BHARAT PETROLEUM CORPN. LTD. versus MADDULA RATNA VALLI AND ORS.

Citation: [2007] 5 S.C.R. 997 · Decided: 27-04-2007 · Supreme Court of India · Bench: S.B. SINHA · Disposal: Dismissed

Judgment (excerpt)

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1 
BHARAT PETROLEUM CORPN. LTD. 
A 
V. 
MADDULA RA TNA VALLI AND ORS. 
APRIL 27, 2007 
[S.B. SINHA AND MARKANDEY KA TJU, JJ.] 
B 
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l 
Burmah Shell (Acuisition of Undertakings in India) Act, '/976-ss. 3, 
5(2)and 7-Vesting of right, title and interest of Burmah Shell-lessee in 
Central Government and consequent Company-Renewal of lease-Claim of. c 
by Government Company, on the same terms and condition on which Burmah 
Shell held the lease-Renewal of lease rejected by High Court since for 17 
years during pendency of eviction suit. Government Company did not pay 
rent nor proved their bonafides-Held: The desire of Government Company 
to renew lease not bona fide and action not fair or reasonable thus claim not 
sustainable-Nevertheless, possession of lease holding has already been D 
delivered-Order of High Court calls for no interference-Constitution of 
India, I950-Articles I2 and 14. 
Maxims; Dura Lex Sed Lex-Meaning of-Only because a statute cause 
hardship, the same may not be declared ultra vires. 
E 
Lex injusta non est lex-Meaning of-A statute must be construed 
justly-Unjust law is no law at all. 
The Burmah Shell (Acquisition of Undertakings in India) Act, 1979 
was enacted to provide for acquisition and transfer of the title, right and 
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interest in the "Burmah Shell Oil Storage and Distributing Company of India 
Ltd "to the appellant -Government company. By reason of s. 3 of the Act, the 
right, title and interest of Burm ah Shell stood transferred to and vested in 
the Central Government which shall be deemed to the lessee or tenant. Under 
sub-section (2) of section 5 on the expiry of the terms of any lease or tenancy, 
such lease or tenancy shall if so desired by the Central Government be renewed G 
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on the same terms and conditions on which the lease or tenancy was held by 
Burmah-Shell. Central Government in exercise of its power conferred upon 
it under section 7 directed that the undertaking of the Burmah Shell shall 
vest in the appellant. 
997 
H 
998 
SUPREME COURT REPORTS 
[2007] 5 S.C.R. 
A 
Burmah Shell-predecessor-in -interest of the appellant was a lessee for 
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a period of 30 years by virtue of lease deed executed by the respondent. The 
stipulated rent was Rs 50/- per month. On expiry of the period of lease, the 
appellant issued show cause notice exercising its purported right of renewal 
on the same terms and condition on which lessee-Burmah Shell held the lease. 
B 
Respondents did not agree. It stated that as rent has not been paid and the 
provisions of the Act have no application, tenancy stood terminated. It called 
upon the appellant to vacae and deliver possession of the premises. Appellant 
did not deliver the vacant possession of the tenanted premises and as such 
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eviction suit was filed. Trial Court dismissed the suit holding that the appellant 
had a right to continue to occupy the leasehold as a tenant on the same terms 
c and conditions on which the tenancy was granted. Respondent filed an appeal 
which was allowed. Appellant filed a Second Appeal. High Court dismissed 
the same. Hence the present appeal. 
Appellant-Government Company contended that by reason of s. 5(2) read 
withs. 7(3) of the 1976 Act, it had an unbridlled statutory right to exercise 
D its option for renewal of the lease which in terms thereof would be deemed to 
have been renewed for another term of30 years from 25.07.1989; and that 
the Court can interfere with the 'desire' expressed by the Government 
company only when it is actuated by any malice or ill-will but not when the 
same was either unfair or unreasonable. 
E 
Respondents contended that an action on the part of the appellant should 
conform to the doctrine of fairness and thus, the impugned judgment cannot 
be interfered with. 
Dismissing the appeals, the Court 
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HELD: 1.1. Appellant-Government Company is a 'State' within the 
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meaning of Article 12 of the Constitution of India. Therefore, it is 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 
G the words "if so desired by the Central Government" . Such a desire cannot 
be based upon a subjective satisfaction. It must be based on objective criteria. 
l . 
The Burmah Shell (Acquisition of Undertakings in India ) Act, 1976 is a 
special statute. It overrides the p

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