TMI Blog1989 (1) TMI 315X X X X Extracts X X X X X X X X Extracts X X X X ..... the show cause notice dated 9-1.1986 and the subsequent order dated 19.4-1986 would require to be quashed, however, leaving it open to the statutory authority, should it consider it necessary, to issue a fresh show cause notice setting out the precise grounds, and afford a reasonable opportunity including an opportunity of personal heating and of adducing evidence wherever necessary to the Respondent-Lessees. - Civil Appeal Nos. 165166 of 1989 - - - Dated:- 17-1-1989 - Venkatachalliah, M.N. And Misra Rangnath,JJ. Yogeshwar Prasad, D.D. Thakur, Soli J. Sorabjee and S.N. Kacker, Mrs. Shobha Dikshit, C.P. Lal, Umesh Chandra, Krishan Chandra, R.K. Mehta, R.C. Verma, Dr. Roxma Swamy, Dilip Tandon, Harish N. Salve, Rajiv Shakdher JUDGMENT The Judgment of the Court was delivered by Venkatachaliah, J. Special Leave Petitions (Civil) 4761 and 4762 of 1985 are by the State of Uttar Pradesh and its officers and SLPs 13298 and 11498 of 1987 by the Lucknow Development Authority, (LDA for short) a statutory body constituted under Sec. 4(1) of the Uttar Pradesh Urban Planning Development Act, 1973 (Act for short) and its Authorities. Seeking special leave to appeal from the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11499 of 1987 respectively do not relate to or bear upon the substantial points of controversy between the parties. They relate to certain incidental matters. Accordingly SLPs 11515 of 1987 and SLP 11499 of 1987 would be governed by the order made in the main SLPs. 3. Special leave is granted in all the petitions. We have heard Sri D.D. Thakur, learned Senior Counsel for the LDA and its authorities; Sri Yogeshwar Prasad, learned senior counsel for the State of Uttar Pradesh and its officers and Sri Soli J. Sorabjee for the respondentLessees. The subject matter of the lease is stated to be an extent of about 9885 Sq. Metres of Nazool land, which was comprised in the lease in favour of a certain Mr. Edwards, granted in the year 1901 for a period of 30 years in the first-instance, with provision for renewal for two more terms of 30 years each. On 6.11.1936, there was the first renewal for 30 years effective from 1.4.1931 in favour of a certain Sri Syed Ali Zahir, a transferee from Mr. Edwards. Sri Syed Ali Zaheer assigned his interest under the lease in favour of Maharaja Pateshwari Prasad Singh of Balrampur. On 7.10.1961, there was a second renewal in favour of the present responde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ording to Government, were serious illegalities in the sanction of the permission dated 31.1.1985 and indicated to the ViceChairman that sanction earlier granted on 31.1.1985 be reviewed and revoked. The ViceChairman, however, did not appear to share the view of Government either as to the existence of any legal infirmities in the grant of permission or as to the availability and the justifiability of review of the permission suggested by Government. The disinclination of the Vice-Chairman in this behalf was communicated to the Government by letter dated 12.9.1985. This marked yet another stage of the proceedings. 6. The State Government, apparently, was in no mood to relent. By communication No. 5062-37-37-3-1985 dated 15.10.1985 Shri Kamal Pandey, the then Secretary to Government of Uttar Pradesh, wrote to the Chairman, LDA recapitulating therein the previous proceedings in the matter of grant of permission for the "BalrampurTowers" on the leaseland and enumerating what, according to Government, were serious infirmities in, and illegalities resulting from, the permission and as to how the construction violated the terms and conditions of the lease and directed the Chairman, LDA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that they have nothing to say in their defence and thereafter action for cancellation of nazul lease and building permit and the removal of the unauthorised constructions will be taken along with their prosecution for fraudulent statement and misrepresen tation as contained in the affidavit." 8. The respondents filed their objections and representations against the proposed cancellation. But Government, by its order No. 5496/37-3/85 dated 19.11.1985, found the explanation unacceptable to it and proceeded to terminate the lease. The operative part of the "notice" terminating the lease reads: "Now therefore on account of the aforesaid breach of the lease conditions the Governor of U.P. does hereby terminate the lease. You are required to hand over possession of the land and building standing thereon to Collector, Lucknow, within 30 days of the receipt of this notice otherwise action for eviction will be taken against you at your cost." This order was, as stated earlier, challenged by the respondent lessees in WP No. 3463 of 1986 before the High Court. 9. So far as the permission for development of the property earlier granted on 31.1.1985 was concerned, separate action was ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t appropriately matters for enforcement of public law remedies. Learned Counsel further submitted that the question whether there were breaches of covenants on the part of the lessee involved the construction of the terms of the lease-deed and required evidence on the matter. Disputes of this nature, learned counsel submitted, could not be resolved on mere affidavits. Thirdly, Sri Yogeshwar Prasad submitted that on the merits of the contentions, the High Court should have noticed that even on the facts admitted, there were clear violations of the covenants and conditions of the lease. Learned counsel also submitted that the view of the High Court that a reasonable opportunity of being heard had been denied to the respondents was erroneous and that, at all events, no hearing could be contemplated in the context for forfeiture of a lease of this nature. Sri Sorabjee for the respondents contended that the State, even as a lessor, could not act arbitrarily either in the grant or premature termination of the leases of public property and disputes arising in such contexts cannot always be reckoned as private law situations and that, at all events, the threatened exercise of extra-judic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount to sub-letting or assignment; or would, in any other way, violate the terms and conditions of the lease and the like, would not be matters that admit of being satisfactorily resolved on mere affidavits. Learned counsel submitted that even according to the learned judges there were serious questions to be examined. 14. On a consideration of the matter, we think, in the facts and circumstances of this case, the High Court should have abstained from the examination of the legality or correctness of the purported cancellation' of the lease which involved resolution of disputes on questions of fact as well. In Express News Papers v. Union of India, [1985] Supp. 3 SCR 382 Venkataramiah, J. in a somewhat analogous situation observed: "The rest of the questions relate truly to the civil rights of the parties flowing from the lease deed. Those questions cannot be effectively disposed of in this petition under Article 32 of the Constitution. The questions arising out of the lease, such as, whether there has been breach of the convenants under the lease, whether the lease can be forfeited, whether relief against forfeiture can be granted etc. are foreign to the scope of Article 32 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tioners were trespassers and could be removed by an executive order. The argument is not only specious but highly dangerous by reason of its implications and impact on law and order." "Before we part with this case, we feel it our duty to say that the executive action taken in this case by the State and its officers is destructive of the basic principle of the rule of law." Therefore, there is no question in the present case of the Government thinking of appropriating to itself an extra-judicial right of re-entry. Possession can be resumed by Government only in a manner known to or recognised by law. It cannot resume possession otherwise than in accordance with law. Government is, accordingly, prohibited from taking possession otherwise than in due course of law. In the result, the appeals of the State of Utter Pradesh (SLPs 4761 and 4762 of 1987) and of the LDA (SLPs 13298 and 11498 of 1987) directed against the common Judgment dated 8.12.1985 in so far as it pertains to WP 6819 of 1985 and WP 357 of 1986 are allowed and the said two writ petitions are dismissed, leaving the question of the legality and validity of the purported cancellation of the lease and the defence of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a) supra of denial of natural justice, the High Court said: "He even did not give any opportunity of hearing to the petitioner on the said question and passed an order some 2 1/2 months thereafter without even touching the objection of the petitioner regarding the competence and jurisdiction of the Vice-Chairman. Some new facts which found place in para 3 of the show cause notice also found place in the order. The Vice-Chairman did not make any enquiry into those facts including construction of three buildings in the city itself and as such it became still more necessary on him to give atleast a personal hearing to the petitioner. As hearing has not been given to the petitioner although there was enough time for the same, the order passed by the ViceChairman violates the principles of natural justice and cannot be sustained. On the contention (b), the High Court held that the ViceChairman had no power to review the earlier order. The High Court was of the view--and this is exactly the opposite of Sri Sorabjee's contention before us--that the Vice-Chairman could derive power to review only if he had been empowered by Government by a direction under section 41(1) of the Act. The Hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terms and conditions of the grant itself. He further submitted that there was material on record to show that the officers and the authorities of the LDA concerned with the grant of the permission under section 15 had betrayed the trust reposed in them by the statute and were disloyal to the Development Authority and on that ground also the successor Vice-Chairman could revoke and rescind the sanction so vitiated by fraud. Shri Thakur relied upon Sec. 21 of General Clauses Act for the exercise of the power to revoke. 20. Shri Sorabjee for the Lessees, however, maintained that the Vice-Chairman, having regard to the nature of the allegations on which the revocation is purported and which fell in the last category mentioned by Sri Thakur, had no authority in law to cancel the permission. He submitted that the view of the High Court as to the irrelevance and insufficiency in law of the grounds on which the purported cancellation was based were effect as they were well known administrative law tests of administrative or statutory discretion, and that appeal to Section 21 of the General Clauses Act to sustain the review was wholly inapposite in this case. Sri Sorabjee submitted that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent areas: If in the opinion of the State Government any area within the State requires to be developed according to plan it may, by notification in the Gazette, declare the area to be a development area." Section 14(1) provides: Development of land in the developed area.--After the declaration of any area as development area under Section 3, no development of land shall be undertaken or carried out or continued in that area by any person or body (including a department of Government) unless permission for such development has been obtained in writing from the (Vice-Chairman) in accordance with the provisions of this Act." Section 15(1) provides: "Application for permission Every person or body (other than any department of Government or any local authority) desiring to obtain the permission referred to in Section 14 shah make an application in writing to the (ViceChairman) in such form and containing such particulars in respect of the development to which the application relates as may be prescribed by (bye laws)." Section 15(3) provides that on receipt of an application for permission for development, the Vice-Chairman, after making such enquiry as he considers necessar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... horise the Vice-Chairman to review the earlier permission but that there being no such directive, the Vice-Chairman had no power to review. The High Court was in effect, held that the earlier directive dated 15.10.1985 under Sec. 41(1) was limited to the cancellation of the lease and for suspension of the building work in the interrugnam as incidental thereto and that the show cause notice dated 9.1.1986 for cancellation of the permission was not pursuant to any directive under Sec. 41(1). Thus, the legal position which the High Court assumes as to the scope of Sec. 41(1) is precisely what Shri Sorabjee contends against. 22. It appears to us that view of the High Court that in the absence of a directive or authorisation from the Government under Section 41(1), the Vice-Chairman, acting as the statutory authority dispensing permissions for development under the Act, cannot revoke or cancel a permission once granted is clearly erroneous. In this case the grant of permission is part of or incidental to the statutory power to regulate orderly development of the "Development Area" under the Act under Regulatory Laws. The power to regulate with the obligations and functions that go wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e exercise of the power to cancel or revoke the permission in three distinct situations. The first is where the grant is itself vitiated by fraud or misrepresentation on the part of the grantee at the time of obtaining the grant. To the second situation belong the class of cases where the grantee, after the grant violates the essential terms and conditions subject to which the grant is made. In these two areas, the power to grant must be held to include the power to revoke or cancel the permit, even in the absence of any other express statutory provisions in that behalf. There must, of course be the compliance with the requirements of natural justice and the grounds must be such as would justify such drastic action. This cancellation is a preventive step. The one aspect of the remedial measures is set-out in Section 27 of the Act. There may be cases of third kind where the grant may be voidable at the instance of the Development Authority or otherwise entitling the Development Authority to initiate appropriate declaratory or other action to get rid of the effect of the permission. It is true that in exercise of powers of revoking or cancelling the permission is akin to and partak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rrect understanding of the position. The High Court did not see any casual connection between the Government's directive dated 15.10.1985 and the proceedings initiated by the Vice-Chairman on 9.1.1986. The High Court was of the view that directive confined itself to the cancellation of the lease and as incidental thereto, required the stoppage of work pending decision whether the lease should be cancelled or not. This infact, was the basis for holding that the Vice-Chairman had no power to cancel. Lessees do not rely upon any subsequent directive to the ViceChairman from the Government in the matter of revocation of the permission. The earlier directive dated 12.8.1985 from the Government to the Vice-Chairman spent itself out with the then ViceChairman declining to act in accordance with it. There is no material to hold that Sri Govardhan Nair felt himself bound by that directive. Sri Sorabjee's contention based on an alleged surrender of discretion cannot, therefore, be upheld. 26. It has, therefore, to be held that the finding of the High Court that the Vice-Chairman had no competence to initiate proceedings to revoke the permission on the ground that the permission itself had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the decision-making process but also on the correctness of the decision itself." When the issue raised in judicial review is whether a decision is vitiated by taking into account irrelevant, or neglecting to take into account of relevant, factors or is so manifestly unreasonable that no reasonable authority, entrusted with the power in question could reasonably have made such a decision, the judicial review of the decision making process includes examination, as a matter of law, of the relevance of the factors. In the present case, it is, however, not necessary to go into the merits and relevance of the grounds having regard to the view we propose to take on the point on natural justice. It would, however, be appropriate for the statutory authority, if it proposes to initiate action afresh, to classify the grounds pointing out which grounds, in its opinion, support the allegation of fraud or misre-presentation and which, in its view constitute subsequent violations of the terms and conditions of the grant. The grounds must be specific so as to afford the Lessees an effective opportunity of showing cause. 29. On the point of denial of natural justice, we agree with conclus ..... X X X X Extracts X X X X X X X X Extracts X X X X
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