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M/s. Jalan Intercontinental Hotels & Another v/s Kolkata Metropolitan Development Authority & Others

    WP. No. 3347 (W) of 2013

    Decided On, 19 June 2019

    At, High Court of Judicature at Calcutta

    By, THE HONOURABLE MR. JUSTICE PROTIK PRAKASH BANERJEE

    For the Petitioner: S.K. Kapur, Sr. Advocate, Anirban Ray, Pooja Agarwal, Richa Goyal, Advocates. For the Respondents: Satyajit Talukdar, Smritika Mukherjee, Advocates.



Judgment Text

1. This is a writ petition under Article 226 of the Constitution of India which challenges a demand of Rs. 6,69,67,987/- imposed by the respondent no. 1 on the petitioner, its lessee, which is Annexure P/18 to the writ petition. An interim order was passed by a coordinate bench after hearing both the sides, admitting the writ petition, staying its operation during the pendency of the writ petition, of course on condition that the writ petitioner did not create third party interest, without the leave of this Court. Affidavits are now complete and the matter came up before me for hearing.

2. It is the case of the writ petitioner that in the event that it could commence construction of a building on the leasehold within two years from the date of execution of the lease deed, the respondents had a jurisdiction to impose any condition of payment of penal charges as a condition for extension of the time to commence construction, but under the deed of lease it had no right to demand penal charges for delayed completion of the construction when construction had commenced within the said period. It therefore challenges an act wholly without jurisdiction, which it submits is not saved merely because it was in the contractual field of a lease.

3. The respondents on the other hand contend that the deed of lease was admittedly not exhaustive and its terms and conditions could not be read alone or in isolation from the terms and conditions of the letter of acceptance of the respondent no. 1 which was in the nature of a letter of allotment, and they two have to be read together. This is the stand taken by the respondents in their affidavit-in-opposition and is also the basis of the demand as in Annexure P/18.

4. The admitted facts of the case are as follows: -

4.1. On accepting the premium offered by the petitioner for lease of Plot No. CH of East Calcutta Township, the respondent no. 1 informed the petitioner by a letter dated February 6, 1997 the general terms and conditions of the allotment of the plot. Delivery of possession of the plot was to be made only on receipt by the respondent no. 1 of the full payment of the premium with interest, if any, in accordance with Condition (vii) of the said general terms and conditions of allotment.

4.2. Some of the terms and conditions of allotment relied upon by the respondent no. 1 before me and placed by both the sides, are set out below: -

"xx. The allottees hall complete the constructions of buildings, structures, etc. as may be required and put the land in use for the purpose for which it has been allotted within a period of three years from the date of delivery of the possession of the land, which period may be extended, for good and sufficient reasons by the Calcutta Metropolitan Development Authority as considered necessary. In case the allottee fails to complete the construction and to put the land in use for the purpose for which it has been allotted within such period, or such extended period, the allotment shall stand cancelled and the lease shall stand forfeited and the Calcutta Metropolitan Development Authority shall have the right to re-enter upon the land." (emphasis supplied by me.) "xxi. The terms and conditions mentioned above are not exhaustive. Further details of the terms and conditions shall be contained in the deed of lease to be executed in respect of the land."

"D. Documentation:

(i) The allottee will have to execute a deed of lease with the Calcutta Metropolitan Development Authority in respect of land and will have to get such deed registered in accordance with the Indian Registration Act.

(ii) The Deed of Lease will have to be executed and registered in duplicate.

(iii) The first copy of the registered deed of lease shall remain in the custody of the Calcutta Metropolitan Development Authority, and the second copy thereof shall remain in the custody of the allottee.

(iv) The allottee will have to bear the cost of preparation of Deed, cost of Stamps, cost of registration and all other incidental costs in connection with the preparation of registration of the deed of lease."

4.3. The letter of allotment does not on its face contain any condition that the general terms and conditions of allotment would survive the deed of lease if the deed of lease does not incorporate any term or condition of allotment.

4.4. Pursuant to the aforesaid, the petitioner entered into a deed of lease with the respondent no. 1 for 99 years. This was dated November 9, 2006. The full premium was paid by the petitioner and no dispute has been raised in this regard. The deed of lease has been made Annexure P/3 to the writ petition.

4.5. Clause 2c of the covenants of the Deed of Lease appear to be material to me and the petitioner has placed this for that reason. Clause 2c provides as follows: -

"THE LESSEE shall within 2 (Two) years from the date of signing of the lease agreement or within such further time as THE AUTHORITY may at its option allow in writing on sufficient and reasonable grounds, and its own cost commence construction of commercial complex upon the demised lands as may be necessary for the said lands to be used for the purpose as settled along with boundary walls, sewers and drains in accordance with plans, sanctions, specifications as may be approved by the appropriate Authority according to the rules and regulations of the Kolkata Municipal Corporation according to the requirements of an statute of any land use and Development Control plan and/or Development Control regulations of the Authority. Failing to commence construction of commercial complex in terms of requirement of the LESSEE by phase within 2 (two) years, Kolkata Metropolitan Development Authority (KMDA) may exercise of the right of re-entering and taking possession unless sufficient reason is shown by the LESSEE" (emphasis supplied by me as emphasized by the learned Senior Counsel of the petitioner.

4.6. This is an express covenant in the deed of lease. Even though the fact of applying for the allotment by the petitioner and the fact of the acceptance of the proposal for allotment have been recited in two separate recitals of the Deed of Lease, the terms and conditions of allotment have consciously not been incorporated in the deed of lease and neither has been the same made part of the deed of lease by reference or necessary implication. The last recital clearly indicates that the deed of lease was being executed and the lease was being granted on the terms and conditions which followed thereafter. Instead, the deed of lease categorically states, in the Testimonium part, that the Deed witnesses what follows thereafter. The terms and conditions being the Covenants indicate as the specific provision relating to construction that which I have set out at paragraph 4.5 hereinabove. There is no reference in the said covenant of the construction having to be completed within a certain time or within a certain time from the date of giving the lessee the possession of the said lands.

4.7. There are other covenants in the deed of lease, including those that the respondents referred to during the hearing. These are Covenants 4(a) to 4(e) of the deed of lease. For the sake of convenience, they are set out hereinbelow: -

"4. PROVIDED ALWAYS and it is hereby agreed as follows:-

(a) Whenever any part of the land of the rent hereby reserved shall be in arears after the due date, or there shall be a breach of any covenants by the LESSEE herein contained, or the LESSEE shall enter into liquidation, whether compulsory or voluntary, the Authority may re-enter on the demised premises and determine the Lease.

(b) That any demand for payment or notice requiring to be made upon or given to the LESSEE shall be sufficiently made or given if sent by the Authority or any of its Authorized Officers to the LESSEE at the address of the demise premises or sent by Registered Post Addressed to the LESSEE at the demised premises or to its last known address and that notice requiring to be given to THE AUTHORITY shall be sufficiently given it delivered at or sent by Registered Post to the office of the KMDA (Marketing & Management Unit).

(c) That any relaxation and any indulgence granted by the Authority to the LESSEE or by the LESSEE to the AUTHORITY shall not in any way prejudice the rights of the parties under this DEED.

(d) That in any case any dispute in the interpretation of any of the clause of the terms and conditions contained in this deed. The decisions of the AUTHORITY shall be final and binding.

(e) That if it is found that the Lease of the demised land has been obtained by the LESSEE on misrepresentation or by fraud the Lease shall be terminated and the AUTHORITY shall re-enter upon the demised premises and the LESSEE shall not be entitled to get any damage or compensation thereof."

4.8. Section 108 of the Transfer of Property Act, 1882 provides that unless there is a contract or usage to the contrary the lessor shall be deemed to have contracted with the lessee that if the latter pays the rent reserved by the lease and performs the contracts binding of the lessee, he may hold the property during the time limited by the lease without interruption. Section 111 of the Transfer of Property Act, 1882 forfeiture occurs when the lessee breaks an express condition which provides that on breach thereof the lessor may re-enter and when the lessor gives in writing a notice to re-enter on that ground. In the instant case, the express covenant for re-entry is when there is no commencement of the construction on the leasehold within 2 years from the date of execution of the lease deed or, for non-payment of rent. There is no covenant in the deed of lease permitting re-entry on failure to complete the construction whether within three years or two years from any date.

4.9. Admittedly, the by a letter received on October 18, 2008 by the respondent no. 1, the petitioner intimated the respondent no. 1 that it had obtained building permit dated September 16, 2008, and was commencing construction from October 20, 2008. There is nothing to show that the respondent no. 1 has disputed this as the date of commencement of construction. This is within two years from the date of execution of the deed of lease. Therefore, the writ petitioner was not in breach of covenant 2(c) of the Deed of Lease, and therefore there was no lapse or breach on its part which would allow the respondent no. 1 to demand penal amounts on pain of reentry or even require that the petitioner seeks extension of time to complete construction.

5. It was submitted by Mr. Kapur, the Learned Senior Advocate appearing on behalf of the petitioner, that once the deed of lease was registered in favour of his client, unless there was something in the statute, whether under the Transfer of Property Act, 1882 or any other law, which would require anything other than the deed of lease to be considered, in the absence of any covenant in the deed of lease or anything which by necessary implication, incorporated by reference or otherwise, any provision of the letter of allotment issued prior to the execution of the deed of lease, the respondents could not claim that such other thing would apply. No breach of the terms of the lease could be alleged if there was no term of the lease requiring construction within a certain time. Therefore, he submits, that reading the deed of lease without reading together the general terms and conditions of allotment, is the correct course to adopt.

6. Mr. Talukdar, appearing for the respondents, argued as I have indicated above and invited me to consider once more the provision of Clause xxi of the letter of allotment/acceptance, as the authority to treat the provision of clause xx, both quoted at paragraph 4.2, as part of the covenants of the deed of lease, by necessary implication. He submits that the use of the words "Further details of the terms and conditions" shall be contained in the deed of lease to be executed shows that the covenants in the deed of lease are further terms and conditions, which necessarily implies the existence of the general terms and conditions of allotment as implied covenants of the deed of lease. Let me test this hypothesis in the present concrete case. In order for Mr. Talukdar to be correct there are to be two sets of terms and conditions, one set already existing, the other being further terms and conditions. They have to coexist once the deed of lease is executed. Which means that there will be a combined condition of the deed of lease that while the time to complete the construction would be three years from the date possession was handed over to the petitioner, he was required to start construction within two years from the date of execution of the deed of lease. Without possession being handed over, naturally, the petitioner could not start construction. In the instant case, as in 1997 when the letter of allotment was issued, the respondent no. 1 was not the owner of the land, and it acquired the land subsequently after it was acquired by the State of West Bengal. It handed over possession to the petitioner in 2002. It executed the deed of lease on November 9, 2006. The petitioner got building permit on September 16, 2008. So, Mr. Talukdar asks me to make such an interpretation which would make it imperative for the petitioner to complete construction by 2005, (three years from 2002) when the deed of lease authorizing it to do so on the basis of which building permit was granted, was not in existence before November 9, 2006, that is to say, one year after expiry of the time mentioned in the letter of allotment, and before the building permit was issued. The result of taking this hypothesis to its logical conclusion is absurd. Therefore, I consider it safer to tread

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on the well- travelled path, that after a deed of lease has been executed, unless a contrary intention appears from it, the only covenants which would bind the parties and subject the lessee to re-entry, would be a breach of an express covenant permitting re-entry. The statute, as I have demonstrated, also indicates this as a sound interpretation. 7. Accordingly, I hold that the respondent no. 1 had no jurisdiction to issue Annexure P/18 dated January 21, 2013 on the basis of a clause in the letter of allotment and a policy, which were alien to the deed of lease and not included therein, and also contrary to the Transfer of Property Act, 1882, as demonstrated above. It could not resurrect the general conditions of allotment which it had not imposed as a covenant in the deed of lease, after the execution of the deed of lease, even on the basis of clause xx of the general terms and conditions of allotment as extracted above. The demand of penalty as in Annexure P/18 stands quashed. The interim order passed earlier merges with this, and no restriction is imposed by this court on transfer or subletting the said leasehold or any part thereof, in terms of the deed of lease. The writ petition is allowed as above. There shall be no order as to costs. Later: - Stay of the operation of the judgment is prayed for on behalf of the Learned Advocate appearing for the K.M.D.A. Such prayer is refused. Urgent Photostat certified copy of this order, if applied for, be given to the parties on compliance of requisite formalities.
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