The Apex Court on 19th April 2023 made fundamental observations in a case titled Gwalior Development Authority and Another v. Bhanu Pratap Singh that a lease deed registered compulsorily under Section 17 of the Registration Act 1908 cannot be altered or amended by the High Court by exercising its power under Article 226.
The above view came from a division bench of Justices Ajay Rastogi and Justice Bela Trivedi and they further stated that if a lease deed was already executed without demur and the transaction also stood concluded, in such a case it shall not be under the jurisdiction of High Courts powers under Article 226 to alter or amend such a lease deed.
The Apex Court was hearing an appeal which challenged the verdict of Madhya Pradesh High Court which has by exercising its power under Article 226 ordered the appellants to execute the lease deed in favour of the respondent, even though the lease deed was already executed.
Background of the case was that the appellants had issued advertisement and had invited bids for grant of leases of different plots. Respondent was one of the bidders for a plot that covered an area of 27,887.50 sq. meters. The offer of the respondent was the highest bid for Rs. 725 per sq. meter and was accepted. It was further informed to respondents by the appellants that plot area had been decided to be leased out in respondent’s favour for a consideration of Rupees 2.06 crore and told them respectively to deposit an amount of Rupees 1.91 crore upto October 31, 1999 in addition to earnest money.
The construction work was to be finalized within a period of 2 years as per stipulation and if there would be failure to deposit the instalments, security amount would be forfeited.
The respondent deposited the above-stated amount amount between September 1997 to the last instalment paid on August 25, 2005. However the respondent failed to deposit by October 31, 1999 but no action was taken by the appellants either for cancellation of the bid or for forfeiture of the amount deposited.The lease deed was executed by the respondent without any demur.
After a period of three and half years, the respondent seemed mandamus against appellants at the High Court to execute the lease deed for the remaining area of 9625.50 sq. meters in addition to the lease earlier executed in favor of the respondent. The High Court allowed the respondent plea.
The appellants unhappy with the High Court’s verdict approached with the present appeal before the apex court.
Before the apex court, the appellants contented that the lease deed was duly executed between the parties without demur and with the consent of the parties. Further stating that respondent were signatories to the lease deed for 18262.89 sq. meters which was executed on March 29, 2006 and the auction proceedings which were started on March 13, 1997 had culminated in the execution of the lease deed and therefore the transaction attained finality. Hence, there was no reason for the respondent to move the High Court and try to reopen the transaction which was concluded and that too doing this after three years.
There was no justification available under Article 226 for High Court to direct to execute the lease deed for the remaining area of land i.e. 9625.50 sq. meters without full consideration which resulted in amendment to the lease deed which was not permissible in law.
Opposing the appellants contention, the respondent said that the tender was circulated by the appellants for 27887.50 sq. meters and as the bid of respondent was the highest and permitted by the appellants and as well as the last instalment of August 25, 2005 was accepted, there was no reason available with the appellants to segregate and sever the land which was put to auction into two parcels. It was further stated that keeping away the remainder of the land has force the respondent to approach the High Court under Article 226.
The undue indulgence shown by the appellants by allowing the respondent to deposit the installment eight years after the due date, and not forfeiting the claim on default was viewed by the Apex Court with strong displeasure.
“We have our strong reservations and such exercise of power by the Authority, in our view, is a clear abuse of discretion which is not only violative of Article 14 of the Constitution, but also smacks of an undue favour which is always to be avoided and whenever there is such a business/commercial transaction, it is always to be examined on the commercial principles where equity has no role to play,” the Court stated.
Moreover, the Supreme Court made it lucid hat when the parties have already executed the lease deed, as on March 29, 2006, it was not for the High Court to alter or amend the same under Article 226.
“The fact is that the parties sitting across the table, got the lease deed executed for 18262.89 sq. Meters without demur on 29th March, 2006 and the transaction stood concluded after execution of the lease deed, which was initiated pursuant to a tender floated by the appellant on 13th March, 1997 and since the lease deed was to be compulsorily registered under Section 17 of the Registration Act, 1908, it was nowhere open to be altered or amended even by the High Court in exercise of its jurisdiction under Article 226 of the Constitution,” the Court held while quashing the order of the High Court.
Lastly, the Court asked the appellants to give one opportunity by making available to the respondent, remaining of the area on priority basis on the prevalent circle rate notified by the government. This was stated by the Court seeing the pendency of the present case and the escalation of property’s value that was in concern in the case.
Written by Sonakshi Misra, 2nd year (4th semester) B.A.LL.B. Hons. Student at Atal Bihari Vajpayee School of Legal Studies, Chhatrapati Shahu Ji Maharaj University, Kanpur.
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