Non -  Reportable    

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL   No  . 3861   of   2014

State of Bihar (Now State of Jharkhand)  Through the Sub Divisional Officer  ....  Appellant    

Versus

Tata Iron      …. Respondent

J U D G M E N T

L. NAGESWARA RAO, J.

1. The Certificate Officer, Jamshedpur issued a notice for

recovery of a sum of Rs.5,97,97,527.92/- towards interest on

arrears of rent payable by the Respondent on 10.05.1994.

The objection raised by the Respondent was rejected by an

order dated 23.01.1996. The Respondent filed a Writ Petition

challenging the demand and the order dated 23.01.1996 of

the Certificate Officer in the High Court of Bihar at the Ranchi

Bench  (now  Jharkhand),  which  was  allowed.   This  Appeal

arises out of the said judgment of the High Court.   

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2. Land  was  acquired  and  conveyed  to  the  Respondent

between  the  years  1912-1929  under  the  Land  Acquisition

Act,  1894  for  setting  up  an  industry.   The  Respondent

established an integrated steel  plant,  allied manufacturing

units,  township,  civic  amenities  for  its  staff,  hospitals,

schools, parks,  etc.  The entire township came up gradually

which was renamed as Jamshedpur.   

3. The Bihar Land Reforms Act was enacted in the year

1950 (for short “the BLR Act”) and by a Notification dated

01.01.1956  all  lands  of  the  Respondent  Company  stood

vested in the State Government.  Section 2B was inserted in

the BLR Act  in the year 19611 exempting the lands which

were  acquired  for  an  industrial  undertaking  from  the

application of the BLR Act.  By virtue of the said amendment,

the Respondent’s lands were exempted from vesting under

the  BLR  Act.   Thereafter,  Section  2B  of  the  BLR  Act  was

deleted  in  the  year  1972  vide  the  Bihar  Land  Reforms

(Amendment) Act, 19722 (for short “Amendment Act, 1972”).

Consequently,  the  lands  of  the  Respondent  again  stood

vested in the State.  Amendment Act, 1972 was assailed by

1 Vide Bihar Land Reforms (Amendment) Act, 1960, Act 02 of 1961. 2 Act No.5 of 1972

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the Respondent by way of a writ petition in this Court. The

implementation  of  the  Amendment  Act,  1972  against  the

Respondent was stayed by this Court.  Later, the Writ Petition

was withdrawn by the  Respondent  and the State of  Bihar

amended the BLR Act in the year 1982 by enacting the Bihar

Land  Reforms  (Amendment)  Act,  1982  (for  short

“Amendment Act, 1982”). Sections 7D and Section 7E of the

BLR Act were substituted by the Amendment Act, 1982 and

the Respondent was treated as  the deemed lessee of  the

State  Government  for  the  lands  held  by  it  subject  to  the

payment  of  fair  and  equitable  rent  which  was  to  be

determined by the State Government.   

4. An Agreement for lease was entered into between the

Appellant and the Respondent on 01.08.1984.  It was agreed

that the lands together with the buildings and structures as

were  being  used  for  the  purposes  of  factories  or  mills  or

godowns  by  the  Respondent  were  saved  to  the  company

under Section 7 of the BLR Act on payment of rent at the rate

of  Rs.200/-  per  acre  per  year  effective  from  01.01.1956.

Clause  (xii)  of  the  Agreement  provided  that  all  rents  and

dues  from  the  Respondent  company  to  the  State

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Government for the period from 01.01.1956 to 31.03.1984

particularly in respect of clauses (i), (ii), (iii), (v), (vi), (ix) and

(x) therein shall be paid in three equal annual installments

with  interest.   The  first  installment  had  to  be  paid  on  or

before 31.12.1984 and the interest would be calculated at

the rate of 9.5% from 01.01.1956 to 31.12.1974 and at the

rate of 13% from 01.01.1975 to 31.03.1984.  According to

Clause  (xv),  the  existing  hats,  Melas,  Bazaars,  Jalkars,

fisheries and other  Sairats were to be settled by the State

Government with the Respondent company on a fixed jama

for a period of five years at a time and the Respondent had

to carry on the management and administration thereof on

payment of the entire amount of the fixed jama to the State

Government.  The entire amount realized towards the above

mentioned items by the Respondent for the period between

01.01.1956 and 31.03.1984 was agreed to be paid by the

Respondent  to  the  State  Government  in  three  equal

installments  with  the  first  of  such  installment  due  on  or

before 31.12.1984.  The interest on such dues was to be paid

at  the  rate  of  9.5%  per  annum  for  the  period  between

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01.01.1956  and  31.12.1974  and  at  the  rate  of  13%  per

annum for the period between 01.01.1975 and 31.03.1984.   

5. A  formal  lease  deed  was  executed  on  01.08.1985

incorporating the terms of the Agreement for  Lease dated

01.08.1984 (for short “Lease Deed”).  A demand was raised

by the State Government for payment of Rs.1.95 Crores as

rent along with interest as per Clause (xii) of the Lease Deed

on  11.09.1985.  A  further  demand  of  Rs.2.19  Crores  was

made on 18.10.1985 towards rent coupled with interest in

terms of Clause (xv) of the Lease Deed.  The Respondent

complied with the demand and made the payments.   

6. On 29.10.1993, a letter was written by the Secretary,

Department of Revenue and Land Reform, Bihar (for  short

“the Secretary”) to the Deputy Commissioner, Jamshedpur in

which it was stated that the Government was suffering heavy

losses  due  to  the  absence  of  the  words  “per  annum” for

calculation of interest in Clause (xii) of the Lease Deed.  After

obtaining legal  opinion,  the Secretary  directed the Deputy

Commissioner, Jamshedpur to re-calculate the interest on the

arrears of rent payable under Clause (xii) of the Lease Deed

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on a yearly basis in the same manner as done for the rent on

the lands under Clause (xv) and realize the same from the

Respondent.  A  certificate  proceeding  was  issued  by  the

District  Collector,  Jamshedpur  under  the  Bihar  and  Orissa

Public  Demands  Recovery  Act,  1914  (for  short  “Public

Demands Act”) by which the Respondent was directed to pay

Rs.5.97  Crores  towards  interest  calculated  on  per  annum

basis in respect of the lands under Clause (xii) of the Lease

Deed. The Respondent filed a Writ Petition against the said

demand before the High Court of Bihar, Ranchi Bench (now

Jharkhand).   The  contention  raised  on  behalf  of  the

Respondent that the demand cannot be said to be a public

demand under the Public Demands Act was rejected by the

learned Single Judge of the High Court.  The learned Single

Judge observed that the demand for the payment of interest

on rent payable under the Lease Deed entered into pursuant

to the BLR Act would certainly fall within the sweep of Item

(vii)  of  Schedule  I  read  with  Section  6(3)  of  the  Public

Demands Act.  Writ Petition No. 2761 of 1994 was dismissed

as  being  not  maintainable  but  liberty  was  granted  to  the

Respondent to raise all objections relating to their liability to

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pay in  accordance with  the provisions of  Section 9 of  the

Public Demands Act.  The Certificate Officer was directed to

consider  the objections notwithstanding any delay in filing

the same without being influenced by the observations made

by the High Court.  The judgment of the learned Single Judge

was affirmed by  the  Division  Bench in  the  LPA No.276  of

1995 (R) filed by the Respondent.

7. On  23.01.1996,  the  Certificate  Officer  rejected  the

objections  that  were  filed by the Respondent.  Questioning

the legality and validity of the demand and the Order of the

Certificate Officer by which the objections were rejected, the

Respondent  filed  a  Writ  Petition  before  the  High  Court  of

Bihar, Ranchi Bench (now Jharkhand).  The High Court stayed

the  execution  of  the  demand  subject  to  the  Respondent

depositing  Rupees  One  Crore  before  30.03.1996  and

furnishing a Bank Guarantee for the remaining amount.  In

compliance of the interim order of the High Court,  we are

informed by the learned Senior Counsel for the Respondent

that an amount of Rupees One Crore was deposited in the

High Court on 28.03.1996. The High Court by the impugned

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judgment allowed the Writ Petition filed by the Respondent

and concluded as follows:

“48 (i)The wording contained in clause (xii)  and clause (xv) would clearly convey the meaning that clauses (xii) would indicate that interest in respect of the said clause can be calculated only on “lump sum” basis and not “per annum” basis as there is no use of words “per annum” in clause  (xii)  like  that  of  clause  (xv)  and  therefore,  the impugned demand for interest “per annum” in respect of clause (xii) is illegal.

(ii)  The  impugned  demand  is  not  a  “public  demand” within  the  meaning  of  section  3(6)  of  the  Bihar  and Orissa  Public  Demands  Recovery  Act,  1914  as  the demand in question is concerned with the interpretation of clause (xii) and hence the demand is not realizable in certificate proceedings.”   

8. Guided  by  the  decisions  of  this  Court  on  the

interpretation  of  contracts  in  Delhi  Development

Authority v.  Durga Chand,3 Provash Chandra Dalui v.

Biswanath  Banerjee,4  20th Century  Finance

Corporation Ltd. v. State of Maharashtra,5 and Union of

India v. Shiv Dayal Soin & Sons (P) Ltd.,6 the High Court

3 (1973) 2 SCC 815 : AIR 1973 SC 2609 ¶19 and 21 4 (1989) 1 SCC Suppl.  487: AIR 1989 SC 1834  5 (2000) 6 SCC 12 ¶ 12 6 (2003) 4 SCC 695  

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was of the opinion that the contract must be construed as a

whole and that the meaning of the words contained in the

contract has to be formed on the facts and circumstances of

each case in  the light  of  the  terms and conditions  of  the

contract.  According to the High Court, the words expressly

mentioned in one place but not in another place must be

taken to have been deliberately omitted on the well settled

principle of  Expressio Unius Est Exclusio Alterius.  The High

Court found that Clause (xii) and Clause (xv) pertain to two

different  types of  lands.   Clause (xii)  relates  to  properties

falling in  Clauses (i),  (ii),  (iii),  (v),  (vi),  (ix)  and (x)  of  the

Lease Deed wherein the Respondent developed the lands by

setting  up  industries,  buildings,  structures,  roads,  civic

amenities, hospitals, etc. whereas Clause (xv) dealt with the

lands settled by the Government on a fixed jama on a period

of five years at a time.  Lands covered in Clause (xv) were

being utilized for hats, bazaars, melas, Jalkars, fisheries and

other Sairats from which the Respondent was earning money.

Taking into account the difference in the nature of the lands

and  their  utility,  the  High  Court  held  that  the  word  “per

annum”  was  intentionally  included  in  Clause  (xv)  of  the

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Lease  Deed  and  excluded  from  Clause  (xii)  of  the  Lease

Deed.  The High Court observed that the State cannot travel

beyond  the  terms  and  conditions  of  the  Lease  Deed  and

issue a demand for payment of interest under Clause (xii) by

calculating the same on a yearly basis.   

9. The  High  Court  accepted  the  submission  made  on

behalf of the Respondent that the demand that was made by

the Certificate Officer was not a public demand within the

meaning of  Section 3(6)  of  the Public  Demands Act.   The

High Court remarked that Sections 7D and 7E of the BLR Act

did  not  provide  for  payment  of  interest  and  the  interest

charged by the State of Bihar was pursuant to an agreement.

As the demand was purely contractual, it cannot be termed

as a “public demand”, according to the High Court.   

10. The judgment of the High Court was criticized by the

learned Senior Counsel for the Appellant, Mr. Sunil Kumar, on

more than one count.  Being aware of the earlier judgment of

the High Court wherein the very same demand was held to

be  a  public  demand  under  the  Public  Demands  Act  by

another Division Bench of the same High Court, a different

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view could not have been taken by the Division Bench.  If the

Division Bench was not in agreement with the judgment of

the earlier Division Bench the only course open to it was to

refer  the  matter  to  a  larger  Bench.   The  learned  Senior

Counsel for the State further submitted that the word “rent”

has not been defined in the BLR Act.  He submitted that the

words and expressions used in the BLR Act but not defined

thereunder  would  have  the  same  meaning  as  per  the

definitions  in  the  Bihar  Tenancy  Act,  1885  or  the  Chota

Nagpur Tenancy Act, 19087.  As the Chota Nagpur Tenancy

Act, 1908 was applicable to the lands in question, the word

“rent”  as defined in  Section 3(xxviii)  of  the Chota Nagpur

Tenancy  Act,  1908  would  apply  to  the  facts  of  the  case.

“Rent” as defined in the said Act includes any rent lawfully

payable by a tenant to his landlord on account of the use or

occupation of the land held by the tenant and includes all

dues (other than personal services) which were recoverable

under any enactment for the time being in force as if they

were  rent.  The  learned  Senior  Counsel  contended  that  in

view of the definition of “rent” in the Chota Nagpur Tenancy

Act,  1908  which  includes  all  dues  recoverable  under  any

7 Section 2(t), BLR Act

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enactment, it cannot be said that the demand made by the

State  of  Bihar  was  not  a  public  demand.   On  the

interpretation of Clauses (xii) and (xv) of the Lease Deed, he

stated that the mere omission of the words “per annum” in

Clause  (xii)  would  not  make  any  difference  and  the

Government  committed  an  inadvertent  error  in  the

calculation of interest payable under Clause (xii) in the year

1985 which was corrected later.     

11. Mr.  Gopal  Jain,  learned  Senior  Counsel  for  the

Respondent,  argued  that  the  High  Court  was  right  in  its

interpretation of  Clause (xii)  and Clause (xv)  of  the Lease

Deed by taking into account the intention of the parties. He

submitted that the revised demand made in the year 1994

was a unilateral decision of the Government contrary to the

terms of the Lease Deed.  The demand made by reading the

words “per  annum” into Clause (xii)  of  the Lease Deed is

wholly impermissible.   

12. The  well  known rule  of  interpretation  of  Contracts  is

that  the  deed  ought  to  be  read  as  a  whole  in  order  to

ascertain the true meaning of its several clauses and a word

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of each Clause should be so interpreted as to bring it into

harmony  with  the  other  provisions  of  the  deed,  if  that

interpretation does no violence to the meaning of which they

are naturally susceptible.8   

13. Lord Hope speaking for the Supreme Court of the United

Kingdom stated the principles of interpretation as follows9:

“The court’s task is to ascertain the intention of the parties by examining the words they used and giving them  their  ordinary  meaning  in  their  contractual context.   It  must  start  with  what  it  is  given by the parties themselves when it is conducting this exercise. Effect is to be given to every word, so far as possible, in  the order  in  which they appear in  the clauses in question.  Words should not be added which are not there,  and  words  which  are  there  should  not  be changed, taken out or moved from the place in the clause where they have been put by the parties.  It may be necessary to  do some of  these things at  a later stage to make sense of the language.  But this should not be done until it has become clear that the language  the  parties  actually  used  creates  an ambiguity which cannot be solved otherwise.”   

8  Chamber Colliery Ltd. v. Twyerould (Note) (1893) (1915) 1 Ch. 268, per Lord Watson 9 Multi-Link Leisure Developments Limited v.  North Lanarkshire Council  (Scotland) [2010] UKSC 47

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14. The well known principles of interpretation of a contract

were correctly appreciated by the High Court. The question

that falls  for  our consideration in this case is  whether the

demand of interest made by the Certificate Officer for the

arrears of rent payable under Clause (xii) of the Lease Deed

was valid or not.  

15. It is relevant to refer to Section 7D and Section 7E of

the  BLR  Act.10 The  Agreement  dated  01.08.1984  and  the

10 7D.Land and buildings etc. acquired for an industrial undertaking and utilized for providing  civic  amenities,  namely,  health,  housing,  welfare,  power  house  and educational facilities to be deemed settled with it by the State –(1) If any land has been acquired for an industrial undertaking under the Land Acquisition Act, 1894 (Act 1 of 1894) so much of such land and buildings and structures thereon in possession of the industrial undertaking as are being utilized for providing civil amenities, namely, health, housing, welfare, power house and education facilities to its employees and so much of the remaining portion of such land and building and structures thereon as are found essential on enquiry by the State Government for production processes of the industrial undertaking shall  be deemed to have been leased out by the State Government with the owner of the industrial undertaking for period as determined by the  State  Government  subject  to  payment  of  such  fair  and  equitable  rent  as determined by the State Government.   

(2)  The  provisions  of  sub-section  (1)  shall  have  effect  notwithstanding anything contained in section 4(a) and shall be without prejudice to the exemptions granted or concession given to intermediaries under Sections 5, 6, 7, 7A, 7B and 7C.

(3) If the claim of the industrial undertaking as to possession over the lands, buildings and structures thereon, referred to in sub-section (1) or to the extent of such lands, buildings and structure is disputed by any person within three months of the commencement of the Bihar Land Reforms (Amendment) Act, 1972, the Collector shall  make such inquiries in the matter as he deems fit and pass orders as may appear to him as just and fair.

(4) The provisions of sub-section (1) shall be deemed to have been inserted in this Act from the commencement thereof.

7E. Land and building, etc., acquired for an industrial undertaking and leased out  by  it  to  another  industrial  undertaking  for  its  expansion  by  establishing  new industry or to an individual to be deemed as leased with it by State Government on same terms. -[If any portion out of the land acquired for an industrial undertaking under the Land Acquisition Act,  1894 (Act I  of  1894) has been leased out by the industrial undertaking before the 22nd June, 1970 to another industrial undertaking for establishment of a new industry or its expansion or to any individual or society or association for residential, commercial or for such other purpose, the whole of such land,  buildings  or  structures  covered  by  such  lease  shall  with  effect  from  the commencement of this Act, be deemed to be leased to the industrial undertaking for such period as may be determined by the State Government subject to payment of

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Lease Deed dated 01.8.1985 was entered into pursuant to

the abovementioned provisions of the BLR Act.  Clause (xii)

of  the  Lease  Deed  pertains  to  lands  which  have  been

developed by the Respondent by establishing industries and

other  civic  amenities whereas Clause (xv)  relates to  lands

which  were  being  used  for  commercial  purposes.   The

Respondent was making money from the use of lands that

were covered under Clause (xv) for which reason the “jama”

was also fixed for the lands falling under Clause (xv) for five

years at a time.  Interest being calculated on a yearly basis

as per Clause (xv) is clearly due to the lands being used for

commercial purposes wherefrom the Respondent was getting

returns.  The exclusion of the words “per annum” in Clause

(xii) was intentional and the Appellant cannot be permitted

to  read  those  words  into  Clause  (xii)  for  the  purpose  of

issuing a demand of additional amount towards interest.  A

plain reading of the Lease Deed as a whole would make it

fair  and  equitable  rent  as  determined  by  the  State  Government  and  the  other industrial  undertaking,  individual,  society  or  association  to  whom lease has  been granted by the industrial undertaking shall be deemed to be the sub-lessee of the original industrial undertaking and the provisions of clauses (G) and (H) of Section 4 shall not be effective with respect to such land or buildings or structures thereon.

The terms and conditions of the lease granted under sub-section(1), shall be determined by the State Government: Provided that if the period of sub-lease expires before the expiry of the lease granted under sub-section (1) then in that condition at the time of renewal of the sublease, the State Government shall have power to revise the amount of rent payable to State Government by the lessee.

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clear that the payment of interest on rent chargeable under

Clause (xii)  is  essentially  different  from that  under  Clause

(xv).  The principle of Expressio Unius Est Exclusio Alterius is

squarely applicable to the facts of this case.  For the above

reasons, we are in agreement with the finding of the High

Court that the District Collector, Jamshedpur was not right in

issuing  a  demand  for  payment  of  Rs.5.97  Crores  towards

interest on the arrears of rent for the lands covered under

Clause (xii) of the Lease Deed.   

16. However,  the  conclusion  of  the  High  Court  that  the

demand  does  not  fall  within  the  sweep  of  the  Public

Demands  Act  is  not  correct.   Being  aware  of  the  earlier

decision  of  the  High  Court  on  this  point,  an  error  was

committed by the High Court in taking a completely different

view.  If the High Court was not in agreement with the earlier

decision, the only course open to it was to refer the matter to

a larger Bench.  That apart, in Clause (xx) of the Lease Deed,

the Respondent and the Appellant agreed that recoveries of

arrears of rent may be affected under the Public Demands

Act.  It  is  not open to the Respondent to contend that the

demand made for payment of interest under the Lease Deed

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as not a public demand in view of Clause (xx) of the Lease

Deed. “Public demand” has been defined in Section 3(6) of

the Public Demands Act as under:  

“3. Definitions. … …

(6)  “Public  demand’  means  any  arrear  or money mentioned  or  referred  to  in  Schedule  I, and includes any interest which may, by law, be chargeable thereon upto the date on which a certificate is signed under Part II.”

Item No.7  of  Schedule  I  of  the  Public  Demands  Act  is  as

follows:

“Any demand payable to the Collector by a person holding any interest in land, pasturage, forest-rights, fisheries or the like, whether such demand is or is not transferable, when such demand is a condition of the use and enjoyment of such land, pasturage, forest right, fisheries or other things.”

17. Item No.7 of Schedule I covers any demand payable by

a person holding any interest in land. Therefore, interest on

rent  payable  for  the  lands  would,  in  our  opinion,  be

recoverable under Item No.7 of Schedule I read with Section

3(6) of the Public Demands Act.

18. The judgment of the High Court is upheld though we are

not  approving  the  conclusion  of  the  High  Court  that  the

demand is not a public demand under the Public Demands

Act.    The amount of Rupees One Crore deposited by the

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respondent in the High Court on 28.03.1996 pursuant to the

interim order shall be returned to the respondent.   

19. For  the  aforementioned  reasons,  the  Appeal  is

dismissed.   

               .................................J.               [L. NAGESWARA RAO]

 ..................................J.               [M.R.SHAH]

New Delhi, May 09, 2019.   

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