LexM/S AJAR ENTERPRISES PRIVATE LIMITED versus SATYANARAYAN SOMANI AND ORS.
Open in Lexace · Ask the AI about this caseJudgment (excerpt)
A B [2017] 8 S.C.R. 388 MIS AJAR ENTERPRISES PRIVATE LIMITED v. SATYANARAYAN SOMANI AND ORS. (Civil Appeal No. 10852 of 2017) AUGUST 24, 2017 [JAGDISH SINGH KHEHAR, CJI, AND DR. D. Y. CHANDRACHUD, JJ.[ Madhya Pradesh Nagar Tatha Gram Nivesh Vikasit Bhoomiyo, Griho, Bhavano Tatha Anya Sanrachanao Ka Vyayan Niyam, 1975 C - rr. 24 and 25 - Right of renewal of lease by lessor - Held: Rule 24 does not embody an absolute or indefeasible right of renewal - A development authority as a public body cannot act arbitrarily or at its own whims, in deciding whether or not to renew the lease - its decisions must be fair, reasonable and guided by public interest - D Public interest postulates both protecting the interests of the authority and ensuring fairness to the leaseholder who may have constructed on the land in pursuance of the leasehold interest - Neither r. 24 nor r. 25 cun be read to divest the authority of the element of discretion on whether to renew the lease - However, exercise of E F discretion must meet the touchstone of Art. 14 of the Constitution - 011 facts, order passed by the High Court cancelling the renewal of lease deed by the Development Authority in favour of appellant company-auction purchaser as also the conversion of leasehold right to freehold, does not call for interference - Public body acted oblivious to and in disregard of public interest - Land allotted to the company in liquidation was not for the purpose for which the appellant company stepped in - Purpose for allotment was for developing a residential colony for its employees, and not for commercial exploitation to a developer - There was no absolute or indefeasible right to renewal either in company in liquidation or in appellant-company which succeeded to the leasehold interest - G Development Authority chose to blink at its obligations by conferring a largesse on appellant-company - Mere acquisition by appellant- company of the leasehold interest for the remainder of the term together with the benefits of the original lease covenants, did not ipso jure entitle appellant-company to renewal of the lease -As also H subsequent conversion of the land to freehold cannot enure to the 388 MIS AJAR ENTERPRISES PRIVATE LIMITED v. 389 SATYANARAYAN SOMANI benefit of appellant since the underlying basis of the entire A transaction stood vitiated by fraud - When public bodies are vested with control over land which was acquired for facilitating planned development, no authority can claim an immunity from its accountability to matters of public interest - Thus, the order passed by the High Court is upheld - However, rights created in favour of B third party purchasers of plots through execution of registered sale deeds by the appellant-company would not be disturbed - Madhya Pradesh Land Revenue Code, 1959 - ss. 181 and 182. UDA-Ujjain Development Authority granted leasehold rights to USO for a period of thirty years to construct residential houses. IISCO C was ordered to be wound up by the High Court. The Official Liquidator took over and auctioned the assets of the company, including the leasehold rights. The leasehold rights were purchased by the appellant company. UDA's case that it had cancelled its allotment and re-entered upon the land. However, UDA was not entitled to seek possession of the land from official liquidator. The appellant was assigned leasehold rights for D the residuary period. After expiry of the period, UDA renewed the lease agreement for another period of thirty years. Thereafter, leasehold rights were converted into freehold rights. The deed of renewal was challenged. The High Court cancelled the renewal oflease deed by UDA in favour of appellant company as also the conversion ofleasehold right to freehold; directed that the possession ofland be taken back; that in order to fetch the best price land be put to public auction; and that the transfer fee be charged on the basis of the guidelines for 2011-2012 and the differential be recovered with eight percent per annum. Hence the instant appeals. Disposing of the appeals, the Court HELD: 1.1 The Madhya Pradesh Nagar Tatha Gram Nivesh Vikasit Bhoomiyo, Griho, Bhavano Tatha Anya Sanrachanao Ka Vyayan Niyam, 1975 contain elaborate provisions for the transfer of government land vested in or maintained by the Town and Country Development Authority and in respect of other land. Rule E F 24 stipulates that every
Excerpt shown. Read the full judgment & AI analysis in Lexace.