In the High Court at Calcutta

Constitutional Writ Jurisdiction

Original Side

The Hon’ble Justice Sabyasachi Bhattacharyya

WPO No. 518 of 2023

Deepak Kejriwal

Vs.

The State of West Bengal and others

For the petitioner : Mr. Rupak Ghosh, Adv.

Mr. Kuldip Mallick, Adv.

Mr. Arun Kumar Upadhyay, Adv.

Mr. Shaunak Sengupta, Adv.

Mr. S. Ray, Adv.

Mr. Debanjan Saha, Adv.

For the

respondent nos. 2 to 7 : Mr. Jaydip Kar, Sr. Adv.

Mr. Kamal Kumar Chattopadhyay, Adv.

Mr. Debdeep Sinha, Adv.

Mr. Tarjir Ali, Adv.

Hearing concluded on : 03.08.2023

Judgment on : 16.08.2023

The Court:-

1. The petitioner has challenged a Circular dated August 18, 2022 and a

communication dated January 31, 2023 made by the respondent

no.1, fixing the rent payable for the first floor of the disputed property

for renewal for a further period of fifteen years, at Rs.72/- per Sq.ft.

per month.

2. The petitioner is carrying on a sole proprietorship business of

manufacturing wooden and steel furniture as well as assembling 2024:CHC-OS:64

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computer products in the name of M/s. Amit Industries at the

disputed property, having office at Shilpa Bhawan, First Floor at 31,

Black Burn Lane, Kolkata-700 012.

3. Respondent no.2, the West Bengal Small Industries D evelopment

Corporation Limited, acts for promotion and growth of Micro, Small

and Medium Enterprises all over West Bengal by providing

infrastructure on subsidized rates and extending marketing support to

MSMEs.

4. In such backdrop, the petitioner alleges that an Allotment Letter dated

September 2, 2003, was issued in favour of the petitioner on the basis

of an application for allotment of an office space. In terms of the said

letter, a short-term lease agreement was executed on September 29,

2003 in favour of the petitioner by the respondent no.2 for an area at

the first floor of Shilpa Bhawan Commercial Complex. The petitioner

had paid a sum of Rs.2,91,900/- as security deposit, equivalent to

advance payment of six months‟ rental.

5. Subsequently, the respondent no.2 approached th e petitioner for

taking back a space of 1149 Sq.ft. out of the total 4865 Sq.ft. allotted

initially. The petitioner, accordingly, handed over the said portion.

6. The lease period expired on September 28, 2018 and the petitioner

applied for renewal of the same six months prior to the expiration of

the lease-deed in terms of the renewal clause therein. The respondent

no.2 replied thereto by a letter dated May 17, 2018 stating that its

Board of directors had agreed to allow the petitioner to renew the 3716

Sq.ft. space for a further long term lease. It further mentioned that the 2024:CHC-OS:64

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tenure of the lease shall be informed to the petitioner and shall be

effective after the expiry of the short term lease on September 28,

2018. The petitioner replied thereto by a letter dated July 17, 2018

and gave a break-up of the schedule towards the payment of the lease

premium.

7. However, the respondent no.2 did not accept the break-up.

8. The petitioner continued to pay rent at the previous rate after the

expiry of its lease, which was accepted by the respondent no.2. It is

alleged that the respondent no.2 also gave rebates in terms of the

expired agreement.

9. However, upon negotiations, the respondent no.2 issued a letter on

January 31, 2023 intimating the terms and conditions of renewal of

lease deed on short term basis for 15 years, the rent for which was

being enhanced to Rs. 72/- per Sq.ft. plus GST @18% along with

payment of municipal tax and a further security deposit of Rs.

18,94,268/-. Outstanding dues were also claimed by the respondent

no.2.

10. The petitioner has challenged such communication and the

supporting Circular.

11. Learned counsel for the petitioner argues that Clause 5(vii) of the lease

deed contains the renewal clause and provides that, should the lessee

duly pay the installments of rent and interest and other dues and

faithfully perform the conditions of the lease-deed, the lessee will be

entitled to renewal of the demise for a further term of 15 years on

such terms and conditions as may be agreed by and between the 2024:CHC-OS:64

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parties upon the lessee giving notice of such intention for such

renewal at least six months prior to expiration of the period of demise

then subsisting.

12. It is argued that the expression “renewal” was conferred as an

entitlement of the petitioner by the said Clause. As such, the

respondent no.2 is not entitled in law and as per the contract to refuse

the same.

13. It is submitted that the respondent no.2 has been vacillating on the

count of the tenure of the lease. However, by its correspondence, it

was given out by the respondent no.2 that it is agreeable to renewal of

the lease. As such, the respondent no.2 cannot now resile from such

position.

14. Learned counsel for the petitioner contends that much after the expiry

of the lease, the respondent no.2 went on accepting rents regularly

from the petitioner and also went on giving rebates to the petitioner

upon timely payment of such rent. Hence, the petitioner ought to be

deemed to have remained in possession of the disputed property by

„holding over‟.

15. It is next contended that the respondent no.2 acted arbitrarily, despite

being a Government instrumentality, which contravenes all norms of

law and settled judicial opinion.

16. It is submitted that the respondent no.2 has placed reliance on the

report of a private engineer. It is argued that the assessment by the

said engineer has been made on the basis of the sale price and not

rent. Moreover, the facilities of the premises which were taken as the 2024:CHC-OS:64

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basis for such calculation were much more than that available in the

petitioner‟s occupied premises.

17. It is, thus, submitted that the respondent-Authorities acted in an

arbitrary manner to ask for such exorbitant rates from the petitioner,

despite having continued to accept rents at the previous rates much

after the expiry of the lease.

18. Learned counsel for the petitioner places reliance on M/s. Erusian

Equipment & Chemicals Ltd. Vs. State of West Bengal and another ,

reported at (1975) 1 SCC 70, for the proposition that where the State

is dealing with individuals in transactions of sales and purchase of

goods, the two important factors are that an individual is entitled to

trade with the Government and an individual is entitled to a fair and

equal treatment with others. A duty to act fairly can be interpreted as

meaning a duty to observe certain aspects of rules of natural justice, it

was held by the Supreme Court.

19. Learned counsel for the petitioner next cites Dwarkadas Marfatia and

sons Vs. Board of Trustees of the Port of Bombay, reported at (1989) 3

SCC 293. In the said judgment, the Supreme Court observed that

corporations must act in accordance with certain Constitutional

conscience and whether they have so acted, must be discernible from

the conduct of such corporations. It was held that the contractual

privileges are made immune from the protection of the Rent Act for the

respondent because of the public position occupied by the respondent

authority. Hence, its actions are amenable to judicial review only to

the extent that the State must act validly for a discernible reason, not 2024:CHC-OS:64

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whimsically for any ulterior purpose. Being a public body even in

respect of its dealing with its tenant, such bodies must act in public

interest and an infraction of that duty is amenable to examination

either in civil suit or in writ jurisdiction.

20. Learned counsel next cites State of U.P. and others Vs. Lalji Tandon

(Dead) through LRS., reported at (2004) 1 SCC 1. In the said

judgment, the Supreme Court held that in case of extension, it is not

necessary to have a fresh deed of lease executed; however, option for

renewal consistently with the covenant for renewal has to be exercised

consistently with the terms thereof, and a fresh deed of lease shall

have to be executed between the parties.

21. Learned counsel lastly cites Style (Dress Land) Vs. Union Territory,

Chandigarh and another, reported at (1999) 7 SCC 89, wherein it was

observed by the Supreme Court that even the administrative orders

are required to be made in a manner in consonance with the rules of

natural justice, when they affect the rights of the citizens to the

property or the attributes of the property. The Supreme Court

deprecated arbitrary action on the part of the said authorities in the

said judgment.

22. Learned senior counsel appearing for the respondents contends that

the applicable statute, since the petitioners have held over even after

expiry of the lease and have not been awarded any further renewal of

the lease, is the West Bengal Government Premises (Tenancy

Regulation) Act, 1976. In support of such contention, learned senior

counsel cites West Bengal Small Industries Development Corporation 2024:CHC-OS:64

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Limited and others Vs. Sona Promoters Private Limited and others ,

reported at (2020) 17 SCC 145.

23. Learned senior counsel for the respondents argues, by placing reliance

on National Sample Survey Organization and another Vs. Champa

Properties Limited and another, reported at (2009) 14 SCC 451, that if

the lease period expires and the parties are not able to agree upon the

increase in rent or terms of renewal, it is open to the landlord to

initiate action for evicting the tenant.

24. The respondents next cite State of West Bengal and others Vs. Calcutta

Mineral Supply Company Private Limited and another , reported at

(2015) 8 SCC 655, where the Supreme Court distinguished between

renewal and extension of lease. It was held that in case of extension,

it is not necessary to have a fresh deed of lease executed, as the

extension of lease for the term agreed upon shall be a necessary

consequence of the clause for extension. However, option for renewal

consistently with the covenant for renewal has to be exercised

consistently with the terms thereof and, if exercised, a fresh deed of

lease shall have to be executed between the parties. In the present

case, no such deed has been agreed upon or executed , for which it

cannot be said that renewal has taken place.

25. Learned senior counsel also places reliance on Joshi Technologies

International INC. Vs. Union of India and others, reported at (2015) 7

SCC 728, for the proposition that in purely contractual matters, the

extraordinary remedy of writ under Article 226 or Article 32 of the

Constitution cannot be invoked. However, in a limited sphere, such 2024:CHC-OS:64

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remedies are available only when the non -Government contracting

party is able to demonstrate that it is a public law remedy which such

party seeks to invoke, in contradistinction to the private law remedy

simpliciter under the contract.

26. It is argued that the renewal clause in the lease deed clearly stipulated

that there has to be an agreement between the parties on the terms of

the renewed lease. In the absence of any consensus between the

parties, the said renewal clause cannot be said to have been invoked

in the present case.

27. It is argued that renewal, as per the clause, is not automatic.

28. Learned senior counsel contends , by placing reliance on

correspondence exchanged between the parties to indicate that the

negotiations were going on but ultimately no consensus was arrived at

regarding the rate of rent.

29. It is argued by the respondents that the locale where the property is

situated is well-connected and situated at the centre of the city. The

assessment of rent made by the valuer appointed by the respondents

is absolutely justified. It is argued that the suggested rent as

proposed by the petitioner would take the rent even below the current

rent which is being paid by the petitioner and, as such, is absurd.

30. It is submitted that there is no violation of Article 14 of the

Constitution of India, since the Circular-in-question regarding rent is

applicable to all tenants and not restricted to the petitioner. 2024:CHC-OS:64

9

31. It is argued that the writ petition is not maintainable in the present

case, since the remedy sought by the petitioner is based purely on the

terms of the contract.

32. In reply, learned counsel for the petitioner reiterates that the option of

renewal has been exercised in the present case by the petitioner and

accepted by the respondents, as evident from the correspondence at

page 71 of the writ petition. Moreover, rent has been continuously

received by the respondents upon grant of rent receipts. Even rebate

has been given in terms of the lease. As such, the respondents have,

for all practical purposes, acted upon the renewal clause by accepting

the offer of the petitioner.

33. Hence, the respondents cannot now resile from such position and ask

the petitioner to pay an exorbitant amount, in default, to leave the

premises.

34. For a complete adjudication of the matter, the renewal clause is

required to be looked into first. The renewal clause is Clause 5(vii).

The same is as follows:

“5(vii) Should the lessee duly pay the instalment of rent and interest

and other dues, if any thereon and faithfully perform and observe

the conditions herein on the part of the lease in that event the

lessee will be entitled to renewal of the demise for a further term

of 15 (fifteen) years on such terms and conditions as may be

agreed by and between the parties hereto upon the lessee giving

notice of such intension for such renewal at least 6 (six) months

prior to expiration of the period demise then subsisting.”

2024:CHC-OS:64

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35. It is clear from the said clause that it has two components. The first

is that the lessee will be entitled to renewal of the demise for a further

term of fifteen years. The second component is that such renewal will

be “on such terms and conditions as may be agreed by and between

the parties”.

36. Thus, the lessee has a right, upon giving notice of intention to renew,

at least six months prior to expiration of the lease, of renewal of the

demise. In the present case, the petitioner has exercised such option

by seeking a renewal well within time. However, the expression

“lessee will be entitled” is qualified by the phrase “on such terms and

conditions as may be agreed by and between the parties”.

37. Read in conjunction, the right of renewal is not unqualified, in favour

of the lessee. The lessee, at best, has the right to seek a renewal, that

too, if he applies prior to six months of expiry of the lease. However,

after asserting such right, the lessee has to depend upon consensus

for such right to ripen into a renewal. In the absence of any consensus

between the parties on the terms and conditions of such renewal, it

may very well be that the renewal never reaches fruition.

38. In Lalji Tandon (supra), cited by the petitioner, the relevant clause

provided that the obligations under the said lease shall continue

throughout the term thereby created and shall be binding on their

respective successors-in-interest in the demised premises, that they

will perform and observe the several covenants, provisos and

stipulations in the aforesaid lease expressed as fully as if the same

covenants, provisos and stipulations had been therein repeated in full, 2024:CHC-OS:64

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with such modifications only as a necessary to make them applicable

to the demise and as if the name of the parties thereto had been

substituted for those in the aforesaid lease, provided always that the

building referred to in the said lease having been erected, the lessee

shall not be under any obligation to erect another.

39. Hence, the renewal clause was explicit and left no option for any

further negotiation or agreement. In such backdrop, the Supreme

Court held that in the case of extension it is not necessary to have a

fresh deed of lease executed as the extension of lease for the term

agreed upon shall be a “necessary consequence of the clause of

extension”. However, the renewal clause in the present case clearly

provides for further exercise of option on the part of the parties before

the renewal reaches fruition.

40. In M/s. Erusian Equipment & Chemicals Ltd. (supra) , the Supreme

Court stressed on a duty of the Government to mete out fair and equal

treatment to all in consonance with the rules of natural justice.

41. In Dwarkadas Marfatia (supra), it was observed that statutory and

public corporations must act in accordance with certa in

Constitutional conscience and whether they have so acted, must be

discernible from the conduct of such corporations.

42. However, in the present case, the dispute arises from the contract

between the parties and the conduct of the parties thereafter. Nothing

on record substantiates the allegations of arbitrariness, mala fide,

unreasonableness or partiality in the act of the respondent-Authorities

in asking for a hike in the rent. 2024:CHC-OS:64

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43. As such, the judgments cited above, although authorities on general

propositions, are not relevant in the context.

44. In Style (Dress Land) (supra), the Supreme Court reiterated that even

administrative orders are required to be made in a manner in

consonance with the rules of natural justice when they affect the

rights of the citizens to the property or the attributes of the property.

In the present case, no violation of natural justice is borne out by the

records. The respondents, in tune with the renewal clause, entered

into prolonged negotiations with the petitioner but the parties could

not arrive at a consensus regarding the rate of rent.

45. It cannot be said, on a prima facie reading of the materials produced

by the respondents, that the rate of rent sought by the respondents is

demonstratively absurd.

46. A certain basis, substantiated by reports of experts in the field, has

been provided by the respondents, just as the petitioner, to

substantiate their respective claims of the market rate of rent in the

area.

47. However, it is beyond the scope of the writ court to enter into a factual

assessment of the fair rent payable in the area. In any event, the

renewal clause in the present case does not provide for any particular

rate of rent but leaves the same entirely to the agreement between the

parties.

48. Either there is an agreement or not. There cannot be any mid -way

solution, where the court can interfere and impose its own views

regarding the rate of rent which ought to be charged by the lessor. 2024:CHC-OS:64

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49. Insofar as the negotiations are concerned, at no point of time did the

parties reach consensus ad idem.

50. Much stress has been placed by the petitioner on Annexure P -8 at

page 71, which is a letter dated May 17, 2018 issued by the

respondent no.1 in favour of the petitioner. In the said

communication, it was conveyed that the Board of Directors of the

Corporation had agreed to allow the petitioner to renew the 3716 Sq.ft.

building space at Shilpa Bhawan, first floor for a further term on „long

term‟ basis. However, it was also stated clearly that “after finalization

of the rate and tenure”, the same will be communicated to the

petitioner. The petitioner wrote on July 17, 2018 to the respondents

indicating that the petitioner agreed to enter the lease agreement “with

mutually agreed terms”. The petitioner, in fact, enclosed a rent

calculation sheet for the ready reference and necessary consideration

of the respondents, thus, leaving the matter wide open for further

negotiation.

51. On July 23, 2018, the respondent-Authorities intimated the petitioner

that the break-up of schedule towards payment of lease premium

shown by the petitioner in its letter could not be accepted by the

respondents.

52. Thus, during the entire period during which the petitioner held over

possession, the parties were continuing their negotiations. In fact, the

respondents had all along maintained their stand regarding the

proposed rent and had never agreed to the rent proposed by the 2024:CHC-OS:64

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petitioner. Thus, there was no agreement between the parties for the

purpose of fructifying the proposed renewal.

53. In view of the above circumstances and on a plain reading of the

contemporaneous correspondence, it cannot be said, by any stretch of

imagination, that the respondents granted a renewal or acceded to the

petitioner‟s proposal for renewal at any point of time. Thus, merely by

permitting the petitioner to hold over the property during the period of

negotiation, the respondents did not acquiesce to the offer of renewal

on the petitioner‟s terms.

54. Thus, the petitioner‟s argument that the respondents had agreed to a

renewal does not hold good ground. In fact, in view of the judgments

cited by the petitioner, it is clear that in case of renewal, a fresh deed

has to be executed, upon agreement being entered into between the

parties, unlike a mere extension. The relevant clause in the lease

deed clearly contemplates a renewal, that too, upon mutually agreed

terms and conditions having been consented to by the parties. In the

absence of any such consensus, the argument of the petitioner that

the respondents have agreed to a renewal at the previous rates,

cannot be accepted.

55. At best, the petitioner can be said to have held over the property. The

respondents, in fact, acted fairly in not insisting upon enhanced

payment during the period of negotiations but accepted occupation

charges (by whatever name called) by issuing receipts, at the previous

rate. However, merely by acceptance of the occupation charges and

calling it „rent‟, as the petitioner continued its occupation, does not 2024:CHC-OS:64

15

amount to a renewal of the lease between the parties. In such

circumstances, since there was no consensus ad idem between the

parties, it cannot be said that there was any renewal at all.

56. The respondents, at no point of time, agreed to the previous rates

being finalized for a renewal of the lease.

57. Inasmuch as the rates proposed by the respondents are concerned,

there is nothing palpably absurd or exorbitant in the said rates to

strike down the same under Article 226 of the Constitution of India.

58. No part of the conduct of the respondents can be labelled as arbitrary

or violative of Article 14 of the Constitution of India and, as such, no

interference is called for.

59. Accordingly, WPO No.518 of 2023 is disposed of by holding that there

was no renewal of lease deed between the petitioner and the

respondents. The petitioner, at present, is holding over the property

and it will be open to the respondents to initiate legal action for

eviction of the petitioner from the property in due process of law, as

contemplated under the governing statute.

60. There will be no order as to costs.

61. Urgent certified server copies, if applied for, be issued to the parties

upon compliance of due formalities.

( Sabyasachi Bhattacharyya, J. ) 2024:CHC-OS:64