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TMI Blog1999 (8) TMI 969X X X X Extracts X X X X X X X X Extracts X X X X ..... commercial premises in Sector 17 of Chandigarh in or about the years 1963-64. However, formal lease deeds were executed between the Lessor and the Lessees in May, 1968 on payment of monthly rent of ₹ 525/- per mensem in advance by the 19th day of the month for which it fell due. The lease was initially for a period of five years from the date of the grant which could be terminated by the Lessor by giving one month's advance notice in writing to the Lessees. The lease was renewable only once for another term of five years with 20% increase in the rent reserved under the deed. In the event of non payment of the rent on the due date or breach or non observance by the Lessee of any of the conditions of the lease deed, it was lawful for the Lessor, notwithstanding the waiver of any previous cause or right for re-entry, to terminate the lease and enter into and upon the building or any part thereof and to re-possess, retain and enjoy the same and in that event the Lessee was not entitled to the refund of lease money or any part thereof or to any compensation whatsoever on account of such resumption. After the expiry of the initial period of 10 years, the rent of the leased pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Nos.10520-21 of 1996 entitled Dr.Sahib Singh Sons vs. Chandigarh Administration were disposed of vide judgment Annexure P-4 upholding the right of the Union Territory Chandigarh to enhance the rent with appropriate directions needed in the peculiar facts and circumstances of the case. Contending that their cases were different than Sahib Singh's matter, the appellant herein insisted for a fresh hearing and a separate judgment. The prayer was accepted and the Division Bench vide its detailed judgment dated 19th December, 1997 dismissed the petitions but in the circumstances directed that if the appellants convey their consent to the terms and conditions incorporated in the impugned notices within three months, the respondents may renew the lease granted to such of the appellants subject to their paying the arrears of rent within six months. The respondents were entitled to charge appropriate interest on the amount of arrears of rent between 1.3.1992 to the date of the stay orders obtained by them from the High Court. For the period during which the payment of the rent at the rates specified in the impugned notices remained stayed by the Court, the appellants were directed to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd dispenser of special services and provider of large number of benefits including the granting of leases are required to act fairly and reasonably. The discretion of the respondents even if assumed is not unlimited and that the respondents cannot give or withhold leases in its arbitrary discretion or at its sweet will. It is further submitted that the High Court was not justified in awarding the interest for the period of stay granted by it in the cases filed by the appellants. There is no dispute that Capital of Punjab (Development Regulation) Act, 1952 (hereinafter referred to as `the Act') being Punjab Act No.27 of 1952, is applicable to the city of Chandigarh with effect from 1968. The Act was enacted at a time when the construction of a new capital of the then Punjab at Chandigarh was in progress. It was considered necessary to vest the State Government with a legal authority to regulate the sale of building sites and to promulgate building rules on the lines of municipal bye-laws so long as a properly constituted local body did not take over the administration of the city. Section 3 of the Act provides: 3. Power of Central Government in respect of transfer of land ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... matters referred to in sub-section (2) of section 5; (l) any other matter which has to be or may be prescribed. The combined reading of Sections 3 and 22 of the Act would indicate the existence of an obligation on the Central Government to make rules for the purposes of regulating the terms and conditions relating to the transfer of property including leasing it out. However, failure to make the rules would not render the transfer of the property made under the terms of the lease as illegal, void or inoperative. Learned counsel appearing for the appellants, after some arguments, also conceded the vesting of powers in the respondents to sell, lease or otherwise transfer the property in the Union Territory of Chandigarh subject to such conditions as it thought fit. They did not insist that the lease could not be made or the terms including the enhancement of rent could not be imposed without framing the rules. We are also of the opinion that power to transfer the property including leasing it out is authorised by Section 3 itself and its terms and conditions left to the satisfaction of the Central Government. Though, not legally obliged to make the rules, the Central Governmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty and substance, but also denies him equality in the matter of entering into contract with the Government and it cannot, therefore, be supported without fair hearing. It was argued for the Government that no person has a right to enter into contractal relationship with the Government and the Government, like any other private individual, has the absolute right to enter into contract with any one it pleases. But the court, speaking through the learned Chief Justice, responded that the Government is not like a private individual who can pick and choose the person with whom it will deal, but the Government is still a Government when it enters into contract or when it is administering largess and it cannot, without adequate reason, exclude any person from dealing with it or take away largess arbitrarily. The learned Chief Justice said that when the Government is trading with the public, the democratic form of Government demands equality and absence of arbitrariness....The activities of the Government have a public element and, therefore, there should be fairness and equality. The State need not enter into any contract with anyone, but if it does so, it must do so fairly without discr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the persons entrusted with the task on behalf of the State and exercise of all powers must be for public good instead of being an abuse of the power. Action of renewability should be gauged not on the nature of function but public nature of the body exercising that function and such action shall be open to judicial review even if it pertains to contractual field. The State action which is not informed by reason cannot be protected as it would be easy for the citizens to question such an action being arbitrary. In the instant case, the respondent Administration relied upon Memo No.317 dated 16.3.1992 of the Executive Engineer CP Division No.3 Chandigarh , Government of Punjab circular dated 15th May, 1996 and affidavit of Shri Krishanjeet Singh, Executive Engineer, CP Division No.5, Union Territory, Chandigarh filed in Civil Writ No.10521/96 to justify their action of enhancement of rent being fair and reasonable. Memo dated 16.3.1992 referred to earlier Memo No.122 dated 3.2.87 and the meeting held in the office of the Chief Engineer, U.T. Chandigarh on 4.3.1992. It was mentioned in the memo that the rates of rent earlier recommended had become obsolete and that the accommodation w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ows: Covered area of SCO is 2066.62 sq.ft. which comes to 192.06 sq.meters. The cost of construction per Sq.Meter at ground floor in the year 1992 was ₹ 2450/- for such buildings. This figure of ₹ 2450/- is based on actual cost of construction of similar other type of buildings in Chandigarh. Thus, the total cost of construction of ground floor comes to ₹ 4,70,547/- (192.06 sq.mtrs. x 2450/-). SCO 51 being an old construction, the total cost of construction was reduced by 20%. After that 1% per annum depreciation was also permitted for 29 years as per the norms. The details are given hereunder: Total cost of construction Of ground floor ₹ 470547.00 2450 x 192.06 less 20% ₹ 94109.00 ₹ 376438.00 Less 1% depreciation per Annum for 29 years ₹ 109167.00 ₹ 267271.0 3. That for the determination of the annual rent value, 9% of net cost of construction is to be taken which comes to ₹ 24054/- (9% of ₹ 267271/- = ₹ 24054/-). This figure of ₹ 24054/- represents rental value per annum, on the total cost of construction which may be marked as A . For calculating the cost of land on which aforesaid SCO has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Chandigarh Administration. The petitioner is, thus, liable to pay this market rent. 14. That in reply to the averments as contained in para 14 of the writ petition it is submitted that the shops mentioned by the petitioner in this para are not rented out by the Chandigarh Administration to the various parties. The said shops are owned by the private individuals and are further rented out to the parties mentioned in the para. But the present shop in occupation of the petitioner is rented by the Government. The market rent calculated @ ₹ 14,000/- per month in respect of ground floor of the SCO in question and in occupation of the petitioner is based on the assessment made by the Engineering Department of Chandigarh Administration and the same is justified reasonable, constitutional and as such deserves to be upheld. The High Court examined the matter in depth and rightly concluded that the procedure adopted and made the basis for enhancing the rent could not be termed to be either arbitrary, discriminatory or unreasonable. We agree with the conclusions arrived at by the High Court and find no infirmity in the action of the respondents in raising the rate of rent on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se the order in favour of the other person is found to be a lawful and justified one it can be followed and a similar relief can be given to the petitioner if it is found that the petitioners' case is similar to the other persons' case. But then why examine another person's case in his absence rather than examining the case of the petitioner who is present before the Court and seeking the relief. Is it not more appropriate and convenient to examine the entitlement of the petitioner before the Court to the relief asked for in the facts and circumstances of his case than to enquire into the correctness of the order made or action taken in another person's case, which other person is not before the case nor is his case. In our considered opinion, such a course -barring exceptional situations - would neither by advisable nor desirable. In other words, the High Court cannot ignore the law and the well-accepted norms governing the writ jurisdiction and say that because in one case a particular order has been passed or a particular action has been taken, the same must be repeated irrespective of the fact whether such an order or action is contrary to law or otherwise. Each ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ismissed ultimately. Holding otherwise would be against public policy and the interests of justice. In case law Kashyap Zip Industries vs. Union of India [1993 (64) ELT 161], interest was awarded to Revenue for the duration of stay under court's order, since the petitioners therein were found to have the benefit of keeping back the payment of duty under orders of the Court. The High Court was, therefore, not wrong in directing the payment of interest on the amount of arrears of rent for the period when the stay order was obtained till the period the writ petitions were dismissed. We, however, feel that awarding of interest @ 18% per annum from the aforesaid period was on the excessive side. The respondent-authority could not be equated with private commercial institutions and conferred with an amount of compensation in the form of interest which, in the judicial parlance, may amount to penalty, despite the fact that the persons found to have jeopardised the process of law were rightly held liable to compensate the respondent- authority by way of interest. In our opinion 15% per annum interest for the aforesaid period would have been just and proper. We, however, agree with the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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