Dalhousie Exchange And Another vs The Life Insurance Corporation Of ...
2023 Latest Caselaw 1268 Cal/2

                       In The High Court at Calcutta
                      Constitutional Writ Jurisdiction
                               Original Side

The Hon'ble Justice Sabyasachi Bhattacharyya


                          WPO No.129 of 2019
                           IA NO.GA/1/2021
                    Dalhousie Exchange and another
                                  VS.
           The Life Insurance Corporation of India and others

For the petitioners      :    Mr. Arindam Banerjee, Adv.,
                              Ms. Sanchali Bhowmik, Adv.

For the respondents       :   Mr. Debajyoti Basu, Adv.,

Mr. Subhajit Sil, Adv., Ms. Sanjukta Ray, Adv.

Hearing concluded on     :    27.04.2023

Judgment on              :    07.06.2023

The Court:

1. The petitioners have challenged a proceeding under Sections 4 and 7

of the Public Premises (Eviction of Unauthorised Occupants) Act, 1971

(hereinafter referred to as, "the 1971 Act") and for quashing the said

proceeding. Admittedly, the Life Insurance Corporation of India (LIC),

the respondent no.1, issued a letter dated July 31, 2003 asking the

petitioner no.1 to vacate the disputed premises on the expiry of

August 31, 2003.

2. Subsequently, there was correspondence between the parties in

respect of increase in the monthly rent, followed by the respondent

no.1 initiating a proceeding under Section 4 of the 1971 Act, bearing

No.EO/299/1203, which was subsequently withdrawn on July 27,

2004.

3. Thereafter, a suit was filed against the petitioner no.1 for declaration

and permanent injunction restraining the petitioner no.1 from sub-

letting, transferring, assigning and/or carrying out any work of

construction. In the suit, the temporary injunction application filed

by the respondent no.1 was dismissed.

4. However, the respondent no.1/LIC issued further notices on May 25,

2005 under sections 4 and 7 of the 1971 Act, to which the petitioner

no.1 responded. The LIC also instituted a proceeding under Sections

4 and 7, giving rise to Case No. EO/316/0505, in which the petitioner

no.1 filed a written objection and its affidavit of examination-in-chief.

Thereafter the said witness was examined and cross-examined.

5. The petitioner no.1 subsequently filed an application before the Estate

Officer asking for cancellation of the orders passed in the proceeding

for eviction and damages, challenging the authority of the previous

Estate Officer, which question was kept open by the Estate Officer to

be decided with the eviction proceeding.

6. Although initially the petitioners challenged the authority of the Estate

Officer, subsequently such ground was not pressed seriously on

behalf of the petitioners, particularly since the Estate Officer was

changed in the meantime. Moreover, in another decision, this Court

held that the person concerned was a duly authorised Estate Officer

under the 1971 Act.

7. The plinth of the challenge is that the petitioner no.1 was a tenant in

respect of the premises and such relationship was never severed in

due course of law. Hence, it is argued that the petitioners are not

unauthorised occupants within the contemplation of the 1971 Act.

8. Learned counsel for the petitioner cites Ashoka Marketing Ltd. And

another Vs. Punjab National Bank and others, reported at AIR 1997 SC

855, where the Supreme Court upheld the vires of the Act but

observed that care must be taken to use the powers, conferred by the

Act, bona fide. It is argued that the Central Government published

two sets of directions, in 1992 and 2002 respectively, essentially in

the light of Ashoka Marketing (supra). As per the said directions, the

provisions of the 1971 Act should not be exercised to evict genuine

tenants and the powers should be used primarily to evict

unauthorised occupants and retired employees of Public Sector

Enterprises.

9. Section 21 of the Life Insurance Corporation Act, 1956 (for short, "the

LIC Act") specifically provides that, in discharge of its functions under

the Act, the LIC shall be guided by such directions in the matter of

policy involving public interest as the Central Government may give to

it in writing and that the same shall be binding on the LIC.

10. That apart, it is argued that the LIC is an authority under Article 12 of

the Constitution of India, for which proposition learned counsel for

the petitioner cites Sukhdev Singh and others Vs. Bhagatram Sardar

Singh Raghubanshi and another, reported at AIR 1975 SC 1331. As

such, the LIC is expected to act fairly, reasonably and to eschew

arbitrariness.

11. It is submitted that as per the bilateral agreement between the LIC

and the petitioner no.1, the petitioner no.1 was a valid tenant. The

rate and periodicity of increase in rent was a part of the crystallised

terms between the parties, of which no breach has been alleged.

12. The plinth of the action of termination of the jural relationship, it is

argued, was that the petitioners did not agree to a higher rate of rent,

which was contrary to the agreement between the parties. The non-

agreement of the petitioners, it is argued, does not jurisprudentially

qualify as a breach of the contract. Hence, the termination and

assumption of powers under the 1971 Act, it is contended, are high-

handed, irrational and violative of Article 14 of the Constitution. It is

argued that the said action is violative of the freedom of trade, practice

and vocation of the partners of the petitioner granted under Article

19(1)(g) of the Constitution and the right to life of the partners of the

petitioner granted under Article 21. The violation of the triad, Articles

14, 19 and 21, vitiate the action of the respondents as

unconstitutional and void.

13. Distinguishing Banatwala and Company Vs. Life Insurance

Corporation and Another, reported at (2011) 13 SCC 446, learned

counsel for the petitioner argues that the observations therein,

regarding the Central Government directions dated May 30, 2002 not

being binding, only pertain to the 2002 directions and have not

considered the 1992 directions. Moreover, it is argued by the

petitioners that the single-line observation of the Supreme Court that

the directions dated May 30, 2022 are not directions under Section 21

of the LIC Act, is a stray finding/observation and is not backed by any

reason. As such, learned counsel for the petitioners contends that the

same cannot be law declared under Article 141 of the Constitution of

India. Moreover, it is contended that the interplay of Sections 6(2)(c)

and 21 of the LIC Act were not considered and, as such, the judgment

fails the per inqurium test and cannot have any binding effect.

14. Next dealing with New India Assurance Company Limited Vs. Nusli

Neville Wadia and another, reported at (2008) 3 SCC 279, the

petitioners lay stress on paragraph no.24 of the judgment where the

Supreme Court observed as follows:

"We may, however, hasten to add that having regard to the fact that the

appellants themselves referred to the directions issued by the Central

Government from time to time, its ultimate effect on the obligations need

not to be finally determined by us".

15. Thus, the issue was kept open by the Supreme Court. Even the

judgments considered by the Supreme Court did not take into

consideration the interplay of Sections 6(2)(c) and 21 of the LIC Act.

The ratio laid down in Ashoka Marketing (supra) sounded out

requirement of care in the user of the draconian powers conferred by

the 1971 Act and cannot be said to be merely advisory, which was not

considered in Nusli Wadia's case.

16. Even though the 1971 Act overrides the Rent Control statutes, the

actions of companies and statutory bodies mentioned in Clauses (2)

and (3) of Section 2(e) of the 1971 Act, while dealing with their

properties, would have to be judged by the standard as held in

Dwarkadas Marfatiya and Sons Vs. Board of Trustees of the Port of

Bombay, reported at (1989) 3 SCC 293, where it was held that all

exercises of discretion or power by public authorities as the

respondents, in respect of dealing with tenants in respect of which

they have been treated separately and distinctly from other landlords,

were on the assumption that they would not act as private landlords

and must be judged by that standard.

17. The impugned action in the present case is arbitrary, it is added.

18. Learned counsel for the petitioners, in reply, also seeks to distinguish

other judgments cited by the LIC in the line of the arguments made

above.

19. Learned counsel for the LIC argues that the writ petition has been

filed only to delay the proceeding pending before the Estate Officer.

Secondly, it is contended that the guidelines sought to be relied on by

the petitioners have no statutory force. Thirdly, the petitioners have

failed to make out any case on merits.

20. While elucidating the first point, learned counsel for the LIC argues

that the petitioners have not approached the court with clean hands,

having suppressed a subsequent clarificatory order dated July 23,

2007 where the Central Government made it clear that the guidelines

will not apply to affluent tenants. By a further clarificatory order, the

Central Government has made it clear that the guidelines are not

applicable to large business houses and commercial entrepreneurs.

21. Learned counsel for the LIC argues that the question whether the

petitioner is a bona fide tenant or not is a factual dispute and cannot

be adjudicated by the writ court, since the same is yet to be

crystallised. The issue is pending before the Estate Officer and ought

to be decided by such authority, provided by law.

22. Under Section 21 of the LIC Act, the Corporation is to be guided by

directions in the matter of policy involving public interest. The

property could have generated much higher amount than the rent

paid by the petitioners, which would go towards the fulfilment of

public interest at large. The petitioners are trying to enjoy the

possession at an unreasonably low amount, which is detrimental to

public interest. The LIC is to insure that the premises are used to

subserve the best objectives and to ensure that it optimises the best

returns. Learned counsel cites Iyer and sons Private Limited Vs. LIC,

reported at ILR (2008) 1 Delhi 499 in such context.

23. By placing reliance on Banatwala (supra), it is reiterated that the

guidelines of 2002 are not directions under Section 21 of the LIC Act,

and, as such, not binding. In Nusli Wadia's case, it was held by the

Supreme Court that the guidelines by the Central Government are not

controlled by statutory provisions and are advisory in character.

24. Learned counsel for the LIC cites Syndicate Bank Vs. Ramchandran

Pillai and others, reported at (2011) 15 SCC 398, for the proposition

that if there has been a violation of non-statutory guidelines, it would

not confer any right to the members of the public to seek direction in

a court of law for compliance with the same. Courts shall not

interfere under Article 226 of the Constitution unless there is an

arbitrary action from the end of the State Authorities.

25. The guidelines of 1992 and 2002 were issued apparently to enforce

the law laid down in Ashoka Marketing (supra) and are executive in

nature, the source of which are executive and have no statutory or

binding force. In such context, the LIC places reliance on Life

Insurance Corporation of India Vs. Damyanti Verma (Decd.) through Lrs,

reported at (2012) SCC OnLine Del 1778). Relying on Jiwan Dass Vs.

Life Insurance Corporation of India and another [1994 Supp (3) SCC

694], the respondents argue that that guidelines cannot curtail or

limit the applicability of the statute or law.

26. It is argued by the LIC that there cannot be any application of Article

14 of the Constitution unless equals are treated differently without

any reasonable basis. In support of such proposition, learned counsel

cites Air India Vs. Nergesh Meerza and others [(1981) 4 SCC 335].

27. In the present case, there is no unequal treatment and/or any case of

transgression or excess of jurisdiction.

28. In the same tune, it is argued that there is no violation of either Article

19(1)(g) or Article 21 of the Constitution of India as well.

29. Learned counsel for the LIC then cites the following Supreme Court

judgments:

i) Oriental Insurance Co. Ltd. Vs. MeenaVariyal and others, reported in

(2007) 5 SCC 428;

ii) Municipal Committee Amritsar Vs. Hazra Singh, reported in (1975) 1

SCC 794;

iii) GM Foods and another Vs. Income Tax and Health and Wealth Tax

Settlement Commissioner, reported in (2015) SCC OnLine Cal 2026.

30. By relying on the same, it is argued that judgments of the Supreme

Court are binding on the High Courts. The High Court cannot say

that a finding of the Supreme Court is ratio or obiter dictum. Obiter

dicta of the Supreme Court are also binding. In such context, it is

argued that the petitioners' line of distinction with regard to

Bantawala (supra) is not tenable in law.

31. In Nusli Wadia's case, the Supreme Court also held that generally

guidelines have no binding effect.

32. In Syndicate Bank (supra) the Supreme Court classified which

executive guidelines have binding effect and which do not. Guidelines

which are not law have no binding effect and are thus unenforceable.

33. The executive directions are only enforceable in writ court if they have

a statutory source or flavour and not if they are merely executive in

character. The latter, being merely advisory, have no binding effect.

34. In support of the said proposition, learned counsel for the LIC cites

Chief Commercial Manager, South Central Railways, Secundrabad and

others Vs. G. Ratnam and others, reported at (2007) 8 SCC 212. By

placing reliance on an unreported judgment of this Court in CO

No.721 of 2018 (Gyan Mahindra Swarup Vs. LICI), learned counsel for

the LIC submits that lessees under the Transfer of Properties Act are

in a worse position than an occupier under the 1971 Act.

35. As per Section 3(a)(ii) and (iii) of the West Bengal Premises Tenancy

Act, 1997, premises owned by a government undertaking and a

statutory body are exempted from the said Act. Therefore, the

respondent no.1 could not have applied for fixation of standard

rent/fair rent under the provisions of the Rent Control statute. The

only recourse open to the respondent is under the 1971 Act and Rules

framed thereunder.

36. For abundant caution, although the point has not been pressed in

final hearing, learned counsel for the LIC cites Eden Reality Ventures

Pvt. Ltd. Vs. Life Insurance Corporation of India, reported at 2020 SCC

OnLine Cal 1112, to argue that the LIC was within its authority to

appoint Mr. A. Sikdar as an Estate Officer under the 1971 Act, which

was initially disputed by the petitioners.

37. Thus, it is argued that the writ petition ought to be dismissed.

38. Coming to the facts of the present case, it is an admitted position that

a notice to quit was issued on July 31, 20003. Even giving a go-bye to

the prior eviction proceeding which was withdrawn and/or the suit

filed by the LIC for different reliefs, the relief for eviction and damages

available to the LIC with regard to public premises lies squarely under

the 1971 Act.

39. It is an admitted position that the respondent no.1/LIC issued notices

under Sections 4 and 7 of the 1971 Act on May 25, 2005, to which the

petitioner no.1 responded. In fact, the respondents also filed a written

objection and adduced evidence in connection with the proceeding

under the said proceeding, bearing no. EO/316/0505. Insofar as the

applicability of the 1997 Act is concerned, it is nobody's case that the

exemption under Section 3 of the said Act is not applicable to the

present case. The LIC being a public authority, the premises-in-

question are public premises, thereby ruling out the applicability of

the 1997 Act, which is the governing Rent Control law in West Bengal,

and bolstering applicability of the 1971 Act.

40. As rightly argued by the LIC, the position of a lessee is worse as an

occupier than an unauthorised occupant under the 1971 Act, which

view is also strengthened by the judgment of this Court in CO No.721

of 2018 (Gyan Mahindra Swarup Vs. LICI).

41. In fact, the established position in the light of Banatwala's case, Nusli

Wadia's case and Ashoka Marketing (supra) is that the 1971 Act

overrides the provisions of the Rent Control law and the Transfer of

Property Act insofar as the zone of operation of the 1971 Act is

concerned. Hence, it would be specious to argue that a full-fledged

proceeding for eviction under either the Rent Control Act or the

Transfer of Property Act is to precede the initiation of a proceeding

under Sections 4 and 7 of the 1971 Act.

42. A sufficient quit notice was issued in the present case on July 31,

2003.

43. The expression "unauthorised occupation" as defined under Section

2(g) of the 1971 Act is as follows:

"unauthorised occupation", in relation to any public premises, means

the occupation by any person of the public premises without authority

for such occupation, and includes the continuance in occupation by any

person of the public premises after the authority (whether by way of

grant or any other mode of transfer) under which he was allowed to

occupy the premises has expired or has been determined for any reason

whatsoever.

44. In the present case, the quit notice was sufficient to determine the

jural relationship previously existing between the parties. The said

definition accommodates "any reason whatsoever", which could very

well include the reasons cited in the notice in the present case.

45. That apart, the petitioners have failed to show undisputedly that there

was a subsequent jural relationship between the parties after the

expiry of the previous lease. Mere negotiations regarding increase of

rent, which never attained finality, could not be termed, by any

stretch of imagination, as a further tenancy/lease between the parties.

46. Although learned counsel for the petitioners has advanced convoluted

arguments on the applicability of Banatwala's case, it has been

rightly contended by the LIC that even obiter dicta of the Supreme

Court are binding on the High Courts. Judicial propriety and the

Constitutional scheme of India precludes this Court from entering into

the question raised by the petitioners as to whether the said judgment

is per incuriam or not.

47. The ratio laid down in Banatwala (supra) was specific, without leaving

any scope for ambiguity. The directions dated May 30, 2022 were

clearly held not to be directions under Section 21 of the LIC Act. In

fact, the petitioners themselves have agreed in their argument that the

1992 guidelines were of similar nature as the 2002 guidelines. As

such, the same observations also govern the 1992 guidelines.

48. Hence, there is no statutory force behind the said guidelines.

49. Be that as it may, even if the guidelines were to be applicable, it

cannot be said that those have been violated in the present case. The

LIC acted squarely in terms of the 1971 Act and the Rules framed

under the same. In fact, the petitioners participated in the proceeding

before the Estate Officer by filing written objection and adducing

evidence and thereafter cannot be permitted to challenge the

proceedings, to which they themselves submitted.

50. Also, no arbitrariness or violation of Article 14, 19 or 21 of the

Constitution has been made out in the present case by the petitioners.

51. The LIC is justified in contending that the question as to the jural

relationship between the parties and as to whether the petitioners

were unauthorised occupants within the contemplation of the 1971

Act, in any event, are to be decided by the Estate Officer in the

pending proceedings.

52. Hence, there is no statutory or constitutional premise of the present

challenge worth being tenable in the eye of law. The respondents have

acted fully within their jurisdiction in conducting the proceedings

under Sections 4 and 7 of the 1971 Act against the petitioners. Thus,

there is no scope of interference in the present writ petition.

53. Accordingly, WPO No.129 of 2019 along with IA NO.GA/1/2021 is

dismissed on contest, without, however, any order as to costs.

54. Urgent certified copies of this order shall be supplied to the parties

applying for the same, upon due compliance of all requisite

formalities.

( Sabyasachi Bhattacharyya, J. )

Later

Learned counsel for the petitioner, after passing of the above

judgment, seeks stay of operation of the above judgment and order.

However, in view of the said judgment having turned down a

challenge primarily to the vires of certain sections, there is no scope

of such grant of stay.

Accordingly, such prayer is refused.

( Sabyasachi Bhattacharyya, J. )