2019 (2) TMI 1735 - HC - Indian Laws

Determination of lease - Sub-letting of premises - perpetual lease - no press activity carried out in demised premises. NO PRESS ACTIVITY - HELD THAT - The terms and conditions of the lease stipulated that the land shall be used by the appellant for the purpose of construction of a building for the bonafide purpose of their press and, thereafter, requests have been granted inasmuch as four floors could be used for commercial purpose for housing commercial offices except hotels, cinemas and restaurants but the basement and the 4th floor were to be used for press and office. Admittedly, if not for the entire period, for a long period of time, that is for 8 years there was no press acivity and the premises was used only for commercial activity if after examining the totality of circumstances, the lease is determined on recording a conclusive finding to the effect that no press has been functioning in the said premises for 8 or 10 years and is being used only for commercial purpose which violates a clause of the lease agreement, we see no reason to hold that the findings recorded for determining the lease and approved by the learned writ Court is a perverse and incorrect finding. The fact of lack of printing press alleged and the finding recorded is a proper finding based on the facts and circumstances of the present case and merely because after the actions were initiated by inspection and issuance of show cause notice on 26th September, 2016 and 10th October, 2016 if some publication activity both in the form of digital or printing is carried out that would not debar or prevent the respondents from determining the lease finding the same to have been breached continuously at least for a period of 8 years and accordingly, we see no reason to uphold the first objection raised RE-ENTRY CLAUSE - HELD THAT - Except for contending that the paper publication has commenced and the breach with regard to printing activity has been rectified by publication of the newspaper in the form of a web edition and by printing in the Noida press, other breaches with regard to misuse of the land and unauthorized constructions having been taken place is not rectified and if the allegations of transfer of 100% shares of the appellant company to Young India has the effect of transfer of the lease as contemplated under Clause III(13) is accepted then the right for re-entry would not be available as these breach still continue to exist. REGARDING CIRCULATION - HELD THAT - The evidence adduced by the appellant vis- -vis the certificates produced by the Audit Bureau of Circulation, when taken note of, they pertain to the period much after the show cause notices and the proceedings for determination took place and, in our considered view, even if the circulations indicated therein are accepted, they would not have material effect on the breach complained of as the breaches are with regard to various terms and conditions of the lease and the figures and certificates of circulation, in our considered view, even if accepted would only show that certain newspaper circulation has commenced during the pendency of the breach proceedings before the competent authority but they do not make any material difference with regard to various other allegations of breach which are found to be established. That being the position, we need not dwell into this aspect of the matter in any further detail. REGARDING TRANSFER OF SHARE/PROPERTY - HELD THAT - There are various judgments which have been brought to our notice wherein the said theory of lifting of the corporate veil has been approved and we have no hesitation in holding that the transfer in question, if analyzed in the backdrop of the principles as discussed hereinabove, we see no error in the findings recorded by the learned writ Court to hold that the transfer in question comes within the prohibited category under clause XIII (3) of the lease agreement. REGARDING REMEDY UNDER THE PP ACT - HELD THAT - The conditions of the lease are identical in nature and therefore in holding that the petitioners have a remedy under the PP Act, the learned writ Court has not committed any error. This issue is also therefore required to be answered against the appellant. If the case in hand is analyzed in the backdrop of the jurisdictional power available to this Court under Article 226 of the Constitution, we find that in this case the finding with regard to no press activity being carried out in the premises for about ten years, misuse of land and 100% transfer of share to another company are all subject matters of four notices issued to the petitioner - The petitioner submitted voluminous documents and replies to these notices which made allegations of unauthorized construction, unauthorized permission to Akash Gift Gallery, clandestine transfer for ulterior motive etc. and the petitioners had in fact admitted the position with regard to there being no press activity and admitted non-publication of the newspaper due to financial trouble for more than eight years. It was only when the breach proceedings took place that press was installed, licence obtained and publication commenced after 24th September, 2017. The appellant also do not deny the fact about there being unauthorized occupation by Akash Gift Gallery, pendency of eviction proceeding. If all these factors are taken note of and a decision is taken by the respondents to say that the dominant purpose for which the lease was granted has been violated and there has been misuse of the conditions of the lease, in the absence of mala fides or ulterior motive having been established, the writ court has rightly refused to interfere into the matter - there are no reason to make any indulgence into a reasonable order passed by the writ court in the facts and circumstances of the present case. Appeal dismissed.

Summary

Issues Involved:

1. No Press Activity
2. Re-entry Clause
3. Circulation
4. Transfer of Share/Property
5. Remedy under the PP Act

Detailed Analysis:

1. No Press Activity:
The court found that the appellant admitted to not having any press activity from 2008 to 2016. The digital publication of the English version of the newspaper commenced on November 14, 2016, and the print version of the weekly newspaper resumed on September 24, 2017. The court held that the breach of not carrying out printing activity for a long period (eight years) was established. The appellant's argument that the breach was rectified by commencing digital and print publication was not accepted, as the breach continued for a significant period before rectification.

2. Re-entry Clause:
The court noted that the breaches included misuse of land, unauthorized construction, and unauthorized transfer of the lease to a third entity. The appellant's argument that the breach was rectified by resuming publication was not sufficient as other breaches (misuse of land and unauthorized construction) were not rectified. The court held that the right for re-entry would not be available as these breaches still existed.

3. Circulation:
The court found that the evidence of circulation provided by the appellant pertained to a period much after the show cause notices and proceedings for determination took place. The court held that even if the circulation figures were accepted, they would not materially affect the breaches complained of, as the breaches were related to various terms and conditions of the lease, not just circulation.

4. Transfer of Share/Property:
The court applied the doctrine of lifting the corporate veil and found that the transfer of shares from AJL to Young India was a clandestine and surreptitious transfer of the lucrative interest in the premises to Young India. The court held that the transaction was not simple or straightforward but indicated a dishonest and fraudulent design to transfer the property held on lease from the Government by AJL to Young India. The court rejected the appellant's argument that mere transfer of shareholding does not amount to transfer of ownership or lease of property.

5. Remedy under the PP Act:
The court held that the provisions of the Public Premises (Eviction of Unauthorized Occupants) Act, 1971 (PP Act) were applicable. The court referred to the Constitution Bench judgment in Ashoka Marketing Ltd. and held that the PP Act would apply to cases where the lease has been determined. The court rejected the appellant's reliance on the Express Newspaper Pvt. Ltd. case, stating that the Constitution Bench had re-examined the applicability of the PP Act and found it applicable in cases like the present one.

Conclusion:
The court dismissed the appeal, upholding the findings of the learned writ Court. The court found that the breaches of the lease terms were established, and the appellant's arguments were not sufficient to overturn the findings. The court held that the doctrine of lifting the corporate veil was applicable and that the provisions of the PP Act were relevant for determining the case.