Depot Superintendent... v. Kolhapur Agricultura..., Supreme Court Of India, Judgment, Law, casemine.com

Citation Codes

Neutral Citations

2007 INSC 704

Equivalent Citations

citation codes

Case Number

Civil Appeal No. 2903 of 2007, decided on June 20, 2007

Disposition

Attorney(S)

Sanjay Kapur, Advocate, for the Appellants;
Shivaji M. Jadhav, Advocate, for the Respondent.

Judges

Dr. Justice Arijit Pasayat

Acts

Section 5, Subsection 2 of the 1983 Income Tax Act
The provisions of Act of 1977
Acquisition Act, and the provisions made thereunder, Section 7
Section 7(3) of the Acquisition Act
Maharashtra Rent Control Act, 1999
Code of Civil Procedure, 1908 (in short “CPC”), Order 6 Rule 17
Section 7 of the Acquisition Act
Section 7 read with Section 9 of the Caltex [Acquisition of Shares of Caltex Oil Refining (India) Limited and of the Undertakings in India of Caltex (India) Limited] Act, 1977

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Smart Summary

Factual and Procedural Background

The appellant, Hindustan Petroleum Corporation Ltd., has been running a petrol pump on land in Kolhapur under a lease executed on 28-12-1959 for 20 years with an option of one further 10-year renewal. Before the initial term expired in 1979, the appellant claimed to have exercised its renewal option for another 30 years by invoking Section 7 read with Section 9 of the Caltex (Acquisition) Act, 1977.

The respondent landlord disputed any valid renewal and, after serving a notice to vacate, filed Civil Suit No. 399 of 1998 for possession and mesne profits. The trial court decreed possession in favour of the respondent. The appellant’s first appeal (RCA 375 of 2000) was dismissed despite an allowed amendment to plead statutory renewal rights. A second appeal to the Bombay High Court was also dismissed. The present Supreme Court appeal challenges that dismissal.

Legal Issues Presented

Whether the lease stood automatically renewed under Section 7(3) of the Caltex (Acquisition) Act, 1977, absent an express desire of the Central Government.
Whether the appellant was entitled to a second renewal term beyond 1979 on the same terms and conditions of the original lease.

Arguments of the Parties

Appellant’s Arguments

Section 7(3) of the Acquisition Act automatically extended the lease for 30 years once the appellant expressed its desire for renewal.
The appellant’s 18-3-1989 letter and the respondent’s acceptance of rent in December 1997 evidenced consent to the renewal.
The suit for eviction lacked legal force because the statutory renewal rendered the termination notice ineffective.
The appellant, as a public sector corporation, should receive equitable time to vacate, if eviction is ordered.

Respondent’s Arguments

The lease expired in 1979, and no valid second renewal occurred.
Section 7(3) requires an affirmative desire of the Central Government; none was shown.
The appellant did not reply to the termination notice nor plead statutory renewal in its original written statement, undermining its belated reliance on Section 7(3).
Consequently, possession and mesne profits were rightly decreed.

Table of Precedents Cited

No precedents were cited in the provided opinion.

Court’s Reasoning and Analysis

The Supreme Court concurred with the High Court’s construction of Section 7(3) of the Acquisition Act. The provision stipulates that renewal of an expiring lease occurs “if so desired by the Central Government,” eliminating any concept of automatic renewal. The appellant produced no material showing such governmental desire. Acceptance of rent by the respondent in 1997 did not override the statutory requirement.

The Court also noted the appellant’s failure to invoke Section 7(3) either in a reply to the landlord’s termination notice or in its original pleadings before the trial court. Even if Section 7(3) were applicable, any renewal would have been confined to a 20-year term from 1979, which would have lapsed by the time of litigation. The appellant was further held not entitled to protection under the Maharashtra Rent Control Act, 1999.

Given the absence of statutory renewal and the appellant’s procedural defaults, the Court found no merit in the appeal. Nevertheless, consistent with a prior notice issued on 11-4-2005, the Court granted time until the end of June 2009 for the appellant to hand over possession, conditional on filing an undertaking within two weeks.

Holding and Implications

APPEAL DISPOSED OF / DISMISSED.

Direct Effect: The appellant must vacate the premises and deliver possession to the respondent by June 2009, subject to filing a timely undertaking; failure to file renders the extension inoperative.

Broader Implications: The decision reaffirms that Section 7(3) of the Caltex (Acquisition) Act does not confer automatic lease renewal absent an explicit desire of the Central Government. No new precedent is created beyond this statutory interpretation.

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Depot Superintendent, H.P Corpn. Ltd. And Another v. Kolhapur Agricultural Market Committee, Kolhapur .

Dr. Arijit Pasayat, J.— Leave granted.

2. Challenge in this appeal is to the order passed by a learned Single Judge of the Bombay High Court dismissing the second appeal filed by the appellant. While issuing notice on 11-4-2005 it was indicated that the appellant has to indicate whether he is willing to accept the suggestions given by the High Court about vacating the premises by 2009.

3. Background facts in a nutshell are as follows:

The appellant is running a retail outlet petrol pump in the suit premises in Kolhapur for which a lease was executed on 28-12-1959 between the predecessor-in-interest of the appellant and the respondent for a period of 20 years with an option of renewal for a further period of ten years. The period expired in December 1989. On 18-3-1989 i.e prior to the expiry of the lease period, the appellant purportedly exercised the right of renewal of the lease deed for a period of 30 years in terms of Section 7 read with Section 9 of the Caltex [Acquisition of Shares of Caltex Oil Refining (India) Limited and of the Undertakings in India of Caltex (India) Limited] Act, 1977 (hereinafter referred to as “the Acquisition Act”).

4. According to the appellant, the respondent by its conduct agreed to extend the lease by accepting rent on 2-12-1997. On 22-10-1997 the respondents noticed the appellant Corporation calling upon the Corporation to vacate the suit land and hand over the possession to the respondent. The respondent filed Civil Suit No. 399 of 1998 with the Court of Civil Judge, Junior Division, Kolhapur on 18-4-1998 inter alia praying for possession of the suit land and mesne profit on the ground that though the respondent served upon the appellant the notice of surrender of possession of land, the appellant avoided giving back the possession.

5. Learned Civil Judge decreed the suit and directed the appellants to hand over vacant possession. The appellants filed regular civil appeal (RCA No. 375 of 2000) before the learned District Judge, Kolhapur. During pendency of the civil appeal the appellant filed an application under Order 6 Rule 17 of the Code of Civil Procedure, 1908 (in short “CPC”) seeking inter alia the following amendment:

(i) By virtue of the Acquisition Act, and the provisions made thereunder, Caltex India Ltd. was converted into Hindustan Petroleum Corporation Ltd.

(ii) As per Section 7 of the Acquisition Act, the Corporation has legal right to renew the lease on the same terms and conditions after its expiry.

(iii) The Corporation by its letter dated 18-3-1989 had intimated to the plaintiff regarding its desire to renew the lease for a further period of 30 years. So automatically the lease period has been extended for 30 years.

(iv) The suit filed on the basis of the said notice has no legal force.

6. By order dated 2-11-2002 the amendment was allowed.

7. By order dated 4-10-2004 the civil appeal was dismissed. Second appeal was filed by the appellant before the Bombay High Court. By the impugned order the High Court dismissed the second appeal.

8. During the hearing of the appeal to avoid litigation between two public bodies the High Court suggested that the appellants may be granted time to vacate the suit plot subject to filing of undertaking but the appellant refused to accept the situation. Under Section 7(3) as noted by the High Court there is no automatic renewal and there can be renewal if it is so desired by the Central Government. In the instant case the other crucial question was whether the company was entitled to second renewal. The High Court held that option of renewal was exercised in the year 1978 and at that time the provisions of Act of 1977 were already enforced.

9. During the pendency of the appeal the appellants contended that they are entitled to benefit of Section 7(3). That plea is unacceptable as no reply was sent to the notice of termination and/or by referring to such right in the written statement filed in the trial court. If in the year 1979 i.e on the expiry of the lease period, even if lease was to be renewed in terms of Section 7(3), extension could have been granted in terms of original lease for a period of 20 years from the year 1979. It is to be noted that the appellants are not entitled to the protection of the Maharashtra Rent Control Act, 1999. Accordingly, the High Court held that there was no merit in the appeal which was dismissed.

10. Stands before the High Court were reiterated in this appeal.

11. Section 7(3) reads as follows:

“7. (3) On the expiry of the term of any lease, tenancy or arrangement referred to in sub-section (1) or sub-section (2), such lease or tenancy or arrangement shall, if so desired by the Central Government, be renewed or continued, so far as may be, on the same terms and conditions on which the lease or tenancy or arrangement was originally granted or entered into.”

12. As rightly observed by the High Court there is no automatic renewal and there can be renewal only if it is so desired by the Central Government. There is no material placed before the courts below that there was any desire in that regard by the Central Government. The appeal is, therefore, sans merit and deserves to be dismissed. But in terms of the notice dated 11-4-2005 time for handing over the possession is extended up to end of June 2009. Undertaking in that regard shall be filed within two weeks from today. If the undertaking is not filed, this order shall not be operative.

13. The appeal is accordingly disposed of.

Depot Superintendent... v. Kolhapur Agricultura...