STATE OF U.P. AND ORS. versus LALJI TANDON (DEAD) THROUGH LRS.

Citation: [2003] SUPP. 5 S.C.R. 77 · Decided: 03-11-2003 · Supreme Court of India · Bench: R.C. LAHOTI · Disposal: Dismissed

Judgment (excerpt)

) 
t 
STATE OF U.P. AND ORS. 
A 
v. 
LALJI TANDON (DEAD) THROUGH LRS. 
NOVEMBER 3, 2003 
[R.C. LAHOTI AND ASHOK BHAN, JJ.] 
B 
Transfer of Property Act, 1882-Government land given on lease for 50 
years-Principal lease deed containing covenant for renewal-Assignee of 
original lessee exercising option for renewal-Execution of fresh lease deed C 
incorporating all covenants of original lease, with option to seek renewa/-
Re-exercise of option for renewal-Grant of-Held: As in the fresh lease deed 
covenant for renewal has been referentially incorporated without any 
reservation, assignee entitled to one more renewal for fifty years and not 
thereafter. 
Land Acquisition Act, I 894-Sections 4 and 6-Land owned by the 
State-Denial of renewal of lease as land acquired by the State-Correctness 
of- Held: Such land is beyond the purview of the Land Acquisition Act-
Hence, cannot be denied renewal in the garb of acquisition notification and 
declaration. 
Government land was given on lease for a term of 50 years to the 
original lessee. The lease contained a renewal clause conferring option on 
the lessee to seek renewal of lease for another term of 50 years. The term 
of 50 years ended in 1937. Lessee alienated his interest in the suit property 
D 
E 
to the respondent. Respondent-assignee of the original lessee exercised his F 
option for renewal. State Government-lessor renewed the lease by 
executing fresh lease deed but belatedly on 20.02.1945. It incorporated all 
the covenants of the original lease including covena_nt of renewal. 
Respondent sought for renewal of the lease for another term of 50 years. 
State officials recommended renewal and also advised the renewal to be 
expedited. Government was issuing instructions to its officers generally G 
directing them to renew such like leases. State Government did not renew 
the lease. Respondent filed a writ petition seeking writ of mandamus. High 
Court directed the State to renew the lease. Hence the present appeal. 
Appellant-State contended that the respondent was entitled only for 
77 
G 
78 
SUPREME COURT REPORTS [2003) SUPP. 5 S.C.R. 
A one renewal for a term of 50 years consistently with the covenant for 
renewal contained in the original lease executed in favour of the original 
lessee which right to renewal stood exhausted with the lease deed of 
20.2.1945 on the expiry of 42 years 2 months and 20 days from the date 
of the lease; that the first renewal shall be deemed to have renewed all 
B other covenants incorporating the rights and obligations between the lessor 
and the lessee excepting the clause for renewal, else it would result in 
creating a lease in perpetuity; and that the land having been acquired by 
the State and also the respondent-State committed breach of the terms of 
the lease, there could be no renewal of lease. 
C 
Dismissing the appeals, the Court 
HELD : 1.1. In India, a lease may be in perpetuity. Neither the 
Transfer of Property Act nor the general law abhors a lease in perpetuity. 
Where the principal lease executed between the parties contains a covenant 
for renewal, its exercise is a unilateral act of the lessee, and the consent 
D of the lessor is unnecessary. Such lease is renewed in accordance with the 
said covenant and whether the renewed lease shall also contain similar 
clause for renewal depends on the facts and circumstances of each case 
regard being had to the intention of the parties as displayed in the original 
covenant for renewal and the surrounding circumstances. There is a 
difference between an extension of lease in accordance with the covenant 
E in that regard contained in the principal lease and renewal of lease, again 
in accordance with the covenant for renewal contained in the original lease. 
In the case of extension it is not necessary to have a fresh lease deed 
executed as the extension of lease for the term agreed upon shall be a 
necessary consequence of the clause for extension. However, option for 
F renewal consistently with the covenant for renewal has to be exercised 
consistently with the terms thereof and, if exercised, a fresh lease deed 
shall have to be executed between the parties. Failing the execution of a 
fresh lease deed, another lease for a fixed term shall nut come into existence 
though the principal lease in spite of the expiry of the term thereof may 
continue by holding over for year by year or month by month, as the case 
G may be. (84-H; 85-A-E) 
1.2. In the instant case, the r

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