Anant Vishnu Muley And Ors. vs State Of Maharashtra And Ors.
2007 Latest Caselaw 1 Bom

JUDGMENT

Dharmadhikari B.P., J.

1. Challenge in present writ petition is to the order dated 2/ 4/1998 passed by respondent No. 1 State of Maharashtra allowing an appeal under Section 248 of Maharashtra Land Revenue Code, 1966 (referred to as "Code" hereafter) filed by present respondent No. 4. Respondent No. 4 Waman is related to petitioners as Uncle. According to petitioners their deceased mother Nalinibai leased out a plot to an Oil Company by name Esso (now Hindustan Petroleum Company) and respondent No. 4 was appointed by said oil company as its dealer to run petrol pump erected on said plot. By Impugned order respondent No. 1 has ordered cancellation of allotment and renewal of said plot in favour of deceased Nalinibai and directed the same to be given to respondent No. 4 by treating his possession after expiry of lease in favour of deceased mother as encroachment and directing its regulari-sation as per provisions of Code. This Court has while admitting writ petition stayed this direction and said interim order continues to operate even today. As respondent No. 4 is above 75 years of age and the senior citizen, matter has been listed for final hearing from category of senior citizen.

2. Plot No. 91 situated at Subashchandra Road, Nagpur ad measuring 10678.75 square feet forms subject matter of present petition. It was leased out initially to Pioneer Insurance Company Ltd Nagpur vide 3 different lease deeds executed by Secretary of State for India on 21/9/1932 for area ad measuring 918.75 square feet for period of about 16 years, 3000 square feet for about 13 years and for 6760 square feet also for about 13 years. These lease deeds were to expire on 31/3/1948, 3/10/1945 & 3/10/1945 respectively. Petitioners state that said Insurance Company was having a building on this land and lease was for commercial cum residential purpose. Pioneer Insurance Company executed sale deed on 14/12/1950 in favour of deceased mother and she got lease hold rights and she was placed in possession of entire property. She thereafter applied for renewal to respondent No. 3 Collector who passed the order on 24/5/1960 and renewed lease in favour of deceased Nalinibai for 30 years. Collector observed that plot ad measuring 4270 square feet was being used for commercial purpose and could be used for that purpose while remaining plot ad measuring 5490 square feet was used for residential purpose and could be used for that purpose. After about six years respondent No. 4 Waman was inducted as the tenant in portion of leased property and said tenancy continued till 1968 when he surrendered tenancy rights in favour of deceased Nalinibai only. Petitioners state that respondent No. 4 discontinued payment of rent in view of this surrender. On 1/4/1968 Nalinibai executed agreement with Esso Standard Eastern Company and inducted it as tenant in portion of leased property. This Esso Company then appointed respondent No. 4 as its dealer and petitioners state that respondent No. 4 in a suit filed by deceased mother for recovery of rent denied relationship of landlord and tenant between him & Nalinibai. Respondent No. 4 also filed a suit for partition and possession claiming ownership on various properties owned by deceased mother but this suit registered as Special Civil Suit 154/1969 was dismissed on 31/7/1973. First Appeal 16/ 1974 challenging this dismissal preferred by respondent No. 4 was also dismissed by Single Judge of this Court on 2/3/1984 and his LPA before Division Bench was also dismissed. It is contended that though respondent No. 4 Waman continued in physical possession, its nature underwent change after surrender from tenant to dealer of Esso. Petitioners point out agreement of dealership between Esso Company and respondent No. 4 for this purpose.

Lease of plot measuring 918.75 square feet was to expire on 31/3/1978 while lease of remaining portion was to expire on 31/3/ 1976 and though deceased mother did not immediately move any application for renewal, she continued in possession of entire plot as lessee. She regularly made payment of rent to lessor State Government and nobody raised objection to sale deed in her favour or to renewal of lease on 24/5/1960 in her favour and she continued to pay all taxes and charges in relation to this property. She (Nalinibai) also applied for renewal and Revenue Case 125/ NAA-48/81-82 was started for that purpose and notices were issued in it on 25/9/1981. When case was under consideration of respondent No. 3 Collector, Nalinibai expired on 12/11/1987. Petitioners, as legal heirs of Nalinibai moved application for mutation and their names were accordingly taken on record against leased property. Nazul Officer on report of Nazul Surveyor issued notices to petitioners as also to respondent No. 4 and said officer then recommended cancellation of leases to respondent No. 3 Collector and its grant in favour of respondent No. 4 on 1/2/1996. Nazul Officer recommended this action because of certain breaches noticed by him. Respondent No. 3 Collector then issued notices to both parties, heard them and rejected the recommendation and directed renewal of lease in favour of petitioners within period of three months from the date of his order on 10/4/1996. Accordingly petitioners made application to Nazul Nayab Tahasildar, Nagpur for renewal. Respondent No. 4 Waman preferred appeal against this order of Collector before respondent No. 2 Additional Commissioner and respondent No. 2 dismissed said appeal after hearing parties. Respondent No. 4 then filed further appeal under Section 248 of Code before Minister (Revenue) i.e. to respondent No. 1. Said authority heard the parties on 26/7/1997 and allowed that appeal vide its order dated 2/ 4/1998. Respondent No. 1 quashed the order passed by respondent nos. 3 and 2 and ordered them to regularise possession of respondent No. 4 by treating him as en-croacher. It is this order which has given rise to present writ petition.

3. I have heard Advocate Uday Dastane for petitioners and Advocate Sunil Manohar for respondent No. 4. Learned AGP Shri Dhote has appeared for respondents 1 to 3.

Advocate Uday Dastane has invited attention to various clauses of lease deed dated 21/9/1932 to contend that Government permitted lessee to raise construction and also to carry on business and further to assign the lease to any third person. He further points out that Government had reserved to itself right to regularise breaches, if any, committed by lessee and lease deeds also contain renewal clause. According to learned Counsel leases were perineal and sale deed in favour of Nalinibai by allottee/grantee from Government was/is therefore legal and valid and free from all encumbrances. He also points out that name of deceased mother was mutated in Government records as lease holder and then names of petitioners were also substituted in her place. He also invites attention to findings in civil litigation about absence of title and interest in respondent No. 4 and finality reached when his First Appeal 16/1974 was dismissed on 2/3/ 1984. He also points out various clauses in lease agreement between deceased mother and Esso to stress that respondent No. 4 was never in possession and it was Esso who appointed him as dealer and placed him in possession as its agent and not independently. He also points out that Esso had reserved a right to purchase and leases were renewed up to 1976 and 1978 respectively. He points out how breaches noticed by Nazul Officer were misconceived and how respondent No. 3 Collector has correctly appreciated the controversy. He states that Hon'ble Minister has for the first time used Section 111 and Section 116 of Transfer of Property Act, 1882 (hereinafter TP Act) and ignored that lease was perpetual and right to renew was inherent in it. He further points out that respondent No. 3 Collector had right to condone breaches in terms of lease deed and alleged breaches, if any, were waived by Collector because he did not exercise right of re-entry. Reliance has been placed on judgment of Hon Apex Court reported at State of U.P. and Ors. Appellants v. Lalji Tandon (Dead), Respondent in support. Attention is invited to Section 2 and Section 3 of Government Grants Act, 1895 (Grants Act hereafter) to state that provisions of TP Act were/are not applicable and terms and conditions in lease deed are determinative of relationship between parties. Purshottam Dass Tandon and Ors. petitioners v. State of U.P. Lucknow and Ors. is pointed out in support. It is also argued that law permitted respondent No. 3 Collector to exercise discretion and after Competent Authority like Collector using his discretion and ordering renewal, respondent No. 1 Hon Minister could not have interfered in the matter in second appeal. State of U.P. v. Zahoor Ahmad is sited in support. He alleges that respondent No. 2 Additional Commissioner found that respondent No. 4 had interest only as "dealer" and this finding of respondent No. 2 was not questioned by respondent No. 4 before respondent No. 1. He invites attention to various provisions of Code and also Rule 35 of Land Disposal Rules framed thereunder to point out competency of Collector in such matters. He argues that respondent No. 1 has not invoked Section 50 of Code and requirement of proviso to Section 51 thereof are ignored. He contends that thus respondent No. 1 has exercised jurisdiction not available to it in the matter and order dated 2/4/1998 is therefore liable to be quashed and set aside.

Advocate Sunil Manohar for respondent No. 4 has stated that on 16/9/1950 when deceased mother Nalinibai purchased three properties included in 3 lease deeds, lease deeds had already expired and Pioneer Insurance Company had no right to sale interest derived by them under these lease deeds as there was never any renewal in their favour after 31/3/1948 or 3/10/1945. He argues that Clauses 7,8 and 9 of these lease deeds were valid and operative during subsistence of lease deeds and not thereafter. He argues that as Pioneer Insurance Company never applied for renewal, it lost all rights conferred by leases on it. It at the most sold only "structure" on part of land and not "land". He contends that Nazul plot could not have been sold and has not been sold to mother of petitioners by Pioneer. He states that there is no order of renewal of leases and no such order is produced by petitioners on record. Order dated 24/5/1960 is not passed by Collector and it is at best an order of assessment or mutation. He points out that even copy of any renewal application moved after expiry of earlier lease deeds in favour of Pioneer Insurance Company & till 1981 is not produced by petitioners on record. He contends that there is no question of any lease expiring either in 1976 or in 1978 in the matter. According to him mere acceptance of rent from deceased mother by Government is not sufficient to infer renewal and he relies upon judgment of Hon. Apex Court reported at Shanti Prasad Devi v. Shankar Mahto and A.I.R. 1990 S.C. 140 in support. He further states that in absence of renewal in their favour Pioneer Insurance Company continued only as statutory tenant and had no assignable right. Reliance is placed upon judgment of Hon Apex Court reported at A.I.R. 1965 S.C. 414 ArvandNivas Private Ltd. v. Anandji Kalyanji's Pedhi for this purpose. He invites attention to 5 objections raised by Nazul Officer and argues that respondent No. 1 has rightly accepted all these objections. He further states that Rule 43 of Land Revenue (Disposal of Government Land) Rules, 1971 permits grant of lease to person in possession even as encroachers and as respondent No. 4 has been consistently in possession, respondent No. 1 has rightly used his powers and order dated 2/ 4/1998 needs to be maintained. Character of respondent No. 4 as dealer of Esso is not relevant according to him in this dispute. Lastly he states that present writ petition involves various disputed questions of facts and hence it is not maintainable and that at the most petitioners ought to have filed a civil suit for redressal of their grievance.

AGP Shri Dhote for respondents 1,2 and 3 has supported the order passed by respondent No. 1 and stated that leasehold rights of deceased mother expired on 31/3/ 1976 and 31/3/1978 and thereafter she was no longer leasee and hence her legal heirs were not in position to inherit any rights. He invited attention to Clause No. 7 of lease deed and stated that deceased never intimated any assignment in favour of any third person as contemplated by this clause and as per Clause 6 lessor had right of re-entry . Deceased alone was free to use portion of land for commercial purpose as per permission given to her by Collector and she could not have sublet it to third person. It is argued that after expiry of lease in 1976 and 1978, the entire property reverted back Government. He states that possession of respondent No. 4 is not being disputed by petitioners and as such the respondent No. 1 has rightly ordered the same to be regularised.

In reply, Advocate Uday Dastane states that respondent No. 1 has also accepted renewals till 31/3/1976 or 31/3/ 1978 that is for period of 30 years after expiry of initial leases in favour of Pioneer Insurance Company . In the alternative, he submits that then 30 years fresh leases must be presumed to have come into existence in favour of deceased mother from date of sale deed till year 1980. He argues that respondent No. 4 cannot continue to approbate and reprobate, & that respondent No. 4 has no locus in the matter. He further states that even if it is presumed that there was no renewal in favour of Nalinibai said defect is waived by respondent No. 3 Collector within his rights. He points out various clauses in agreement between respondent No. 4 and Esso to further his case and sites judgment of Hon Apex Court reported at BSNL and Ors. v. Subashchandra Kanchan and Anr. reported at (2006) 8 S.C.C. 279. He contends that there is no reply by respondents to his arguments on application of Grants Act and its effect in the matter.

4. Respondent No. 4 has before this Court in return for first time sought to contend that there was no question of leases expiring on 31/3/1976 or 31/3/1978. It is sought to be demonstrated that leases were not renewed after its expiry initially and there was no valid lease on 14/12/1950 when deceased Nalinibai purchased property from Pioneer Insurance Company. It appears that before respondent No. 3 Collector present respondent No. 4 accepted expiry of leases in favour of deceased in 1976 and 1978 respectively. Collector has in his order made reference to order dated 24/5/1960 and observed that its copy could not be produced by anybody. However he found that said order is mentioned in revenue records and as per those records all leases were renewed up to 31/3/ 1976 & 31/3/1978. The Collector has found that there was no renewal after this expiry. Even before Hon Minister, respondent No. 4 did not question validity of this finding and Hon Minister has accepted the fact of renewal up to 31/3/1976 and 31/3/1978.' Respondent No. 4 had challenged order of Collector before respondent No. 2 Additional Commissioner but again before respondent No. 2 there is no such stand. Perusal of impugned order reveals that respondent No. 4 Waman advanced arguments accepting expiry of lease in favour of deceased mother in 1976 and 1978. Only contention advanced was that 1950 sale deed was executed by Pioneer Insurance Company after expiry of leases in its favour and hence was not valid. The Hon Minister has ordered regularisation of encroachment of respondent No. 4 from 31/3/ 1976 and 31/3/1978 i.e. after alleged expiry of renewed period of leases in favour of Nalinibai. Respondent No. 4 also asserted before respondent No. 1 that he is tenant on suit lands since 1956 and he paid rent to deceased directly up to 1968 and thereafter through Esso ie. Hindustan Petroleum Corporation. It is therefore apparent that respondent No. 4 also admits that he was inducted by deceased mother of present petitioners . Hence his contention that there was no renewal up to 31/3/1976 and 31/3/1978 therefore cannot be accepted.

Respondent No. 4 had filed Special Civil Suit 154 of 1969 against deceased Nalinibai for partition and separate possession. Perusal of judgment dated 31/7/1973 in said suit reveals a specific finding recorded in paragraph 13 that property involved in that suit was self acquired property of Vishnupant Muley, husband of deceased Nalinibai. Deceased Nalinibai was defended No. 1 in that suit. While recording finding against issue No. 10, Joint Civil Judge, Senior Division, Nagpur has recorded that the property forming subject matter of present writ petition mentioned by learned Judge as house at Subhashchandra Road was purchased by deceased Nalinibai and was not joint family property. Suit of respondent No. 4 was dismissed with cost and as already stated above the judgment is maintained by this Court in First Appeal and thereafter in LPA.

Initially he paid rent to deceased Nalinibai & then accepted status as dealer of her leasee M/s Esso. Then he tried to claim ownership in civil suit & failed. In view of material available on record, it is apparent that respondent No. 4 cannot now be permitted to question the title of Nalinibai in present proceedings.

5. This brings me to consideration of question whether after expiry of all leases in their favour, Pioneer Insurance Company was competent to execute sale deed in favour of deceased Nalinibai Clauses of lease agreements between Pioneer Insurance Company and Secretary of State for India in Council are therefore important. It is not in dispute that all lease-deeds are identical. Lease deeds permit Pioneer Insurance Company to hold the properties demised till particular day i.e. till 3/10/1945 or 31/3/1948, as the case may be. It also permits erection of buildings and also envisages induction of tenants by leasee in those buildings. It also permits lessee to carry on any trade, business or activity which is not regulated or to permit to be carried on by any other person any such trade, business or activity on the premises. Clause 6 enables leasee to carry on or to permit to be carried on regulated activities, trade or business with previous permission of Deputy Commissioner. Clause 7 requires lessee to intimate every assignment within one month to Deputy Commissioner. Clause No. 8 assures lessee peaceful enjoyment and holding without any lawful interruption or disturbance by lessor upon lessee paying rent and observating conditions of lease deeds. First proviso to Clause No. 8 gives right of re-entry to lessor for breach or nonobser-vance by lessee of any term or condition of lease deed though earlier such breach or lapse may have been waived by lessor. Second proviso to this clause gives discretion to lessor to recover from lessee a sum of money not exceeding Rs. 50/ as may be fixed by Deputy Commissioner as consideration for non-exercise of power of re-entry. Clause No. 9 covenants that lessor shall execute at the request and cost of lessee a renewed lease of said lands for term of 30 years. Clause No. 10 of respective lease deeds also brings successors and assigns of lessee as also his heirs, executors, administrators, representatives and assigns in its fold.

In impugned order respondent No. 1 has relied upon provisions of Section 111 of TP Act to conclude that after expiry of period . mentioned in the lease deed, leases automatically come to an end. Respondent No. 1 further observes that if lessor accepts rent even after such expiry, lease deed is deemed to have been renewed. However respondent No. 1 has refused to undertake deeper scrutiny and observed that only mention of these provisions in brief is sufficient. He has thereafter given importance to fact that respondent No. 4 has been in continuous possession of lands in dispute. Little latter respondent No. 1 mentions that after expiry of leases on 31/ 3/1976 and 31/3/1978 respectively, leases in favour of deceased Nalinibai come to an end and property comprised therein vests in Government. Respondent No. 4 has contended that after expiry of lease in favour of Pioneer Insurance Company on 3/10/1945 and 31/3/1948, said Company only had a right to defend its possession till evicted in accordance with law and it could not have transferred or assigned any interest in leasehold property as it had no such title.

6. In Shanti Prasad Devi v. Shankar Mahto (supra), Hon Apex Court considers question whether mere acceptance of rent from a leasee overstaying the lease period can be construed as consent of lessor to continuation of lease. Following observations are important:

17. We fully agree with the High Court and the first appellate Court below that on expiry of period of lease, mere acceptance of rent for the subsequent months in which the lessee continued to occupy the lease premises cannot be said to be a conduct signifying 'assent' to the continuance of the lessee even after expiry of lease period. To the legal notice seeking renewal of lease, the lessor gave no reply. The agreement of renewal contained in Clause (7) read with Clause (9) required fulfilment of two conditions; first the exercise of option of renewal by the lessee before the expiru of the original period of lease and second, fixation of terms and conditions for the renewed period of lease by mutual consent and in absence thereof through the mediation of local Mukhia or Panchas of the village. The aforesaid renewal Clauses (7) and (9) in the agreement of lease clearly fell within the expression 'agreement to the contrary' used in Section 116 of the Transfer of Property Act under the aforesaid clauses option to seek renewal was to be exercised before expiry of the lease and on specified conditions.

18. The lessor in the present case had neither expressly nor impliedly agreed for renewal. The renewal as provided in the original contract was required to be obtained by following a specified procedure i.e. on mutually agreed terms or in the alternative through the mediation of Mukhias and Panchas. In the instant case, there is a renewal clause in the contract prescribing a particular period and mode of renewal which was 'an agreement to the contrary' within the meaning of Section 116 of the Transfer of Property Act. In the face of specific Clauses (7) and (9) for seeking renewal there could be no implied renewal by 'holding over' on mere acceptance of the rent offered by the lessee. In the instant case, option of renewal was exercised not in accordance with the terms of renewal clause that is before the expiry of lease. It was exercised after expiry of lease and the lessee continued to remain in use and occupation of the leased premises. The rent offered was accepted by the lessor for the period the lessee overstayed on the leased premises. The lessee, in the above circumstances, could not claim that he was 'holdingover' as a lessee within the meaning of Section 116 of the Transfer of Property Act.

Here, respondent No. 3 Collector renewed the lease of Nalinibai till 1976 & 1978 a$ mentioned above. Not only this, the renewal clause does not require lessee to seek renewal before expiry of lease and renewal contemplated is at the end of lease period. Lease deeds can be renewed successively at the request and cost of lessee. There is no prohibition to apply after expiry of lease period. Proviso to Clause 9 of lease deed only permits enhancement of rent for grant of every renewal and states that every lease shall contain conditions already incorporated or as may be applicable. Here not only first renewal but all successive renewal are also assured by lessor and there is no discretion to refuse with it in this respect, except disagreeing with leasee on quantum of rent. In the facts of present case, there is no such disagreement. It is therefore apparent that above ruling has no application.

7. Anand Nivas Private Ltd. v. Anandji Kalyanji's Pedhi has been relied upon by respondent No. 4 to contend that after expiry of leases in their favour Pioneer Insurance Company could not have transferred any interest in land to deceased Nalinibai. Hon Apex Court there considered provisions of Bombay Rents, Hotel and Lodging House Rates Control Act (57 of 1947), and observed by majority that a person remaining in occupation of the premises let to him after the determination of or expiry of the period of the tenancy is commonly, though in law not accurately, called a statutory tenant. Such a person is not a tenant at all, he has no estate or interest in the premises occupied by him. He has merely the protection of the statute in that he cannot be turned out so long as he pays the standard ent and permitted increases, if any, and performs the other conditions of the tenancy. His right to remain in possession after the determination of the contractual tenancy is personal. It is not capable of being transferred or assigned, and devolves on his death only in the manner provided by the statute. The right of a lessee from a landlord on the other hand is an estate or interest in the premises and in the absence of a contract to the contrary is transferable and the premises may be sublet by him. But with the determination of the lease, unless the tenant acquires the right of a tenant holding over, by acceptance of rent or by assent to his continuing in possession by the landlord, the terms and conditions of the lease are extinguished, and the rights of such a person remaining in possession are governed by the statute alone. Section 12(1) of the Act 57 of 1947 merely ecognizes his right to remain in possession so long as he pays or is ready and willing to pay the standard rent and permitted increases and performs the other conditions of the tenancy, but not the right to enforce the terms and conditions of the original tenancy after it is determined. Assuming that the tenant was entitled to sublet the premises under the terms of the lease he could not, relying upon Section 12(1), exercise the right to sublet granted under the lease after he became a statutory tenant. Again in view discussion above as there was already renewal for period of 30 years i.e. upto 1976 on 1978 in favour of deceased mother of present petitioners , I find that this judgment has no application. Moreover this judgment is held to be not a good law in subsequent judgment of Hon Apex Court reported at A.I.R. 2003 S.C. 229 Om Wati Gaur v. Jitendra Kumar in paragraph 13 of report. Learned Counsel for respondent No. 4. Waman has also cited A.I.R. 1990 S.C. 140 (?) in chronology and submissions placed in writing on record. Names of parties are not specified. But again the reliance on it is for same purpose. Hence it is not necessary for this Court to go into details thereof because of facts of present matter.

8. Here, reference to provisions of Grants Act is called for & I find it proper to reproduce paras 78 & 79 form Express Newspapers Pvt. Ltd. v. Union of India which aptly consider it as under:

78. It is common ground that the perpetual lease was a Government grant governed by the Crown Grants Act, 1895, now known as the Government Grants Act. The Act is an explanatory or declaratory Act. Doubts having arisen as to the extent and operation of the Transfer of Property Act, 1882 and as to the power of the Government to impose limitations and restrictions upon grants and other transfers of land made by it or under its authority, the Act was passed to remove such doubts as is clear from the long title and the preamble. The Act contains two sections and provides by Section 2 for the exclusion of the Transfer of Property Act, 1882 and, by Section 3 for the' exclusion of any rule of law, statute or enactment of the Legislature to the contrary. Sections 2 and 3 read as follows:

2. Transfer of Property Act, 1882, not to apply to Government grants -

Nothing in the Transfer of Property Act, 1882, contained shall apply or be deemed ever to have applied to any grant or other transfer of land or of any interest therein heretofore made or hereafter to be made by or on behalf of the Government to, or in favour of, any person whomsoever; but every such grant and transfer shall be construed and take effect as if the said Act had not been passed.

3. Government grants to take effect according to their tenor -

All provisions, restrictions, conditions and limitations over contained in any such grant or transfer as aforesaid shall be valid and take effect according to their tenor, any rule of law, statute or enactment of the Legislature to the contrary notwithstanding.

79. It is plain upon the terms that Section 2 excludes the operation of the Transfer of Property Act. 1882 to Government grants. While Section 3 declares that all provisions, restrictions, conditions and limitations contained over any such grant or transfer as aforesaid shall be valid and shall take effect according to their tenor, notwithstanding any rule of law, statute or enactment of the Legislature to the contrary. A series of judicial decisions have determined the overriding effect of Section 3 making it amply clear that a grant of property by the Government partakes of the nature of law since it overrides even legal provisions which are contrary to the tenor of the document.

Advocate Uday Dastane has relied upon State of U.P. v. Zahoor Ahmad, and following observations made by Hon Apex Court:

13. The lease in die present case was for the purpose of erecting a temporary rice mill and for no other purpose. The mere fact that the State is the lessor will not by (make?) it a Government grant within the meaning of the Government Grants Act. There is no evidence in the present case in the character of the land or in the making of the lease or in the content of the lease to support the plea on behalf of the State that it was a grant within the meaning of the Government Grants Act.

15. In the present case the High Court correctly found on the facts that the respondent after the determination of the leave held over. Even if the Government Grants Act applied Section 116 of the Transfer of Property Act was not rendered inapplicable. The effect of Section 2 of the Government Grants Act is that in the construction of an instrument governed by the Government Grants Act the Court shall construe such grant irrespective of the provisions of the Transfer of Property Act. It does not mean that all the provisions of the Transfer of Property Act are inapplicable. To illustrate, in the case of a grant under the Government Grants Act Section 14 of the Transfer of Property Act will not apply because Section 14 which provides what is known as the rule against perpetuity will not apply by reason of the provisions in the Government Grants Act The grant shall be construed to take effect as if the Transfer of Property Act does not apply.

16. Section 3 of the Government Grants Act declares the unfettered discretion of the Government to impose such conditions and limitations as it thinks fit, no matter what the general law of the land be. The meaning of Sections and. 3 of the Governments Grants Act is that the scope of that Act is not limited to affecting the provisions of the Transfer of Property Act only. The Government has unfettered discretion to impose any conditions, limitations, or restrictions in its grants, and the right privileges and obligations of the grantee would be regulated according to the terms of the grant, notwithstanding any provisions of any statutory or common law.

9. State of U.P. and Ors. Appellants v. Lalji Tandon (Dead), Respondent has been relied upon by petitioners to state that lease in favour of their mother was/is a perpetual lease. In paragraph 13, Hon Apex Court observes:

13. In India, a lease may be in perpetuity. Neither the Transfer of Property Act nor the general law abhors a lease in perpetuity. (Mulla on the Transfer of Property Act, Ninth Edition, 1999, p. 1011). Where a covenant for renewal exists, its exercise is, of course, a unilateral act of the lessee, and the consent of the lessor is unnecessary. Baker v. Merckel (1960) 1 All. E.R. 668, also Mulla, ibid, p. 1204 Where the principal lease executed between the parties containing a covenant for renewal, is renewed in accordance with the said covenant, whether the renewed lease shall also contain similar clause for renewal depends on the facts and circumstances of each case regard being had to the intention of the parties as displayed in the original covenant for renewal and the surrounding circumstances. There is a difference between an extension of lease in accordance with the covenant in that regard contained in the principal lease and renewal of lease, again in accordance with the covenant for renewal contained in the original lease. In the case of extension it is not necessary to have afresh deed of lease executed; as the extension of lease for the term agreed upon shall be a necessary consequence of the clause for extension However, option for renewal consistently with the covenant for renewal has to be exercised consistently with the terms thereof and, if exercised, a fresh deed of lease shall have to be executed between the parties. Failing the execution of a fresh deed of lease, another lease for a fixed term shall not come into existence though the principal lease in spite of the expiry of the term thereof may continue by holding over for year by year or month by month, as the case may be.

I find that reference to following paragraphs is also important to correctly appreciate the law in the point.

17. Green v. Palmer (1944) All. E.R. 670, bears a close resemblance with the facts of the present case. There the parties had entered into a lease agreement for six months. One of the covenants in the lease read so-

The tenant is hereby granted the option of continuing the tenancy for a further period of six months on the same terms and conditions including this clause, provided the tenantgives to the landlord in writing four weeks' notice of his intention to exercise his option" The plea raised on behalf of the tenant was that the clause gave him a perpetual right of renewal. Uthwatt, J. of Chancery Division held

...the first thing one observes is that, in terms, there is granted to the tenant a single option exercisable only once upon the named event, and the subject-matter of that option is an option "of continuing the tenancy for a further period of six months on the same terms and conditions including this clause." To my mind, what that means is this : the tenant is to be allowed once, and once only, the opportunity of continuing the tenancy continuing it for a further six months. Then we come to the critical words "on the same terms and conditions including this clause." As I read it, that means there is included in the new tenancy agreement a right in the tenant, if he thinks fit, to go on for one further six months, and when you have got to that stage you have finished with the whole matter. In other words, it comes to this : "Here is your present lease. You may continue that, but I tell you, if you continue it, you continue it on the same terms as you were granted the original lease. You may continue it for a further 6 months with the right to go on for another 6 months.

Upon that footing, in the events which have happened, all the landlord was bound to do under this arrangement was to permit the tenant to occupy for a period not exceeding 18 months in the whole from the time when the original lease was granted.

18. We find ourselves in full agreement with the view of the law taken in the decisions cited herein above. It is pertinent to note that the respondent is not claiming a lease in perpetuity or right to successive renewals under the covenant for renewal contained in the 1887 lease. The term of 50 years under the 1887 lease came to an end in the year 1937 and the option for renewal was exercised by the respondent as assignee of the original lessee which exercise was honoured by the lessor State executing a fresh deed of lease belatedly on February 20, 1945. This lease deed does not set out any fresh covenants, mutually agreed upon between the parties for the purpose of renewal. Rather it incorporates, without any reservation, all the covenants, provisos and stipulations as contained in the principal lease as if they had been herein repeated in full. Not only was a fresh deed of lease executed but the conduct of the parties also shows that at the end of the term appointed by the 1945 lease, i.e. in or around the year 1987, the lessor did not exercise its right of re-entry. On the other hand, the respondent exercised his option for renewal. The officials of the appellant State, i.e. the Collector and the Board of Revenue, all recommended renewal and advised the State Government to expedite the renewal The State Government was generally renewing such like leases by issuing general orders/instructions to its officers. At no point of time prior to the filing of the counter-affidavit, on the present litigation having been initiated, the State or any of its officers took a stand that the right of renewal, as contained in the principal deed of lease, having been exhausted by exercise of one option for renewal, was not available to be exercised again.

19. Now that the covenant for renewal has been referentially incorporated without any reservation in the lease deed of 1945 the exercise of option for renewal cannot be denied to the respondent. However, in the lease deed to be executed for a period of 50 years commencing May 20, 1987, the covenant for renewal need not be incorporated and, therefore, the term of the lease would come to an end on expiry of 50 years calculated from May 20. 1987. This view also accords with the view of the law taken in Green v. Palmer (supra).

10. It is not in dispute that the lease deeds in favour of Pioneer Insurance Company are executed in September 1932 by Secretary of State for India in Council and provisions of Grant Act are applicable to it. From the law discussed above, it is apparent that the document of lease executed by respondents 1 to 3 in favour of Pioneer Insurance Co. will have to be interpreted as per language used in it without getting influenced by provisions of TP Act. The relevant clauses of the agreement are already mentioned above. Clause 9 & 10 of lease deed dated 21/9/1932 read as under:

9. The lessor further covenants that he will at the end of the term hereby granted and so on from time to time thereafter at the end of each successive further term of years as shall be granted at the request and cost of the lessee execute to him a renewed lease of the said land for the term of 30 years.

Provided that the rent may be enhanced for the grant of every renewed lease and that every lease shall contain shall (all?) of the conditions herein contained as shall be applicable.

10. It is agreed that the expression lessor and the lessee herein used shall, unless inconsistent with the context, include in the case of the former his successors and assignee's and in case of the latter in his heirs, executors, administrators, representatives and assigns.

Clause 9 therefore obliges respondents 1 to 3 to execute renewed lease for period of 30 years in favour of lessee at the request and cost of lessee at the end of term of lease. Only qualification is about increase in rate of rent for every renewed lease. It however contemplates execution of renewed lease deed and negotiations about rate of rent are kept open. I therefore find that renewal is not automatic and such a type of lease cannot be construed as perineal or lease in perpetuity. Observations in State of U.P. and Ors. Appellants v. Lalji Tandon (supra) show that "principal lease in spite of the expiry of the term thereof may continue by holding over for year by year or month by month, as the case may be ". It therefore follows that all rights available to Pioneer Insurance Co. continued to remain so available till the execution of sale deed by them and then devolved upon Nalinibai. But then this discussion is not very relevant here because respondent No. 3 Collector has already renewed lease on 24/5/1960 for period up to 31/3/1976 or 31/ 3/1978. It is to be noted that order for further renewal is also passed by him on 10/4/1996.

In , Hon. Division Bench in case of Purshottam Dass Tandon and Ors. v. State of U.P. Lucknow and Ors. in para 5 observed that:

5. ...The argument is devoid of any substance because the State, always was and is agreeable to execute fresh leases. Even the learned Addl. Advocate General had to accept that Government never adopted shut door policy so far grant of fresh lease was concerned. Apart from it the Government by its own conduct stretching over long years has given rise to right in favour of the lessees to pet a fresh lease from the State. Since leases were in respect of Government land, they were undoubtedly governed by Government Grants Act and their nature could be determined by their tenor. Therefore, after expiry of time for which leases were granted they came to an end. And the Government could refuse to grant fresh lease or take over the same. But as seen earlier it did not. Rather it decided to execute fresh leases in favour of every lessee on terms and conditions mentioned in Government order. It was said so even in paragraph 3 of the supplementary affidavit filed on 4th February, 1986. In doing so or taking this decision the Government was acting in accordance with rules as paragraph 50 of the Manual itself contemplates for renewal or grant of fresh lease after expiry of the lease without any option for renewal In law where a person, having two alternative courses of actions mutually exclusive chooses to adopt one and rejects the other expressly or impliedly then he is said to have elected to choose one. He is subsequently precluded from adopting the course which he intended to reject. It is known as doctrine of election. Like estoppel it is also child of equity. It is founded on the principle that one should not be permitted to approbate and reprobate that is blow hot and cold in same breath. It has been extended and applied as an aspect of estoppel to prevent a person from falling a victim to what would have otherwise resulted in injustice to him and unfair advantage to other. In Chapter XIII of Estoppel by Representation by Spencer Bower and Turner III Edition page 314, the principle is explained thus:

Where A, dealing with B, is confronted with two alternatives and mutually exclusive courses of action in relation to such dealing, between which he may make his election, and A so conducts himself as reasonably to induce B to believe that he is intending definitely to adopt the one course, and definitely to reject or relinquish the other, and B in such belief alters his position to his detriment, A is precluded, as against B, from after wards resorting to the course which he has thus deliberately declared his intention of rejecting;

At page 326 rule of election as applied to relationship is discussed thus, "The most important of these is that of landlord and tenant. In such cases, where the lease or other instrument creating the relation contains provisions for forfeiture or breach of any of the covenants, and a clause of re-entry, the lessor, on any breach by the lessee may, if he pleases, put an end to the relationship, but he need not do so, he may prefer not to exercise his right of forfeiture, whether considering it more to his own advantage to take this course or actuated by generosity or other altruistic motive. But if by acts and conduct (which is the normal type of case), or otherwise, he indicates to his tenant an intention to waive the forfeiture, and to treat the tenancy as continuing, he is estopped from subsequently setting up, as against the tenant, that has been forfeited and determined.

The rule enunciated in this paragraph applies where the landlord waives his right of re-entry accrued to him due to breach of the covenant. On principle, however, there does not appear any difference between right of reentry due to forfeiture or by efflux of time. A lessor may after expiry of period for which lease is granted renew the same or resume that is re-enter. But if out of the two that is re-entry or resumption the two divergent courses, he chooses to grant fresh lease or at least creates that impression by his conduct spread over long time it results in abandonment, which according to the Supreme Court in Sha Mulchand and Co. v. Jawahar Mills is an aggravated form of waiver, he cannot subsequently turn round and claim that he intended to re-enter. Even the terms of lease deed do not support the submission of learned Additional Advocate General Apart from lease deed in Civil Misc. Writ No. 2293 of 30 1981 which was a lease for hotel and building the lease deed in Civil Misc. Writ No. 7226 of 1981 was produced. In material particulars there was no difference. The learned Additional Advocate General also stated that every lease deed even if it was not identical it was similar and terms and conditions of all the leases were almost the same. In these lease deeds there was no express or implied bar for execution of fresh lease. They further did not debar a lessee from applying for fresh lease. Much was attempted to be made out of the following expression.' shall and will at the end of expiration or other sooner determination of the said term peaceably and quietly leave, surrender and yield up to the said Secretary of State ...together with all such erections, buildings, and fixtures'. It was urged that this indicated that the lessees were to surrender and handover possession peaceably after expiry of the term for which the lease was granted. The expression could not be read in isolation. As is clear it was incorporated as a penal clause to apply where the lessee committed breach of conditions. It was in addition to the right of pulling down unauthorised constructions. Right of reentry either on expiration of the term for which lease was granted or even earlier was conferred on Collector only if the lessee committed breach of any covenant. The decision in Chairman, Ramappa, Gundappa Sahakari Samyakta Besav v. State of Mysore does not appear to have any relevance, since the G.O. of 1959 was not only a hope and expectation but a decision of the Government to grant leases to the existing lessees and this policy of the Government did not undergo any change at any point of time. The policy in fact remained the same. The Government, therefore, having exercised its option and decided to renew leases it is too late in the day for learned Additional Advocate General to urge that granting of lease was only a concession which could be withdrawn by the Government at any time. Nor it can be claimed that the principle of election could not apply to Government in view of weighty pronouncements by the Supreme Court that Government of a constitutional democracy cannot claim immunity from applicability of principles of equity and fairness. The Government thus having abandoned its right of re-entry, the learned Counsel for petitioner, appears to be right in his submission that it resulted in creating a jural or legal relationship between lessor and lessee permitting them not only to continue in possession but to get a fresh lease executed in their favour. Moreover in a country wedded to ideals of democracy and welfare state it would be unthinkable to import such outdated concept. If the land is needed or building has to be demolished in public interest for general welfare probably no exception can be taken as the interest of individual has to be sacrificed for the society. But asking the lessee to vacate land or remove Malwa for no rhyme or reason, but because the State was the owner cannot be accepted to be in consonance with present day philosophy and thinking about role of State.

These observations about estople on account of election will apply with more vigour particularly because of Clause No. 9 and 10 of lease agreements between Secretary, State of India and Pioneer Insurance Co. here is no question of asking for any fresh lease in the facts of present case because renewals were already ordered in 1960 itself and said renewals also expired in 1976 and 1978 respectively. Renewal for further period is already ordered by respondent No. 3 Collector on 10/4/1996. Though after expiry of initial leases, Pioneer Insurance Company did not seek formal renewal and though after purchase mother of petitioners also did not seek any such renewal, respondent No. 3 also did not exercise right of re-entry and ultimately opted to renew leases in favour of and in her name.

11. Next question is what is the effect of order of renewal dated 24/5/1960 and whether respondent No. 3 Collector has waived alleged lapses committed by deceased Nalinibai by entering into lease agreement with Esso or lapses as pointed out. by Nazul Officer. Five lapses pointed out by the Nazul Officer while recommending cancellation of lease to respondent No. 3 Collector were:-(i) Leasehold plot was used for commercial purpose, (ii) Pioneer Insurance Co. could not have executed sale deed in 1950 without obtaining renewal and there was breach of Clause 7 of lease deeds, (iii) Property was never in use or possession of deceased Nalinibai and it was always in possession of respondent No. 4, (iv) Nalinibai without obtaining permission from Government/ lessor created tenancy in favour of Esso Co. and committed breach and (v) Name of deceased Nalinibai Muley was wrongly shown in record of City Survey Office. Various clauses of said lease deed are already pointed out above. The controversy is in fact considered when respondent No. 3 Collector permitted renewal on 10/4/1996 for period beyond 31/3/1976 and 31/3/ 1978 and, thereafter by respondent No. 2 in detail. The power of re-entry upon noticing breach, power to condone such breaches or lapses, power to waive right of re-entry, permission for commercial user and for inducting tenant or for assignment are all apparent upon bare reading of lease deed. Perusal of note dated 1/2/1996 prepared by Nazul Officer shows that respondent No. 4 Waman was running petrol pump on this land since 1956 and before 1968 he was running it as dealer of Standard Vacume Oil Company. Collector has in his order dated 10/4/1996 noted that permission to use 4279 square feet of land for commercial purpose i.e. for installation of petrol pump was given by Additional Collector Nagpur wide his order dated 24/5/ 1960 in revenue case No. 1/A- 7/57-58. He also noticed that present respondent No. 4 is not himself in physical possession. It was also found by him that deceased applied for renewal in 1981 but Nazul Authorities did not take any steps in the matter and present petitioners paid nazul rent, till 95- 96. These findings are upheld by Additional Commissioner on 31/7/1996. Respondent No. 2 Additional Commissioner noticed that no leasehold rights or occupancy rights can be conferred on respondent No. 4 and lessee was entitled to transfer interest in land. Hence there was no breach committed by deceased Nalinibai by entering into agreement with Esso Company in 1968. He also accepted that respondent No. 4 has no locus-standi and it is only for State Government to take cognizance of breaches of conditions, if any. He also found that Collector was Competent Authority to renew lease. It is therefore apparent that Competent Authority under Code has exercised powers of renewal and also found that there were no breaches by Nalinibai. These findings are not appropriately evaluated by respondent No. 1 who has given importance only to presence of respond No. 4 on spot and then has taken recourse to provisions of TP Act to hold that leases in favour of deceased mother expired on 31/3/1976 and 31/3/1978. The locus of respondent No. 4 or nature of his possession is totally ignored by respondent No. 1. Effect of Grants Act is also not considered. Powers of or discretion available with respondent No. 3 Collector in the matter is also lost sight of. I therefore find that order passed by respondent No. 1 shows total non application of mind and also there is failure to exercise jurisdiction. Said order is therefore unsustainable.

Counsel for petitioners has invited attention to judgment of Hon Apex Court in case of BSNL and Ors. v. Subashchandra Kanchan and Anr. reported at . The Hon Apex Court has considered question of waiver of right in the matter of appointment of arbitrator by party by failing to communicate appointment of arbitrator by them and then accepting appointment of one of the persons named by other side as arbitrator before High Court. Relevant discussion in this respect is contained in paragraph 21 and Hon Apex Court has also found that waiver may at times resemble a form of election and sometimes be based on ordinary principle of estoppel. This angle is already considered above while considering Purshottam Dass Tandon and Ors. petitioners v. State of U.P. Lucknow and Ors. (supru).

12. Status or locus of Waman in view of agreement between deceased Nalinibai and M/s Esso and subsequent appointment of respondent No. 4 as their dealer by M/s Esso also needs to be briefly considered here. The agreement dated 1/4/1968 shows that deceased mother Nalinibai was lessor therein and she was accepted to be in absolute possession of property to be demised in favour of M/s Esso. M/s Esso was to hold property for term of 10 years and property was also having a service station which was to be kept in good condition at the cost of lessor. Lessor Nalinibai also agreed not to sale property without first giving an option to Esso to purchase it. Nalinibai was given right to re-enter in case of any breach or default by Esso. Leasees were also given right to install, erect and maintain at their own expenses pumps, tanks, fixtures fittings, containers, sign boards advertisements etc. Agreement between Esso Co and respondent No. 4 shows that respondent No. 4 Waman was given the licence and permission to enter upon the site and use the outfit temporarily with express stipulation that he had no right, title or interest in it. Said agreement also declared that the site and outfit was to remain absolute property and in sole possession of Esso. Respondent No. 4 accepted this agreement and acted upon it. Thus, his status was always that of agent of lessee of deceased mother Nalinibai. This aspect of the matter which is considered by respondent No. 2 Additional Commissioner and by respondent No. 3 Collector has been given a go-bye by respondent No. 1. Even the Civil adjudication between parties and its effect has not been gone into by respondent No. 1. It has not been disputed by respondent No. 4 that respondent No. 3 Collector is Competent Authority under Code or under Land Disposal Rules to grant lease or to renew lease of Government lands. Section 51 of Code enables Collector to regularise encroachment but then that can be done only after giving public notice of his intention to do so by Collector and after considering objections received from public. Respondent No. 1 has not followed this procedure while directing respondent No. 3 to treat possession of respondent No. 4 as encroacher and to regularise it. Section 2(12) defines "to hold land" or "to be landholder or holder of land" to mean to be lawfully in possession of land, whether such possession is actual or not. Section 2(23) states that "occupant" means a holder in actual possession of unalienated land, other than the tenant or Government lessee; provided that, where a holder in actual possession is the tenant, the landholder or the superior landlord, as the case maybe shall be deemed to be the occupant. Sub-section (17) defines landlord to mean a lessor. As per Section 2(40) "tenant" means a leasee, whether holding under an instrument, or under an oral agreement, and includes a mortgagee of a tenant's rights with possession; but does not include a leasee holding directly under the State Government. It is therefore apparent that respondent No. 4 Waman cannot be treated as occupant and provisions of Code recognise Nalinibai only as landholder. I find that this aspect is also appropriately considered by respondent No. 2 Additional Commissioner. It is apparent that renewal of lease or condoning breaches by leasee is clearly a matter between Collector and petitioners . Respondent No. 4 has no right to intervene ORDER or to challenge use of discretion by Collector in favour of petitioners. Respondent No. 1 has not considered the facts and law applicable to controversy before it. Even the appreciation of the situation by respondent No. 3 Collector and thereafter by respondent No. 2 Additional Commissioner has not been properly evaluated by respondent No. 1. Non application of mind by respondent No. 1 is thus apparent. I therefore find that order dated 2/4/1998 can not be sustained.

13. Writ Petition is accordingly allowed. Impugned order dated 2/4/1998 passed by respondent No. 1 at Annexture "P with petition is hereby quashed and set aside. Rule is made absolute accordingly. However, in the circumstances of the case there shall be no orders to costs.