NON-REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 5158 OF 2005

STONE INDIA LTD. & ANR.            ....APPELLANT(S)

        VERSUS

BOARD OF TRUSTEES, PORT OF  CALCUTTA & ORS.         .…RESPONDENT(S)

O R D E R

SURINDER SINGH NIJJAR, J.

1. This  appeal  is  directed against  the  judgment  and  

order  dated  5.2.2004  passed  by  the  High  Court  at  

Calcutta  in  MAT  No.3993  of  2000.  By  the  aforesaid  

judgment the Division Bench has upheld the judgment  

and order dated 30.8.2000 passed by the learned Single

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Judge whereby the learned Single Judge dismissed the  

writ  petition  challenging  the  newly  added  clause  

permitting 25% increase in rent every ten years and the  

huge amount on account of arrears of rent claimed by  

the respondents from the appellants for the plots of land  

leased to the appellants.   

2. The appellants are assignees of two separate leases  

under the respondents, Calcutta Port Trusts. The leases  

were  granted in  respect  of  the  Plots  at  Taratola  Road.  

These leases were granted by the respondents in the year  

1947 for an initial  period of 30 years. The lease deeds  

contained identical provisions for two further renewals of  

30 years each, at the option of the lessees. According to  

the  appellants  the  renewal  clause  in  both  the  leases  

provided that the renewal would be “at such rate of rent  

to be fixed by the Commissioners in accordance with the  

rates then prevailing for land in the neighbourhood of a

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similar  character  and  with  and  subject  to  the  like  

covenants,  conditions and provisions as are  in and by  

these presents reserved and contained.” According to the  

appellants at the time of renewal the rent was liable to be  

enhanced (taking into account neighbourhood rents), but  

all  other  provisions  of  the  original  lease  were  to  be  

maintained.  

3. The appellants expressed the desire for a renewal of  

the  leases  for  another  30  years,  which  expired  on  

30.6.1977.  The  respondents  by  communications  dated  

17.10.1977  and  29.12.1977  offered  the  appellants,  

renewal of the leases of the Plots on similar terms and  

conditions.  However, the letters contained an identical  

stipulation as follows:

“5. The renewal will be subject to the following  conditions, besides other general conditions as  embodied  in  the  Trustees’  standard  lease  from:- xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

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(iv)  the lease will  contain clause reserving to  the Trustees the right to raise the rate of rent  every 10 years during the initial period of the  lease and also during the optional period of the  lease upto 25% for the schedule rent prevailing  at such time whichever is higher….”

4. At the same time the letters purported to enhance  

the  rent  from  the  original  sum  of  Rs.2,484.37  to  

Rs.17,226.40(an increase by 700%). Appellants protested  

against the unilateral  illegal action of  the respondents.  

However,  the  appellants  started  to  pay  the  enhanced  

rent,  under  protest.  The  draft  lease  deeds  which  were  

sent to the appellants on 15.11.1978 were not signed by  

the appellants. On 20.1.1983, the respondents purported  

to notify a schedule of rent charges specifying the rent to  

be charged for plots of land in various localities. By letter  

dated 23.7.1987, the appellants were informed about the  

increase in rent under the lease deeds, upto the schedule  

rate of rent,  under the clause for enhancement of rent  

every ten years.

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5. The  Notification  dated  20.1.1983  and  the  letter  

dated  23.7.1987 were  challenged  by  the  appellants  by  

way of writ petition under Article 226 of the Constitution  

of India. The aforesaid writ petition remained pending in  

the High Court till 30.8.2000.  

6. We may notice here the submissions made before  

the  High Court.  It  was submitted  that  the  notification  

dated  20.1.1983  would  not  be  applicable  to  the  

appellants  as  the  rights  and obligations  of  the  parties  

were  governed  by  the  original  renewal  clause.   Hence  

communication  dated  23.7.1987  was  arbitrary  and  an  

abuse of discretionary powers.  It was claimed that the  

increase in rent is arbitrary and violates Article 14 of the  

Constitution of India. It was also pleaded that purported  

increase of rent is whimsical.   Therefore,  a prayer was  

made for recall of the notification dated 20.1.1983 and  

notification dated 23.7.1987.  

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7. On  the  other  hand,  it  was  pleaded  by  the  

respondent-Board of Trustees, Port of Calcutta that the  

respondents had the power under Section 49 of the Major  

Port Trusts Act, 1963, inter alia, to frame scale of rates  

from time to time for use of the properties belonging to  

the  respondents-  Port  Trust  of  Calcutta.  It  was  also  

submitted  on  behalf  of  the  respondents  before  the  

learned  Single  Judge  that  the  matter  is  essentially  

contractual in nature. The appellants having voluntarily  

entered into the lease agreements were bound to accept  

the renewal on the stipulated conditions.  

8. The appellants submitted before the learned Single  

Judge that in view of the law laid down by the Supreme  

Court in numerous judgments including the judgment in  

the case of Ramana Dayaram Shetty vs. International  

Airport  Authority  of  India  and Ors.,  AIR  1979 SC  

1628, it was no longer permissible for the respondents to

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submit that no writ would lie against the Port Trust in  

contractual matters. It would also be against the ratio of  

the law laid down by this Court in  Jamshed Homusji  

Wadia vs.  Board of  Trustees,  Port  of  Mumbai  and  

another, (2004) 3 SCC 214.  

9. On  the  other  hand  counsel  for  the  respondents  

submitted  that  the  matter  is  covered  against  the  

appellants by a judgment of  the Division Bench of  the  

Calcutta High Court in The Board of Trustees for the  

Port of Calcutta & Anr. vs. Brooke Bond India Ltd.   

and Anr.(dated 21.08.1997 being matter No.2419 of  

1986).  According to the respondents the said judgment  

which  also  pertains  to  the  Port  of  Calcutta  had  

specifically held that the parties are squarely governed by  

the explicit terms and conditions in the contract. If it is  

provided that at the end of 10 years the landlord would  

be at liberty to raise the rent either at the rate of 25% of

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the rent originally fixed or as per the schedule of the rent  

as notified at the relevant time,  the action of the Board  

would be legally justified.  The Division Bench had even  

gone so far as to say that even an opportunity of hearing  

would not be necessary to be given to the lessee.  

10. Learned  Single  Judge,  upon  consideration  of  the  

above submissions, held that the appellants voluntarily  

entered  into  the  lease/licences  with  the  respondents.  

Therefore, the matter is purely contractual. Therefore, the  

appellants are not entitled to seek redress under Article  

226 of the Constitution for any breach of the covenants  

contained in the lease agreements.  It is also held that  

the Major Port Trust Act, 1963 is applicable to all major  

Ports. Sections 48 and 49 of the Act empower the Port  

authorities to fix/refix the rate of rent, which has been  

duly  sanctioned by  the  Central  Government.  It  is  also  

held that this type of case comes within the purview of a

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matter of policy and it should be left to the authorities  

and the High Court will not make an investigation into  

fixation of rent. The learned Single Judge also held that  

the enhanced rent is neither arbitrary nor unreasonable.  

These findings were upheld by the Division Bench.   

11. These findings have been challenged in this appeal  

by the appellants.  

12. It  is  submitted  before  us  by  Mr.  Bhaskar  Gupta,  

learned senior counsel appearing for the appellants, that  

both  the  learned  Single  Judge  as  well  as  the  Division  

Bench have not adverted to the primary challenge of the  

appellants.  According  to  the  learned  counsel  the  lease  

was executed in the year 1947. At that time the Major  

Port Trust had not been enacted. Therefore, no reliance  

could have been placed on any notification issued under  

Section  49.  Notifications  dated  20.1.1983  and  the  

communication  dated  23.7.1987  cannot  be  made

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applicable to the appellants.  The rights of the appellants  

qua  the  demised  lands  were  given  by  the  lease  deeds  

validly executed between the parties.   The respondents  

had quite illegally through letters dated 17.10.1977 and  

29.12.1977 purported to add an additional clause to the  

lease  deeds  providing  for  enhancement  of  rent  as  

contained  in  clause  5(iv)  of  the  aforesaid  letters.  The  

appellants  objected  to  the  arbitrary  enhancement  

through letters dated 4.11.1977 and 21.1.1978. It is for  

this reason that draft lease which was sent for signatures  

of the appellants on 15.11.1978 was not signed by the  

appellants. Even thereafter the Port Trust purported to  

increase the rent firstly  on 23.7.1987 and secondly on  

17.1.1988. The arrears are being claimed on the basis of  

illegal enhancement. Learned counsel submitted that the  

renewal of the lease at the expiry of 30 years period was  

automatic.  It  was a unilateral act of the appellant and  

consent of the lessor was wholly unnecessary. At the time

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of renewal the respondent-Board was at liberty to refix  

the rent as stipulated in the original lease deeds. Learned  

counsel also submitted that Clause 5 sub-clause (iv) in  

the  two  letters  cannot  be  made  applicable  to  the  

appellants.  There has to  be strict  compliance  with the  

provisions of the lease deeds which do not provide any  

periodic increase in rent at the interval of every 10 years.  

Learned  senior  counsel  further  submitted  that  the  

renewal clause in the lease deeds clearly provides that  

the lessee shall be entitled to seek renewal for a period of  

30 years.  The clause further provides for a further period  

of  30  years  at  such  rates  of  rent  to  be  fixed  by  the  

Commissioners.  This  clause  only  entitles  the  

Commissioner to fix the new rent by taking into account  

the prevailing rate in the locality. Such fixation has to be  

for 30 years. There can be no further revisions at interval  

of  every 10 years.  Learned counsel  also  submitted the  

finding of the learned Single Judge that no writ would be

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maintainable in contractual matters is against the settled  

law by the Supreme Court in a catena of judgments.  He  

has made reference to a number of judgments in support  

of the submission that action of the respondents had to  

conform to the mandate of Article 14 of the Constitution  

of India. It could not be arbitrary. According to him the  

20.1.1983 Notification  is  being  made  applicable  to  the  

appellant  without  legal  sanction  as  the  rights  of  

appellants are entirely covered under the lease deeds.   

13. On the other hand, Mr. Parag P. Tripathi, learned  

Additional  Solicitor  General  submitted  that  the  

appellants have now argued a wholly new case which was  

not argued before the High Court. He has submitted that  

in  any  event  the  writ  petition  ought  to  have  been  

dismissed at the threshold only on the ground of delay  

and  latches.  The  cause  of  action,  if  any,  arose  to  the  

appellant  in  the  year  1977  when  the  letters  dated

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17.10.1977 and 29.12.1977 were sent to them. But the  

writ  petition  was  not  filed  till  17th of  February,  1988.  

Even  otherwise,  according  to  him,  the  10  years  

enhancement  on 23.7.1987  was  pursuant  to  the  draft  

lease  which  had  been  sent  to  the  appellants  on  

15.11.1978.  He has sought to justify  the action of  the  

respondents. According to him the enhancement in rent  

after a period of every 10 years was necessary to put the  

appellants  lease  hold  rights  at  par  with  other  lease  

holders of the property belonging to the Port Trust. Since,  

other  lease  holders  are  paying  lease  rental  at  the  

schedule rate as fixed under various Notifications issued  

by the Port Trust the increase in the rent was necessary  

to bring the appellants at par with the schedule rates.  

Therefore,  the  action  of  the  respondents  is  reasonable  

and  can  be  justified  even  under  Article  14  of  the  

Constitution of India. The lease rent has been fixed by  

the  Commissioner  in  terms  of  clause  13  of  the  lease

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deeds which provide as under:

“13. Any statutory powers hereafter conferred  upon  the  Commissioners  shall  apply  to  the  premises  and  shall  be  deemed  to  be  incorporated in these presents.”

According to Mr. Tripathi by virtue of the aforesaid clause  

the  various  notifications  issued  by  the  Port  Trust  

enhancing  the  rent  periodically  are  deemed  to  be  

incorporated in  the  lease  deeds.  Therefore,  the  proviso  

relied  upon  by  the  appellants  containing  the  original  

renewal clause has to be read along with clause 13. This  

would  necessarily  lead  to  a  conclusion  that  the  

Notification dated 20.1.1983 would be applicable to the  

appellant.  In fact, the land belonging to the appellants  

find  mention  at  Serial  Nos.16  and 17  of  the  schedule  

attached to the Notification. Therefore, the writ petition  

had been rightly dismissed by the learned Single Judge.  

The Division Bench upheld the findings recorded by the

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learned Single Judge. Therefore, the order in appeal did  

not call for any interference.   

14. The learned Single Judge seems to have dismissed  

the writ petitions for three reasons, viz :-

1) The matter is purely contractual in nature.  Therefore in view of the law laid down by this  Court in the case of Radhakrishna Aggarwal v.  State of Bihar, ATP 1977 SC 1496 and also in  Bareilly  Development  Authority  v.  Ajai  Pal  Singh  1989  (2)  SCC 116,  no  relief  could  be  granted under Article 226 of the Constitution.

2)  The Port Authorities are empowered to fix  and enhance the rent under Sections 48 and  49 of the Major Port Trust Act, 1963.

3)  What rent is to be fixed is a policy decision.  Even otherwise the Court will not interfere in  the absence of proven mala fides.  

The Division Bench simply upheld the aforesaid findings  

of the learned Single Judge.

15. Upon consideration of the entire matter, we are of  

the opinion that issues which were not agitated before the  

High  Court  either  before  the  learned  Single  Judge  or

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before the Division Bench are sought to be agitated in this  

Court  for  the  first  time.  In  the  peculiar facts  and  

circumstances of this case, it would be in the interest of  

justice  to remand the matter back to the learned Single  

Judge of the High Court to re-determine the controversy  

between the parties after giving due opportunity to the  

parties to place on record any further material in support of  

their  respective  submissions.   In view of  the  above the  

appeal is allowed. The judgments of the learned Single  

Judge  dated  30.8.2000  and  Division  Bench  dated  

5.2.2004 are set aside.  The matter is remanded back to  

the  learned  Single  Judge  of  the High  Court  for  a  fresh  

decision on merits.

16. At this stage we are informed by Mr. Bhaskar Gupta  

that  the  respondents  have  started  eviction proceedings  

against  the  appellants  due  to  the  expiry  of  lease  and  

non-payment  of  the  enhanced  rent.   In  our  opinion,  

it  would  be  inappropriate  to  grant  any  stay  in  those

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proceedings.  However,  the  appellants  are  at  liberty to  

make necessary application before the  appropriate  court  

for  appropriate  relief  in  the  second  writ  petition.   The  

application if  any made, shall  be decided on merit.  We  

may also notice here that as an interim measure by the order  

dated 5.8.2005 this Court had directed that pending disposal  

of the appeal,  the appellants will  pay to the respondents a  

sum of Rs.50,000/- and deposit  a sum of  Rs.50,000/- per  

month towards the rent without prejudice to the contentions  

of  either  party.  The  aforesaid  amount  has  been  deposited  

regularly  with  the  Registry  of  this  Court.  We  permit  the  

respondents  to  withdraw  the  aforesaid  amount.  The  

respondents  have  also  been  in  receipt  of  Rs.50,000/-  per  

month which was directed to be paid by the appellant during  

the pendency of the appeal. However, in view of the remand  

and in view of the huge amount in arrears (though according  

to  Mr.  Gupta,  there  are  no  arrears)  we  direct  that  the  

appellants shall pay at least a sum of Rs. 2 lakhs per month  

during the pendency of the proceedings before the High Court

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subject to any further revision that may be made by the  

High Court, in any future orders.

17. With  the  aforesaid  observations,  the  matter  is  

remanded back to the learned Single Judge for deciding  

the writ petition on merits. We request the learned Single  

Judge of the High Court to decide the writ petition finally  

within a period of six months from the date of receipt of a  

copy of this order.

..……….……………… ……….J

(TARUN CHATTERJEE)

      ..…………………………………J                   (SURINDER SINGH NIJJAR)

NEW DELHI, DECEMBER   07, 2009.