HON’BLE SRI JUSTICE K.C. BHANU WRIT PETITION NO.29890 OF 2011 ORDER: This writ petition is filed under Article 226 of the Constitution of India to declare the action of the respondents in seeking to terminate the lease deed dated 14.5.2009 entered into between the petitioners and the 1st resdpondent on the basis of the report submitted by the 1st respondent on 1.10.2011, as arbitrary, illegal, violation of Article 14 of the Constitution of India by declaring the said report as vitiated by non-application of mind, and perversity in findings on record, and issue a consequential direction to the respondents not to interfere with the activity of the petitioners in regard to establishment of the retail outlet of the petitioners in regard to establishment of the retail outlet and the provision of amenities to travellers in the land admeasuring 13310 sq. yards leased to the petitioners in Sy.No.41/44 of Khanamet village, Srilingampally Mandal, Ranga Reddy District. 2. Heard. 3. It is stated in the affidavit filed in support of the petition that the 1st petitioner belongs to Scheduled Caste category; that she was selected as a retail outlet dealer by the dealer selection board attached to the oil companies on 31.01.2002 under Marketing Plan, 1996 under S.C. Women category and letter of intent was issued on 11.3.2002; that by virtue of the above selection, the 1st petitioner applied to the 2nd respondent for allotment of a suitable site for locating such clean fuel outlet in terms of the policy of the 2nd respondent contained in G.O.Ms.No.340 dated 8.7.2003; that the terms of such allotment were also stipulated in the said G.O as regards the amounts to be collected from prospective lessees towards lease rentals; that the 1st petitioner as a selected candidate for a retail outlet, made an application to the 2nd respondent in terms of the said G.O, which entitles the 1st petitioner to be allotted a site for location of clean fuel retail outlet along with provision of further amenities for travelers in regard to which the 1st petitioner had entered into an agreement with the 1st petitioner; that on such application, the 2nd respondent issued G.O.Ms.No.213 dated 27.2.2009 directing the 1st respondent to lease the land admeasuring an extent of Ac.2.30 cents in Sy.No.41/14 of Khanamet village, Serilingampally Mandal, Ranga Reddy District in favour of the petitioners for establishment of environment friendly clean fuel outlet and development for other traveler amenities as per the MOU entered into with the 2nd petitioner for a period of 33 years; that the petitioners were also permitted to sublease as per conditions stipulated in M.O.U.; that in pursuance of the above referred G.O issued by the 2nd respondent, the 1st respondent entered into a lease deed with the petitioners on 14.5.2009; that as per the terms of lease deed, the petitioners shall be required to pay a monthly rent of Rs.2,66,200/- payable in advance every month which shall be divided in proportion to land which each of the petitioners has; that the lease shall be in force for the full term of thirty years; that if the lessees fail or neglect or commit default in payment of the rent as stipulated above for consecutive 6 months, then the lesser shall give six months notice for paying the rent along with an interest @ 12% per annum for rectifying the breach, and in default it shall be lawful for the lesser to terminate and determine the lease by a notice of termination and to respondent- enter upon the schedule property or any part thereof and this demise shall stand absolutely determined in such an event. It is further stated that having regard to the clearly delineated terms of obligations inter se the parties to the lease deed, under the control of the Government as provided for under Section 34 of the Act as amended by Act 8/2008, under which the 1st respondent is reconstituted, the 1st respondent has an obligation in law to act fairly and reasonably consistent with the requirements of Article 14 of the Constitution of India; that the land which was allotted to the petitioners had been rocky and filled with boulders which involved clearing operations and crushing operations; that the permission for stone crushing operations in the site could not be secured by the 2nd petitioner; that the 1st respondent issued a notice on 23.5.2011 which was not served on the petitioners initially due to the change in address, indicating thereby that there is a default in the remission of payment of lease amounts and calling upon the petitioners to tender payment of Rs.59,86,838/- to clear the dues as on 30.4.2011 and also to pay the rental for the month of May, 2011; that in pursuance of the said notice, the 1st petitioner tendered an amount of Rs.10.00 lakhs and the 2nd petitioner deposited a sum of Rs.20.00 lakhs; that the 2nd petitioner however sought time for six months; that as per clause 7(a) of the lease deed entered on 14.5.2009, into between the parties, the petitioners are required to be provided a notice of 6 months to make good the default in the payment of rent; that the impugned action of the 1st respondent in seeking to cancel the lease deed dated 14.5.2009 on the basis of the findings and conclusions arrived at in its report dated 1.10.2011 is arbitrary and unreasonable and hence the present writ petition. 4. The learned counsel for the petitioners contended that the 1st respondent issued notice dated 1.10.2011 which is contrary to the agreement dated 14.5.2009 entered into between the petitioner and the 1st respondent and therefore, it is nothing but pre-conclusion of issue and therefore, he prays to allow the writ petition. 5. On the other hand, the learned standing counsel for the 1st respondent contended that the petitioner has no cause of action to file writ petition; that it is only for the 2nd respondent to take appropriate decision basing on the report of the 1st respondent. 6. The learned Government Pleader for the 2nd respondent contended that the 2nd respondent will take appropriate decision in terms of the agreement dated 14.5.2009. 7. It is not in dispute before this Court that once the State or an instrumentality of State enters into a contract, it is under an obligation to act fairly, justly and reasonably in consenance with Article 14 of the Constitution of India. By virtue of the agreement dated 14.5.2009, the petitioners entered into an agreement with the 1st respondent for the purpose of establishment of environment friendly clean fuel outlet and; that the lease is for a period of 30 years; that the first respondent sent a notice dated 23.5.2011 asking the petitioners to pay the arrears as on 30.4.2011 and the installment for the month of May, 2011 due on 14.5.2011, failing which further action for cancellation will be initiated as per the agreement. Clause 7 of the agreement provided always and it is hereby mutually agreed as follows: “If the lessees fail or neglect or commit default in payment of the rent as stipulated for consecutive 6 months, then the lessor shall give six months notice for paying the rent along with an interest @ 12% per annum for rectifying the breach. Even thereafter if the lessees have not paid up the rent or rectified the breach, then it shall be lawful for the lessor to terminate and determine the lease by a second notice of termination and to reentered upon the schedule property or any part thereof and this demise shall stand absolutely determined in such as event. However, this right does not accrue to the lessor, if it has been in breach of this deed for any obligation it had to carry out under this deed and has not carried them out.” 8. According to the learned counsel for the petitioner that on 18.9.2011 and 15.10.2011, the petitioners have paid the entire amount due to the 1st respondent; that as of now there are no dues, and that even according to this clause, if the petitioners defaulted in payment of rent for consecutively six months, then the lessor shall give six months time to enable the petitioner to pay the rent due. As the petitioners failed to pay the rent consecutively for six months, they issued a notice on 23.5.2011under which period of six months would be elapsed by 22.11.2011. But before expiry of the said date, the 1st respondent seems to have addressed a letter invoking the same clause to request the Government to take necessary action and issue orders for termination of the lease deed by H.M.D Authority. The action of first respondent, it is nothing but coming to pre-conclusion because the time as per lease deed has not been elapsed. There can not be any dispute that the parties are bound by the terms of the contract in view of the fact that it is statutory contract. Therefore, the action of the 1st respondent contrary to a lease deed cannot be countenanced. In such circumstances, contractual rights and obligations can be enforced by this court by issuing suitable directions to set right an arbitrary action of first respondent. However, this aspect has to be considered by the 2nd respondent and it has to take appropriate decision as per the conditions laid down in lease deed dated 14.5.2009. 9. With the above observations, the Writ Petition is disposed of. No costs. _______________ K.C.BHANU,J. 10.11.2011, Gk. HON’BLE SRI JUSTICE K.C. BHANU WRIT PETITION NO.29890 OF 2011 Date:10.11.2011 Gk.