Delhi Ap.21 : The Supreme Court on Thursday observed that the High Court in exercise of its jurisdiction under Article 226 of the Constitution, cannot alter or amend the lease deed compulsorily registered under Section 17 of the Registration Act 1908.
A division bench of Justices Ajay Rastogi and Bela M Trivedi was of the view that when the lease deed has already been executed without demur and the transaction also stood concluded, it shall not be open for the High Court to alter or amend the same.
The Court was hearing an appeal challenging an order of the Madhya Pradesh High Court which had under Article 226 directed the appellants to execute the lease deed (which has already been executed) in favor of the respondent.
By way of background, the appellants issued an advertisement and invited bids for grant of leases of different plots. The respondent was also one of the bidders for plot area 27,887.50 sq. meters. The offer of the respondent was ₹725 per sq. meter, which being the highest bid, was finally accepted.
The appellants informed the respondents that it has been decided to lease out the plot area of 27887.50 sq. meters in his favour for a consideration of ₹2.06 crore and directed the respondent to deposit a sum of ₹1,91 crore upto the period of October 31, 1999 in addition to the earnest money.
As per the stipulation, the construction work was to be completed within the period of two years and on failure to deposit the instalments, the security amount would be forfeited.
The respondent deposited the above-stated sum from September 1997 to the last instalment on August 25, 2005. Notably, despite the respondent failed to deposit the instalments in terms of conditions of the bid document by October 31, 1999 and the final amount was deposited on August 25, 2005. But no action was taken by the appellants either for cancellation of the bid or for forfeiture of the amount deposited by the respondent. The lease deed was executed by the respondent without any demur.
After a period of three and half years, the respondent moved the High Court seeking a mandamus against appellants 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 said prayer.
Aggrieved, the appellants preferred the present appeal before the apex court.
Before the top court, the appellants argued lease deed was duly executed between the parties without demur and with the consent of the parties, as they were signatories to the lease deed for 18262.89 sq. meters which was executed on March 29, 2006.
It was further emphasised that the auction proceedings which were initiated at the first instance on March 13, 1997, finally culminated in the execution of the lease deed and thereby, the transaction attained finality.
Therefore, it was stated that there was no reason for the respondent to move the High Court and try to reopen the transaction which was finally concluded, that too after three years.
It was further argued that there was no justification available to invoke the jurisdiction under Article 226 with a direction to execute the lease deed for the remaining area of land i.e. 9625.50 sq. meters without any consideration and that amounted to amendment to the lease deed which was not permissible in law.
Opposing the plea, the respondent submitted that once the tender was floated by the appellants for 27887.50 sq. meters and the bid of the respondent was the highest and accepted by the appellants and the last instalment of August 25, 2005 was accepted, there was no justification available with the appellants to segregate and sever the land which was put to auction into two parcels.
It was argued that keeping away the remainder of the land has compelled the respondent to move the High Court under Article 226.
At the outset, the top court expressed strong displeasure on 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.
“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 said.
With regard to the interference by the High Court, the top court made it clear that when the parties have already executed the lease deed, as on March 29, 2006, it was not open 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 observed while setting aside the order of the High Court.
However, considering the pendency of the instant case and the escalation in the value of the property in question, the Court asked the appellant to consider making available one opportunity to the respondent for the remainder of the area on priority basis on the prevalent circle rate notified by the government.
