2017 (3) TMI 1484 - SC - Indian Laws

Entitlement to get the lease deed renewed - land was taken for Oil Mill but huge commercial construction was done - Held that - Municipality has no authority to grant a lease for a period exceeding 10 years without prior permission of the State Government. In the present case, the State Government had only granted permission to lease the land till the year 2012. Therefore, the appellant has no inherent right to claim that fresh lease be granted in its favour. The original lease was granted for running an oil mill and as on date admittedly there is no oil mill situated on the land. The leased property is a public property leased out at a very meagre rent. It cannot be utilised for a purpose other than the purpose for which it was leased out. True it is that the appellant may have been permitted to raise construction on the leased land but it is obvious that the construction to be raised should have connection with the original business of the company i.e. running an oil mill. The appellant has raised a huge commercial complex earning crores of rupees but is paying only a few hundred rupees to the Municipality. The appellant is not entitled to claim that lease deed must be renewed in his favour. The High Court of Gujarat was perfectly justified in holding that the appellant cannot claim that he is entitled to renewal of the lease deed as a matter of right. The finding of the High Court that the appellant is earning huge profits by way of rent is not denied. It has also been stated that the land is required by the Municipality for educational purposes.

Summary

Issues:
1. Validity of lease renewal
2. Authority of Municipality to grant lease
3. Purpose of leased property
4. Claim for renewal of lease deed

Validity of lease renewal:
The case involved a dispute over the renewal of a lease deed for land leased to a company for running an oil mill. The original lease expired in 1952, and a fresh lease deed was executed in 1956 for 30 years. Despite an arbitration award in favor of the company allowing construction for business purposes, the lease was canceled by the Collector in 1978. Subsequent legal battles ensued, leading to a government order in 1991 for renewal from 1982, executed in 2007. The appellant claimed a right to renewal based on past permissions and constructions.

Authority of Municipality to grant lease:
The respondent argued that the State Government's permission was required for leases exceeding 10 years, as per the Gujarat Municipalities Act, 1963. The State Government had permitted the lease until 2012, limiting the Municipality's authority. The appellant's claim of inherent right to renewal was contested based on the legal requirements for lease permissions.

Purpose of leased property:
The Court noted that the original lease was for an oil mill, but no such mill existed on the property currently. The appellant had constructed a commercial complex generating significant revenue, paying minimal rent. The Court emphasized that the property should align with the original purpose of the lease, and unauthorized commercial activities could not be justified on leased public property.

Claim for renewal of lease deed:
The appellant contended that the lease deed should be renewed as a matter of right due to past permissions and constructions. However, the Court held that the appellant's profit from the property and the Municipality's need for educational purposes outweighed the claim for renewal. The High Court's decision denying the appellant's entitlement to renewal was upheld, dismissing the appeal based on the facts and circumstances of the case.

In conclusion, the Supreme Court dismissed the appeal, upholding the decision that the appellant was not entitled to the renewal of the lease deed as a matter of right. The Court emphasized the legal limitations on lease permissions, the necessity for the property to align with its original purpose, and the Municipality's authority over public land usage. The judgment highlighted the significance of legal requirements, property usage compliance, and public interest considerations in lease renewal disputes.