Sunday, 26 June 2016

When leasehold property can not be converted to freehold property?

The contention urged by the learned senior
counsel for the respondent that it has deposited a
sum of Rs.96,41,982/- as conversion charges of the
property in question from leasehold to freehold right
of the same is also of no relevance and lends no
support to the respondent for the reason that in the
absence of renewal of lease of the property by the
DDA, the original lessee himself becomes an
unauthorised occupant of the property in question.
The deposition of conversion charges in respect of
the same to the office of the DDA cannot help the
respondent in claiming any right with respect to the
property in question. The question whether such a
procedure in respect of the public property is
permissible in law or not is not required to be
decided in this case. The instant case having
peculiar facts and circumstances, namely, after
10.08.1968 the lease stands terminated by efflux of
time, which is further evidently clear from the
termination notice dated 01.09.1972 and thereafter,
the original lessee becomes an unauthorised occupant
in terms of Section 2(g) of the Public Premises
(Eviction of Unauthorised Occupants) Act, 1971 and
consequently, not entitled to deal with the property
in question in any manner. The very concept of
conversion of leasehold rights to freehold rights is
not applicable to the fact situation.
CA @ SLP(C) No. 6978 of 2012 1
REPORTABLE
IN THE SUPREME COURT OF INDIA
 CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 3783 OF 2016
 (Arising out of S.L.P. (C) NO.6978 of 2012)
DELHI DEVELOPMENT AUTHORITY ………… APPELLANT
VERSUS
M/S ANANT RAJ AGENCIES PVT. LTD. ………… RESPONDENT

V. GOPALA GOWDA, J.
 Dated:12th April, 2016

2. This appeal by special leave is directed against
the impugned judgment and order dated 31.05.2011
passed by the High Court of Delhi at New Delhi in RSA
No. 6 of 1983, wherein the High Court has dismissed
the second appeal filed by the appellant-Authority
(hereinafter called “DDA”) holding that acceptance of
rent, in the instant case, by the DDA pursuant to a
demand made by it amounts to a renewal of lease in
respect of the property in question.
3. Brief facts are stated hereunder to appreciate
the rival legal contentions urged on behalf of the
parties:
The Delhi Improvement Trust vide lease deed dated
06.01.1951 granted lease of plot no.2, Jhandewalan,
“E” Block, Delhi in favour of original lessee Balraj
Virmani. After enactment of the Delhi Development
Act, 1957, the DDA was constituted by notification of
the Central Government and by virtue of Section 60 of
the aforesaid Act, all properties, movable or
immovable, vested in the Delhi Improvement Trust came
to be vested in the DDA.
4. The lease in respect of property in question was
initially for a period of 20 years i.e., w.e.f.
11.08.1948 to 10.08.1968 and the same was liable to
be extended for a further period of 20 years at the
option of lessee in accordance with the terms and
conditions contained therein. Clause (vi) of the
lease deed is a relevant condition, which reads as
under:
“vi) not to use the said land and
buildings that may be erected thereon
during the said term for any other
purpose other than for the purpose of
cold storage plant without the consent in
writing of the said lessor; provided that
the lease shall become void if the land
is used for any purpose other than that
for which the lease is granted not being
a purpose subsequently approved by the
lessor”.
Clause III(b) is another relevant condition which
reads thus:
“III(b) in case this lease with the
lessee shall continue for the said
period of 20 years and provided the
lessee has observed performed and
complied with the terms and covenants,
conditions and options to renew the
lease on such terms and conditions as
the lessor deems fit for further period
of 20 years, provided that the notice of
the intention of the lessee to exercise
this option of renewal is given to the
lessor six months before the expiration
of the lease; provided further that if
the lease is extended for a further
period 20 years the lessor shall have
the right to enhance the rental upto 50%
at the original rent.”
5. On 23.02.1967, the original lessee approached the
DDA for renewal of his lease. The DDA served a show
cause notice dated 16.02.1968 to the original lessee
for breach of the terms and conditions contained in
the lease deed committed by him with respect to the
lease. Following breaches were pointed out in the
aforesaid show cause notice:
a. The mezzanine floor of the said building
being used for printing press and office
purposes by different tenants in
contravention of the clause 1(vi) and (vii)
of the lease deed.
b.Cold storage has been sublet to M/s
Baikunth cold storage since December, 1965
in contravention of clause 1(vii) of the
lease deed.
c.Portion of mezzanine floor being used for
residential purposes by the cold storage
staff in contravention of clause 1(xv) of
the lease deed.
d.Only single storey building stands on the
plot in place of four storied building in
contravention of clause 1(xv)(c) of the
lease deed.
By the said notice, 15 days time was given to the
original lessee to remedy the breaches as pointed out
in the show cause notice. The original lessee replied
to the said show cause notice through various
communications dated 01.03.1968, 26.06.1968 and
01.07.1968. However, no further communication was
issued by the DDA in this regard.
6. The DDA vide notice dated 01.09.1972 terminated
the lease of the said land on account of
non-observation of the terms and conditions contained
in the lease deed. 
7. Aggrieved by the decision of the DDA, the
original lessee filed original suit for perpetual
injunction bearing no. 47 of 1975 before the
Sub-Judge, Delhi seeking restraining order against
the DDA. The learned Sub-Judge vide judgment and
order dated 07.03.1981 decreed the said suit in
favour of the original lessee. The learned Sub-Judge
has found notice dated 01.09.1972 of the DDA to be
arbitrary, illegal and without jurisdiction.
8. Aggrieved by the decision of the learned
Sub-Judge, the DDA preferred the First Appeal vide
RCA No. 75 of 1982 before the Court of Additional
District Judge (ADJ), Delhi. The learned ADJ vide
judgment and order dated 29.09.1982 dismissed the
appeal and affirmed the judgment and order passed by
the trial court.
9. Aggrieved by the said judgment of the learned
ADJ, DDA preferred the Second Appeal vide RSA No. 06
of 1983, before the High Court of Delhi at New Delhi.
During the pendency of the said second appeal an
application vide CM No. 13336 of 2007 was moved under
Order 22 Rule 10 of the CPC for substitution of M/s
Anant Raj Agencies Pvt. Ltd.-the respondent herein in
place of original lessee-Balraj Virmani. In the said
application it was urged that the property in
question had been purchased by the respondent vide
sale deed in view of compromise decree dated
22.06.1988 passed by the High Court in terms of
settlement between the original lessee and the
respondent herein. The High Court vide order dated
03.11.2009 substituted the respondent in place of the
original lessee-Balraj Virmani in the second appeal
proceedings.
10. During the pendency of the said RSA No. 6 of
1983, the respondent applied to DDA for conversion of
the said premises from leasehold to freehold vide
application dated 26.03.2004. The respondent
deposited a sum of Rs.96,41,982/- towards conversion
charges as per the policy applicable, but the request
for conversion was rejected by the DDA. Being
aggrieved by the said decision, the respondent
preferred writ petition being CWP No. 10015 of 2005
before the High Court of Delhi praying for directions
to be issued to the DDA to consider the request of
the respondent and grant conversion of the said
premises from leasehold to freehold. The High Court
by its order dated 19.07.2007 disposed of the said
writ petition by directing DDA to decide the matter
of conversion within a period of 8 weeks after the
disposal of RSA No. 6 of 1983.
11. The High Court by its judgment and order dated
31.05.2011 has dismissed RSA No. 6 of 1983 filed by
the DDA holding that its act of demanding and
accepting rent tantamounts to renewal of lease in
respect of the property in question. Hence, this
appeal by way of special leave has been filed by the
DDA raising certain substantial questions of law
urging various grounds.
12. Mr. Ashwani Kumar, the learned counsel appearing
on behalf of the DDA contended that the High Court
has failed to appreciate that the original lessee has
admittedly breached the terms and conditions
contained in the lease deed and thus, not entitled to
the renewal of the same in his favour.
13. It was further contended by the learned counsel
that the High Court has erred in not appreciating
that both the courts below have proceeded on wrong
interpretation of clause III (b) of the lease deed
dated 06.01.1951 that the lease was unilaterally
renewable at the option of the lessee in respect of
the leased property in favour of the original lessee.
14. The learned counsel further contended that after
the admission of the breaches, in respect of terms
and conditions set out in the lease deed referred to
supra, by the original lessee as pointed out in the
show cause notice dated 16.02.1968, the same was not
condoned by the DDA. In such a situation it is not
right on the part of the trial court, the first
appellate court and the High Court to hold that there
was automatic renewal of the lease of the property in
question only for the reason that the rent was
deposited by the lessee in the office of the DDA.
15. It was further contended by the learned counsel
that the High Court has failed to appreciate that the
original lessee created an interest in the said
property, in favour of third party-respondent, during
the period when he was no more a lease holder, in
respect of the said property, by virtue of
determination of lease in his favour by efflux of
time. Therefore, the original lessee, having no
right, title or interest in the said property, could
not have transferred the said property to the
respondent and therefore, the alleged transfer of the
property in question in his favour is void and the
same is not binding upon the DDA.
16. The learned counsel further contended that the
High Court has failed to appreciate that the deposit
of the rent by the original lessee and its acceptance
by the office of the DDA is administrative in nature
and would not be construed as an estoppel or waiver
of the DDA’s right in respect of the property in
question unless a specific intention to this effect
is communicated to the original lessee.
17. Per contra, Mr. C.S. Vaidyanathan, the learned
senior counsel appearing on behalf of the respondent
contended that the present appeal is not maintainable
as the DDA itself has intentionally acquiesced and
agreed to the original lessee’s continued use of the
said property after the expiry of first term of lease
on 10.08.1968. It was further submitted that the DDA
after more than one year of the expiry of the first
term of lease demanded rent in respect of the said
property vide notice dated 03.10.1969, pursuant to
which payments towards rent were made by the original
lessee. The learned senior counsel further emphasised
upon the point that the instant case differs from
those cases where rent is tendered by the lessee sans
demand from the lessor. He further submitted that the
acceptance of rent by the DDA on various occasions
pursuant to demand made by it, clearly proves the
intention of the DDA that the lease is renewed in
favour of the original lessee.
18. It was further contended by him that in view of
the settled principle of law as well as the
precedents laid down by this Court in a catena of
cases that the exercise of option for renewal cannot
be stalled on account of the alleged breaches of the
terms and conditions of the lease when no steps were
taken by the DDA to assert its right and power in
respect of re-entry into the property in question
till the option for renewal of lease exercised by the
lessee and therefore, this appeal is not maintainable
in law as no substantial question of law arises for
consideration of this Court in exercise of its
appellate jurisdiction. It was further submitted by
him that in the instant case, the DDA issued show
cause notice dated 16.02.1968 to the original lessee
informing him of four breaches of terms and
conditions contained in the lease deed allegedly
committed by him. The original lessee made detailed
replies to the said notice vide communications dated
01.03.1968, 26.06.1968 and 01.07.1968. The DDA after
receiving the replies from the original lessee
neither communicated nor took any action to take the
possession of the property in question and therefore,
the conclusion that the DDA was satisfied with the
replies made by the original lessee can be safely
arrived at. In fact, the demand of rent by the office
of the DDA on 03.10.1969 was immediately acceded. It
was further submitted that in view of the aforesaid
it can be safely concluded that after the expiry of
the first term of the lease and acquiescence of the
DDA in letting the original lessee to continue in
possession of the said property, the lessee became a
tenant at will in respect of the said property.
Therefore, the impugned judgment and order passed by
the High Court is not bad in law and thus,
interference by this Court with the same is not
warranted.
19. With respect to the substitution of the
respondent in place of the original lessee, during
pendency of the second appeal, it was submitted by
the learned senior counsel that the said substitution
of party was allowed by the High Court vide order
dated 03.11.2009 in RSA No. 06 of 1983. The DDA did
not even file a reply to the application for
substitution filed by the respondent and therefore,
it is estopped from questioning such substitution of
the respondent in place of original lessee. It was
further submitted by him that the order dated
03.11.2009 has not been challenged by the DDA and
therefore, it has no right to raise any new plea in
this regard at this stage.
20. The learned senior counsel further submitted that
the DDA has deliberately and intentionally suppressed
and concealed material fact from this Court i.e., the
policy of the DDA for conversion of the property from
leasehold to freehold is under consideration and the
same is clear from the communication dated 22.01.2008
sent by the DDA to the respondent. He further
submitted that admittedly, the DDA has not refunded
the amount of Rs.96,41,982/- deposited by the
respondent as conversion charges.
21. While concluding his contentions the learned
senior counsel submitted that the courts below have
rightly rejected the case of the DDA while holding
the notice dated 01.09.1972, whereby it sought to
determine the lease of the original lessee,
arbitrary, illegal and without jurisdiction. The High
Court has correctly held that the acceptance of rent
by the office of the DDA, in respect of the said
property, pursuant to the demand made by the office
of the DDA amounts to renewal of lease in the instant
case and therefore, no interference with the impugned
judgment and order by this Court in exercise of its
appellate jurisdiction under Article 136 of the
Constitution of India is required.

22. On the basis of the aforesaid rival legal
contentions urged on behalf of the parties the
following points would arise for consideration of
this Court:
1. Whether the original lessee has
acquired any right, in respect of the
property in question after the
termination of lease by efflux of time
on 10.08.1968 and also by termination
notice dated 01.09.1972, in thePage 14
CA @ SLP(C) No. 6978 of 2012 14
absence of renewal of lease by the DDA
in writing as provided under Clause
III(b) of the lease deed, by virtue of
payment of rent in the office of the
DDA?
2.Whether the respondent herein acquires
any right in respect of property in
question by getting substituted in
place of the original lessee by virtue
of a compromise decree, between the
original lessee and the respondent,
based on a sale deed dated 14.10.1998
executed by the original lessee, by
invoking Order 22 Rule 10 of the CPC
during the pendency of the appeal
before the High Court?
3.What order?
Answer to Point No.1
23. After careful examination of the material facts
and evidence on record it is clear that on the basis
of the admitted facts, the lease of the property in
question is not renewed by the DDA in favour of the
original lessee, in accordance with clause III(b) of
the lease deed dated 06.01.1951. From a reading of
the said lease deed it becomes very clear that the
original lease period was initially for a period 20
years, which period expired on 10.08.1968 as the
lease period commenced w.e.f. 11.08.1948. No doubt,
the original lessee availed his option of the renewal
of lease as provided in the lease deed by making a
request to the DDA vide his letter dated 23.2.1967,
but the same was not acceded to by the DDA. Before
expiry of the original lease period, notices were
issued by the office of DDA on 09.02.1968 and
16.02.1968 to the original lessee alleging certain
breaches of the terms and conditions (extracted
above) of the lease deed. The original lessee was
given 15 days time to remedy the said breaches.
Though the original lessee made several replies to
the aforesaid notices but he had failed to rectify
the said breaches notified to him. Therefore, the DDA
vide notice dated 01.09.1972 decided not to renew the
lease of the property in question and terminated the
lease in respect of the same, though in law the same
was not even required on the part of the DDA in view
of the conditions of the lease deed as after the
expiry of the original period of lease it stands
terminated by efflux of time.
24. The concurrent findings recorded by the courts
below declaring the termination notice dated
01.09.1972, terminating the lease of the property in
question granted in favour of the original lessee,
served by the DDA to the original lessee, as illegal,
arbitrary and without jurisdiction on the erroneous
assumption of the non-existent fact that there has
been a renewal of the lease for the reason that the
original lessee applied for the renewal of the lease
within time as stipulated in the clause III(b)
(supra) of the lease deed and has been paying rent
for the property in question to the office of the
DDA. In our view, the said conclusion of the courts
below is erroneous in law as it is contrary to the
Clause III (b) of the lease deed and also Sections
21(1) and 22 of the Delhi Development Act, 1957 (for
short the “DD Act”) read with Rule 43 of the Delhi
Development Authority (Disposal of Developed Nazul
Land) Rules, 1981 (for short the “Nazul Land Rules”).
In this regard, it would be necessary for this Court
to refer to the decision relied upon by the learned
counsel for the appellant, in the case of Shanti
Prasad Devi & Anr. v. Shankar Mahto & Ors.1 wherein
this Court, while interpreting Section 116 of the
Transfer of Property Act, 1882 with regard to its
applicability and the effect of “holding over”, held
that it is necessary to obtain assent of the landlord
for continuation of lease after the expiry of lease
period and mere acceptance of rent by the lessor, in
absence of agreement to the contrary, for subsequent
months where lessee continues to occupy lease
premises cannot be said to be conduct signifying
assent on its part. The relevant paras 18 and 19 of
the case are extracted below :-
“18. We fully agree with the High Court
and the first appellate court below that
on expiry of period of lease, mere
acceptance of rent for the subsequent
months in which the lessee continued to
occupy the lease premises cannot be said
to be a conduct signifying “assent” to
the continuance of the lease even after
expiry of lease period. To the legal
notice seeking renewal of lease, the
lessor gave no reply. The agreement of
renewal contained in clause (7) read
with clause (9) required fulfilment of
two conditions: first, the exercise of
option of renewal by the lessee before
the expiry of original period of lease
and second, fixation of terms and
1
 (2005) 5 SCC 543
conditions for the renewed period of
lease by mutual consent and in absence
thereof through the mediation of local
mukhia or panchas of the village. The
aforesaid renewal clauses (7) and (9) in
the agreement of lease clearly fell
within the expression “agreement to the
contrary” used in Section 116 of the
Transfer of Property Act. Under the
aforesaid clauses option to seek renewal
was to be exercised before expiry of the
lease and on specified conditions.
19. The lessor in the present case had
neither expressly nor impliedly agreed
for renewal. The renewal as provided in
the original contract was required to be
obtained by following a specified
procedure i.e. on mutually agreed terms
or in the alternative through the
mediation of Mukhias and Panchas. In the
instant case, there is a renewal clause
in the contract prescribing a particular
period and mode of renewal which was “an
agreement to the contrary” within the
meaning of Section 116 of the Transfer
of Property Act. In the face of specific
clauses (7) and (9) for seeking renewal
there could be no implied renewal by
“holding over” on mere acceptance of the
rent offered by the lessee. In the
instant case, option of renewal was
exercised not in accordance with the
terms of renewal clause that is before
the expiry of lease. It was exercised
after expiry of lease and the lessee
continued to remain in use and
occupation of the leased premises. The
rent offered was accepted by the lessor
for the period the lessee overstayed on
the leased premises. The lessee, in the
above circumstances, could not claim
that he was “holding over” as a lessee
within the meaning of Section 116 of the
Transfer of Property Act.”
 (emphasis supplied by this Court)
To the same effect, the learned counsel has
further, rightly placed reliance on another
decision of this Court in the case of Sarup Singh
Gupta v. S. Jagdish Singh & Ors2, wherein this Court
has held as under :-
“8…In our view, mere acceptance of rent did
not by itself constitute an act of the
nature envisaged by Section 113, Transfer
of Property Act showing an intention to
treat the lease as subsisting. The fact
remains that even after accepting the rent
tendered, the landlord did file a suit for
eviction, and even while prosecuting the
suit accepted the rent which was being paid
to him by the tenant. It cannot, therefore,
be said that by accepting rent, he intended
to waive the notice to quit and to treat
the lease as subsisting. We cannot ignore
the fact that in any event, even if rent
was neither tendered nor accepted, the
landlord in the event of success would be
entitled to the payment of the arrears of
rent. To avoid any controversy, in the
event of termination of lease the practice
followed by the courts is to permit the
landlord to receive each month by way of
compensation for the use and occupation of
the premises, an amount equal to the
monthly rent payable by the tenant. It
cannot, therefore, be said that mere
acceptance of rent amounts to waiver of
notice to quit unless there be any other
evidence to prove or establish that the
landlord so intended…”
 (emphasis supplied by this Court)
2
 (2006) 4 SCC 205
25. Further, in the case of Ashoka Marketing Ltd. &
Anr. v. Punjab National Bank & Ors3, wherein the
question for consideration was whether the provisions
of Public Premises (Eviction of Unauthorised
Occupants) Act, 1971 overrides the provisions of
Delhi Rent Control Act, 1958, the Constitution Bench
of this Court after interpretation of the relevant
provisions of both the Acts has clearly held that the
Public Premises (Eviction of Unauthorised Occupants)
Act, 1971 must prevail over the Rent Control Act. The
relevant paras 55 and 70 of the decision read thus:
“55. The Rent Control Act makes a
departure from the general law
regulating the relationship of landlord
and tenant contained in the Transfer of
Property Act inasmuch as it makes
provision for determination of standard
rent, it specifies the grounds on which
a landlord can seek the eviction of a
tenant, it prescribes the forum for
adjudication of disputes between
landlords and tenants and the procedure
which has to be followed in such
proceedings. The Rent Control Act can,
therefore, be said to be a special
statute regulating the relationship of
landlord and tenant in the Union
territory of Delhi. The Public Premises
Act makes provision for a speedy
machinery to secure eviction of
unauthorised occupants from public
premises. As opposed to the general law
3
 (1990) 4 SCC 406
which provides for filing of a regular
suit for recovery of possession of
property in a competent court and for
trial of such a suit in accordance with
the procedure laid down in the Code of
Civil Procedure, the Public Premises
Act confers the power to pass an order
of eviction of an unauthorised occupant
in a public premises on a designated
officer and prescribes the procedure to
be followed by the said officer before
passing such an order. Therefore, the
Public Premises Act is also a special
statute relating to eviction of
unauthorised occupants from public
premises. In other words, both the
enactments, namely, the Rent Control
Act and the Public Premises Act, are
special statutes in relation to the
matters dealt with therein. Since, the
Public Premises Act is a special
statute and not a general enactment the
exception contained in the principle
that a subsequent general law cannot
derogate from an earlier special law
cannot be invoked and in accordance
with the principle that the later laws
abrogate earlier contrary laws, the
Public Premises Act must prevail over
the Rent Control Act.
70……In our opinion, the provisions of
the Public Premises Act, to the extent
they cover premises falling within the
ambit of the Rent Control Act, override
the provisions of the Rent Control Act
and a person in unauthorised occupation
of public premises under Section 2(e)
of the Act cannot invoke the protection
of the Rent Control Act.”
The Transfer of Property Act, 1882 is a general law
governing the landlord and the tenant relationship in
general. The specific Rent Control Acts are
advancement over the Transfer of Property Act,
thereby providing more protection to the tenant from
arbitrary increase of rent and ejectment from the
rented premises by the landlord. Thus, in the light
of the aforesaid case law, it can be concluded that
the Transfer of Property Act, 1882 is not applicable
in respect of the public premises. The property in
question is public premises by virtue of Section 2(e)
(3)(ii) of the Public Premises (Eviction of
Unauthorised Occupants) Act, 1971, which is
reproduced hereunder:
“2(e) “public premises” means—
(3) in relation to the [National
Capital Territory of Delhi]—
(ii) any premises belonging to the
Delhi Development Authority, whether
such premises are in the possession
of, or leased out by, the said
Authority;….”
Therefore, in the instant case, as per clause III(b)
of the lease deed and Sections 21 and 22 of the DD
Act read with Rule 43 of the Nazul Land Rules and in
the light of Shanti Prasad Devi, Sarup Singh Gupta
and Ashoka Marketing Ltd. cases (supra), there cannot
be an automatic renewal of lease in favour of the
original lessee once it stands terminated by efflux
of time and also by issuing notice terminating the
lease. Merely accepting the amount towards the rent
by the office of the DDA after expiry of the lease
period shall not be construed as renewal of lease of
the premises in question, in favour of the original
lessee, for another period of 20 years as contended
by the respondent.
26. Further, the property in question, vested in the
DDA, is a Nazul land, a developed land as is defined
under Rule 2(i) of the Nazul Land Rules, which reads
thus:
"Nazul land" means the land
placed at the disposal of
the Authority and developed
by or under the control and
supervision of the Authority
under section 22 of the Act”
27. Section 3(2) of the DD Act says the Authority
shall be a body corporate by the name Delhi
Development Authority (DDA). Section 21 of the DD Act
empowers the DDA in respect of the disposal of the
land and sub-section (3) of Section 21 makes it very
clear that nothing in the aforesaid Act shall be
construed as enabling the Authority or the local
Authority concerned to dispose of the land by way of
gift, mortgage or charge but subject to certain
reference in the DD Act with regard to the disposal
of land shall be construed as reference to the
disposal thereof in any manner, whether by way of
sale, exchange or lease or by creation of any
easement right or privilege or otherwise. Since, the
power conferred by the DD Act upon DDA to grant lease
includes renewal of lease and in the absence of such
a renewal of lease of the property in question in
favour of the original lessee, as required in law,
there cannot be an automatic renewal of the same in
his favour. The non-grant of renewal of lease in
favour of the original lessee is very clear from the
fact that the original lessee failed to remedy the
breaches pointed out by the DDA in its show cause
notices dated 09.02.1968 and 16.02.1968 and further
made very clear from the issuance of termination
notice dated 01.09.1972, whereby the DDA has conveyed
its clear intention of non-renewal of the lease of
the property in question. The relevant portion of the
aforesaid termination notice reads thus:
“7. And whereas since you
have failed to observe
perform and comply with the
terms and covenant,
conditions of the above lease
the said breaches still
continue. It has been decided
not to renew the lease for
further period.”
Thus, it is abundantly clear from the aforesaid legal
statutory provisions of the DD Act and terms and
conditions of the lease deed and the case law
referred supra that there is no automatic renewal of
lease of the property in question in favour of the
original lessee. Therefore, the concurrent findings
of the courts below on the contentious issue in the
impugned judgment are not only erroneous but also
error in law and hence, the same cannot be allowed to
sustain in law and liable to be set aside.
28. From the above discussion, it is clear that in
the absence of renewal of lease, the status of the
original lessee, in relation to the property in
question, is that of an unauthorised occupant as he
had continued in occupation of the property in
question as an ‘unauthorized person’ in terms of
Section 2(g) of the Public Premises (Eviction of
Unauthorised Occupants) Act, 1971, which reads as
under:
“2(g) “unauthorised occupation”, in
relation to any public premises,
means the occupation by any person
of the public premises without
authority for such occupation, and
includes the continuance in
occupation by any person of the
public premises after the authority
(whether by way of grant or any
other mode of transfer) under which
he was allowed to occupy the
premises has expired or has been
determined for any reason
whatsoever.”
29. In the absence of renewal of lease after
10.8.1968, the pleadings of the original lessee that
the DDA is estopped from taking the plea that there
is no renewal of lease after having accepted the rent
after 10.8.1968, in respect of property in question
and after accepting certain sums in respect of the
same, subsequently, for change of the property in
question from leasehold to freehold are all
irrelevant aspects for the reason that the same are
contrary to the aforesaid provisions of the DD Act,
the Nazul Land Rules applicable to the fact situation
and the terms and conditions of the lease deed.
Further, it is clear from the contents of the
termination notice dated 01.09.1972 served upon the
original lessee by the DDA that it has not only
refused to renew the lease of the property but also
asked the original lessee to hand over the possession
of the property in question within 30 days, which is
absolutely in consonance with Section 5 of the Public
Premises (Eviction of Unauthorised Occupants) Act,
1971.
30. Without examining the case in the proper
perspective that the property in question being a
Public Premises in terms of Section 2(e) of the
Public Premises (Eviction of Unauthorised Occupants)
Act, 1971 and that after expiry of lease period the
original lessee has become unauthorized occupant in
terms of Section 2(g) of the said Act in the light of
relevant statutory provisions and rules referred to
supra and law laid down by the Constitution Bench of
this Court in the Case of Ashoka Marketing Ltd. &
Anr. (supra), the concurrent findings of the courts
below on the contentious issue is not only erroneous
but also suffers from error in law and therefore,
liable to be set aside.
31. The grant of perpetual injunction by the Trial
Court in favour of original lessee, restraining the
DDA from taking any action under the said termination
notice dated 01.09.1972, on the ground that the
termination notice dated 01.09.1972 being illegal,
arbitrary and without jurisdiction and the
affirmation of the same by both the first appellate
court, i.e., by the learned ADJ and further by the
High Court by its impugned judgment and order are not
only erroneous but also suffers from error in law.
Thus, Point no.1 is answered in favour of the
appellant.
Answer to Point no.2
32. The High Court’s order dated 03.11.2009 whereby
the respondent was substituted in place of the
original lessee on its application under Order 22
Rule 10 of CPC for the reason of execution of sale
deed dated 14.10.1998 by the original lessee in
favour of the respondent by entering into compromise
between them in Suit No. 601 of 1984 is also bad in
law. The sale of the property in question to give
effect to the compromise decree in aforesaid suit is
void ab initio in law for the reason that the
original lessee, in the absence of renewal of lease
in his favour himself had no right, title or
interest, at the time of execution of sale deed, in
respect of the property in question. It is well
settled position of law that the person having no
right, title or interest in the property cannot
transfer the same by way of sale deed. Thus, in the
instant case, the sale of the property in question by
the original lessee in favour of the respondent is
not a valid assignment of his right in respect of the
same. For the aforesaid reasons, the sale deed is not
binding on the DDA. The High Court has failed to
appreciate this important factual and legal aspect of
the case.
33. The contention urged by the learned senior
counsel for the respondent that it has deposited a
sum of Rs.96,41,982/- as conversion charges of the
property in question from leasehold to freehold right
of the same is also of no relevance and lends no
support to the respondent for the reason that in the
absence of renewal of lease of the property by the
DDA, the original lessee himself becomes an
unauthorised occupant of the property in question.
The deposition of conversion charges in respect of
the same to the office of the DDA cannot help the
respondent in claiming any right with respect to the
property in question. The question whether such a
procedure in respect of the public property is
permissible in law or not is not required to be
decided in this case. The instant case having
peculiar facts and circumstances, namely, after
10.08.1968 the lease stands terminated by efflux of
time, which is further evidently clear from the
termination notice dated 01.09.1972 and thereafter,
the original lessee becomes an unauthorised occupant
in terms of Section 2(g) of the Public Premises
(Eviction of Unauthorised Occupants) Act, 1971 and
consequently, not entitled to deal with the property
in question in any manner. The very concept of
conversion of leasehold rights to freehold rights is
not applicable to the fact situation.
Answer to Point no.3
34. The original lessee has been in unauthorised
occupation of the property in question for around 30
years (till he executed a sale deed in favour of the
respondent) and the respondent has been illegally
inducted in possession of the same, by the original
lessee, who himself was in unauthorised possession of
the property. For around 17 years the respondent has
been enjoying the property in question without any
right, title or interest. Thus, both are liable to
pay the damages for unauthorised occupation and the
DDA is empowered under Section 7 of the Public
Premises (Eviction of Unauthorised Occupants) Act,
1971 to claim damages from them. We record this
finding in exercise of our appellate power in view of
our finding and reasons assigned in this judgment
holding that the concurrent finding is not only
erroneous but also suffers from error in law in
granting decree of permanent injunction in favour of
the respondent who is not entitled in law for the
same. There is a miscarriage of justice in granting
the relief by the courts below in favour of the
respondent. Further, keeping in view the public
interest involved in this case and particularly
having regard to the peculiar facts and circumstances
of the case we have to allow this appeal of the DDA.
Since we have answered the points framed in this
appeal in favour of the appellant-DDA, we further,
direct the DDA to take possession of the property
immediately without resorting to eviction
proceedings, as the respondent has been in
unauthorised possession of the property in question,
by virtue of erroneous judgments passed by the courts
below. The respondent has been unlawfully enjoying
the public property which would amount to unlawful
enrichment which is against the public interest.
35. For the aforesaid reasons this appeal is allowed,
the impugned judgment and decree of the High Court
affirming the judgments and decrees of the First
Appellate Court and the Trial Court in RCA No. 75 of
1982 and OS No. 47 of 1975 respectively, is hereby
set aside. Accordingly, We pass the following order–
A. The DDA is allowed to take the possession of
the property in question immediately and
dispose of the same in accordance with the
provisions of the DD Act read with the
relevant Rules in favour of an eligible
applicant by conducting public auction, if it
intends to dispose of the property.
B. The DDA is entitled for the recovery of
damages from both, the original lessee or his
legal heirs and the respondent, for the period
of their unauthorised occupation of the
property at the market rate prevalent in the
area.
C. The amount which has been deposited, with the
DDA, by the respondent as conversion charges
is to be adjusted towards the damages that may
be determined by the DDA in accordance with
law.
D.The costs of Rs.1 lakh is awarded to the DDA,
payable by the respondent for these
proceedings.


 ………………………………………………………J.
 [V. GOPALA GOWDA]

 ………………………………………………………J.
 [ARUN MISHRA]
New Delhi,
12th April, 2016
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