Partly allowed

Usha Breco Limited v. the Commissioner of Land Revenue

Kerala HC13 Aug 2014WP(C)/27251/2013

Case brief

AI extract

What is this about?

Court quashed unilateral rent fixation orders where the lease deed mandated mutual consent for revisions. Refixed future rent at 20% annual increase every five years and directed payment of arrears.

What did the court decide?

Fixed fixation of rent orders quashed. Rent refixed at 20% enhancement every five years. Petitioner directed to pay arrears of Rs.61,100.

Usha Breco Limited Vs the Commissioner of… — Contract and Commercial Disputes | Kerala HC (2014)

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT:

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THE HONOURABLE MR.JUSTICE A.M.SHAFFIQUE

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WEDNESDAY, THE 13TH DAY OF AUGUST 2014/22ND SRAVANA, 1936

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WP(C).NO. 27251 OF 2013 (F)

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PETITIONER:-

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USHA BRECO LIMITED, REPRESENTED BY CAPT SANJEEV NAIR, REGIONAL HEAD, SOUTHERN REGION, USHA BRECO LIMITED, MALAMPUZHA UDANKHATOLA, MALAMPUZHA GARDENS, PALAKKAD DISTRICT.

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BY ADVS.SRI.K.M.SATHYANATHA MENON, SRI.ARUN AJAY SHANKAR.

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RESPONDENTS:

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1. THE COMMISSIONER OF LAND REVENUE, THIRUVANANTHAPURAM - 695 001.

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2. STATE OF KERALA, REPRESENTED BY ITS SECRETARY TO GOVERNMENT, REVENUE DEPARTMENT, SECRETARIAT, THIRUVANANTHAPURAM - 695 001.

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3. THE REVENUE DIVISIONAL OFFICER, PALAKKAD - 678 001.

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4. THE TAHSILDAR, PALAKKAD - 678 001.

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5. THE VILLAGE OFFICER, MALAMPUZHA, PALAKKAD DISTRICT, PIN - 678 651.

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BY SR. GOVT. PLEADER SMT.ANITHA RAVINDRAN.

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THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 19/06/2014, THE COURT ON 13/08/2014 DELIVERED THE FOLLOWING:

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rs.

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WP(C).NO. 27251 OF 2013 (F)

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APPENDIX

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PETITIONER'S EXHIBITS & ANNEXURES:-

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EXHIBIT P1. TRUE COPY OF THE GOVERNMENT ORDER NO.G.O.(MS) 705/89/RD DATED 03.10.1989.

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EXHIBIT P2. TRUE COPY OF THE SAID LEASE DEED DATED 16 NOVEMBER 1989.

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EXHIBIT P3. TRUE COPY OF THE AUTHORIZATION GIVEN BY THE COMPANY IN FAVOUR OF CAPT. SANJEEV NAIR.

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EXHIBIT P4. TRUE COPY OF THE PROCEEDINGS DATED 17.04.1999 OF THE 4TH RESPONDENT.

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EXHIBIT P5. TRUE COPY OF THE ORDER DATED 30.06.1999 OF THE 3RD RESPONDENT.

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EXHIBIT P6. TRUE COPY OF THIS REPRESENTATION DATED 09.07.1999 SUBMITTED BY THE PETITIONER TO THE DISTRICT COLLECTOR, PALAKKAD.

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EXHIBIT P7. TRUE COPY OF THE REVISION FILED BY THE PETITIONER BEFORE THE 1ST RESPONDENT DATED 10.12.1999.

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EXHIBIT P8. TRUE COPY OF THE STAY PETITION FILED BY THE PETITIONER BEFORE THE 1ST RESPONDENT DATED 10.12.1999.

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EXHIBIT P9. TRUE COPY OF THE NOTICE ISSUED BY THE 5TH RESPONDENT DATED 13.12.1999.

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EXHIBIT P10. TRUE COPY OF THE INTERIM ORDER OF THIS HON'BLE COURT IN C.M.P NO.53749 IN OP. NO.31549/99E.

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EXHIBIT P11. TRUE COPY OF THE JUDGMENT DATED 28.10.2005 OF THIS HON'BLE COURT IN O.P.NO.31549 OF 1999.

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EXHIBIT P12. TRUE COPY OF THE PROCEEDINGS OF THE 1ST RESPONDENT DATED 28.03.2006.

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EXHIBIT P13. TRUE COPY OF THE SAID REPRESENTATION DATED 18 OCTOBER 2008 SUBMITTED BY THE PETITIONER BEFORE THE DISTRICT COLLECTOR, PALAKKAD.

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EXHIBIT P14. TRUE COPY OF THE GAZETTE NOTIFICATION NO.6580/E2/2007/TD DATED 05.05.2008.

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EXHIBIT P15. TRUE COPY OF THE ORDER DATED 03.10.2013 OF THE GOVERNMENT.

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........2/-

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WP(C).NO. 27251 OF 2013 (F)

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EXHIBIT P16. TRUE COPY OF THE STOP MEMO DATED 28.10.2013 ISSUED BY THE 5TH RESPONDENT.

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EXHIBIT P17. TRUE COPY OF THE ORDER ISSUED BY THE 4TH RESPONDENT ON 30.10.1999.

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ANNEX. A COPY OF THE STATEMENTS SHOWING THE CALCULATION OF LAND VALUE.

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ANNEX. B COPY OF THE STATEMENT SUPPORTING THE PAYMENTS TO VARIOUS GOVERNMENT BODIES.

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RESPONDENT'S EXHIBITS:- NIL.

//TRUE COPY//

P.A. TO JUDGE

rs.

A.M.SHAFFIQUE, J

*** * * * * * * * * * * * *** W.P.C.No.27251 of 2013

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Dated this the 13^th day of August 2014

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J U D G M E N T

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This writ petition is filed seeking for a direction to quash Exts.P4, P5, P15, P16 and P17 and also for a declaration that respondents 1 and 2 have no power to cancel the lease deed in terms of Rule 21 of the Kerala Land Assignment Rules, 1964 (hereinafter referred to as 'the KLA Rules') and for other consequential benefits.

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The facts involved in the writ petition would disclose that as per Ext.P1 Government order G.O.(MS) No.503/88/GAD dated 24/12/1988, the Government agreed to provide 1600 Sq.Meters of Government land on lease to the petitioner for a period of 33 years for execution, running and maintenance of Passenger Ropeway System. The petitioner was also permitted to mortgage the said land for obtaining institutional finance. The petitioner was granted advance possession of the land as per G.O.(MS)

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No.592/89/FD dated 25/7/1989. After considering the proposal in detail, the Government sanctioned lease of an extent of 660 Sq.Meters in Sy.No.698/2 of Malampuzha-I village and a further extent of 1000 Sq.Meters in Sy.No.67A/7C1 in Malampuzha-II village for a period of 33 years at a lease rent of 18% of the market value of the land per annum at the rate of Rs.800/- per cent in Malampuzha I village and Rs.500/- per cent in Malampuzha II village. The terms and conditions were stipulated in G.O.(MS) No.705/89/RD dated 03/10/1989. It was provided that the lease rent will be revised by mutual consent every five years. Further, it is stated that the lease also will be subject to the usual conditions under the KLA Rules, in addition to certain special conditions mentioned therein. Pursuant to the said Government Orders, necessary agreement was also executed between the parties stipulating the various terms and conditions.

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According to the petitioner, they were running a rope way at Malampuzha Gardens from 1991 onwards. Though specific provision was made as per the Government Orders and as per the terms of the agreement that lease rent can be revised by mutual consent, the 4^th respondent Tahsildar has unilaterally enhanced the rent as per Ext.P4 proceedings dated 17/04/1999. Rent was fixed at Rs.26,400/- and Rs.40,000/- in respect of two items of property, based on 20% of the market value of land. Challenging Ext.P4, the petitioner preferred an appeal under Rule 21 of the KLA Rules. The appeal was allowed remitting the matter back to the Tahsildar for fresh consideration observing that as per the agreement, the rate fixed was 18% of the market value. Petitioner preferred a revision before the Government. But, in the meantime, steps were taken for recovery of the amount. Petitioner filed O.P.No.31549 of 1999 before this Court. By judgment dated 28/10/2005, this Court directed the Land Revenue Commissioner to pass final

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orders in the revision filed by the petitioner. The 1^st respondent passed Ext.P12 order directing the District Collector to convene a meeting and to arrive at an amicable solution in the matter. Meetings were convened by the District Collector on several occasions, but no orders were passed. Thereafter the petitioner was faced with orders at Ext.P15 dated 03/10/2013 from the Government cancelling the lease on account of failure on the part of the petitioner to pay the lease rent on the basis of the market value of the land. Pursuant to Ext.P15, Ext.P16 stop memo has been issued. According to the petitioner, Tahsildar has passed an order at Ext.P17 on 30/10/1999, which the petitioner was totally unaware of, fixing the rent at Rs.23,760/- with effect from 16/11/1994 and Rs.38,610/- with effect from 16/11/1999 in respect of property coming under Malampuzha I vilage and Rs.36,000/- with effect from 16/11/1994 and Rs.58,500/- with effect from 16/11/1999 with respect to property coming under Malampuzha II

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village. According to the petitioner, the terms of the contract do not enable the Government to revise the rent unilaterally as the contract specifically provided that the enhancement of rent shall be revised by mutual consent every five years. Specific reference is made to Clause 4(a) of the agreement which reads as under:

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“(a) A lease rent of 18% of the market value of the land per annum at the rate of Rs.800/(Rupees Eight Hundred only) per cent for 660 Square Metres (16.5 Cents) in Survey No.696/2 of Malampuzha I Village and Rs.500/- (Rupees Five Hundred only) per cent for 1000 Sq.Metres (25 cents) in Survey No.67A/7C1 in Malampuzha II village shall be paid in advance on the 1^st December, 1989 by the grantee and the subsequent annual payments shall be paid on the corresponding day of the succeeding year. The lease rent will be revised by mutual consent every five years.”

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Counter affidavit is filed by the 4^th respondent inter alia supporting the stand taken by them. According to

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W.P.C.No.27251/2013

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them, lease rent was not revised after the completion of first five years. However, having considered the increase in market value of land and the commercial importance of the area, the land value was limited to Rs.8,000/- per cent and orders were issued to pay 20% of the land value as lease rent. In the appeal filed before the RDO, lease rent was revised at 18% of the market value. After directions were issued by this Court in O.P.No.31549/1999 and thereafter as directed by the Land Revenue Commissioner, meetings were held, but since the petitioner was not willing to arrive at an amicable settlement, orders could not be passed. It is, pursuant to the same, that the lease rent agreement was cancelled as per Government Order dated 03/10/2013.

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During the pendency of the writ petition, the petitioner had filed statements offering to pay enhancement of rent at the rate of 10% every five years. Annexure A(3) is the lease rent computed at the rate of 10% land value enhanced for every five years in respect of the total land

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W.P.C.No.27251/2013

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involved. The tabulation for land value enhancement at the rate of 20% is also provided. Separate statements are also provided indicating the enhancement of the land value in each village.

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Having regard to the factual issues involved in the matter, the short question to be considered is whether the Government can revise the rent taking into consideration the market value of the land even in an instance where there is no consensus between the parties. It is not in dispute that as per Ext.P1 Government order and the agreement that followed, specific provision had been made indicating that “the lease rent will be revised by mutual consent every five years”. It is also not in dispute that the annual rent fixed at the time of lease was Rs.4,626/-. When the lease amount is liable to be refixed every five years and that too by mutual consent, there cannot be a unilateral fixation of rent by the Government. Government has to comply with the terms of the contract. Perusal of Ext.P17

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W.P.C.No.27251/2013

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dated 30/10/1999 would show that rent has been fixed on the basis of land value which was not agreed upon by the petitioner. Reference to the factual situation in the case would show that all along the petitioner was objecting to the computation of lease rent. The only question to be considered is whether the Government can invoke the provisions of KLA Act and Rules to enhance the lease rent.

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Perusal of Ext.P1 Government order indicates that the lease will also be subject to the usual conditions under the KLA Rules in addition to the special conditions. The lease is apparently granted under Rule 13(c) read with Rule 14(3) of the KLA Rules. The terms and conditions are specified under Appendix VII in terms of Rule 15 of the KLA Rules. Rule 15 is extracted hereunder:

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“ 15. Conditions of lease or licence.- (1)

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Orders granting lease or licence under these rules for agricultural purposes shall be issued in the form in Appendix VI to these rules and those for non-agricultural purposes shall be issued in the

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W.P.C.No.27251/2013

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form in Appendix VII to these rules. The lease or licence shall also be subject to the terms and the conditions specified in the order of grant.

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(2) Lease or licence granted under these rules shall be heritable, but not alienable; [xxxx] Provided that the military personnel may lease for cultivation purposes the land assigned to them, whilst they are away on active service [xxxx].

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(3) The assignee shall not be competent to determine the lease or licence of his own accord during the currency thereof except when otherwise provided for in the order of grant.

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(4) It shall be competent for the authority who granted the lease or licence, to terminate the same, after giving sixty days' notice, in writing, to the assignee, if the land or portion thereof is required for Government or public purposes. The grant shall also be liable to termination, after giving reasonable notice, not exceeding fifteen days, if the assignee violates any of the conditions of the grant order.”

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W.P.C.No.27251/2013

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Rule 18 relates to rental to be charged, which reads as under:

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18. Rental to be charged .(1) Rents

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shall be charged for the lease or licence as the case may be, of land and the trees, if any, standing thereon and included in the lease or licence at such rates as Government may, by order, specify.

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(2) The assignee shall, in addition to paying rent under sub-rule (1) deposit with the Government in advance an amount equal to one year's rent as security.”

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Rule 24 confers on the Government certain

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specific powers which reads as under:

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“ 24. Powers of Government.-

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Notwithstanding anything contained in these rules the Government may, if they consider it necessary so to do in public interest, assign land dispensing with any of the provisions contained in these rules and subject to such conditions, if any, as they may impose.”

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W.P.C.No.27251/2013

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When a specific provision is made in Ext.P1 that the lease deed shall be renewed every five years by mutual consent, the special provision in the lease deed prevails. If mutual consent was not possible, there is no provision which enables the Government to invoke KLA Rules to fix the lease rent. The remedy was to approach a civil court to fix the rent. Under such circumstances, I am of the view that no authority is vested with the respondents to refix the lease rent unless it is by mutual consent.

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Having formed such an opinion, during the course of arguments, I requested the petitioner to submit a statement showing the agreed rent. According to them, 10% of increase in rent every five years is what they have agreed upon and what they are willing to pay. On my request, they have also given a tabulation showing the enhancement of rent every five years at 20% from 19941999 to 2009-2014.

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W.P.C.No.27251/2013

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Having regard to the fact that so far a mutual consent has not been arrived at and having found that the Government is not entitled to invoke the provisions of KLA Rules for revising the rent, especially in the light of the specific provision made under Ext.P1 Government order and also Ext.P2 agreement, I am of the view that an alternate method of computation of rent can be adopted by directing the petitioner to give enhanced rent at the rate of 20% of the existing rent every five years. When so computed, the enhancement would be as under:

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LAND VALUE ENHANCEMENT @ 20% EVERY 5 YEARS

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*5 Year Slab*	*Annual Lease* *Rent*	*Lease Rent* *Payable for 5* *years*	*Lease Rent paid*	*Arrears*
1994-99	5551	27756	23130	4626
1999-04	6661	33307	23130	10177
2004-09	7994	39969	23130	16839
2009-14	9592	47962	18504	29458
T	otal	148994	87894	61100

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The tabulation would show that the rent upto

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2009-2014 would come to Rs.1,48,994/-. Petitioner had

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W.P.C.No.27251/2013

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already remitted Rs.87,894/- and the balance to be remitted is Rs.61,100/-. According to me, until the contract is over, the petitioner shall pay rent which is enhanced at 20% every five years which will be applicable from 2014 onwards. This, however, is without prejudice to the parties to enter into mutual consent in regard to the rent in future years and in the absence of any such mutual consent, this formula shall be adopted till the contract period is over and until the rate of rent is enhanced in a properly instituted suit by the Government.

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In regard to the right of the Government to revoke or cancel the lease the relevant provision in the agreement are clauses 15, 17 and 19 which reads as under:

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“(15) The assigning authority may revoke the grant wholly or in part, if the charge specified in condition (4) or any part thereof shall remain unpaid for fifteen days after it has become payable, whether formally demanded or not, or if the grantee shall have broken any of the

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conditions of the grant herein contained and assume control or otherwise dispose of all the or any part of the land any buildings, fences and structures thereon and the grantee shall not be entitled to any compensation therefore.

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(17) The grant hereby given may be revoked by the assigning authority after giving sixty days' notice in writing and by the Government or the Board of Revenue without notice for emergent reasons (the said Government or the Board of Revenue being the sole judge of emergency) and shall be terminable by the grantee by giving to the assigning authority sixty days notice in writing but without prejudice to any right of action or remedy of the assigning authority in respect of any antecedent breach of any of the foregoing conditions. The grantee shall not in case of such revocation or termination, be entitled to any compensation in respect of any buildings, fences and structures on the land or of any other improvement effected by the grantee to the land but he may, before the revocation or termination of the grant takes effect or if the grant is revoked without notice, within such time as may be

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allowed by the assigning authority in that behalf, remove such buildings, fences and structures.

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(19) If the grantee shall fail to pay to the Government any sums payable under the grant on the respective rates on which they are made payable, he shall pay interest at 12% per annum on such amounts from the dates on which they were so payable until the date of payment of recovery.”

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Apparently, no such eventuality has arisen to make such provisions, especially when the dispute is only with reference to refixation of rent. The petitioner has been paying the admitted rent and therefore there was no failure to pay rent. Hence Clause 15 cannot be invoked. No eventuality as envisaged in terms of Clause 17 has also arisen in the case.

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In the said circumstances, this writ petition is disposed of as under:

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i) The fixation of rent by the respondents in terms of Exts.P4, P5, P16 and P17 are hereby quashed.

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ii) The rent of the premises is refixed in terms of the tabulation mentioned in paragraph 12 of the judgment and the petitioner shall pay the balance amount of Rs.61,100/(Rupees sixty one thousand and one hundred only) within a period of one month from the date of receipt of a copy of this judgment, failing which, it shall be open for the Government to take appropriate action in accordance with the terms of contract. The amount deposited as per interim directions shall be adjusted towards the balance amount payable and future rent.

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Iii) Future rent shall be paid by the petitioner at 20% above the rent fixed as above until a mutual consent is arrived at between the parties or the rent is varied by an order of the Court.

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(A.M.SHAFFIQUE, JUDGE)

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jsr

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W.P.C.No.27251/2013 17

Usha Breco Limited v. the Commissioner of Land Revenue

Case brief

What is this about?

What did the court decide?

Usha Breco Limited v. the Commissioner of Land Revenue

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Statutes considered

Parties & counsel

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