2013 (1) TMI 752 - SC - Indian Laws

Cancellation of lease - Default in payment of lease rent - whether possession had indeed been taken over from the lessee pursuant to the termination of the lease. - Held that - Lessee makes an unequivocal and unconditional admission that possession had indeed been taken over by the Appellant-Port Trust. What is significant is that the lessee had asked for refund of the amount paid by her towards instalments and in case such a refund was not possible to return the plot to her. We do not think that such an unequivocal admission as is contained in the letter can be wished away or ignored in a suit where the question is whether the lessee had indeed been dispossessed pursuant to the termination of the lease. There is no worthwhile explanation or any other reason that can possibly spell a withdrawal of the admission or constitute an explanation cogent enough to carry conviction with the Court. We have in that view no hesitation in holding that dispossession of the lessee had taken place pursuant to the termination of the lease deed in terms of panchnama dated 14th December 1978. Whether the suit for declaration to the effect that the termination of the lease was invalid and that the lease continued to subsist could be filed more than 17 years after the termination had taken place - Held that - Court was dealing with proceedings arising under Article 226 of the Constitution exercise of powers whereunder is discretionary but then grant of declaratory relief under the Specific Relief Act is also discretionary in nature. A Civil Court can and may in appropriate cases refuse a declaratory decree for good and valid reasons which dissuade the Court from exercising its discretionary jurisdiction. Merely because the suit is within time is no reason for the Court to grant a declaration. Suffice it to say that filing of a suit for declaration was in the circumstances essential for the plaintiffs. That is precisely why the plaintiffs brought a suit no matter beyond the period of limitation prescribed for the purpose. Such a suit was neither unnecessary nor a futility for the plaintiff s right to remain in possession depended upon whether the lease was subsisting or stood terminated. It is not therefore possible to fall back upon the possessory rights claimed by plaintiffs over the leased area to bring the suit within time especially when we have while dealing with the question of possession held that possession also was taken over pursuant to the order of termination of the lease in question. Addition of the lessee as a co-plaintiff in the suit also came as late as in the year 1999 when the original plaintiff transferee of the lease appears to have realised that it is difficult to assert his rights against the Port Trust on the basis of a transfer which was effected without the permission of the lessor-Port Trust. - Impugned order is set aside - Decided in favour of appellants.

Summary

Issues Involved:
1. Validity of the termination of the lease.
2. Possession of the plot after the termination.
3. Limitation period for filing the suit challenging the termination.
4. Requirement for seeking a declaration of invalidity of the termination.
5. Applicability of Section 120 of the Major Ports Act.
6. Constructive res judicata and Order II, Rule 2 of the Code of Civil Procedure, 1908.
7. Rights of the transferee to challenge the termination without the lessor's permission.

Detailed Analysis:

Validity of the Termination of the Lease:
The appellant-Port Trust issued notices to the respondent-lessee for default in payment of lease rent, leading to the termination of the lease on 8th August, 1977, effective from 13th December, 1978. The trial court and the first appellate court found the termination invalid due to the absence of proper notice under Sections 106 and 111(g) of the Transfer of Property Act, 1882, and lack of authorization of the person who signed the termination notice and took possession.

Possession of the Plot After the Termination:
The trial court recorded an ambivalent finding regarding the possession of the plot, noting that the plot was open and covered with wild bushes, making it difficult to determine possession. However, the lessee's letter dated 22nd February, 1979, unequivocally admitted that possession had been taken over by the appellant-Port Trust. The Supreme Court held that this admission was conclusive evidence of dispossession.

Limitation Period for Filing the Suit Challenging the Termination:
The right to sue first accrued on 13th December, 1978, when the lease was terminated. Under Article 58 of the Limitation Act, 1963, a suit for declaration must be filed within three years from the date the right to sue first accrues. The suit filed in 1996 was clearly barred by limitation, as it was instituted nearly eighteen years after the termination.

Requirement for Seeking a Declaration of Invalidity of the Termination:
The Supreme Court emphasized that any order, even if invalid, must be challenged in court within the prescribed limitation period. The lessee or transferee could not ignore the termination order and seek an injunction without having the termination declared invalid by a competent court. The necessity of recourse to the court for such declarations was reiterated, citing precedents like Smith v. East Elloe Rural District Council and Krishnadevi Malchand Kamathia & Ors. v. Bombay Environmental Action Group and Ors.

Applicability of Section 120 of the Major Ports Act:
The Supreme Court found it unnecessary to examine whether the suit was barred by Section 120 of the Major Ports Act, which prescribes a six-month limitation period, as the suit was already barred under the general limitation period.

Constructive Res Judicata and Order II, Rule 2 of the Code of Civil Procedure, 1908:
The court did not delve into whether the suit was barred by constructive res judicata or Order II, Rule 2, as the first suit filed in 1980 for permanent prohibitory injunction did not address the validity of the termination, which had already occurred by then.

Rights of the Transferee to Challenge the Termination Without the Lessor's Permission:
The addition of the original lessee as a co-plaintiff in 1999 was noted, but the court did not specifically address the rights of the transferee to challenge the termination without the lessor's permission.

Conclusion:
The Supreme Court allowed the appeal, set aside the judgments and decrees of the lower courts, and dismissed the suit filed by the respondents, holding that the suit was barred by limitation and the lessee had been dispossessed pursuant to the termination of the lease. The court reiterated the necessity of seeking judicial declarations for challenging orders and emphasized adherence to limitation periods.