K.P. Sivasubramaniam, J.@mdashBoth the appeals arise out of two suits filed by the respective opposite parties. The suit in O.S. No. 350of 1988 on the file fo the District Munsif, Kuzhithurai, was filed jointly by one Kulandaivel nadar hereinafter called the lessee, and Bharat Petroleum Corporation Ltd. hereinafter called the Corporation or the Government Company against one D. Packiaraj and D. Packiadas hereinafter called the lessors, praying for specific performance of the contract dated 29-6-1968 by directing the defendants to execute a lease deed in respect of the plaint x schedule property in favour of the first plaintiff and an order of permanent injunction to prevent the breach of the obligation to renew the lease existing in favour of the first plaintiff under the lease dated 29-6-1968.
2. The suit in O.S. No. 524 of 1988 was filed by the lessors against the lessee and the Corporation praying for a decree to recover vacant possession of the plaint ''A'' schedule property, for removal of the plaint ''B'' schedule structures, if the defendants fail to remove them before they are dispossessed, a sum of Rs. 600/- towards arrears of rent till the date of the suit and for recovery of mesne profits from the date of the suit till the date of recovery of possession.
3. In the suit in O.S. No. 350 of 1988, the lessees/plaintiffs contended that the property originally belonged to the defendants and their brother Ghanasikhamony. Ghanasikhamony died without issues and his rights devolved on his brothers, the defendants. On 29-6-1968 the defendants demised the plaint schedule property on lease to the first plaintiff in continuation of an earlier lease granted for a portion of the property. The lease was for the purpose of building and the first plaintiff was in possession of the schedule property as lessee on a monthly rent of Rs. 360/- per month. The rent was being paid regularly. The first plaintiff had already constructed buildings and had erected a petrol pump for the sale of petrol and petroleum porducts. In the lease granted on 29-6-1968 more area was included than what was granted in the earlier lease and the total area in the possession of the first plaintiff includes the area granted under the lease dated 29-6-1968, The first plaintiff thereafter granted a lease of nine cents out of the total area in his possession to the Burmah Shell Oil Company for the erection and sale of petrol and petroleum products and the second plaintiff/Corporation is in joint possession with the first plaintiff. A fresh lease was executed by the first plaintiff in respect of nine cents in his possession as required under the provisions of the Burmah Shell (Acquisition of undertakings in India) Act, 1976, (hereinafter called "the Act") in favour of Bharat Refineries Ltd. The lease granted in favour of the first plaintiff was a permanent lease and the parties never intended that the first plaintiff should vacate the property at the end of the lease period. The lease deed also contained a covenant for renewal and the renewal clause was explicit. By a reply letter dated 20-11-1987 to the suit notice and also by a notice dated 18-2-1988 the first plaintiff had informed the defendants of their willingness and option to continue as lessee and demanding execution of the renewal deed, But by their reply dated 19-3-1988 the defendants denied the right of the plaintiffs to get a further renewal. It was further stated that the Bharat Refineries Limited was an undertaking of the Union Government and in terms of the Act, the lease granted to Burma Shell shall be deemed to have been transferred and vested with the Central Government. Such lease shall be renewed on the said terms and conditions. Therefore, the defendants have to execute the sale for a further period of 20 years.
4. In the writ statement by the lessors/ defendants in the suit , it was contended that though the lease was admitted the lease was not for the building purpose. The lease was given for the purpose of erecting a petrol pump and for sale of petrol in that bunk. The building claimed to have been put up by the first plaintiff was only a shed which can be easily dismantled and removed. The lease alleged to have been granted in favour of the Corporation is a sublease and the defendants are not aware of any such sublease or its terms. The first plaintiff was not authorised to grant any sub-lease and hence the sub-lease was invalid and and not binding on the defendants. The sub lease was given without the consent of the lessors. The claim that the plaintiffs have a right to get the renewal of the lease was also denied. The defendants also denied the right of the Central Government to have the lease renewed in terms of the Act. The stipulation in the lease deed is that at the expiry of 20 years, the parties may make any fresh agreement on terms and conditions to be settled then and even if it was assumed that it was a covenant for renewal, such stipulation was vague, uncertain and uneforceable. There is no covenant which is capable of specific enforcement. The lease deed dated 29-6-1968 was executed after rescinding and cancelling the earlier lease deed dated 7-5-1965. There was no authorisation to the first plaitiff to give a sublease or to induct a stranger into the leased premises. Therefore, the sub-lease given in favour of the Corporation was not valid.
5. In the suit inO.S. No, 524of 1988 filed by th lessors, the parties had raised the very same contentions respectively as in the earlier suit. It is further stated by the plaintiff/ lessors that on 7-5-1965 the plaintiffs have leased out 5 1/2 cents on the southwestern corner of Survey No. 2278 to the first defendant on a monthly rent of Rs. 100/-. The said lease was given for a period of 10 years. A fresh lease agreement was entered into on 29-6-198 under which the lessors gave an additional area of 9 1/2 cents and the lessee agreed to pay an enhanced monthly rent of Rs. 300/-. The said lease was specifically limited for a period of 20 years commencing from 29-6-1968. The lessee installed a petrol bunk and was selling petrol supplied by Burmah Shell Oil Company. These are trees in the plaint ''A'' schedule property which were excluded from the lease and the lessors continued to be in possession of the said trees. The lease granted in favour of the lessee was determined by efflux of time by the end of 28-6-1988 and the lessee and all persons claim right under him are liable to quit the premises on29-6-1988. But byway of abundant caution and to afford sufficient time for the lessee to make a prepartion a legal notice was issued on 26-9-1987. The lessee was duly informed that the plaintiffs require the suit land for their own use. A reply dated 20-11-1987 was received contending false and untenable contentions. On 3-3-1988, the first defendant lessee had sent another notice to the lessor contending that the lease was intended to be a permanent lease and was not liable to be evicted as long as he was willing to pay the stipulated rent. A reply notice was issued on 19-3-1988 by the lessor. It was further contended that in the lease deed there was no expression of any covenant for the renewal of the lease. It was only left open to the parties to make fresh agreement on terms and condition to be agreed between themselves. In O.S.No. 350 of 1988, it has been averred by the lessee that he had granted a sub lease of 9 cents to the second defendant. Therefore, the second defendant/Bharat Petroleum Corporation was also impleaded in the suit. The defendants are liable to quit the suit premises on the remvoal of the petrol bunk and accessories by 29-6-1988 and their continued occupation was wrongful and hence they were liable to pay mesne profits.
6. In the written statement filed by the first defendant/lessee, it was contended that the lease was a permanent lease. The lease was grnated for the purpose of erecting a petrol pump and a lease has been granted in favour of the Burma Shell Oil Company by the lessee. The plaintiffs right was to receive only usufructs from the trees on the land. Therefore, such right does not amount to possession of the trees. The covenant for renewal confers an immediate right to further term and as the convenant runs with the land it is exercisable by the defendant/ lessee. In terms of the Burma Shell Acquisition Act, 1976, the lessor was bound to renew the lease in favour of the lessee. The lessor was fully aware of the purpose of the lease being for running the petrol bunk. The suit was also not maintainable and the plaintiff/lessor was not entitled to any relief.
7. In the written statement of the second defendant/Corporation , it was contended that the lease was a permanent lease and the parties never intended that the first defendant should vacate the property at the end of 20 years . The entire area is in the possession of the first defendant and includes an area granted under the lease in favour of the Corporation. It was further stated that the lessor cannot plead ignorance of the lease to the Burma Shell and the consequences of passing of the Acquisition Act, 1976. The grant of lease to the second defendant was inherent and cannot be questioned by the lessor. The termination of the tenancy was not legal and the lessor was not entitled to recover possession of the property from the defendants. The suit was also not maintainable.
8. Both the suits were tried together by the trial Court as follows :--
(a) The suit in O.S. No. 524 of 1988 filed by the lessor was maintainable and the provisions of the Tamil Nadu Buildings (Lease and Rent Control) Act, would not apply.
(b) The renewal of the lease was possible only on mutual agreement and not by the lessee alone opting for renewal. Hence, the lease came to an end on 29-6-1988.
(c) The lessee cannot compel the lessor to renew the lease.
(d) The lessee and the Corporation are not entitled to resist the suit for possesion for by the lessor and thus lessor was entiled for mesne profits.
(e) The object of the lease was not to grant any permanent or perpetual lease in favour of the lessee.
(f) There was privity of contract between the lessor and the Corporation and the provisions of the Burmah Shell (Acquisition of Undertakings in India Act., 1976 (hereinafter called ''the Act") did not contemplate compelling the lessor to renew the lease. Hence, O.S. No. 524 of 1988 filed by the lessor was decreed as prayed for and O.S. No. 350 of 1988 filed by the lessee and the Corproation was dismissed. Two appeals were filed by the lessee and the Corporation before the sub-Court, Kuzhithurai. The appeal in A.S. No, 1 of 1995 was directed against the decree in O.S. No. 524 of 1988 and the appeal in A.S. No, 26 of 1995 was directed against the dismissal of the suit in O.S. No. 350 of 1988.
9. The appellate Court reversed the decision of the trial Court in both the appeals. The appellate Court held that the sub-lease in favour of the Corporation was with the knowledge and consent of the lessor and the same was permissible under the lease deed. Hence, Sections 5(2) and 7(3) of the Act were enforceable and the Corporation was entitled to insist upon the renewal of the lease. With the result, the suit by lessor was dismissed while the suit by the lessee and the Corporation was decreed as prayed for. Therefore, the present two Second Appeals by the lessor.
10. In both the appeals, the following substantial question of law had been framed for consideration :--
"Whether the first defendant can put forward any right to continue in possession on the basis of the Central Act 2 of 1976 ?"
11. Mr. N.S. Varadachari, learned counsel for the lessor/appellant contends that a perusal for the lease deed would show that there was no question of any automatic renewal of the lease. When the lease period was over, further renewal was contemplated only on fresh terms. But when there is no agreement between the parties on any terms of the furture period, much less any agreement to continue the lease, the lease automatically comes to a close on the period of lease. The option to renew was only discretionary, subject to the parties agreeing on terms. It is further contended that the Corporation is only a sub tenant with whom the lessor was not concerned at all. There is absolutely no privity of contract with the tenant and therefore, the lessor was not bound by the terms of the agreement between the lessee and the sub lessee. For the same reason, the statutory benefit conferred under the Acquisition Act cannot have any application for the present lease. The benefit of the Act would be available to the tenant and not to the sub tenant. Therefore, the original lease having expired on 28-6-1988 the respondents are not entitled to continue in possession and they would become trespassers after the period of tenancy. Learned counsel would also contend that no notice was necessary when the lease expires by efflux of time. As regards any superstructures the lessee was free to remove them before, he hands over possession of the property and on the termination of the lease, the lessee was bound to put the lessor in possession of the properly in the state in which he had received , as provided u/s 108(h) and (q) of the Transfer of Property Act. There is no proof of any consent by the lessor for the sub tenancy and hence the conclusions of the appellate Court as regards the applicability of the Act were unsustainable.
12. Reliance is place on the judgment of a Division Bench of this Court in United Plantations and Industries v. Tata Tea Limited., (1990) 1 MLW 402 in support of the contention that there was no question of any automatic renewal of the lease when once it expires by efflux of time. In that case, the agreement provided that the lease may be renewed for such further period and upon such revised rent and other terms and conditions as may be mutually agreed upon. The Division Bench after considering the issue very elaborately along with many other prior rulings, concluded that the exercise of the option either by the lessor or the lessee was permissive and discretionary and there was nothing in the agreement to show that the lessor was bound to grant the renewal.
13. Reference is also made to the judgment of another Division Bench of this Court in
"It is not a bilateral contract as being concluded by volition of lessor and lessee, but it is a statutory right to continue in possession. But the status of such occupant is that of the tenant alone. Section 23(1) of the ESSO (Acquisition of Undertakings in India) Act, 1974 which employs non obstante clause does exclude the operation of other enactment, which includes the Transfer of Property Act or other statutory enactments which apply to leases."
14. Therefore, according to learned counsel , the principles of the Transfer of Property Act recognising the right of a sub tenant, are not available for invoking statutory protection extended under the acquisition Act. On facts also in the letter dated 18-2-1988, it is only first respondent, lessee who had intimated the lessor about his willingness to continue lease and not the Corporation, apparently because there was no privity of contract with the lessor. In fact, the prayer in the suit filed by the lessees is also only to the effect that lessee should execute the lease deed in favour of the first plaintiff. Therefore, the provisions of the Acquisition Act cannot be invoked.
15. Mr. T. R. Rajagopalan, learned Additional Advocate-General, appearing for the respondents/lessees contends that Section 108(j) of the Transfer of Property Act envisages assignment of lease and hence subtenancy is not something which is prohibited under law. A reading of Section 5 of the Acquisition Act will show that any type of lease inclusive of a sub-lease would be covered by the Act. The expression "any lease or any right of tenancy" was suggestive of including assignees also, any person in lawful occupation by virtue of the understanding between the parties. In the agreement, there was no prohibition for sub-leasing the property. In fact, the lease in favour of the Petroleum Corporation was fully known to the lessor and the very lease itself was for the purpose of running a petrol bunk. In fact, the sub-lease was attested by the lessor. He would further contend that the decision in (1990) 1 MLW 402 , holding that the right of renewal was only discretionary and subject to agreement, was not applicable to the present case which was governed by the provisions of the Acquisition Act. It is further contended that having regard to the objects of the Act public interest was involved and hence the provisions were required to be interpreted in favour of continuing of the lease. There was also no necessity even to file a separate suit since the applicability of the Transfer of Property Act was excluded. He would further contend that the lease being a single and comprehensive transaction, it cannot be split up only with reference to nine cents of the land.
16. Learned counsel for the second respondent/Corporation, contended that a perusal of Sections 3, 5 and 11 would disclose that the Act governs all types of lease hold rights and a sub-lease was certainly covered under the Act. Supply of petrol being an essential commodity, the provisions of the Act have to be interpreted in favour of public interest.
17. Mr. T.R. Rajagopalan, relies on the observation of the judgment of E. Padmanabhan, J. reported in (1999) 2 MLW 552 , holding that the intendment of legislature that the existing lease in favour of the undertaking shall be continued for a further period should be given full effect.
18. Reference is also made to the judgment of another learned single Judge in
19. It may be first considered as to whether the lessee would be entitled to the relief of specific performance or to resist the suit by the lessor for possession, only by virtue of the agreement by the lessor, ignoring the provisions of the Acquisition Act. It is true that in the agreement, the right of renewal is mentioned as follows :--(Matter is vernacular, omitted--Ed.) It is true that the phraseology employed is vague and uncertain, but it may be safely concluded that there is a clause granting option in favour of both the parties to seek for renewal subject to fresh terms and conditions. The vagueness coupled with the renewal being made subject to the conditions to be agreed between the parties would render the right of renewal discretionary in terms of the judgment of a Division Bench reported in (1990) 1 MLW 402 . Therefore, as an ordinary lessee, the lessee, the first respondent is not entitled to be granted an automatic renewal in the absence of fresh terms and conditions to be agreed between the parties.
20. But in the present case, the supervening factor is the passing of the Acquisi- tion Act and it would be relevant to extract Section 5 of the Act.
5. Central Government to be lessee or tenant under certain circumstances.
(a) Where any property is held in India by Burmah Shell under any lease or under any right of tenancy, the Central Government shall, on and from the appointed day, be deemed to have become the lessee or tenant, as the case may be, in respect of such property as if the lease or tenancy in relation to such property had been granted to the Central Government, and thereupon all the rights under such lease or tenancy shall be deemed to have been transferred to, and vested in, the Central Government.
(2) On the expiry of the term of any lease or tenancy referred to in Sub-section (1) such lease or tenancy shall, if so desired by the Central Government, be renewed on the same terms and conditions on which the lease or tenancy was held by Burmah Shell immediately before the appointed day."
21. It is also necessary to consider the scope of applicability of the principles arising under the Transfer of Property Act in the context of the Acquisition Act and Section 11 of the Act is as follows :--
"11. Effect of Act on other laws. The provisions of this Act shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force or in any instrument having effect by virtue of any law other than this Act or in any decree or order of any Court, tribunal or other authority."
22. A reading of Section 11 indicates the overriding effect only in respect of the provisions which may be inconsistent with the Acquisition Act. In other words, the principles under the Transfer of Property Act are not abrogated to the extent that such provisions are consistent with the Acquisition Act.
23. In this background one of the issues which requires to be resolved is whether the sub-tenancy is binding on the lessor under the Transfer of Property Act. Sub-tenancy is not unlawful and in fact Section 103(j) entitles the lessee to sub-lease the whole or any part of his right. This liberty on the part of the lessee is subject to of course, by mutual agreement and with the permission of the lessor. It is only when there is a specific prohibition in the lease agreement to sub-lease the property, unauthorised sub-letting would become a ground for eviction and the lessor may be enabled to plead that there is no privity of contract with the sub-lessee and consequently, the sub-lessee has no right to exercise the option for renewal. But in the present case, it would be idle to contend that the lessor had not consented for the sub-lease or that he was unaware of the lease in favour of the Corporation. The sub-lease in favour of the Corporation was well known to the lessor and it is admitted by P.W. 1 one of the appellants, that he was aware of the sub-lease and had in fact, attested the lease deed between the lessee and the Corporation. Apart from the above factual position, a reading of Section 5 of the Acquisition Act clearly brings out that any right of tenancy would be governed by the Act. The expression "any lease or under any right of tenancy" has to be given its natural meaning which should include an authorised sub-tenancy. The conjunction "or" indicates two separate categories. While the words "any lease" would mean a direct lease with the Corporation, the following words "or under any right of tenancy" should naturally include direct or indirect right of tenancy. A sub-lease which is authorised by the lessor either expressly or by implication, will certainly fall under the expression "under any right of tenancy".
24. Therefore, I have no difficulty in rejecting the contention raised on behalf of the lessor, more so, having regard to the admitted facts of the present case. The provisions of the Act will apply to the sub-lease in favour of the second respondent/Corporation, executed by the lessee/the first respondent.
25. But at the same time, notwithstanding my conclusions as above, I find that there is total failure on the part of the respondents to comply with the requirements under the Act, which alone could entitle the protection under the act. Section 5 of the Act creates a deemed fiction whereby notwithstanding the fact that the Burmah Shell was the lessee, after passing of the Act, it is the Central Government which is deemed to have become a tenant. In fact, it is the pleading of the lessees themselves in O.S. No. 350 of 1988 that the lease granted to Burmah Shell shall be deemed to have been transferred to the Central Government. Sub-section (2) specifically envisages renewal of tenancy "if so desired by the Central Government. "The said requirement is totally lacking in the present case. Not a scrap of paper had been filed on behalf of the respondents to show that the Central Government had ever exercised its option u/s 5(2) of the Acquisition Act.
26. This defect, in my opinion, goes to the root of the matter. It is needless to point out that with the passing of the Act, it is the Central Government which had stepped into the shoes of the Burmah Shell Company. u/s 13 of the Act, contracts entered into by the Corporation shall continue in force and operate against or in favour of the Central Government. But as regards the desire to have the lease renewed, it is the Central Government which has to act positively and express its desire to have the renewal of the lease. The statutory requirements have to be strictly complied with and cannot be substituted by the said desire being expressed by any other person or authority.
27. Though a detailed written statement had been filed by the Corporation in O.S. No. 524 of 1988, there is no whisper of either the Corporation or the Government having expressed its desire to the lessor, much less, even to the lessee, first respondent. Even assuming for the sake of discussion that it would be sufficient if the Central Government had expressed its desire to the lessee, no such case had been made out by the respondents. Nextly, assuming again that it is not necessary that the Central Government alone should express its desire and that it would be sufficient if the Government Company had expressed its desire, here again there is neither any pleading nor any evidence to show even the Government Company expressing its desire. In this context, a perusal of the exhibits discloses that it is only three notices which have been exchanged between the lessor and lessee which should have some relevance to the issue. Ex. A-3 (B-17) is a notice dated 26-9-1987 from the lessor to the lessee terminating the lease with effect from 29-6-1988. Ex. A-4 (B-16) is the reply of the lessee dated 20-11-1987, expressing that the lessee had a right to exercise the option and its desire to continue the lease after 28-6-1988. In paragraph No. 4 of the said notice, it is stated as follows :--
"Moreover Burmah Shell was taken over by the Central Government under Burmah Shell (Acquisitton of Undertakings in India) Act, 1976 on 24-1-1976 and vested in Bharat Petroleum Corporation Ltd. Under the provisions of the Act such lease can be renewed on the same terms and conditions."
28. There is nothing to indicate from the above extracted paragraph 2 either the Central Government or the Government company expressing its desire to renew the lease. Ex. A-5 (B-14) dated 3-3-1988 is a notice from the lessee again expressing his option to renew the lease. Curiously in this notice, there is absolutely no whisper about the rights of the Central Government or the Government Company to have the lease renewed in terms of Section 5 of the Act. In fact, the claim in the notice is to have the renewal only in the context of his alleged personal right as a lessee to exercise the option for the renewal. This is all the evidence available on record to prove the option being exercised by the lessee. There is no evidence of either the Central Government or the Government Company seeking renewal or expressing their desire to continue the lease in terms of Section 5 of the Act. In fact as stated earlier, even assuming for the sake of discussion, that such a desire could have been expressed by the Central Government to the lessee alone and not necessarily to the lessor, there is neither any pleading much less, any evidence to the said effect.
29. Therefore, in my opinion, there is total non-compliance of requirements u/s 5 of the Act and hence the protection sought for under the provisions of the Acquisition Act cannot be invoked in the present case. The mere filing of a suit for specific performance by the Government Company as a co-plaintiff, cannot satisfy the statutory requirements u/s 5 of the Act. A perusal of the prayer in O.S. No. 350 of 1988 filed by the lessees is still more perplexing,
(a) For specific performance of contract dated 29-6-88 by directing the defendants to execute a lease deed in respect of the schedule property in favour of the 1st plaintiff.
(b) An order of permanent injunction to prevent the breach of the obligation to renew the lease existing in 1st plaintiffs favour under the lease dated 29-6-1968 restraining the defendants from interfering with the peaceful possession and enjoyment of the plaintiffs."
30. The prayer thus made is nothing but a mockery of the provisions of the Acquisition Act. The beneficiary under the Act can only be the Central Government or the Government Company, and not the lessee/private party. It is also seen that the Government Company in its written statement in the suit filed by the lessor had pleaded only the case of the lessee by stating that under the lease deed between the lessor and lessee, the intention was to create a permanent lease and that the lessee had intimated his willingness and option to continue as a lessee. In O.S. No. 350 of 1988, the Corporation had chosen to be a co-plaintiff only for the sake of obtaining a decree in favour of the first respondent/lessee alone. It did not occur to the Government Company that it had been specifically excluded from being granted with any relief. Therefore, the right of the Government Company or the Central Government as envisaged u/s 5 of the Act had been to tally abandoned. Nothing was done either by the Government Company or the Central Government to assert its right or to comply with the obligations envisaged u/s 5(2) of the Act.
31. In Bharat Petroleum Corporation Ltd. v. N. Ravi, (1997) 1 MLW 309, the learned Judge on an analysis of Section 5(2) of the Act had held that the provision does not contemplate any automatic renewal of the lease.
32. In S. Sivakumar v. Bharat Petroleum Corporation Ltd. (1997) 3 L W 520, S. S. Subramani, J. held that for the renewal of the lease as contemplated u/s 5(2) of the Acquisition Act, it was necessary to exercise the option to renew. Mere desire to obtain renewal was not sufficient.
33. In
34. I have already held that as between the lessor and lessee, the renewal clause in the lease deed is vague and uncertain and not enforceable, especially in the absence of both parties agreeing to the terms of the renewal.
35. It may also be incidentally pointed out here that even assuming that Section 5 of the Act could be enforced in the present case, the extended period of lease Itself pursuant to the renewal would come to an end by next year. The lease period in the earlier agreement was from 15-5-1975 to 28-6-1988. This works out to a period of 13 years, one month and 13 days. On that basis, the extended period from 28-6-1988 would come to an end by 10-8-2001 which is less than one year from now.
36. Therefore, neither on the basis of the lease agreement between the lessor and the lessee nor under the provisions of Act 2 of 1976, can the respondents herein resist the suit for possession filed by the appellant/ lessor who had terminated the lease in accordance with law. For the same reason, the suit filed by the respondents for specific performance is also liable to be dismissed.
37. In the result, both the Second Appeals are allowed and the judgment and decree of the trial Court in both suits are restored though for different, reasons. No costs.
38. Considering that the lease is for a commercial purpose involved in the supply of essential commodity, the respondents are directed to hand over vacant possession within a period of six months from today subject to both the respondents filing an affidavit of undertaking within four weeks from today.
