CHHATU RAM HORIL RAM LTD. versus STATE OF BIHAR AND ANR.

Citation: [1968] 2 S.C.R. 881 · Decided: 31-01-1968 · Supreme Court of India · Bench: J.C. SHAH · Disposal: Dismissed

Cited by 2 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

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CHHATU RAM HORIL RAM LTD. 
v. 
STATE OF BIHAR AND ANR. 
January 31, 1968 
[J. C. SHAH AND V. RAMASWAMI, JJ.) 
Bihar Land Reforms Act (30 of 1950), ss. 3, 4 and 10-Lease of mica 
bearing /ands-Covenant for renewc/ of /ease-Vesting of estate in State 
Government under the Act-Whether lessee entitled to renewal. 
The appellant-company obtained a lease of certain mica bearing land 
from the owners for a period of fifteen years. 
The lease deed provided 
for a renewal of the lease on the expiry of the period at the option of the 
lessee. The land .was within an estate and by virtue of a notification under 
the Bihar Land Reforms Ac', 1950, the estate vested in the State Govern-
ment under s. 4, free 1from all encumbrances and free from all rights of 
the lessees. But the appellant continued in occupation for the remaining 
period of the contractual lease, under a s'atutory lease deemed to have 
been granted by the State under s. Hl of the Act. 
On the question whether the &ppellant was entitled to specific perfor-
mance of the covenant of renewal, 
HELD : The agreement of renewal of the lease in future was 
not 
binding upon the State Government after the vesting of the estate. 
(I) The original contractual lease came to an end by the operation 
of s. 4 and under s. 10 a fresh statutory lease for the remainder of the 
term of •hat lease, in favour of the lessee, came into being with terms and 
conditions mutatis mutandis the same as the conditions of the original 
leas·~. But the covenant granting an option of renewal of 1he lease on the 
expiry of the period of the lease is merely a covenant running with the 
land, and does not create any interest in land. It being in the nature of 
an encumbrance and by virtue Of s. 4 it was extinguished and the land 
vested in the State free from the obligation crea'ed by the renewal clause. 
[885 C-E] 
The St1:1te of Bihar v. Indian Copper Corporation Ltd. I.L.R .. 38 Pat. 
1160, approved. 
(2) Rule 40 of the Mineral Concession Rules, 1949, under which a 
lessee of a mining lease is enti•led to at least one renewal for a period not 
exceeding the duration of the original lease, applies to grants made by 
Government and not to statutory leases. Therefore, the , rule has 
no 
applica'ion. 
Even assuming the rule was applicable, the duration of the 
original lease in the case of such a statutory lease must be deemed to be 
no longer than the period between the date of vesting and the da'e of 
expiry of the original lease and that period. for which renewal may have 
been claimed, expired many years ago. [885 G; 886 A-Bl 
CIVIL APPELLATE JURISDICTION: 
Civil Appeal No. 47 of 
1965. 
Appeal from the judgment and decree dated December 12, 
1962 of the Patna High Court in· Appeal from Original Decree 
No. 433 of 1959. 
. 
H. R. Gokhalt!, S. N. Prasad and iJ. P. Singh, for the appel-
lant. 
· 
· 
882 
SUPlll!MB COUllT llBPOllTS 
[1968] 2 S.C.R. 
D. P. Singh, K. M. K. Nair and Shivapufan, for the respon-
dent. 
The Judgment of the Court was delivered by 
Shah, J. On September 30, 1940 the appellant-a private 
limited Company-obtained a lease froin the owners of 3,300 
acres of mica bearing land in viIJage Sapi:hi in the District of 
Gaya, for a period cf fifteen years. Clause 29 of the indenture 
of lease read as folJows :-
·· 
· 
"If on the expiry of the term of the thika we execu-
tant Nos. 1 and 2, first party, the lessors, desire to let 
out in thika the thika property or any portion thereof 
and if any other person wants to take it in thika, then 
in such circumstances it will be incumbent upon us, 
executant Nos. I and 2 first party, the lessors. to inform 
about it to executant No. 3, second party, the lessee, 
first. If on the same terms and stipulations and ;ama 
executant No. 3, second party, the lessee, wants to take 
it in thika then in that case, we executant Nos. I and 2, 
first party, the lessors, shall let it out in thika to him 
( executant No. 3), and we shall execute a fresh thika 
deed in respect thereof in favour of executant No. 3, 
second party, the lessee. and executant No. 3, second 
parfy. the lessee, shall be competent to get the deed 
executed." 
By virtue of a notification issued under s. 3 of the Bihar Land 
Reforms Act, 1950, the right of •he owners in the lands. vested 
on June 27, 1953 in the State of Bihar. 
The appellant Company 
remained thereafter in occupation under a statutory lease deemed 
to be granted by the State for the remaini

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