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TMI Blog2007 (4) TMI 666X X X X Extracts X X X X X X X X Extracts X X X X ..... ion Limited. The said Act came into force on 24.01.1976 which was the appointed day fixed within the meaning of Section 2A(c) of the Act. By reason of Section 3 of the said Act the right, title and interest of Burmah Shell stood transferred to and vested in the Central Government. Section 5 of 1976 Act provides that the Central Government shall be deemed to be the lessee or tenant under the circumstances specified therein. Sub-section (2) of Section 5 which is relevant for our purpose reads thus : On the expiry of the terms of any lease or tenancy referred to in sub-section (1) such lease or tenancy shall if so desired by the Central Government be renewed on the same terms and conditions on which the lease or tenancy was held by Burmah-Shell immediately the appointed day. 3. It is not in dispute that the Central Government in exercise of its power conferred upon it under section 7 of the said Act directed that the undertaking of the Burmah-shell shall vest in the appellant herein which is a Government company; the consequences, inter alia, wherefor is laid down in sub-section (3) thereof which reads as under : The provisions of sub-section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... against you for appropriate reliefs and that you will also be liable for all my client s cost. 6. Despite service of the said notice, as the appellant did not deliver vacant possession of the tenanted premises; a suit for eviction was filed. In their written statement, the appellants averred: The allegations that the lease expired on 24.07.1989, that the plaintiffs demanding delivery of vacant possession and arrears of rent or damages, that the plaintiffs require the plaint schedule property for their bonafide use for construction of shops and carrying on business are all absolutely false. The alleged requirement of the plaintiffs is false and its an afterthought and made to lend support of their claim for possession contrary to the statutory renewal/protection available to this defendant. 7. By reason of a judgment dated 30.12.1999, the learned Senior Civil Judge, Anakapalle, Andhra Pradesh dismissed the said suit in view of the provisions of the 1976 Act holding that the appellant had a right to continue to occupy the leasehold as a tenant on the same terms and conditions on which the tenancy was granted. An appeal preferred thereagainst, however, was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the lease. Thus the finding of the lower court that Ex.A.1 quit notice is invalid is erroneous. The object of the Act is to prove better service to the public and the same can be achieved only when the outlet is situated at a place where there will be more vehicular traffic but the vehicular traffic at the schedule premises is completely closed, and the same has been diverted into the bye-pass road. Therefore, the defendant cannot serve the public, as it was earlier by continuing petrol bunk in the schedule premises. By taking shelter under the above technicality, the retailer of the defendant-Corporation Subramanayam and others cannot be allowed to squat on the property for a poultry (sic paltry) monthly rent of Rs.50/-. 8. A Second Appeal preferred thereagainst by the appellant has been dismissed by the High Court of Andhra Pradesh holding : In this case, it is an admitted fact that for 17 long years during the pendency of this lis, neither the appellant paid the rents nor deposited to the credit of the suit to prove their bona fides that there is a bona fide requirement, apart from their legal right to have renewal automatically under sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decretal premises. 11. Mr. Sudhir Chandra, learned Senior Counsel appearing on behalf of the appellant submitted that the appellant, by reason of Section 5(2) read with Section 7(3) of the 1976 Act, had an unbridlled statutory right to exercise its option for renewal of the lease which in terms thereof would be deemed to have been renewed for another term of 30 years from 25.07.1989 and in that view of the matter the impugned judgment cannot be sustained. 12. Mr. Aman Lekhi, learned Senior Counsel appearing on behalf of the respondents, on the other hand, submitted that an action on the part of the appellant should conform to the doctrine of fairness and in that view of the matter, the impugned judgment cannot be interfered with. 13. Appellant-company is a State within the meaning of Article 12 of the Constitution of India. It is, therefore, enjoined with a duty to act fairly and reasonably. Just because it has been conferred with a statutory power, the same by itself would not mean that exercise thereof in any manner whatsoever will meet the requirements of law. The statute uses the words if so desired by the Central Government . Such a desire cannot be based upon a su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ernor of U.P. Ors. [(1998) 1 SCC 591], it was held : Thus the decision of the Government to withdraw from acquisition was based upon a misconception of the correct legal position. Such a decision has to be regarded as arbitrary and not bona fide. Particularly in a case where as a result of a decision taken by the Government the other party is likely to be prejudicially affected, the Government has to exercise its power bona fide and not arbitrarily. Even though Section 48 of the Act confers upon the State wide discretion it does not permit it to act in an arbitrary manner... 18. We are, however, not oblivious of the legal principle that only because a statute causes hardship, the same may not be declared ultra vires. (Dura Lex Sed Lex). We may, in this regard, notice certain principles : 19. In Raghunath Rai Bareja and Anr. v. Punjab National Bank and Ors. [2006 (13) SCALE 511], it is stated : Learned counsel for the respondent-Bank submitted that it will be very unfair if the appellant who is a guarantor of the loan, and director of the Company which took the loan, avoids paying the debt. While we fully agree with the lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, Mumbai [2006 (9) SCALE 652], one of us (Katju, J.) stated : In this connection, it may be mentioned that according to the theory of the eminent positivist jurist Kelsen (The Pure Theory of Law) in every legal system there is a hierarchy of laws, and whenever there is conflict between a norm in a higher layer in this hierarchy and a norm in a lower layer the norm in the higher layer will prevail (see Kelsen s The General Theory of Law and State ). 24. With that we may add that a statutory order or discretion exercised by a statutory authority must also be tested on the anvil of the constitutional scheme. 25. This Court number of times has laid emphasis on reasonable action on the part of the State even as a landlord. [See M/s. Dwarkadas Marfatia Sons v. Board of Trustees of the Port of Bombay [(1989) 3 SCC 293] and in contractual matters Noble Resoources Ltd. v. State of Orissa Anr. [(2006) 10 SCC 236] and State of Karnataka Anr. v. All India Manufacturers Organisation Ors. [(2006) 4 SCC 683]. 26. Reasonableness and non-arbitrariness are the hallmarks of an action by the State. Judged from any angle, the action on the part of the appellant does ..... X X X X Extracts X X X X X X X X Extracts X X X X
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