1. In this writ petition the petitioner has challenged the vires of Sections 49 and 52 of the Major Port Trusts Act, 1963 asking the Court to declare the aforesaid two sections are ultra vires Constitution and therefore enhancement of rent in the schedule framed thereunder are not enforceable, and consequently has challenged the decision of the Board enhancing the rate of rent with effect from 1st May, 1978. This writ petition is seriously opposed by the respondent Port authorities.
2. The short fact of the case is that the writ petitioner has taken possession of a plot of land being No. D-403 measuring about 12,140.62 square meters pursuant to a lease agreement dated 1st Sept. 1948 granted for 30 years. While in possession after expiry of 30 years another lease was executed by the respondent Board on or about 10th July, 1981 in favour of the petitioner for a period of thirty years to be computed from 1st May, 1978 with an option for renewal by executing fresh lease for another period of thirty years. The terms of the present lease inter alia provides for enhancement of rent in every 10 years upto 25% of the rate of rent or the scheduled rate of rent which was then in force, whichever is higher, less rebate of 3% if the rent is paid regularly during the currency of the lease on or before 15th day of the month following the month for which such rent is due. On expiry of ten years computing from 1st May, 1978 the Board wants to increase the rate with effect from 1st May, 1988. The rate of increase applicable in this case is schedule rent as it is higher than 25 per cent of existing rent mentioned in the lease agreement.
3. Mr. Pratap Chatterjee, learned Senior Advocate appearing for the writ petitioners, however, did not press the point of constitutional validity of the aforesaid two sections. His argument has been confined to as follows:—
In order to increase rent the effect of the lease cannot be given retrospectively as it is sought to be done in this case. Admittedly the previous lease expired on 30th April 1978. The present lease has been executed and registered on 10th July 1981. In between 1st May, 1978 and 9th July, 1981 the petitioner has been in possession without any lease. If the effect of anterior date as mentioned in the lease is given then the same is contrary to the Transfer of Property Act, 1882 read with Indian Registration Act. He argues that the lease from year to year or month by month in respect of a property having valuation of more than Rs. 100/- must be created by a written instrument followed by registration. Unless that is done there cannot be any lease. Therefore, the Board cannot compute the period of 10 years from an anterior date and this must be computed from the date of execution of the lease that is to say prospectively. So, ten years has to be computed from 10th July, 1981, necessarily the increase of rent could be done not before 10th July, 1991, but in this case the Board has sought to increase from 1st May, 1988. In support of his submission that the lease must not be from an anterior date, must be prospective, he has relied on a decision of learned single Judge of this Court reported in 2001 (2) Cal HN 579.
4. His further contention is that the lease is not void entirely but to the extent of the aforesaid period of three years. So, the aforesaid period of three years cannot lawfully be termed to be the period of lease in terms of the present lease.
5. Next contention of Mr. Chatterjee in his case is that though in terms of the lease the Board has sought to increase applying the rate mentioned in the scheduled rent but this rate is wholly invalid and illegal and this was once challenged in this Court and the Division Bench of this Court has held that the aforesaid provision of scheduled rent is ultra vires the Constitution. He argues though the aforesaid decision ultimately was taken to Supreme Court and the apex Court has recorded compromise between the parties therein, still then the ratio and the law declared by the said judgment of the Division Bench has to be made applicable in this case because the said judgment was not set aside nor such judgment can be set aside as the writ of mandamus once issued remains valid and operative unless the higher forum after adjudication sets the same aside. In this case the Supreme Court has not set aside the same. In support of his contention he has relied on a decision of Supreme Court reported in AIR 1980 SC 226 (para 10). Alternatively though the said writ on which the Division Bench judgment was rendered was dismissed and withdrawn but the challenge made therein or which is being made herein are still open for adjudication by this Court and I should adjudicate the point raised as to the validity of the scheduled rent. He argues that the rent fixed under the schedule is arbitrary and illegal and the same cannot be made applicable in this case, this has to be done upon deliberation bilaterally with the tenants. Moreover, the scheduled rent is only applicable in a case of monthly tenants not in case of the lessee.
6. Mr. Suhrit Roychowdhury learned Senior Advocate appearing with Mr. Suresh Majumdar learned Advocate to oppose this application, submits that there is no illegality to execute a lease with an anterior date and the lease cannot be held to be void for any reason either partially or wholly. It is always open and lawful for the parties to fix a date in the instrument with retrospective effect as terms thereof. However, relationship of lessor and lessee cannot be termed to have been existing retrospectively but prospectively. He has drawn my attention to various sections of the Transfer of Property Act and submits that there is no embargo or prohibition against retrospective application of lease. He has drawn my attention to an English decision on this point rendered in case of Bird v. Backer reported in 1868 QB IEL & EI 12.
7. So far as the challenge as against the rent is concerned, he submits, that parties have agreed for the period of lease and also the mode and method of enhancement. In this case parties have agreed enhancement at a higher rent between the rent fixed in the lease and in the schedule. He argues Supreme Court order disposed of SLP filed against the above Bench judgment recording terms of settlement arrived at between the parties in that case whereby the writ petition was withdrawn and the Division Bench judgment was set aside. Moreover, the Supreme Court has modified the said judgment in expressed terms. He further argues that the scope and effect of the aforesaid order of the Supreme Court recording settlement vis-a-vis the Division Bench judgment was examined in another case by the learned Single Judge of this Court. This judgment, however, is unreported one but it has been categorically held that the ratio of the aforesaid Division Bench judgment cannot be relied on. That apart he has also placed an unreported decision of the Division Bench judgment wherein the question of legality and validity of the aforesaid scheduled rent was raised and the Division Bench on identical facts and circumstances has held the aforesaid mode and method of enhancement of rent relying upon the schedule rent is absolutely lawful and valid. Moreover, having regard to the present letting out market value of the land in that area the proposed enhancement is much less and absolutely reasonable and justified.
8. Having heard the respective contention of the learned Advocates it appears to me that in this case two points emerge for adjudication of this Court which are as follows:—
(i) Whether the lease deed mentioning an anterior date for computation of term thereof is lawful and valid or not. In other words, whether the Port respondent is justified in computing the period of 10 years from 1st May, 1978 being an anterior date to the present lease or not.
(ii) Whether the ratio decided in the Division Bench judgment as to the legality and validity of the scheduled rent has got any binding effect upon this Court or not. If not, whether the scheduled rent is illegal, arbitrary and invalid in this case or not.
9. Admittedly the writ petitioners have been in occupation before execution of the ‘lease deed’ dated 10th July, 1981 on the strength of another lease previously executed and continued for 30 years that is to say till 30th of Sept. 1978. Therefore, there is no disruption of possession with acceptance of rent. Factually there was neither any instrument nor any document authorising the writ petitioner to continue possession after 30th Sept. 1978 till 10th July, 1981 after expiry of thirty years of first lease. Therefore, effect in this case would be holding over under Section 116 of the Transfer of Property Act that is quoted hereunder:
“Section 116. Effect of holding over.— If a lessee or under lessee of property remains in possession thereof after the determination of the lease granted to the lessee, and the lessor or his legal representative accepts rent from the lessee or under lessee, or otherwise assents to this continuing in possession, the lease is, in the absence of an agreement to the contrary, renewed from year to year, or from month to month, according to the purpose for which the property is leased, as specified in Section 106.
Illustrations
(a) A lets a house to B for five years. B underlets the house to C at a monthly rent of Rs. 100. The five years expired, but C continues in possession of the House and pays the rent to A. C's lease is renewed from month to month.
(b) A lets a firm to B for the life of C.C dies, but B continues in possession with A's assent. B's lease is renewed from year to year.”
10. So, by operation of law the lease dated 1st Sept. 1978 was renewed from year to year as the lease was granted for engineering factory namely manufacturing purpose by virtue of Section 106 of the Transfer of Property Act. This holding over could have continued, but for the present lease, which records the lessee to hold demised land from 1st May, 1978.
11. It is true in the present lease deed the date of commencement has been mentioned on and from 1st May, 1978. The present dispute is concerned with enhancement of rent as regard rate of rent and time for levy. To decide this question precisely the duration of occupation is prime consideration. Effect of execution of the present lease in this case in my view is regularising the period for which there was no formal document because of holding over as observed above.
12. Mr. Roy Chowdhury has rightly submitted for the purpose of computation of the period of lease anterior date mentioned in the ‘lease deed’ can legitimately be noted. I find in support of this proposition an English decision rendered in case Bird v. Backer reported in 1858 QB IEL & EL 12. In that case a lease was executed on 17th July, 1851 mentioning to give effect from 25th Dec. 1849 for a period of 14 years with a proviso enabling the demise to be determined at the expiration of the first seven years thereof. In that case it was held that 7 years were to be reckoned from 25th Dec. 1849 and that the lease might be determined on 25th Dec. 1856. In that case it was argued that the interest in the lease should be counted from 19th July, 1851 and not from 25th of Dec. 1849 and therefore, lease should not be determined till 19th July, 1858. Such argument was not accepted and it was held that the parties intended to terminate the lease after 14 years, to be computed from an anterior date and the reference of which can be made only for this purpose. Combined reading of Sections 5 and 105 of the Transfer of Property Act it appears to me right and obligation of lessor and lessee can be asserted and demanded after execution and registration thereof and their interest can be said to have been created thereupon.
13. The decision of the learned Single Judge of this Court reported in 2001 (2) Cal HN 579, in my view in this case is not applicable at all. The said decision was rendered on different fact and in relation to premises tenancy. Under the Transfer of Property Act or for that matter Registration Act there is no embargo to execute and register a lease retrospectively, so the first ten years in terms of the present lease expired on 30th April, 1988.
14. So, I hold that respondent has lawfully in terms of the agreement sought to enhance the rent. As such, the issue No. 1 is answered in affirmative and in favour of the respondent.
15. It is contended by Mr. Chatterjee that the rate demanded by the respondent Post as per scheduled rent is arbitrary and illegal on the strength of earlier Division Bench judgment which is reported in 1999 (2) CLJ 372 (sic). It appears the aforesaid judgment was taken to Supreme Court and has been set aside by the Apex Court on the basis of the terms of settlement filed by the parties in the Court. As a matter of fact, specific prayer was made while filing the terms of settlement for dismissal of the writ petition on which the judgment was rendered and for setting aside of the judgment and order of the Division Bench as reported above.
16. Mr. Chatterjee argues that though the writ petition was compromised but the ratio and the principle laid down by the Division Bench judgment still remains. Such an argument, in my view, is patently absurd. When the cause is dismissed by the consent of the parties, how the judgment could remain? Therefore, ratio of Division Bench judgment cannot be followed and it would be foolish effort on part of this Court if the argument of Mr. Chatterjee is accepted. Moreover, in another unreported decision on the above principle rendered in case of C.O 196(W) of 1993 (Kumud Mazumdar v. Board of Trustees for the Port of Calcutta) the learned Single Judge of this Court did not follow the aforesaid Division Bench judgment as it was set aside.
17. Mr. Chatterjee contends even if the Division Bench judgment is not applicable but the point raised therein to challenge the constitutional validity of the schedule rate is still open and I should decide independently.
18. In exercise of the statutory power the Board prescribed rate of rent having regard to all the factors namely location and the importance of the area. This statutory power was sought to be challenged in the writ petition. However, such challenge has not been pressed. This scheduled rate, though fixed by the Board received the approval of the Central Government and has been notified in the Gazette. In my view the constitutional validity of this rate on the plea of arbitrary and unreasonable is not required to be decided by me for the simple reason, in the lease agreement both the parties have agreed to increase rate of rent at the rate of 25 per cent of the existing rent or the scheduled rent whichever is higher. These contractual provisions in my view are of a private character. The writ Court should not entertain this challenge. Moreover, the entire contractual provision has not been challenged and only challenge is against the scheduled rate as notified. Fortuitously the scheduled rate in this case appears to be higher than that of 25 per cent above existing rate. Had the scheduled rate been lesser than that of the 25 per cent above the existing rate the latter could have been agreed rate and demanded, and in that case also it would not have been open for the parties to raise any dispute, as it is a contractual obligation right of a concluded contract. In my view the challenge in the writ petition as against the scheduled rate is not bona fide. When both the parties have agreed to accept the scheduled rate to be the contractual bargain they should accept. As because the scheduled rate has now become higher, the challenge perhaps has been made, otherwise no challenge would have been there.
19. Accordingly, I hold that this Court should not examine such challenge at all and the scheduled rate, which is demanded and sought to be applied, is binding upon both the parties since it is higher one. It may so happen in future the scheduled rate may be lesser than that of an agreed one in that case also the Board will not be entitled to raise any dispute since it has agreed to accept such rate in terms of the lease deed. Thus the issue No. 2 is decided against the petitioner again.
20. As far as demand for payment of the additional 15 per cent over and above the rent made by the respondent is concerned the same in my view is illegal and wrongful. Under the lease agreement the respondents are not authorised to realise the same. This demand is accordingly set aside.
21. Therefore, save and except as above no order on this writ petition. There will be no order as to costs.
Order accordingly.
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