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A.P Srtc And Others v. S. Jayaram .
Factual and Procedural Background
The appellant Corporation invited tenders in 1979 for leasing out its newly shifted canteen premises. The respondent emerged as the highest bidder and executed a lease deed for the period 1-4-1979 to 31-3-1982 at a monthly rent of Rs 4,000.
On 9-9-1981, the Corporation issued Circular No. 45/81, formulating a policy to renew existing contractors’ leases for one additional three-year term with stepped-up rents (15%, 17% and 20% increases for the first, second and third year, respectively). The circular required the Corporation to make an offer to each incumbent contractor; however, no such offer was communicated to the respondent.
Instead, the Corporation floated fresh tenders for 1-4-1982 to 31-3-1985. Unaware of the circular, the respondent participated and, after negotiations, offered Rs 20,025 per month; his bid was accepted. Upon learning of Circular No. 45/81, he filed a civil suit seeking enforcement of the circular terms and relief from the higher bid obligations. The trial court decreed in his favour, and the High Court affirmed. The present appeal by the Corporation challenges those concurrent findings.
Legal Issues Presented
- Whether the respondent was entitled to claim renewal of the lease for 1982-1985 under Circular No. 45/81 despite having participated in, and won, the subsequent tender process.
- Whether the respondent had waived the benefits of Circular No. 45/81 by submitting a fresh tender at a higher rent.
Arguments of the Parties
Appellant’s Arguments
- The respondent had already enjoyed two three-year terms (1976-1979 and 1979-1982) and therefore could not claim an additional term under the circular.
- By voluntarily bidding in the 1982 tender, the respondent waived any right he might have had under Circular No. 45/81 and is bound by the contract resulting from that bid.
Respondent’s Arguments
- He qualified as an “existing contractor” on 9-9-1981 and was therefore entitled to the renewal benefits under Circular No. 45/81.
- The claim of waiver cannot stand because he was unaware of the circular when he submitted the 1982 tender, and the Corporation never made the mandated renewal offer.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Basheshar Nath v. CIT, AIR 1959 SC 149 | Waiver requires intentional or voluntary relinquishment of a known legal right. | Used to conclude that the respondent could not have waived a right under Circular 45/81 because he was unaware of it, and the Corporation never offered renewal. |
Court's Reasoning and Analysis
The Court affirmed that Circular No. 45/81 applied to “existing contractors,” which indisputably included the respondent as of 9-9-1981. The appellant’s argument that an earlier tenancy (1976-1979) exhausted the respondent’s entitlement was rejected; the rights arising from the 1979 tender were treated as independent and unaffected by the earlier occupancy.
Addressing waiver, the Court adopted the principle from Basheshar Nath that waiver must be an intentional relinquishment of a known right. Because the respondent was unaware of the circular and the Corporation failed to make the requisite renewal offer, no waiver could be inferred. The Corporation could not rely on its own failure to communicate the circular to defeat the respondent’s claim.
Consequently, the lower courts correctly ordered that any rent paid under the interim order exceeding what would have been payable under Circular 45/81 must be refunded to the respondent.
Holding and Implications
APPEAL DISMISSED.
The Supreme Court upheld the decrees of the trial court and the High Court, confirming the respondent’s entitlement to renewal under Circular 45/81 and directing refund of excess rent. The decision reinforces the doctrine that waiver cannot be presumed absent knowledge of the right and underscores that a public authority cannot benefit from its own failure to implement its stated policy. No broader precedent was set beyond these factual confines, and no costs were awarded.
Order
1. This appeal is against concurrent findings of facts as also on law, arrived at by the trial court and upheld by the High Court. The relevant facts touching the questions arising for decision in the present appeal, briefly stated are that the premises for running a canteen on contract under the appellant Corporation came to be shifted to new premises on 26-2-1979. A tender was floated inviting bids for lease of the canteen premises for a period of 3 years. The respondent was the highest bidder and his bid for obtaining the canteen premises on lease money called rent of Rs 4000 per month was accepted. A lease deed for the period 1-4-1979 to 31-3-1982 was executed.
2. The appellant Corporation, in the interest of avoiding litigation and complaints which are often made, took a policy decision that the existing contractors in the premises owned by the Corporation will be allowed an extension of one term i.e for a further period of 3 years at enhanced rates of rent @ 15%, 17% and 20% for the first, second and third year respectively over the rent fixed for the preceding year. The circular also contained a provision that the Corporation shall make an offer to the contractor occupying the premises to take benefit of the policy decision of the Corporation. A circular in this regard, being Circular No. 45/81, was issued on 9-9-1981. The finding of fact arrived at by the courts below is that this circular was not brought to the knowledge of the respondent and certainly it is not the case of the appellant Corporation that at any time an offer was made to the respondent to exercise option for renewal of term subject to enhancement of lease rent in terms of the said circular.
3. Instead, the appellant Corporation invited fresh tenders for lease of the canteen premises for the period 1-4-1982 to 31-3-1985. The respondent, unmindful of the right available to him under the circular, as he was not aware of the same, participated in the process of tenders and made a bid which in the process of negotiations he revised to Rs 20,025 per month. His bid was accepted by the Corporation. On becoming aware of Circular No. 45/81 the respondent filed a civil suit seeking benefit of the circular and renewal for one term of 3 years on the terms and conditions proposed by the Corporation in the said circular and consequently being relieved from his obligation which he had incurred by making a bid through tender. The said suit has been decreed by the trial court and the decree in favour of the respondent has been upheld by the High Court.
4. It is submitted by the learned counsel for the appellant that prior to 1-4-1979 the respondent had already held a lease for a period of 2 years extended by a term of one year and thus for the period 1-4-1976 to 31-3-1979, he was not entitled to the benefit of the circular as by 31-3-1982 he had already taken the benefit of two terms of lease of three years each. This submission has to be summarily rejected. The respondent was holding the canteen premises w.e.f 1-4-1979, pursuant to a right to occupy having been secured by him in an open competitive bid wherein the respondent was the highest bidder. The rights which were created w.e.f 1-4-1979 are independent rights and the factum of occupation of canteen premises in the old building of the Corporation for the preceding period of 3 years by the respondent has no relevance for the purpose of Circular No. 45/81. The circular itself was issued on 9-9-1981 and applied to the existing contractors which the respondent certainly was.
5. It was next submitted that the respondent should be deemed to have waived his rights under Circular No. 45/81 by submitting tender in response to the notice inviting tenders in the year 1984 and he must be held bound by the terms of the contract which he entered into pursuant to the tender submitted by him. The High Court has formed an opinion that the respondent cannot be deemed to have waived the right or the benefit available to him under Circular No. 45/81 because he was not even aware of the existence of the circular. To constitute waiver there must be an intentional relinquishment of a known right or the voluntary relinquishment or abandonment of a known existing legal right or conduct such as warrants an inference of the relinquishment of a known right or privilege (Basheshar Nath v. CIT AIR 1959 SC 149). Moreover, the circular itself stipulates the Corporation making an offer to the contractors for taking benefit of the policy decision and it is undisputed that the Corporation never made such an offer to the respondent. Inasmuch as there is a failure on the part of the Corporation to extend the benefit of the circular to the respondent, the Corporation cannot be permitted to take shelter behind its own wrong.
6. The trial court and the High Court have directed the amount paid by the respondent under the interim order passed by the High Court to be refunded to the extent to which it is in excess of the amount which the respondent would have been liable to pay to the Corporation under the terms of Circular No. 45/81. No fault can be found with the view so taken by the High Court.
7. The appeal is devoid of any merits and liable to be dismissed. It is dismissed accordingly. No order as to the costs.
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