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REPORTABLE   

IN THE SUPREME COURT OF INDIA     CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.  3783  OF 2016   (Arising out of S.L.P. (C) NO.6978 of 2012)

DELHI DEVELOPMENT AUTHORITY           ………… APPELLANT

VERSUS

M/S ANANT RAJ AGENCIES PVT. LTD.      ………… RESPONDENT

J U D G M E N T

V. GOPALA GOWDA, J.       Leave granted.

2.2. This appeal by special leave is directed against

the  impugned  judgment  and  order  dated  31.05.2011

passed by the High Court of Delhi at New Delhi in RSA

No. 6 of 1983, wherein the High Court has dismissed

the second appeal filed by the appellant-Authority

(hereinafter called “DDA”) holding that acceptance of

rent, in the instant case, by the DDA pursuant to a

demand made by it amounts to a renewal of lease in

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respect of the property in question.

3.3. Brief facts are stated hereunder to appreciate

the rival legal contentions urged on behalf of the

parties: The Delhi Improvement Trust vide lease deed dated

06.01.1951 granted lease of plot no.2, Jhandewalan,

“E” Block, Delhi in favour of original lessee Balraj

Virmani.  After  enactment  of  the  Delhi  Development

Act, 1957, the DDA was constituted by notification of

the Central Government and by virtue of Section 60 of

the  aforesaid  Act,  all  properties,  movable  or

immovable, vested in the Delhi Improvement Trust came

to be vested in the DDA.  4. The lease in respect of property in question was

initially  for  a  period  of  20  years  i.e.,  w.e.f.

11.08.1948 to 10.08.1968 and the same was liable to

be extended for a further period of 20 years at the

option of lessee in accordance with the terms and

conditions  contained  therein.  Clause  (vi)  of  the

lease deed is a relevant condition, which reads as

under:

“vi)  not  to  use  the  said  land  and buildings  that  may  be  erected  thereon during  the  said  term  for  any  other purpose  other  than  for  the  purpose  of cold storage plant without the consent in

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writing of the said lessor; provided that the lease shall become void if the land is used for any purpose other than that for which the lease is granted not being a  purpose  subsequently  approved  by  the lessor”.  

 Clause  III(b)  is  another  relevant  condition  which

reads thus:

“III(b)  in  case  this  lease  with  the lessee  shall  continue  for  the  said period  of  20  years  and  provided  the lessee  has  observed  performed  and complied  with the terms and covenants, conditions  and  options  to  renew  the lease on such terms and conditions as the lessor deems fit for further period of 20 years, provided that the notice of the intention of the lessee to exercise this option of renewal is given to the lessor six months before the expiration of the lease; provided further that if the  lease  is  extended  for  a  further period  20 years the lessor shall have the right to enhance the rental upto 50% at the original rent.”

5.5. On 23.02.1967, the original lessee approached the

DDA for renewal of his lease. The DDA served a show

cause notice dated 16.02.1968 to the original lessee

for breach of the terms and conditions contained in

the lease deed committed by him with respect to the

lease.  Following  breaches  were  pointed  out  in  the

aforesaid show cause notice: a.  The mezzanine floor of the said building

being  used  for  printing  press  and  office

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purposes  by  different  tenants  in contravention of the clause 1(vi) and (vii) of the lease deed.

b.Cold  storage  has  been  sublet  to  M/s Baikunth cold storage since December, 1965 in  contravention  of  clause  1(vii)  of  the lease deed.

c.Portion of mezzanine floor being used for residential  purposes  by  the  cold  storage staff in contravention of clause 1(xv) of the lease deed.

d.Only single storey building stands on the

plot in place of four storied building in

contravention  of  clause  1(xv)(c)  of  the

lease deed.

By the said notice, 15 days time was given to the

original lessee to remedy the breaches as pointed out

in the show cause notice. The original lessee replied

to  the  said  show  cause  notice  through  various

communications  dated  01.03.1968,  26.06.1968  and

01.07.1968.  However,  no  further  communication  was

issued by the DDA in this regard.

6.6. The DDA vide notice dated 01.09.1972 terminated

the  lease  of  the  said  land  on  account  of

non-observation of the terms and conditions contained

in the lease deed.

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7.7. Aggrieved  by  the  decision  of  the  DDA,  the

original  lessee  filed  original  suit  for  perpetual

injunction  bearing  no.  47  of  1975  before  the

Sub-Judge,  Delhi  seeking  restraining  order  against

the  DDA.  The  learned  Sub-Judge  vide  judgment  and

order  dated  07.03.1981  decreed  the  said  suit  in

favour of the original lessee. The learned Sub-Judge

has found notice dated 01.09.1972 of the DDA to be

arbitrary, illegal and without jurisdiction.  

8.8. Aggrieved  by  the  decision  of  the  learned

Sub-Judge, the DDA preferred the First Appeal vide

RCA No. 75 of 1982 before the Court of Additional

District  Judge  (ADJ),  Delhi.  The  learned  ADJ  vide

judgment  and  order  dated  29.09.1982  dismissed  the

appeal and affirmed the judgment and order passed by

the trial court.

9.9. Aggrieved  by  the  said  judgment  of  the  learned

ADJ, DDA preferred the Second Appeal vide RSA No. 06

of 1983, before the High Court of Delhi at New Delhi.

During  the  pendency  of  the  said  second  appeal  an

application vide CM No. 13336 of 2007 was moved under

Order 22 Rule 10 of the CPC for substitution of M/s

Anant Raj Agencies Pvt. Ltd.-the respondent herein in

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place of original lessee-Balraj Virmani. In the said

application  it  was  urged  that  the  property  in

question had been purchased by the respondent vide

sale  deed  in  view  of  compromise  decree  dated

22.06.1988  passed  by  the  High  Court  in  terms  of

settlement  between  the  original  lessee  and  the

respondent herein.  The High Court vide order dated

03.11.2009 substituted the respondent in place of the

original lessee-Balraj Virmani in the second appeal

proceedings.

10.10. During the pendency of the said RSA No. 6 of

1983, the respondent applied to DDA for conversion of

the  said  premises  from  leasehold  to  freehold  vide

application  dated  26.03.2004.  The  respondent

deposited a sum of Rs.96,41,982/- towards conversion

charges as per the policy applicable, but the request

for  conversion  was  rejected  by  the  DDA.  Being

aggrieved  by  the  said  decision,  the  respondent

preferred writ petition being CWP No. 10015 of 2005

before the High Court of Delhi praying for directions

to be issued to the DDA to consider the request of

the  respondent  and  grant  conversion  of  the  said

premises from leasehold to freehold. The High Court

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by its order dated 19.07.2007 disposed of the said

writ petition by directing DDA to decide the matter

of conversion within a period of 8 weeks after the

disposal of RSA No. 6 of 1983.  

11.11. The High Court by its judgment and order dated

31.05.2011 has dismissed RSA No. 6 of 1983 filed by

the  DDA  holding  that  its  act  of  demanding  and

accepting  rent  tantamounts  to  renewal  of  lease  in

respect  of  the  property  in  question.  Hence,  this

appeal by way of special leave has been filed by the

DDA  raising  certain  substantial  questions  of  law

urging various grounds.  

12.12. Mr. Ashwani Kumar, the learned counsel appearing

on behalf of the DDA contended that the High Court

has failed to appreciate that the original lessee has

admittedly  breached  the  terms  and  conditions

contained in the lease deed and thus, not entitled to

the renewal of the same in his favour.

13.13. It was further contended by the learned counsel

that the High Court has erred in not appreciating

that both the courts below have proceeded on wrong

interpretation of clause III (b) of the lease deed

dated  06.01.1951  that  the  lease  was  unilaterally

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renewable at the option of the lessee in respect of

the leased property in favour of the original lessee.

14.14. The learned counsel further contended that after

the admission of the breaches, in respect of terms

and conditions set out in the lease deed referred to

supra, by the original lessee as pointed out in the

show cause notice dated 16.02.1968, the same was not

condoned by the DDA. In such a situation it is not

right  on  the  part  of  the  trial  court,  the  first

appellate court and the High Court to hold that there

was automatic renewal of the lease of the property in

question  only  for  the  reason  that  the  rent  was

deposited by the lessee in the office of the DDA.  

15.15. It was further contended by the learned counsel

that the High Court has failed to appreciate that the

original  lessee  created  an  interest  in  the  said

property, in favour of third party-respondent, during

the period when he was no more a lease holder, in

respect  of  the  said  property,  by  virtue  of

determination of lease in his favour by efflux of

time.  Therefore,  the  original  lessee,  having  no

right, title or interest in the said property, could

not  have  transferred  the  said  property  to  the

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respondent and therefore, the alleged transfer of the

property in question in his favour is void and the

same is not binding upon the DDA.  

16.16. The learned counsel further contended that the

High Court has failed to appreciate that the deposit

of the rent by the original lessee and its acceptance

by the office of the DDA is administrative in nature

and would not be construed as an estoppel or waiver

of  the  DDA’s  right  in  respect  of  the  property  in

question unless a specific intention to this effect

is communicated to the original lessee.

17.17. Per contra, Mr. C.S. Vaidyanathan, the learned

senior counsel appearing on behalf of the respondent

contended that the present appeal is not maintainable

as the DDA itself has intentionally acquiesced and

agreed to the original lessee’s continued use of the

said property after the expiry of first term of lease

on 10.08.1968. It was further submitted that the DDA

after more than one year of the expiry of the first

term of lease demanded rent in respect of the said

property vide notice dated 03.10.1969, pursuant to

which payments towards rent were made by the original

lessee. The learned senior counsel further emphasised

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upon the point that the instant case differs from

those cases where rent is tendered by the lessee sans

demand from the lessor. He further submitted that the

acceptance of rent by the DDA on various occasions

pursuant to demand made by it, clearly proves the

intention of the DDA that the lease is renewed in

favour of the original lessee.  

18.18. It was further contended by him that in view of

the  settled  principle  of  law  as  well  as  the

precedents laid down by this Court in a catena of

cases that the exercise of option for renewal cannot

be stalled on account of the alleged breaches of the

terms and conditions of the lease when no steps were

taken by the DDA to assert its right and power in

respect  of  re-entry  into  the  property  in  question

till the option for renewal of lease exercised by the

lessee and therefore, this appeal is not maintainable

in law as no substantial question of law arises for

consideration  of  this  Court  in  exercise  of  its

appellate jurisdiction. It was further submitted by

him that in the instant case, the DDA issued show

cause notice dated 16.02.1968 to the original lessee

informing  him  of  four  breaches  of  terms  and

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conditions  contained  in  the  lease  deed  allegedly

committed by him.  The original lessee made detailed

replies to the said notice vide communications dated

01.03.1968, 26.06.1968 and 01.07.1968. The DDA after

receiving  the  replies  from  the  original  lessee

neither communicated nor took any action to take the

possession of the property in question and therefore,

the conclusion that the DDA was satisfied with the

replies made by the original lessee can be safely

arrived at. In fact, the demand of rent by the office

of the DDA on 03.10.1969 was immediately acceded. It

was further submitted that in view of the aforesaid

it can be safely concluded that after the expiry of

the first term of the lease and acquiescence of the

DDA in letting the original lessee to continue in

possession of the said property, the lessee became a

tenant  at  will  in  respect  of  the  said  property.

Therefore, the impugned judgment and order passed by

the  High  Court  is  not  bad  in  law  and  thus,

interference  by  this  Court  with  the  same  is  not

warranted.

19.19. With  respect  to  the  substitution  of  the

respondent in place of the original lessee, during

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pendency of the second appeal, it was submitted by

the learned senior counsel that the said substitution

of party was allowed by the High Court vide order

dated 03.11.2009 in RSA No. 06 of 1983. The DDA did

not  even  file  a  reply  to  the  application  for

substitution filed by the respondent and therefore,

it is estopped from questioning such substitution of

the respondent in place of original lessee. It was

further  submitted  by  him  that  the  order  dated

03.11.2009 has not been challenged by the DDA and

therefore, it has no right to raise any new plea in

this regard at this stage.

20.20. The learned senior counsel further submitted that

the DDA has deliberately and intentionally suppressed

and concealed material fact from this Court i.e., the

policy of the DDA for conversion of the property from

leasehold to freehold is under consideration and the

same is clear from the communication dated 22.01.2008

sent  by  the  DDA  to  the  respondent.  He  further

submitted that admittedly, the DDA has not refunded

the  amount  of  Rs.96,41,982/-  deposited  by  the

respondent as conversion charges.  

21.21. While  concluding  his  contentions  the  learned

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senior counsel submitted that the courts below have

rightly rejected the case of the DDA while holding

the  notice  dated  01.09.1972,  whereby  it  sought  to

determine  the  lease  of  the  original  lessee,

arbitrary, illegal and without jurisdiction. The High

Court has correctly held that the acceptance of rent

by the office of the DDA, in respect of the said

property, pursuant to the demand made by the office

of the DDA amounts to renewal of lease in the instant

case and therefore, no interference with the impugned

judgment and order by this Court in exercise of its

appellate  jurisdiction  under  Article  136  of  the

Constitution of India is required.           

22. On  the  basis  of  the  aforesaid  rival  legal

contentions  urged  on  behalf  of  the  parties  the

following  points  would  arise  for  consideration  of

this Court: 1. Whether  the  original  lessee  has

acquired any right, in respect of the

property  in  question  after  the

termination of lease by efflux of time

on 10.08.1968 and also by termination

notice  dated  01.09.1972,  in  the

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absence of renewal of lease by the DDA

in  writing  as  provided  under  Clause

III(b) of the lease deed, by virtue of

payment of rent in the office of the

DDA? 2.Whether the respondent herein acquires

any right in respect of property in

question  by  getting  substituted  in

place of the original lessee by virtue

of  a  compromise  decree,  between  the

original  lessee  and  the  respondent,

based on a sale deed dated 14.10.1998

executed  by  the  original  lessee,  by

invoking Order 22 Rule 10 of the CPC

during  the  pendency  of  the  appeal

before the High Court?  

3.What order?   

Answer to Point No.1 23. After careful examination of the material facts

and evidence on record it is clear that on the basis

of the admitted facts, the lease of the property in

question is not renewed by the DDA in favour of the

original lessee, in accordance with clause III(b) of

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the lease deed dated 06.01.1951. From a reading of

the said lease deed it becomes very clear that the

original lease period was initially for a period 20

years,  which  period  expired  on  10.08.1968  as  the

lease period commenced w.e.f. 11.08.1948. No doubt,

the original lessee availed his option of the renewal

of lease as provided in the lease deed by making a

request to the  DDA vide his letter dated 23.2.1967,

but the same was not acceded to by the  DDA. Before

expiry  of  the  original  lease  period,  notices  were

issued  by  the  office  of  DDA on  09.02.1968  and

16.02.1968 to the original lessee alleging certain

breaches  of  the  terms  and  conditions  (extracted

above) of the lease deed. The original lessee was

given  15  days  time  to  remedy  the  said  breaches.

Though the original lessee made several replies to

the aforesaid notices but  he had failed to rectify

the said breaches notified to him. Therefore, the DDA

vide notice dated 01.09.1972 decided not to renew the

lease of the property in question and terminated the

lease in respect of the same, though in law the same

was not even required on the part of the DDA in view

of  the  conditions  of  the  lease  deed  as  after  the

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expiry  of  the  original  period  of  lease  it  stands

terminated by efflux of time.

24. The  concurrent  findings  recorded  by  the  courts

below  declaring  the  termination  notice  dated

01.09.1972, terminating the lease of the property in

question granted in favour of the original lessee,

served by the DDA to the original lessee, as illegal,

arbitrary and without jurisdiction on the erroneous

assumption of the non-existent fact that there has

been a renewal of the lease for the reason that the

original lessee applied for the renewal of the lease

within  time  as  stipulated  in  the  clause  III(b)

(supra) of the lease deed and has been paying rent

for the property in question to the office of the

DDA. In our view, the said conclusion of the courts

below is erroneous in law as it is contrary to the

Clause III (b) of the lease deed and also Sections

21(1) and 22 of the Delhi Development Act, 1957 (for

short the “DD Act”) read with Rule 43 of the Delhi

Development  Authority  (Disposal  of  Developed  Nazul

Land) Rules, 1981 (for short the “Nazul Land Rules”).

In this regard, it would be necessary for this Court

to refer to the decision relied upon by the learned

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counsel  for  the  appellant,  in  the  case  of  Shanti

Prasad Devi & Anr.  v. Shankar Mahto & Ors.1 wherein

this  Court,  while  interpreting  Section  116  of  the

Transfer of Property Act, 1882 with regard to its

applicability and the effect of “holding over”, held

that it is necessary to obtain assent of the landlord

for continuation of lease after the expiry of lease

period and mere acceptance of rent by the lessor, in

absence of agreement to the contrary, for subsequent

months  where  lessee  continues  to  occupy  lease

premises  cannot  be  said  to  be  conduct  signifying

assent on its part. The relevant paras 18 and 19 of

the case are extracted below :-

“18. We fully agree with the High Court and the first appellate court below that on  expiry  of  period  of  lease,  mere acceptance  of  rent  for  the  subsequent months in which the lessee continued to occupy the lease premises cannot be said to be a conduct signifying “assent” to the continuance of the lease even after expiry  of  lease  period.  To  the  legal notice  seeking  renewal  of  lease,  the lessor gave no reply. The agreement of renewal  contained  in  clause  (7)  read with clause (9) required fulfilment of two conditions:  first, the exercise of option of renewal by the lessee before the expiry of original period of lease and  second,  fixation  of  terms  and

1   (2005) 5 SCC 543

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conditions  for  the  renewed  period  of lease by mutual consent and in absence thereof through the mediation of local mukhia or  panchas of  the  village.  The aforesaid renewal clauses (7) and (9) in the  agreement  of  lease  clearly  fell within the expression “agreement to the contrary”  used  in  Section  116  of  the Transfer  of  Property  Act.  Under  the aforesaid clauses option to seek renewal was to be exercised before expiry of the lease and on specified conditions.

19. The lessor in the present case had neither  expressly  nor  impliedly  agreed for renewal. The renewal as provided in the original contract was required to be obtained  by  following  a  specified procedure i.e. on mutually agreed terms or  in  the  alternative  through  the mediation of Mukhias and Panchas. In the instant case, there is a renewal clause in the contract prescribing a particular period and mode of renewal which was “an agreement  to  the  contrary”  within  the meaning of Section 116 of the Transfer of Property Act. In the face of specific clauses (7) and (9) for seeking renewal there  could  be  no  implied  renewal  by “holding over” on mere acceptance of the rent  offered  by  the  lessee.  In  the instant  case,  option  of  renewal  was exercised  not  in  accordance  with  the terms of renewal clause that is before the  expiry  of  lease.  It  was  exercised after  expiry  of  lease  and  the  lessee continued  to  remain  in  use  and occupation of the leased premises. The rent offered was accepted by the lessor for the period the lessee overstayed on the leased premises. The lessee, in the above  circumstances,  could  not  claim that he was “holding over” as a lessee within the meaning of Section 116 of the Transfer of Property Act.”

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    (emphasis supplied by this Court)

To  the  same  effect,  the  learned  counsel  has

further,  rightly  placed  reliance  on  another

decision of this Court in the case of  Sarup Singh

Gupta v. S. Jagdish Singh & Ors2, wherein this Court

has held as under :-  

“8…In our view, mere acceptance of rent did not  by  itself  constitute  an  act  of  the nature envisaged by Section 113, Transfer of  Property  Act  showing  an  intention  to treat  the  lease  as  subsisting.  The  fact remains that even after accepting the rent tendered, the landlord did file a suit for eviction,  and  even  while  prosecuting  the suit accepted the rent which was being paid to him by the tenant. It cannot, therefore, be said that by accepting rent, he intended to waive the notice to quit and to treat the lease as subsisting. We cannot ignore the fact that in any event, even if rent was  neither  tendered  nor  accepted,  the landlord in the event of success would be entitled to the payment of the arrears of rent.  To  avoid  any  controversy,  in  the event of termination of lease the practice followed  by  the  courts  is  to  permit  the landlord to receive each month by way of compensation for the use and occupation of the  premises,  an  amount  equal  to  the monthly  rent  payable  by  the  tenant.  It cannot,  therefore,  be  said  that  mere acceptance  of  rent  amounts  to  waiver  of notice to quit unless there be any other evidence  to  prove  or  establish  that  the landlord so intended…”      (emphasis supplied by this Court)

2   (2006) 4 SCC 205

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25. Further, in the case of  Ashoka Marketing Ltd. &

Anr. v.  Punjab  National  Bank  &  Ors3,  wherein  the

question for consideration was whether the provisions

of  Public  Premises  (Eviction  of  Unauthorised

Occupants)  Act,  1971  overrides  the  provisions  of

Delhi Rent Control Act, 1958, the Constitution Bench

of this Court after interpretation of the relevant

provisions of both the Acts has clearly held that the

Public Premises (Eviction of Unauthorised Occupants)

Act, 1971 must prevail over the Rent Control Act. The

relevant paras 55 and 70 of the decision read thus: “55. The  Rent  Control  Act  makes  a departure  from  the  general  law regulating the relationship of landlord and tenant contained in the Transfer of Property  Act  inasmuch  as  it  makes provision for determination of standard rent, it specifies the grounds on which a landlord can seek the eviction of a tenant,  it  prescribes  the  forum  for adjudication  of  disputes  between landlords and tenants and the procedure which  has  to  be  followed  in  such proceedings. The Rent Control Act can, therefore,  be  said  to  be  a  special statute regulating the relationship of landlord  and  tenant  in  the  Union territory of Delhi. The Public Premises Act  makes  provision  for  a  speedy machinery  to  secure  eviction  of unauthorised  occupants  from  public premises. As opposed to the general law

3   (1990) 4 SCC 406

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which provides for filing of a regular suit  for  recovery  of  possession  of property in a competent court and for trial of such a suit in accordance with the procedure laid down in the Code of Civil  Procedure,  the  Public  Premises Act confers the power to pass an order of eviction of an unauthorised occupant in a public premises on a designated officer and prescribes the procedure to be followed by the said officer before passing such an order. Therefore, the Public Premises Act is also a special statute  relating  to  eviction  of unauthorised  occupants  from  public premises.  In  other  words,  both  the enactments,  namely,  the  Rent  Control Act and the Public Premises Act, are special  statutes  in  relation  to  the matters dealt with therein. Since, the Public  Premises  Act  is  a  special statute and not a general enactment the exception  contained  in  the  principle that  a  subsequent  general  law  cannot derogate  from  an  earlier  special  law cannot  be  invoked  and  in  accordance with the principle that the later laws abrogate  earlier  contrary  laws,  the Public Premises Act must prevail over the Rent Control Act.

70……In our opinion, the provisions of the Public Premises Act, to the extent they cover premises falling within the ambit of the Rent Control Act, override the provisions of the Rent Control Act and a person in unauthorised occupation of public premises under Section 2(e) of the Act cannot invoke the protection of the Rent Control Act.”

The Transfer of Property Act, 1882 is a general law

governing the landlord and the tenant relationship in

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general.  The  specific  Rent  Control  Acts  are

advancement  over  the  Transfer  of  Property  Act,

thereby providing more protection to the tenant from

arbitrary  increase  of  rent  and  ejectment  from  the

rented premises by the landlord. Thus, in the light

of the aforesaid case law, it can be concluded that

the Transfer of Property Act, 1882 is not applicable

in respect of the public premises. The property in

question is public premises by virtue of Section 2(e)

(3)(ii)  of  the  Public  Premises  (Eviction  of

Unauthorised  Occupants)  Act,  1971,  which  is

reproduced hereunder: “2(e) “public premises” means— (3) in  relation  to  the  [National Capital Territory of Delhi]— (ii) any  premises  belonging  to  the Delhi Development Authority, whether such premises are in the possession of,  or  leased  out  by,  the  said Authority;….”

Therefore, in the instant case, as per clause III(b)

of the lease deed and Sections 21 and 22 of the DD

Act read with Rule 43 of the Nazul Land Rules and in

the light of  Shanti Prasad Devi,  Sarup Singh Gupta

and Ashoka Marketing Ltd. cases (supra), there cannot

be an automatic renewal of lease in favour of the

original lessee once it stands terminated by efflux

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of time  and also by issuing notice terminating the

lease. Merely accepting the amount towards the rent

by the office of the DDA after expiry of the lease

period shall not be construed as renewal of lease of

the premises in question, in favour of the original

lessee, for another period of 20 years as contended

by the respondent.

26. Further, the property in question, vested in the

DDA, is a Nazul land, a developed land as is defined

under Rule 2(i) of the Nazul Land Rules, which reads

thus: "Nazul land" means the land placed  at  the  disposal  of the  Authority  and  developed by or under the control and supervision of the Authority under section 22 of the Act”

27. Section 3(2) of the DD Act says the Authority

shall  be  a  body  corporate  by  the  name  Delhi

Development Authority (DDA). Section 21 of the DD Act

empowers the DDA in respect of the disposal of the

land and sub-section (3) of Section 21 makes it very

clear  that  nothing  in  the  aforesaid  Act  shall  be

construed  as  enabling  the  Authority  or  the  local

Authority concerned to dispose of the land by way of

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gift,  mortgage  or  charge  but  subject  to  certain

reference in the DD Act with regard to the disposal

of  land  shall  be  construed  as  reference  to  the

disposal thereof in any manner, whether by way of

sale,  exchange  or  lease  or  by  creation  of  any

easement right or privilege or otherwise. Since, the

power conferred by the DD Act upon DDA to grant lease

includes renewal of lease and in the absence of such

a renewal of lease of the property in question in

favour of the original lessee, as required in law,

there cannot be an automatic renewal of the same in

his  favour.  The  non-grant  of  renewal  of  lease  in

favour of the original lessee is very clear from the

fact that the original lessee failed to remedy the

breaches pointed out by the DDA in its show cause

notices dated 09.02.1968 and 16.02.1968 and further

made  very  clear  from  the  issuance  of  termination

notice dated 01.09.1972, whereby the DDA has conveyed

its clear intention of non-renewal of the lease of

the property in question. The relevant portion of the

aforesaid termination notice reads thus: “7.  And  whereas  since  you have  failed  to  observe perform  and  comply  with  the terms  and  covenant,

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conditions of the above lease the  said  breaches  still continue. It has been decided not  to  renew  the  lease  for further period.”  

Thus, it is abundantly clear from the aforesaid legal

statutory  provisions  of  the  DD  Act  and  terms  and

conditions  of  the  lease  deed  and  the  case  law

referred supra that there is no automatic renewal of

lease of the property in question in favour of the

original lessee. Therefore, the concurrent findings

of the courts below on the contentious issue in the

impugned  judgment  are  not  only  erroneous  but  also

error in law and hence, the same cannot be allowed to

sustain in law and liable to be set aside.  

28. From the above discussion, it is clear that in

the absence of renewal of lease, the status of the

original  lessee,  in  relation  to  the  property  in

question, is that of an unauthorised occupant as he

had  continued  in  occupation  of  the  property  in

question as an ‘unauthorized  person’ in terms of

Section 2(g) of the Public Premises (Eviction  of

Unauthorised  Occupants)  Act,  1971,  which  reads  as

under: “2(g) “unauthorised occupation”, in

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relation  to  any  public  premises, means the occupation by any person of  the  public  premises  without authority for such occupation, and includes  the  continuance  in occupation  by  any  person  of  the public premises after the authority (whether  by  way  of  grant  or  any other mode of transfer) under which he  was  allowed  to  occupy  the premises  has  expired  or  has  been determined  for  any  reason whatsoever.”

29. In  the  absence  of  renewal  of  lease  after

10.8.1968, the pleadings of the original lessee that

the DDA is estopped from taking the plea that there

is no renewal of lease after having accepted the rent

after 10.8.1968, in respect of property in question

and after accepting certain sums in respect of the

same,  subsequently,  for  change  of  the  property  in

question  from  leasehold  to  freehold  are  all

irrelevant aspects for the reason that the same are

contrary to the aforesaid provisions of the DD Act,

the Nazul Land Rules applicable to the fact situation

and  the  terms  and  conditions  of  the  lease  deed.

Further,  it  is  clear  from  the  contents  of  the

termination notice dated 01.09.1972 served upon the

original  lessee  by  the  DDA that  it  has  not  only

refused to renew the lease of the property but also

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asked the original lessee to hand over the possession

of the property in question within 30 days, which is

absolutely in consonance with Section 5 of the Public

Premises  (Eviction  of  Unauthorised  Occupants)  Act,

1971.

30. Without  examining  the  case  in  the  proper

perspective  that  the  property  in  question  being  a

Public  Premises  in  terms  of  Section  2(e)  of  the

Public Premises (Eviction of Unauthorised Occupants)

Act, 1971 and that after expiry of lease period the

original lessee has become unauthorized occupant in

terms of Section 2(g) of the said Act in the light of

relevant statutory provisions and rules referred to

supra and law laid down by the Constitution Bench of

this Court in the Case of  Ashoka Marketing Ltd. &

Anr.  (supra), the concurrent findings of the courts

below on the contentious issue is not only erroneous

but also suffers from error in law and therefore,

liable to be set aside.   

31. The grant of perpetual injunction by the Trial

Court in favour of original lessee, restraining the

DDA from taking any action under the said termination

notice  dated  01.09.1972,  on  the  ground  that  the

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termination  notice  dated  01.09.1972  being  illegal,

arbitrary  and  without  jurisdiction  and  the

affirmation of the same by both the first appellate

court, i.e., by the learned ADJ and further by the

High Court by its impugned judgment and order are not

only erroneous but also suffers from error in law.

Thus,  Point  no.1  is  answered  in  favour  of  the

appellant.

Answer to Point no.2

32. The High Court’s order dated 03.11.2009 whereby

the  respondent  was  substituted  in  place  of  the

original  lessee  on  its  application  under  Order  22

Rule 10 of CPC for the reason of execution of sale

deed  dated  14.10.1998  by  the  original  lessee  in

favour of the respondent by entering into compromise

between them in Suit No. 601 of 1984 is also bad in

law. The sale of the property in question to give

effect to the compromise decree in aforesaid suit is

void  ab  initio in  law  for  the  reason  that  the

original lessee, in the absence of renewal of lease

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in  his  favour  himself  had  no  right,  title  or

interest, at the time of execution of sale deed, in

respect  of  the  property  in  question.  It  is  well

settled position of law that the person having no

right,  title  or  interest  in  the  property  cannot

transfer the same by way of sale deed. Thus, in the

instant case, the sale of the property in question by

the original lessee in favour of the respondent is

not a valid assignment of his right in respect of the

same. For the aforesaid reasons, the sale deed is not

binding  on  the  DDA. The  High  Court  has  failed  to

appreciate this important factual and legal aspect of

the case.  

33. The  contention  urged  by  the  learned  senior

counsel for the respondent that it has deposited a

sum of Rs.96,41,982/- as conversion charges of the

property in question from leasehold to freehold right

of the same is also of no relevance and lends no

support to the respondent for the reason that in the

absence of renewal of lease of the property by the

DDA,  the  original  lessee  himself  becomes  an

unauthorised occupant of the property in question.

The deposition of conversion charges in respect of

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the same to the office of the  DDA cannot help the

respondent in claiming any right with respect to the

property  in  question.  The  question  whether  such  a

procedure  in  respect  of  the  public  property  is

permissible  in  law  or  not  is  not  required  to  be

decided  in  this  case.  The  instant  case  having

peculiar  facts  and  circumstances,  namely,  after

10.08.1968 the lease stands terminated by efflux of

time,  which  is  further  evidently  clear  from  the

termination notice dated 01.09.1972 and thereafter,

the original lessee becomes an unauthorised occupant

in  terms  of  Section  2(g)  of  the  Public  Premises

(Eviction of Unauthorised Occupants) Act, 1971 and

consequently, not entitled to deal with the property

in  question  in  any  manner.  The  very  concept  of

conversion of leasehold rights to freehold rights is

not applicable to the fact situation.  

Answer to Point no.3

34. The  original  lessee  has  been  in  unauthorised

occupation of the property in question for around 30

years (till he executed a sale deed in favour of the

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respondent)  and  the  respondent  has  been  illegally

inducted in possession of the same, by the original

lessee, who himself was in unauthorised possession of

the property. For around 17 years the respondent has

been enjoying the property in question without any

right, title or interest. Thus, both are liable to

pay the damages for unauthorised occupation and the

DDA is  empowered  under  Section  7  of  the  Public

Premises  (Eviction  of  Unauthorised  Occupants)  Act,

1971 to  claim  damages  from  them.  We  record  this

finding in exercise of our appellate power in view of

our  finding  and  reasons  assigned  in  this  judgment

holding  that  the  concurrent  finding  is  not  only

erroneous  but  also  suffers  from  error  in  law  in

granting decree of permanent injunction in favour of

the respondent who is not entitled in law for the

same. There is a miscarriage of justice in granting

the  relief  by  the  courts  below  in  favour  of  the

respondent.  Further,  keeping  in  view  the  public

interest  involved  in  this  case  and  particularly

having regard to the peculiar facts and circumstances

of the case we have to allow this appeal of the DDA.

Since  we  have  answered  the  points  framed  in  this

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appeal in favour of the appellant-DDA, we further,

direct the DDA to take possession of the property

immediately  without  resorting  to  eviction

proceedings,  as  the  respondent  has  been  in

unauthorised possession of the property in question,

by virtue of erroneous judgments passed by the courts

below. The respondent has been unlawfully enjoying

the public property which would amount to unlawful

enrichment which is against the public interest.   

35. For the aforesaid reasons this appeal is allowed,

the impugned judgment and decree of the High Court

affirming  the  judgments  and  decrees  of  the  First

Appellate Court and the Trial Court in RCA No. 75 of

1982 and OS No. 47 of 1975 respectively, is hereby

set aside. Accordingly, We pass the following order–  

A.  The DDA is allowed to take the possession of

the  property  in  question  immediately  and

dispose of the same in accordance with the

provisions  of  the  DD  Act  read  with  the

relevant  Rules  in  favour  of  an  eligible

applicant by conducting public auction, if it

intends to dispose of the property.  B.  The  DDA is  entitled  for  the  recovery  of

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damages from both, the original lessee or his

legal heirs and the respondent, for the period

of  their  unauthorised  occupation  of  the

property at the market rate prevalent in the

area. C.  The amount which has been deposited, with the

DDA, by the respondent as conversion charges

is to be adjusted towards the damages that may

be determined by the DDA in accordance with

law. D.The costs of Rs.1 lakh is awarded to the DDA,

payable  by  the  respondent  for  these

proceedings.

                                                             ………………………………………………………J.                        [V. GOPALA GOWDA]

                                                    ………………………………………………………J.                                 [ARUN MISHRA]   

New Delhi, 12th April, 2016