M/S Sagar Engineering Industries v. The Lieutenant Governor And Others

IN THE HIGH COURT AT CALCUTTA

[ CIRCUIT BENCH AT PORT BLAIR ] ...

WPA/244/2021 IA Nos. CAN/1/2021, CAN/2/2022 M/s Sagar Engineering Industries ...Petitioner Vs.

The Lieutenant Governor and Others ... Respondents Mr. Gopala Binnu Kumar ... for the petitioner Mr. Shatadru Chakraborty ...for the respondents August 18, 2022 [MAM] Item No.5 Being aggrieved and dissatisfied with the entire episode adopted by the respondent no.4 in passing the cancellation order dated 26th September, 2019, followed by vacation notice dated !4th July, 2021 and notice dated 17th September, 2021, in violation to the lease deed and the extended lease deeds, the petitioner preferred the present application under Article 226 of the Constitution of India, for issuance of appropriate writ.

The petitioner's contention in brief is that on 22.10.1992, Plot No.11 measuring an area of 500 sq. mtrs., Garacharma Industrial Estate, was allotted in favour of M/s Sagar Engineering Industries through its proprietor S. Babu (since deceased) for setting up unit of manufacturing bakery machineries and steel furniture. Subsequently on 09.11.1992 a lease agreement was executed between the petitioner firm and the respondent no.4 which was

registered before the Sub-Registrar under the Indian Registration Act, 1908 for a period of 15 years. As per the terms and conditions of the said lease deed, the said lease deed can be determined by the respondent No.4, if the said plot is not used for the said purpose for a period of six months or if the petitioner becomes a defaulter in payment of premium or if it is given in sub lease, without taking previous permission of the lesser in writing. That lease deed was time to time extended and after the expiry of initial lease period of fifteen years, the lease deed was further extended for a period of five years from 2008 to 2013 and thereafter again extended for a period of five years from 05.09.2015 for the period from 2013 to 2018.

As per the extended lease stated in 05.9.2015 there is an arbitration clause being clause 13, which states that if any dispute arises between the lesser and the lessee with regard to any clause of the agreement, the same shall be referred to the sole arbitrator, to be appointed by the Hon'ble Lieutenant Governor and the decision of the arbitrator shall be final and binding upon both the parties. Sole proprietor S. Babu when attended the age of 75 years, he executed a partnership deed with one Anand Jaiswal and AM Suresh Babu in the name of the said firm and it was registered before the Sub-Registrar. Since said proprietorship firm was changed to the partnership firm, said S. Babu initially informed the respondent No.4 verbally

in order to change the constitution of firm from proprietorship to partnership, but no heed was given to such initiation, therefore on 29.12.2017, the petitioner firm submitted letter to the respondent No.4 and requested to change the said constitution. In the month of August 2018, the extended lease period expired but before that the partners of the petitioner firm repeatedly approached the respondent No.4 for extension of the lease period with required amendment of constitution to which the respondent No.4 verbally assured the petitioner firm that the same will be extended for a further period of 5 years but nothing yielded. Petitioner could not pray for further extension of lease as respondent no.4, in spite of several requests did not change the said constitution of the firm. Subsequently on 09.05.

2019, the petitioner firm was horrified to receive show cause notice whereby it was informed that in the last week of April, 2019, an inspection was carried and it was found that the unit of the petitioner firm was closed and therefore a show cause notice was issued and the petitioner firm replied the said show cause notice on 27.5.2019 contending that since urgent work of the petitioner firm at Coast Guard and Navy jetty was under process, therefore the unit was closed during the inspection of the committee.

The respondent no.4 without considering the case of the petitioner firm for extension of the lease period and

change of constitution of the petitioner firm in a most illegal and arbitrary manner issued a cancellation order on 26.9.2019 which was served upon the petitioner firm on 01.10.2019. Petitioner/Firm on 03.10.2019 represented before the respondent no.4 against said cancellation order. Respondent no.4 vide notice dated 12.12.2019 replied the representation of the petitioner dated 03,10.2019 stating that grounds mentioned in the representation is not justified.

Learned Counsel on behalf of the petitioner submits that after receiving notice dated 12.12.2019 the petitioner firm once again on 29.12.2019 represented before the respondent no.4 to revoke the cancellation order as at no point of time there was any violation of the terms and condition of the agreement or violation of the rules governing the affairs. He further submits that there is no provision under the agreement and the rules governing the affairs, which debar a proprietorship firm to convert into a partnership firm, rather the clause of the agreement debar the lessee from sub-leasing the said plot to a third party. During the pendency of the process pertaining to renovation of the cancellation order said sole proprietor S. Babu died on 01.7.2020. Since S.Babu died without any legal heir, so the partnership deed was amended and executed between the partners Anand Jaiswal and AM Suresh Babu.

The respondent no.4, instead of considering the case of the petitioner firm for renewal of the lease period on 14.7.2021, issued vacation notice wherein directed the petitioner firm to remove all the materials within three days and to hand over the physical possession failing which they threatened that force will be applied. After receiving said vacation notice dated 14.7.2021, the petitioner firm represented before the office of the respondent no.4, by narrating the entire facts pertaining to the affairs of the business followed by process initiated for change of constitution and requested to revoke the cancellation order dated 26.9.2019 and all subsequent orders passed on the basis of the said cancellation order.

It is further submitted on behalf of the petitioner that the petitioner firm by invoking Clause-13 of the said agreement, on 20.9.2021, made an application before the Hon'ble Lieutenant Governor to appoint an Arbitrator to adjudicate the said dispute and the same is pending before the Hon'ble Lieutenant Governor. Despite receiving said prayer for appointment of an Arbitrator to adjudicate the said dispute which was received by the respondent no.4 on 20.9.2021, the respondent no.4 on 23.9.2021, in a most illegal manner, forcibly entered into the said unit and removed all the movable belongings including tools and machinery of the petitioner firm and seized the unit of the petitioner firm and the immovable machineries lying in the

said unit and also disconnected the electric connection of the unit. Accordingly, the petitioner has prayed for issuance of a Writ in the nature of mandamus to recall/withdraw the cancellation order dated 26.9.2019 as well as vacation notice dated 14.7.2021 and notice dated 17.9.2021 and all consequent orders and also for a direction upon the respondent no.4 to change the constitution of unit and also in the nature of mandamus directing respondent no.4 to allow the petitioner firm to peacefully carry the business in the said premises with a further direction in the nature of mandamus directing the respondent no.4 to renew the lease agreement.

Respondent nos.1 to 4 by filing affidavit submitted that the relief sought for by the petitioner may not be granted by the Hon'ble Court while exercising its discretion under Article 226 of the Constitution because the property in question is under a commercial lease and writ petitioner is a commercial allotee. The writ petitioner does not have any vested or constitutional right to continue its possession over the leased premises. Remedy, if any, of the petitioner is before the Civil Court. The respondents have exercised through right as owner of the industrial plot which was leased to the petitioner under lease agreement and the petitioner being the lessee has not vested the proprietorship right over the subject premises. The petitioner has sought to face its cause of action on lease agreement which by law

free nature terminable and in any event the tenure of the said lease agreement has in fact expired and the respondents cannot be compelled to renew or extend the lease agreement under any provision of law or principle of equity. On a bare reading it is apparent that there is no violation of fundamental or constitutional right to justify the present application preferred under 226 of the Constitution of India. The petitioner has in fact approached the Court with unclean hands and the writ application is liable to be dismissed in limini with exemplary costs. Mr. Chakraborty, learned Advocate on behalf of the respondents further submits that the plot granted to the petitioner was assigned only for the purpose for which it is assigned i.e.

for sell of still furniture and manufacturing of bakery machine steel furniture but the activity was changed from steel fabrication and manufacturing of bakery machine steel furniture to sub-contract works of sheep repairing and the constitution of petitioner/firm was changed from proprietorship to partnership without obtaining prior sanction from the competent authority. Moreover, the period of the lease agreement expired in the year 2018 and thereafter the petitioner had not taken any effective step to renew said lease agreement. Accordingly, Mr.

peaceful possession of the plot but the petitioner failed to hand over peaceful physical possession and thereafter another notice was given but the petitioner submitted representation with the request for revocation of cancellation order and the representation was examined and found unjustified. The cancellation order was rightly passed and the petitioner was given an opportunity to vacate within three days. He further submits that thereafter letter was given to the estate official with a request for eviction of the premises and for taking early action on September 28-30, 2021 and also on November 15, 2021 and the matter has been taken up with the estate official for eviction of the petitioner as per concerned Act and the proceeding is pending even on date. Mr.

Chakraborty also denied all other petitioner's allegations made in the Writ Petition including the allegation that they have taken forcible possession. He further submits that furnitures of the petitioner are still lying at the premises. On perusal of the cancellation order it appears that lease was cancelled vide order dated 26.9.2019 and the said cancellation was made in terms of Clause 10 and 8 of the Andaman & Nicobar Islands Industrial Estate Rules, 1977 which states as follows:- "Clause 10: "In the event of the lease agreement not being renewed, the lease shall ipso facto be determined at the expiry of the lease period and the plot shall vest with the lessor free from all encumbrances. In that case the lessor shall take over the plot."

Clause 8: "The land leased out under these rules shall not be alienated or encumbered in any manner without the prior sanction in writing of the Secretary (Industries)"

Accordingly, the said cancellation was made on the ground firstly that the lease agreement was not renewed by the petitioner and as such ipso facto it came to an end and according to Clause 10 it automatically vested to the respondent and they are at liberty to take over the plot and secondly in violation of the terms and the lease agreement the petitioner has alienated and/or encumbered the property by reconstituting proprietorship firm to a partnership firm, without obtaining permission from the competent authority, in writing.

In the agreement dated 18th September, 2015 the arbitration clause i.e. Clause 13 runs as follows:- In case of dispute between the lessor and the lessee with regard to any of the Clause of Agreement, the same shall be referred to the sole arbitrator to be appointed by the Hon'ble Lt. Governor and the place of such arbitrator shall be at Port Blair. The decision of the arbitrator shall be final and binding on both the parties. The arbitrator shall be governed by Arbitration and Conciliation Act, 1996." It appears that in terms of said arbitration clause the petitioner has duly approached before the concerned authority by giving a letter which was received by the respondent authority on 20.9.2021. In Para 12 and 13 it has been clearly stated in that letter which was received by the office of the Hon'ble Lieutenant Governor, A & N Islands on 20.9.2021 that in terms of Para 13 an arbitrator may be

appointed to resolve the dispute and also requested that the cancellation and vacation order may be reconsidered and/or agreement may be renewed to allow the unit to continue its operation and to enable the petitioner to provide continue employment to the existing manpower and to generate more employment. From the endorsement of the aforesaid letter it appears that said letter was received by the office of Lieutenant Governor on 20.9.2021 and without giving any response to the said letter, the respondent has seized the petitioner's firm three days thereafter i.e. on 23.9.2021 without taking any legal recourse.

Having considered the aforesaid facts and circumstances of the case the Writ Petition being WPA 244 of 2021 is hereby disposed of with the following directions1) That the respondent no.4 will remove the seal and/or lock put by them in the petitioner/Farm within a period of two weeks from the date of communication of the order,

2) The appropriate authority/respondent shall dispose of the petitioner's prayer for appointment of arbitrator in terms of Clause 13 of the Lease Deed dated 18.9.2015, within a period of three weeks from the date of communication of the order.

3) Appointed Arbitrator will conclude arbitration proceeding within a maximum period of six weeks from the date of appointment.

4) The respondents shall not disturb the petitioner's possession in the disputed property till disposal of the arbitration proceeding.

The CAN applications are accordingly disposed of. There shall be no order as to costs.

Urgent photostat certified copy of this order be supplied to the parties after completion of all required formalities.

(Ajoy Kumar Mukherjee, J.)