for the petitioners, thus, contended that it was not provided in the leases that it was a Government grant and in that context referred to the forms for disposal of land by DDA under the Delhi Development Authority (Disposal of Developed Nazul Land) Rules, 1981. In clause 13 of Form A and in clause 11 of Form C, it is specifically stated, “This lease is granted under the ‘Government Grants Act, 1895”, but such a clause is absent in Form B. Form A relates to Group Housing Societies and Form C relates to perpetual leases to allottees, while Form B is in respect of the perpetual sub-leases.
24. Learned counsel for the petitioners once again emphasized that while construing different expressions, it is the intent of the clause which has to be seen and in that context referred to judgment in Chhajju Ram v. Neki & Ors., 1922 PC 112 at 115 where while construing and interpreting the words ‘any other sufficient reason’, it was observed that it should be construed as meaning a reason sufficient on grounds at least analogous to those specified immediately previously.
25. Lastly, it was contended by learned counsel for the petitioners that no fee can be charged by the respondent even for grant of such permission in view of judgment of the learned Single of this Court in Sunil Vasudeva & Ors. v. Delhi Development Authority, AIR 1988 Delhi 184 where it was held that DDA cannot recover transfer levy while granting consent for sale or transfer of property or land under the lease in case of a lease under the Grants Act unless it was so provided in the lease.
26. In context of the aforesaid contentions, both the parties referred to judgment of this Court in Ruby Advertisers…Petitioner v. Delhi Development Authority…) 359. In the said case, the issue of charging an amount @ Re. 17- per sq.ft per month for grant of permission to let out a portion of the factory was challenged. Similar clause as involved in the present case was in issue. It was held that the scheme of residential lease and industrial lease is different, which is apparent from a specific provision in the residential leases for such subletting, which was absent in case of industrial plots. The guidelines for subletting of industrial premises were considered, which were in the context of industrial premises and it was held that such charging was permissible. The said guidelines are as under:—
“Sub-letting of Industrial Premises :
10.11 In the interest of production and better utilisation of the industrial built up premises, sub-letting of premises constructed upon industrial plots by lessees who have been genuinely engaged in production in those premises has been permitted subject to the following conditions:—
i) The minimum area, which shall be permitted to be sub-let shall not be less than 500 sq. ft.
ii) The maximum area to be sub-let shall not exceed 50% of the permissible floor area.
iii) Each industrial unit seeking permission to sub-let will have to prove that the space to be sub-let is surplus.
iv) Not more than two tenants shall be permitted in one premises.
v) The office/storage space will not be permitted to be sub-let.
vi) The trade to be run by the tenants will have to be permissible in that industrial areas as per the zonal plan.
vii) While submitting the application for permission to sub-let, a plan of the built-up space as well as of the area to be sub-let will be submitted by the applicant industrial unit.
viii) The fee at the rate of Rs. 17- per sq.ft per month shall be recovered on annual basis but for a period not exceeding three years or till there is a change in tenancy whichever is earlier.
ix) The tenant could be permitted to pay the fee on behalf of the lessee, if he so likes, but this payment will be in the name of the Lessee.
x) Where the lessee/sub-lessee of an industrial plot exceeding 2000 sq. mtr. has obtained exemption under the Urban Land (Ceiling & Regulations) Act, 1976, on the grounds that this entire area is required by him for his bonafide use, the permission to sub-let shall not be granted.
xi) All conditions regarding the sub-letting will also be applicable to industrial plots purchased in open auction.
xii) If a “ sister concern” is proposed to be allowed in the industrial premises, it will require approval and payment of fee.”
These guidelines are stated to have been relaxed and the liberalized policy, as contained in the letter dated 01.01.1991, is as under:—
“ As you may be aware the Lt. Governor of Delhi has liberalised certain provisions of the existing guidelines for land management of the Delhi Administration pertaining to the sub-letting of industrial premises in Delhi. The salient features of this liberalisation are given below :
I) The minimum permissible area to be sub-let will be 250 sq. ft.
II) The sub-letting will be permitted for a period of 5 years in the first instance and thereafter the permission may be renewed for a further period of 5 years at a time, against a total permissible period of 3 years presently.
III) A maximum of three sub-lettees can be permitted, subject to the total area of sub-letting not exceeding 50% of the total permissible floor area.
IV) A fee @ Rs. 1/- per sq. ft. per month w.e.f 1.11.90 shall be charged in advance on annual basis. However, the period of subletting prior to 1.11.1990 is to be regularised on payment of fee calculated @ 20 paise per sq. ft. per month.
V) The permission may be granted only to those allottees who are themselves engaged in industrial activity in the premises.
The Lt. Governor has desired that these guidelines should also be made applicable to the industrial accommodation under the control of DDA in the interests of uniformity. I am therefore directed to request to kindly issue necessary instructions on these lines to the concerned officers in the DDA responsible for land management.”
27. It was noticed that as per the circulars issued by the respondent, some kind of uniform practice in grant of permission of letting out of in dustrial premises was sought to be brought into force. This was so in the context of there being a restriction on the area to be sub-let and the levy of certain charges. It was observed in paras 17 & 18 as under:—
“17. Insofar as the plea of learned counsel for the petitioner on the basis of there being no authority to impose such a levy is concerned, it is to be noted that the petitioner applied for permission to sub-let the property and the petitioner was asked to apply for the same in a prescribed proforma. The circulars issued by the respondent show that an attempt has been made to have some kind of a uniform practice in grant of permissio of letting of industrial premises. There is a restriction on the area o be sub-let and the levy of certain charges. The object is apparent as these plots were given to be utilized by the perpetual lessees themselves for setting up of their industrial units. Thus, it is not permissible to sub-let the whole of the property in terms of the said guidelines and a fee is charged on uniform basis. There is no doubt that the respondent can reject the premises to sub-let. If that be the position, then the permission can be granted subject to certain terms and conditions to be stipulated.
“18. The second proviso to clause 4(a), in fact, says that the consent may be given by the lessor,' who may impose such terms and conditions as he thinks fit'. Thus, apart from the issue of 50% unearned increase, the clause deals with the imposition of such terms and conditions including for parting with possession and the terms and conditions imposed as per the said clause for sub-letting the property is the restriction on maximum and minimum area to be sub-let as also the charge to be paid. This is really a fee for the consent to be granted and is not a tax.”
28. I have considered the submissions advanced by learned counsel for the parties in this context and I am of the considered view that insofar as the issue of recovery of charges is concerned, the matter is no more res Integra in view of judgment of this Court in Ruby Advertisers's case (supra). Once there is a restriction on parting with possession, charges can be imposed for the same. This is also to be understood in the context of the stipulation in the proviso to clause (6) not only provides for 50% unearned increase, but also of imposition of such terms and conditions as lessor thinks fit. It cannot, thus, be said that there is no provision for charging of the amount for sub-letting or transferring of possession.
29. The expression ‘sub-letting’ has not been specifically used in the leases in question, but the expression ‘parting with possession’ has been used. Though the expression ‘parting with possession’ is preceded by the expression of ‘sale, transfer or assigning’, it is not mere parting with possession, which is referred to, but ‘otherwise parting with possession’. Thus, the clause envisages not only parting with possession in the context of sale, transfer or assigning, but also parting with possession in other context, which would include the cases of sub-letting.
30. I am unable to agree with the submission of learned counsel for the petitioners that the levy of any charges would amount to unilateral amendment of the terms and conditions of the sub-lease or would be a charge not authorized by the sub-lease deed and, thus, covered by the principles laid down in Sunil Vasudeva's case (supra). This is so since in the present case, there is a specific provision for imposition of such terms and conditions apart from the imposition of unearned increase.
31. I am, thus, in agreement with the submission of learned senior counsel for the respondent in this context that what is sought to be granted is a bundle of rights and there can be provision for payment of charges for further transfer in respect of any of these rights. In case of a sale, transfer or assigning coupled with parting with possession, it may be 50% unearned increase, but it can be a different amount in case of mere parting with possession by sub-letting. A reading of clauses of the lease deed cannot imply, as was sought to be contended by learned counsel for the petitioners, that the building has to be segregated from the land. The enjoyment of building cannot be without land rights and rights in the building and the land are inter-linked for purposes of parting with possession for enjoyment of the same.
32. Insofar as the issue of Grants Act is concerned and reference by learned counsel for the petitioners to different forms, there is no doubt that in certain forms, there is a specific clause stipulating that the lease is under the Grants Act, which is not so in all the forms. However, the reference made by learned counsel for the petitioners would show that Form A deals with the perpetual leases of Group Housing Societies and Form C deals with the perpetual leases of residential plots, while Form B is in respect of the perpetual sub-lease deeds. The sub-lease deed would in turn imply that terms and conditions of the lease deed would also apply and, thus, absence of the stipulation of the lease being under the Grants Act in sub-lease deed would not be so material if the lease itself stipulates so. It is, however, true that really speaking in the counter affidavit, no case has been set up on the issue of the Grants Act and the aforesaid aspect actually arose on account of the plea raised by the petitioners under Section 108 of the T.P Act.
33. I, however, fail to appreciate how the aforesaid provision would apply when there is a specific restriction in the sub-lease deeds in question itself on parting with possession since the wordings of Section 108 itself begin with ‘in the absence of a contract’. This plea was really raised on the presumption that there is no restriction on parting with possession which is not accompanied by sale, transfer or assigning. As noticed above, I am of the considered view that the said clause covers parting with possession other than also by way of sale, transfer or assigning. I am, thus, of the considered view that in terms of the policy for industrial plots, which has been reproduced in judgment of this Court in Ruby Advertisers's case (supra), a levy can be made by the respondent.
34. However, in the present cases, there has been determination of the leases and the policy has not been applied for purposes of levying charges on the petitioners. Once the policy/guidelines have been brought into force, they have to be uniformly applied and there cannot be a pick and chose in their application. It cannot, thus, be said by the respondent DDA that it will apply the guidelines in some cases and not in the others. To that extent, there is substance in the plea of the petitioners, which was raised as an alternative plea, that there can be rectification on payment of charges and, thus, this aspect is remediable. All the respondent is required to do is that after the physical verification of each of the properties, the quantum of charges to be paid be intimated to the individual sub-leases.
35. Before parting with the matter, a reference has to be made to the peculiar facts of CWP No. 2181 of 2003, since the plea of the petitioner is that there is no sub-letting involved. This is a case arisen from a direction of the Delhi Pollution Control Committee dated 21.01.2000 in compliance of the Orders of the Hon'ble Supreme Court in respect of the polluting industries. The order refers to units which have been found not discharging any trade affluent from the industries/process/premises and the petitioner is mentioned at S.No 18. While dealing with the petitioner's case, there is a specific direction that the name should be changed since the original name was Mirkana Engineering & Chemical Industries Pvt. Ltd. The petitioner applied for change of name and the certificate was issued by the Registrar of Companies approving the change of name. It is further stated that A-One Motors is a trading style and name of the petitioner company as is apparent from letterhead of the petitioner (Annexure P - 4). The certificates issued by the Chartered Accountants and Tata Engineering have also been enclosed that A-One Motors is only a brand name of the petitioner. Not only this, a specific plea has been raised in response to cancellation of the lease deed as per the letter dated 10.03.2003 (Annexure P - 7) that the petitioner never received the show-cause notice. The petitioner is carrying on business under the dealership of Tata Engineering. Thus, in the aforesaid case, there would be no question of sub-letting, though the issue of permissible user would have to be examined. I am, however, unable to accept the contention of learned counsel for the petitioner that as a consequence of the shut down of the industry in pursuance to the directions of the Supreme Court any special rights accrue in favour of the petitioner. This is so since the sub-lease deed itself provides for running of an industry as per the Master Plan of Delhi except the industries excluded in terms of clause 14 of the sub-lease deed in question.
36. In view of the aforesaid discussions, a writ of mandamus is issued quashing the impugned orders determining the lease deed with a direction that the matters should be re-examined in pursuance to the directions aforesaid specially keeping in mind the provisions of the Master Plan and its Development Code as also the policy for charging for sub-letting of industrial plots as mentioned above. The petitioners shall be granted an opportunity of hearing before a fresh decision is taken after inspection of the properties. The petitioners shall cooperate with the process of inspection and furnish material called for by the respondent.
37. Rule is made absolute leaving the parties to bear their own costs.
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