IN THE HIGH COURT OF JUDICATURE AT MADRAS Dated:26.11.2007 Coram: The Honourable Mr. Justice V. DHANAPALAN W.P. Nos.20679, 21834-21836, 25054, 25061, 25062, 24214-24216 & 21128/2007 and M.P. Nos.2 & 3 in W.P. No.21128 of 2007 and M.P. Nos.1 to 3 in all other writ petitions G.A. Sridhar Petitioner in W.P. No.20679 of 2007 A.V. Janarthanan Petitioner in W.P. No.21834 of 2007 P. Pandurangan Petitioner in W.P. No.21835 of 2007 G.S. Dhasaradan Petitioner in W.P. No.21836 of 2007 G. Muthukrishnan Petitioner in W.P. No.25054 of 2007 Kumara Venkateswaralu Petitioner in W.P. No.25061 of 2007 P. Kailasam Petitioner in W.P. No.25062 of 2007 T. Jayaraj Petitioner in W.P. No.24214 of 2007 N. Srinivasan Petitioner in W.P. No.24215 of 2007 K. Munusamy Petitioner in W.P. No.24216 of 2007 1. A. Kishtappa Chetty 2. S. Vadivel 3. R. Perumal 4. A. Sadayappan 5. A. Venugopal 6. G. Murali Manohar 7. Shree Mangala Marines represented by its Proprietor 8. N. Krishnamurthy 9. B. Anandan 10.P.C. Manusamy 11.C. Vairamuthu Petitioners in W.P. No.21128 of 2007 vs. 1 The Union of India Secretary to Ministry of Industry and Commerce Department of Industrial Policy and Promotion New Delhi https://hcservices.ecourts.gov.in/hcservices/ 2 The Deputy Salt Commissioner Office of the Deputy Salt Commissioner Chennai – 600 006 3 NTPC Tamil Nadu Energy Company Limited 1, Village Road Rashimi Towers, IV Floor Nungambakkam, Chennai – 600 034 .. Respondents in W.P. Nos.20679, 21834 to 21836, 25054, 25061, 25062, 24214 to 24216 of 2007 1 The Deputy Salt Commissioner Office of the Salt Commissioner Government of India Shastri Bhavan 26, Haddows Road Chennai – 600 006 2 NTPC Tamil Nadu Energy Company Ltd. Rashmi Towers, IV Floor 1, Village Road Nungambakkam, Chennai – 600 034 3 Hindustan Petroleum Corporation Limited Thalamuthu Natarajan Building No.8, Gandhi Irwin Road Egmore, Chennai – 600 008 Respondents in W.P. No.21128/2007 Prayer in W.P. Nos.20679, 21834 to 21836, 25054, 25061, 25062, 24214 to 24216 of 2007: Writ Petitions filed under Article 226 of the Constitution of India seeking writs of certiorarified mandamus as stated therein, praying to calling for the records of the proceedings in C.No.11012/5/W/G1/04/Vol.II dt.3.5.07 on the file of the 2nd Respondent, quash the same. Prayer in W.P. No.21128 of 2007 Writ Petition filed under Article 226 of the Constitution of India seeking a writ of mandamus as stated therein, praying to directing the first respondent from dispossessing the petitiones from their respective salt manufacturing lands leased and to the petitioners by the first respondent situated at Vallur Salt Factory, Ponneri Taluk, Thiruvallur District except by due process of law. For petitioners in W.P. Nos.20679, 21834 to 21836, 25054, 25061, Mr. R. Subramanian, Sr. Counsel 25062, 24214-24216/2007 for Mrs. S. Hemalatha https://hcservices.ecourts.gov.in/hcservices/ For petitioner in W.P. No.21128 of 2007 Mr. V. Sairam For RR 1 & 2 in 20679, 21834 to 21836, 25054, 25061, 25062, 24214 to 24216 of 2007 Mr. V.T. Gopalan and Addl. Solicitor General of India For R1 in W.P. No.21128/2007 for Mr. T.S. Sivagnanam For R3 in W.P. Nos.20679, 21834 to 21836, 25054, Mr. S. Vijayakumar 25061, 25062, 24214 to SCGSC 24216 of 2007 and for R2 in W.P. No.21128/2007 For R3 in W.P. No.21128/2007 Mr. O.R. Santhanakrishnan COMMON ORDER Since the issue involved in all the above writ petitions is the same and the facts are also identical, these writ petitions are decided by a common order. 2. While W.P. No.21128 of 2007 has been filed seeking a writ of mandamus forbearing the first respondent from dispossessing the petitioners from their respective manufacturing lands situated at Vallur Salt Factory, Ponneri Taluk, Thiruvallur District, leased out to them by the first respondent, the other writ petitions have been filed seeking a writ of certiorari calling for the records of the proceedings dated 03.05.2007 on the file of the second respondent and to quash the same. 3. The facts which are necessary for deciding these writ petitions, are as under: a. The Deputy Salt Commissioner of the Government of India (in short "the Deputy Commissioner") who is arrayed as one of the respondents in all these writ petitions, had initially given on lease, certain extent of lands to the petitioners under separate Lease Deeds on receipt of certain sums as assignment fee and ground rent for the purpose of manufacturing salt and the lease period of these lease deeds vary from petitioner to petitioner. The petitioners, by employing a large number of persons under various categories and by investing sums of Rs.7 lakhs each annually, have been manufacturing salt for about two decades. b. While so, the Ministry of Industry and Commerce, Department of Industrial Policy and Promotion, New Delhi ("the Ministry" for short), vide its orders dated 09.04.2007 and 27.04.2007, had conveyed the approval of the Government of India to transfer the leased out lands to NTPC Tamil Nadu Energy Company https://hcservices.ecourts.gov.in/hcservices/ Limited ("NTECL" for short) and Hindustan Petroleum Corporation Limited ("HPCL" for short) respectively. Citing these orders, the Deputy Commissioner had issued an order dated 03.05.2007 addressed to each of the petitioners proposing to take over the area leased out to them, subject to payment of a certain sum as compensation by NTECL / HPCL as the case may be. The Deputy Commissioner had also stated in the said order that the amount of compensation would be arrived at between the petitioners and NTECL/HPCL by way of mutual negotiations and the leased out lands would be taken over on receipt of confirmation from NTECL/HPCL stating that they have compensated the petitioners. The relevant portion of the impugned orders passed by the Deputy Commissioner runs as under: "Ministry of Industry and Commerce, Department of Industrial Policy and Promotion, New Delhi in their Orders No.04011/31/2000-Salt, dated 9.4.2007 and 04011/12/2006-Salt, dated 27.04.2007 have conveyed the approval of the Government of India to transfer the areas leased out to you to NTPC Tamil Nadu Energy Company Limited (NTECL) / Hindustan Petroleum Corporation Limited (HPCL). Therefore, it is proposed to take over an area of (may vary in each case) acres leased out to you under Vallur Salt Factory subject to payment of compensation which the NTECL/HPCL may arrive through mutual negotiations. 2. In view of the above, please note that the above said area will be taken over by the Department for handing over to NTECL/HPCL as soon as the NTECL/HPCL confirms that they have paid the compensation to you." 4. Challenging these orders dated 03.05.2007 which have been passed by the Deputy Commissioner well before the expiry of the respective lease deeds, the present writ petitions. 5. The main grounds taken by the petitioners in these petitions are that: a. the action of the Deputy Commissioner in terminating the lease deed well before its expiry is not legally sustainable; b. as per the lease deed, the lease can be terminated only as per clause 1, clause 2 or clause 22 of the lease deed and the Deputy Commissioner cannot terminate lease deed in violation of these clauses; c. either NTECL or HPCL cannot invite them for negotiations for payment of compensation as there is no privity of contract between them and it is only the Deputy Commissioner who can fix the compensation even assuming that he can take over their lands; https://hcservices.ecourts.gov.in/hcservices/ 6. The Deputy Commissioner has filed counter contending that: a. the writ petitions are not maintainable since the lands in question have been approved for transfer to (i) NTPC and TNEB in the name of NTECL for the establishment of a 2 x 500 MW Thermal Power Plant and Hindustan Petroleum Corporation Limited for re-locating their existing Petrol Oil Lubricant (POL) Terminal from the congested area at Tondiarpet on market value basis fixed at Rs.9,14,760/- per acre and the impugned proceedings is only a notice communicating the decision and as such, there is no illegality in the said order, more particularly when the Government of India has granted approval of transfer in public interest; b. the writ petitions are not maintainable even as per Clause 23 of the Lease Deeds which states that any question, dispute or difference should be referred only to the Salt Commissioner to the Government of India; c. the petitioners, having participated in several rounds of negotiations for compensation, as admitted by them, pursuant to receipt of impugned orders, are estopped from challenging the impugned orders at this stage; d. since the State of Tamil Nadu is facing acute power crisis due to industrial development and formation of new residential apartments/houses and also providing other power consuming units by industrialists and public, it has become necessary to increase the power generation to meet the requirements of power and accordingly, the Chief Engineer, Ennore Thermal Power Station, Tamil Nadu Electricity Board, by letter dated 28.11.2002, had sought permission for collection of soil samples in certain lands at Vallur Village and during the deliberations held between the Chief Minister of Tamil Nadu and the Union Minister for Power, Government of India, it has been decided to establish a new 2 x 500 MW Thermal Power Station at Ennore at an estimated cost of Rs.5,000 crores to overcome the acute power crisis in the State and the Government of India, taking into consideration the fact that the Southern Region of the country is expected to have substantial energy shortage of 13% and peak shortage of 21%, has accorded a top priority for commissioning the project during early 11th plan and has accorded mega status for the power project; e. similarly, HPCL has come up with the request for transfer of Salt Department lands informing that their Petrol Oil Lubricant (POL) Terminal in Tondiarpet is located in a thickly populated area and is very congested and with the proposed development of new port at Ennore to decongest the existing Chennai Port and also to shift the handling of https://hcservices.ecourts.gov.in/hcservices/ hazardous cargo away from the main city, the shifting of their existing terminal at Tondiarpet has become inevitable; f. "Salt" is a Central subject in the Constitution of India and appears as item No.58 of the Union List of the VII Schedule and Salt Organisation, a Central Government Department presently functioning under the Ministry of Commerce and Industry, Department of Industrial Policy and Promotion, New Delhi is the Regulatory Body having control over manufacture, supply and distribution of salt and the Salt Department owns vast extent of land in the coastal Districts of Tamil Nadu and has leased out the same for salt manufacture to private entrepreneurs. g. there is no possibility of large number of workers being employed by the petitioners and huge sums of money to the tune of Rs.7 lakhs being invested by them inasmuch as the affidavits in most of the writ petitions are drafted in the same manner as done in one W.P. No.20679 of 2007, without taking into consideration the basic facts about the extent of land held by the each of the petitioners; h. the petitioners have not shown due diligence in salt manufacture from the very commencement of the lease period and consequently, leases granted to the petitioners were determined by this respondent on 01.05.2003 for non- payment of Government dues and non-working of the holdings during the years 2001 and 2002 and however, a lenient view was taken and determination order was revoked on 16.10.2003 after the payment of pending Government dues by the petitioners and assurances given by them to work the holdings and even those assurances have not been kept up by them; i. the issue of the communication dated 03.05.2007 by the Deputy Commissioner has become a legal requirement in view of the transfer of the Salt Department lands covered under various leases to NTECL & HPCL by the Government of India and as such, there is no illegality in the same, especially when the Government of India had ordered transfer of lands only in national and public interest; j. in terms of the order passed by the Deputy Commissioner, only NTECL/HPCL is liable to pay the compensation for extinguishment of leasehold rights by the petitioners and not the Deputy Commissioner and as such, the petitioners cannot contend that NTECL/HPCL cannot call them for the purpose of payment of compensation; k. the question of privity of contract does not arise in this case since the lease deeds do not speak of any compensation for premature termination of lease and that too, when the Government of India, taking into consideration the fact that the lands are required in public and national https://hcservices.ecourts.gov.in/hcservices/ interest, has passed orders to the effect that the lessees have to be compensated by NTECL/HPCL; l. even earlier, this procedure of transfer of land has been followed without any hitch when the Salt Department lands located at Attiput (North / Voyalur / Thillai) were transferred to TIDCO during the year 1999 for establishment of Petro Chemical Industrial Park at Ennore; and in such circumstances, the communication dated 03.05.2007 to all the lease holders of Vallur Salt Factory about taking over of the lands leased to them for salt manufacture is in no way infirmed and does not call for any interference by this Court and the mandamus as sought by the petitioner need not be granted. 7. Heard Mr. R. Subramanian, learned Senior Counsel and Mr. V. Sairam, learned counsels for the petitioners and Mr. V.T. Gopalan, learned Additional Solicitor General of India for the Union of India and the Office of the Salt Commissioner, Mr. S. Vijayakumar learned Senior Central Government Standing Counsel appearing for NTECL and Mr. O.R. Santhanakrishnan, learned counsel for HPCL. 8. Learned counsels for the petitioners, at the threshold, have contended that while admittedly, the lease deeds have not expired, the Deputy Commissioner cannot take over the leased out lands from the petitioners without terminating the lease as per the terms of the lease deeds. Questioning the action of NTECL / HPCL in calling the petitioners for negotiations for payment of compensation, the learned counsels for the petitioners have vehemently contended that they do not have locus standi to invite the petitioners for negotiations for the reasons that there is neither privity of contract between them and the petitioners nor they are the agents of the Deputy Commissioner. In other words, it is their strong contention that if at all the compensation has to be determined, it is only the Deputy Commissioner who has to fix it and not NTECL / HPCL and in view of these, the impugned orders call for interference by this Court and the mandamus as sought deserves to be granted. 9. In support of their arguments, the learned counsels for the petitioners have relied on: i a decision of a learned Single Judge of this Court reported in CDJ 2007 MHC 1896 in the case of Subramania Reddy & others vs. The Deputy Salt Commissioner, Chennai and another: (para 4) "First respondent filed counter affidavit wherein it is stated that since the petitioners have breached the lease deed condition No.22 and defaulted in payment of rent, the respective lease was cancelled. Petitioners' application for reconsideration were pending. The Government of India, Ministry of Industries (Department of Industrial Policy and Promotion) by communication dated 6.1.1999 addressed to the Salt Commissioner, Jaipur, conveyed the approval of the Government of India to the transfer of Salt Department land measuring 1434 Hectares to the Government of Tamil Nadu/TIDCO Ltd., for establishment of Petro https://hcservices.ecourts.gov.in/hcservices/ Chemical Industrial Part at Ennore near Chennai including the lands leased out to the petitioners herein. Letters were also issued to various sale licensees of the Salt Department as well as to the second respondent on 29.1.1999 mentioning the licence numbers and stated that the above said lands could be taken over by he department for handing over to TIDCO as soon as TIDCO confirms that they had paid the compensation to all licensees. The second respondent thereafter wrote letters to the petitioners and requested the petitioners to come to TIDCO office on 30.3.1999 and determined the amount of compensation payable to each of the petitioners and therefore the decision of the first respondent was accepted and acted upon by the second respondent and only a formality of accepting the compensation and effectuating the transfer by handing over possession remain. It is submitted in the counter affidavit that in spite of cancellation of lease, the leasehold lands were to be handed over only after receipt of compensation and it could not matter whether there was any lease subsisting or to be cancelled. It is further stated that cancellation of lease granted in favour of the petitioners are not relevant to the issue for the payment of compensation and cannot be taken advantage of by the TIDCO to withhold the compensation to the petitioners. It is again stated in the counter affidavit that the Government of India in its order dated 6.1.1999 imposed condition, particularly condition No.3 and stated that the State Government/TIDCO shall pay compensation to the lessees for extinguishing the leasehold rights, which TIDCO and lessees may arrive at their mutual negotiations and the legal case arising out of the transfer should also be taken care of and defended by the TIDCO/State Government at their costs. Citing the said order, the first respondent states that the Salt Department should not be dragged on for payment of compensation and TIDCO also agreed through its letter dated 4.11.1999 to comply with the condition mentioned above. The second respondent also is bound to pay Rs.35,000/- per acre provisionally." ii a Bombay High Court judgment reported in AIR 1979 Bombay 31 in the case of Kachrulal Hiralal Dhoot vs. The Gurudwara Board Nanded and others: (para 5) "The question then arises, how is the amount of compensation of Rs.17,000/- to be apportioned between Gurudwara and Kachrulal. It is not disputed in view of the finding given by the trial Court that the only right of Gurudwara was to receive every year a sum of Rs.5.50 being double the amount of land revenue in respect of this survey number. Since the plea as to adverse possession has been given up, it is unnecessary for us to consider whether such payment was being made regularly from time to time by Kachrulal and his ancestors. If the right of Gurudwara is only to receive annually a sum of Rs.5.50, then naturally upon acquisition of the property including their interest in the land, namely, survey No.41, their right will be to receive the amount which can be arrived at upon capitalisation of twenty years' income. Either on the footing that Kachrulal and his ancestors are permanent https://hcservices.ecourts.gov.in/hcservices/ licensees or permanent tenants in a period of twenty years the only amount which Gurudwara could have got from them would have been Rs.5.50 x 20 i.e. Rs.110/-. Thus, the amount of compensation of Rs.17,000/- has to be apportioned between Gurudwara and Kachrulal in such a manner that Gurudwara will be entitled to only Rs.110/- and the rest of the amount of compensation shall have to be paid to Kachrulal." iii a Division Bench judgment of this Court reported in 1975 (11) MLJ 323 in the case of T. Durairajan vs. Sri Kasi Viswanathaswamy Temple (Tawker's Charities) represented by Trustees for the time being Sri T.R. Ramanatha Davey and T.R. Viswanatha Davey at No.36, Ekambareswarar Agraharam, Park Town, Madras – 3 (para 12): "The next contention of the counsel on either side based on the alternative relief to which either of them would be entitled, thus gains prominence in the instant case. We may at the outset reiterate our earlier dissent on the extreme contention of Mr. T.R. Ramachandran that the interest of the second claimant should be deemed to be a permanent interest and that therefore the entire compensation should be invested and the second claimant be entitled to the income therefrom subject only to the liability to pay the agreed rent to the Charities. In the various decisions cited by Mr. T.R. Ramachandran, which concern themselves with permanent leases or statutory tenants, compensation has been fixed by Courts in varied proportions ranging from one-third to the tenant and two-thirds to the landlord or three-fifths to the tenant and two-fifths to the landlord, ten annas to the tenant and six annas to the landlord, etc. In Shama Prosunna Bose Mozumdar v. Brakoda Sundari Dasi, the Court said: "In apportioning compensation money between landlord and a tenant, the principle to be followed is to ascertain first the amount of rent payable to the landlord and capitalise that rent at so many years' purchase, then to put a money value upon the chance (if there be any) of an enhancement of the existing rent. These two sums the landlord is entitled to get and the tenant is entitled to get the balance." . . . In the case under consideration, we are concerned with a lease for a fixed term, may be for an extended period beyond sixty years. Under the lease the first claimant is entitled to purchase the buildings after the expiry of the period of sixty years from the sub-lessees of the land. . . " iv a judgment of the Supreme Court reported in (1996) 8 SCC 664 in the case of Mangatram and others vs. State of Haryana and others (para 7) https://hcservices.ecourts.gov.in/hcservices/ "As regards apportionment of the compensation, the High Court has directed to pay 1/4 to the tenant and 3/4 to the Wakf Board. In view of the judgment in Col. Sir Harinder Singh Brar Bans Bahadur v. Bihari Lal and Inder Parshad v. Union of India, the tenants are entitled to 3/4 of the compensation while the landlord is entitled to 1/4 of the compensation. In view of the above law, the order of the High Court in appeals arising from reference under Section 30 is modified to the extent that appellants/tenants Mangat Ram and others are entitled to 3/4th while the Wakf Board is entitled to 1/4th of the compensation amount. The amount awarded in the judgment of the Single Judge under Section 23 (1-A) also requires to be apportioned accordingly." v another judgment of the Supreme Court reported in (2004) 12 SCC 327 in the matter of State of Jammu and Kashmir vs. Ghulam Mohd. Dar and another (para 3) "It is not disputed that the contract agreement entered into by and between the parties contains an arbitration agreement. Furthermore, the respondent herein filed the aforementioned writ petition for enforcing a contract qua contract. Although an objection has been taken as regards the maintainability of the writ petition by the appellant herein, the same unfortunately has not been considered by the High Court. It is well settled that writ of or in the nature of mandamus would not ordinarily issue for enforcing the terms and conditions of a contract qua contract. A writ of mandamus would issue when a question involving public law character arises for consideration. It is also well settled that the High Court would not entertain a writ petition involving disputed questions of fact. Keeping in view the aforementioned well- settled principles of law, the impugned judgments cannot be sustained. They are set aside accordingly. The appeal is allowed. However, the parties appearing before us proposed that Justice R.P. Sethi, a former Judge of this Court be appointed as a sole arbitrator in terms of the arbitration agreement. Accordingly, we request Justice R.P. Sethi to act as the sole arbitrator. Learned counsel appearing for the parties also submitted that no plea as regards limitation would be raised before the learned arbitrator. The parties would be at liberty to approach Justice R.P. Sethi for the aforementioned purpose. The remuneration payable to the arbitrator shall be decided by the arbitrator himself. We may make it clear that the fees payable to the learned arbitrator would be decided by him and the award, if any, would be filed before the High Court." vi yet another judgment of the Supreme Court reported in AIR 1997 SC 2669 in the case of Union of India and others v. A. Ajit Singh (paras 7, 8 and 9) https://hcservices.ecourts.gov.in/hcservices/ “7. The next question is