IN IN IN THE HIGH COURT OF JUDICATURE AT BOMBAY THE HIGH COURT OF JUDICATURE AT BOMBAY THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORDINARY ORDINARY ORIGINAL CIVIL JURISDICTION ORIGINAL CIVIL JURISDICTION ORIGINAL CIVIL JURISDICTION WRIT WRIT WRIT PETITION NO. 1422 OF 2001 PETITION NO. 1422 OF 2001 PETITION NO. 1422 OF 2001 1. Nanavati Speciality Chemicals ) Pvt. Ltd. (earlier known as) ) Nanavati Services & Traders Pvt.Ltd, ) a private Ltd. Company incorporated ) under the provisions of the Companies ) Act, 1956 and having its Registered ) Office at "Nanavati Mahalaya", 18 Homi ) Modi Street, Fort, Mumbai 400 023. ) 2. Mr. Priyam S. Jhaveri ) Director of Petitioner No.1 ) Company having office at Nanavati ) Mahalaya, 18, Homi Modi Street, ) Mumbai - 400 023 ) ..Petitioners V/s. 1. Union of India, ) 2. The Commissioner of Customs ) (Preventive), Bombay having his office ) at New Customs House, Bellard Estate, ) Mumbai - 400 038 ) 3. Deputy Commissioner of Customs ) (Preventive-G), Bombay ) having his office at New ) Custom House, Bellard Estate, ) Mumbai - 400 038 ) ..Respondents ...... Mr. E.P. Bharucha, Sr.Adv. with Mr. Cyrus Bharucha, Mr. Sachin Chanderana and Mr. Suresh Oak i/by M.K. Ambalal & Co. for the Petitioners Mr. K.R. Choudhari with Mr. R.C. Master for Respondent- Union of India ...... CORAM CORAM CORAM : SHRI J.N.PATEL & : SHRI J.N.PATEL & : SHRI J.N.PATEL & SHRI SHRI SHRI K.K.TATED, JJ. K.K.TATED, JJ. K.K.TATED, JJ. DATE DATE DATE : 29TH AUGUST, 2008 : 29TH AUGUST, 2008 : 29TH AUGUST, 2008 : 2 : JUDGMENT JUDGMENT JUDGMENT : (PER K.K. TATED, J) : (PER K.K. TATED, J) : (PER K.K. TATED, J) 1. By this Writ Petition under Article 14,19,121,226 and 200A of the Constitution of India, the Petitioners are seeking orders, directions against the Respondents in view of the failure of duties and inaction on their part in fixing the revised lease rent and paying the revised lease rent to the Petitioners for the premises which are under the use, occupation, possession and enjoyment of the Respondents. It is the case of the Petitioners that they entered into a lease agreement which was valid for a period of 5 years from 1st May, 1991 to 30th April, 1996 with the Respondents. The said lease agreement provided for renewal of the lease period for a further period on the terms and conditions containing therein namely to submit the revision of the rent and request being made by the Respondents three months prior to the expiry of lease period. Accordingly on the request having been made by the Respondents for an extension of the lease for 5 years from 1st May, 1996 to 30th April, 2001, the Petitioner agreed to extend a lease period for further term of 5 years on the condition of revision of rent in terms of prayer clause (a) of the lease agreement. However, the Petitioners avert that the Respondents : 3 : unreasonably, openly and deliberately failed to revise the lease rent and acted in terms of the recommendation made by the Chairman, Hiring Committee (CPWD), Mumbai with respect to the enhancement / revision of the lease rent. It is the case of the Petitioner that even after completion of the entire revised lease period of 5 years on 30th April, 2001, the Respondent even failed and neglected to fix the revised rent and have not made payment at the revised rent to be fixed on such revision though the Respondents are bound to pay at such revised rate. Therefore, the Petitioners preferred above mentioned Writ Petition with following prayers :- a) That this Hon’ble Court be pleased to issue a writ of Mandamus or a writ in the nature of Mandamus or any other appropriate writ order or direction directing the Respondents to forthwith fix and finalize the renewed lease rent for the period from 1st May, 1996 to 30th April, 2001 at the rate of 12.67 per Sq.Ft. per month and forthwith pay the difference to the Petitioners with interest @24% per annum from the respect due dates as per statement being Exhibit -T hereto; b) That this Hon’ble Court be pleased to issue a writ of Mandamus or writ in the nature of Mandamus or any other appropriate writ order or direction directing the Respondents to forthwith vacate and handover peaceful and vacant possession of the said premises described in para 3(1) to the Petition. c) For ad-interim reliefs in terms of prayers (a) and (b) above; d) For the costs of and incidental to the : 4 : present petition; e) For such further and other reliefs as this Hon’ble Court may deem fit and proper. 2. The Respondents have filed their affidavit in reply dated 14th September, 2001 duly affirmed by the Deepak Arora, Deputy Commissioner of Custom (Preventive), Mumbai and further affidavit in reply of Mrs. Reshma Lakhani, Joint Commissioner of Custom (P) (New Custom House, Ballard Estate, Mumbai) dated 20th October, 2002. The Respondents raised an objection about the maintainability of above mentioned Writ Petition for seeking reliefs derived from the contractual obligation of the Respondent and not from any statutory obligation. It is the case of the Respondents that the present Writ Petition is not maintainable under Article 226 of the Constitution of India and deserves to be dismissed on that ground. The Respondents further raised objection about the jurisdiction of this Hon’ble Court in view of Section 41 of the Presidency Small Causes Court Act, 1882. It is the case of the Respondent that Small Causes Court has exclusive jurisdiction to entertain the dispute between licensor and licensee of any nature. Not only that it is the case of the Respondents that they never agreed to refer the matter to the Hiring Committee for fixing : 5 : lease rent in respect of the suit premises. It is the case of the Respondents that in view of contractual agreement between the Petitioner and the Respondents, this Court have no jurisdiction under article 226 of the Constitution of India to grant any relief in favour of the Petitioner. 3. The learned senior counsel Mr. Bharucha appearing on behalf of the Petitioners relied on lease agreement between Petitioners and Respondents dated 16th December, 1994. The learned senior counsel specifically relied on para 1, 2, 3, 8 and 11 from the said lease agreement. It is the case of the Petitioners that by their letter dated 20th January, 1996, called upon the Assistant Commissioner of Custom for renewal of lease agreement dated 16th December, 1994. It is specifically stated in the said letter that "we would, therefore, request you to kindly let us know whether you need the suit premises for a further period of another 5 years and ready and willing to execute the lease agreement, which will be subject to the revision of the rent, based on prevailing market rate in the adjoining locality of the said premises in your occupation, where they are situated." The learned senior counsel appearing for Petitioner pointed out that the Assistant Commissioner : 6 : and Custom Preventive (G) and Building vide its letter dated 7th March, 1996 informed the Petitioner that the Custom house was interested to continue hiring of their Warehouse on rental basis for a further period of 5 years. It is also specifically stated in the said letter that they would refer the matter to the Hiring Committee (CPWD), Mumbai for their opinion. It is the case of the Petitioner that the Hiring Committee in their meeting discussed the Petitioner’s matter for fixing lease premium and came to the conclusion that market rate is between 12.67 paise per Sq.Ft. to 13.50 per Sq.Ft. Para 1 of the said Minutes of meeting reads as under :- ". Certified that the reassessment rent as on 1-5-1996 of the Building "Nanavati Godown" Opp. Sewree police station, New tank Bunder Road, Mumbai-10, partly Ground Floor and entire First Floor belonging to M/s. Nanavati Services & Trades P.Ltd. Nanavati Mahalaya, 6th floor, 18 Homi Mody Street, Fort, Mumbai-23 consisting of 25397.50 Sq.ft. as per lease deed of plinth area for office and godown and land appurantanent there hired by office of the Assistant Collector of Customs New Custom house, Ballard Estate, Mumbai-38 as worked out according to principles laid down in the directorate General of works, CPWD, New Delhi O.M. No.21/8/85-W-II(DG) dated 13-6-85 is Rs.12.67 (Rs.Twelve and Piase Sixty seven only) per Sq.ft. of plinth area per month based on recognised principles of valuation for Rs.13.50 (Rupees Thirteen & Paise fifty only) per Sq.ft. of plinth area per month as market rate." : 7 : 4. The senior Advocate for the Petitioners also relied on Minutes of the Meeting of Hiring Committee dated 11th February, 1998 in which it is specifically stated by the Hiring Committee that lease amount in respect of the Suit Premises works out to Rs.12.67 per Sq.Ft. of Plinth area per month as per the prevailing market rate. Thereafter, the Petitioners have written a letter dated 6th April, 1998 to the Additional Commissioner of Custom in respect of rent revision of Nanavati Godown at Sewree with effect from 1st May, 1996 in which Petitioner stated that market rate @ Rs.12.67 per Sq.meter and Rs.13.50 per Sq.meter per month is on lower side. In the said letter dated 6th April, 1998, Petitioner demanded rent @ Rs.5 per Sq.meter per month. Inspite of the several correspondence and decision taken by the Hiring Committee, the Respondents have failed and neglected to pay the revised rent in respect of the suit premises. Therefore, the Petitioners wrote a letter dated 6th March, 2001 to the Deputy Commissioner of Custom and called upon Respondents to make the payment of revised rent as per Hiring Committee’s decision. In the said letter the Petitioner stated that "We would like to reiterate that our accepting the lower rate of : 8 : Rs.12.67 paise per Sq.ft. per month instead of our claim of Rs.13.00 per Sq.Ft. per month is to respect your request and the Ministry’s direction of negotiation of rent, however without prejudice to the fact and with the clear understanding that if the Ministry does not approve and sanction with immediate effect, the rate of Rs.12.67 paise per Sq.Ft. per month, with retrospective effect from 1st May, 1996 then would be constrained to maintain our claim of Rs.13.00 per Sq.ft. per month as per letter dated 12th February, 2001 sent by our Advocates and Notary, M/s. Manilal Kher Ambalal & Co." 5. Inspite of lengthy correspondence, the Respondents did not pay the Hiring charges as per Hiring Committee decision and, therefore, the Petitioner filed the above mentioned Writ Petition for direction against the Respondents and forthwith fix and finalize the revised lease rent for the period from 1st May, 1996 to 30th April, 2001 @ Rs.12.67 paise per Sq.Ft. per month and forthwith pay the difference to the Petitioner with interest @ Rs.24% per annum from respective due dates as per the statement of claim annexed to the Petition at Exhibit-T Exhibit-T Exhibit-T. The Petitioner further prays that this Hon’ble Court be pleased to issue Writ of Mandamus and Writ in the nature of Mandamus or any other appropriate : 9 : Writ or direction, directing the Respondents to forthwith vacate and hand over peaceful and vacant possession of the said premises described in Para 3 (I) of the Petition. 6. Mr. Bharucha the senior Advocate appearing on behalf of the Petitioner pointed out that from the affidavit in reply dated 14th September, 2001 filed by the Respondents that Respondents also agreed to refer the matter to the Hiring Committee (CPWD) Bombay for fixing lease rent in respect of the suit premises. The learned senior counsel appearing for the Petitioner mainly relied on para 4 (II, III, IV, and VI) of the said affidavit in reply. The learned senior counsel appearing for the Petitioner also relied on para 2 and 6 of the Respondents’ further affidavit dated 20th October, 2002 to show that Respondents are also agreed to refer the matter to the Hiring Committee for fixing lease rent in respect of the suit premises. 7. In reply to the Respondents’ say about the maintainability of the Writ Petition under Article 226 of the Constitution of India for prayer clauses (a) and (b), the learned senior counsel appearing for the : 10 : Petitioner relied on decision in the matter of Whirlpool Whirlpool Whirlpool Corporation Corporation Corporation V/s. Registrar of Trade Marks, Mumbai and V/s. Registrar of Trade Marks, Mumbai and V/s. Registrar of Trade Marks, Mumbai and Ors. Ors. Ors. reported in 1998 (8), SCC reported in 1998 (8), SCC reported in 1998 (8), SCC (Page-1) on para 14,15 and 16 which reads as under :- "14. The power to issue prerogative writs under Article 226 of the Constitution is plenary in nature and is not limited by any other provision of the Constitution. This power can be exercised by the High Court not only for issuing writs in the nature of habeas corpus, mandamus, prohibition, quo warranto and certiorari for the enforcement of any of the Fundamental Rights contained in Part III of the Constitution but also for "any other purpose". 15. Under Article 226 of the Constitution, the High Court, having regard to the facts of the case, has a discretion to entertain or not to entertain a writ petition. But the High Court has imposed upon itself certain restrictions one of which is that if an effective and efficacious remedy is available, the High Court would not normally exercise its jurisdiction. But the alternative remedy has been consistently held by this Court not to operate as a bar in at least three contingencies, namely, where the writ petition has been filed for the enforcement of any of the Fundamental Rights or where there has been a violation of the principle of natural justice or where the order of proceedings are wholly without jurisdiction or the vires of an Act is challenged. There is a plethora of case-law on this point but to cut down this circle of forensic whirlpool, we would rely on some old decisions of the evolutionary era of the constitutional law as they still hold the field. 16. Rashid Ahmed V. Municipal Board, Kairana laid down that existence of an adequate legal remedy was a factor to be taken into consideration in the matter of granting writs. This was followed by another Rashid Case, namely, K.S. Rashid & Son V. Income Tax : 11 : Investigation Commission which reiterated the above proposition and held that where alternative remedy existed, it would be a sound exercise of discretion to refuse to interfere in a petition under Article 226. This proposition was, however, qualified by the significant words, "unless there are good grounds therefor", which indicated that alternative remedy would not operate as an absolute bar and that writ petition under Article 226 could still be entertained in exceptional circumstances." 8. The learned senior counsel further relied in the matter of Popcorn Entertainment & Anr. Vs. City Popcorn Entertainment & Anr. Vs. City Popcorn Entertainment & Anr. Vs. City Industrial Industrial Industrial Development Corpn. & Anr. with Platinum Development Corpn. & Anr. with Platinum Development Corpn. & Anr. with Platinum Entertainment Entertainment Entertainment & Anr. Vs. City Industrial Development & Anr. Vs. City Industrial Development & Anr. Vs. City Industrial Development Corpn. Corpn. Corpn. & Anr. reported in 2007 (9) Supreme Court Cases & Anr. reported in 2007 (9) Supreme Court Cases & Anr. reported in 2007 (9) Supreme Court Cases (Page 593) to show that the High Court have jurisdiction under Article 226 of the Constitution of India to decide these matter if the same is admitted and pending for long time for final hearing. He relied on para 47 and 50 which reads as under:- "47. We have given our careful consideration to the rival submissions made by the respective counsel appearing on either side. In our opinion, the High Court has committed a grave mistake by relegating the appellant to the alternative remedy when clearly in terms of the law laid down by this Court, this was a fit case in which the High Court should have exercised its jurisdiction in order to consider and grant relief to the respective parties. In our opinion, in the instant case, 3 of the 4 grounds on which writ petitions can be entertained in contractual matter were made out and hence it was completely wrong of the High Court to : 12 : dismiss the writ petitions. in the instant case, 3 grounds as referred to in Whirlpool Corpn. have been made out and accordingly the writ petition was clearly maintainable and the High Court committed an error in relegating the appellant to the civil court. 50. Learned counsel for the appellant submitted that since all the pleadings, records, annexures filed before the High Court and also of this Court is available before this Court, this Court may dispose of the same on merits without remitting the matter to the High Court for fresh disposal as suggested by the learned Senior Counsel for Respondent 1. It is true that all the records, documents, annexures are available before us. At the same time, the High Court had no occasion to consider all these rival submissions and to render a categorical finding on all the issues. The High Court has disposed of the writ petition only on the ground of availability of alternative remedy. The High Court has not recorded its finding on the merits of the rival claim. Since elaborate arguments were advanced by the learned Senior Counsel for the appellant and countered by the learned Senior Counsel for the respondent, we extracted the entire argument in extenso in order to enable the High Court to consider all the above submissions made by both the parties on merits and dispose off the same within a period of 6 weeks from the date of receipt of this judgment. As already noticed the request for allotment of construction of multiplex was made on 18-5-2004 and the allotment was made by the Board’s resolution dated 3-6-2004. It is also a matter of record that both the appellants in the civil appeals have deposited several crores of rupees as and when directed by Respondent 1. It is also pertinent to notice that commencement certificate to the appellants permitted them to start the construction was also made on 28-2-2005. However, the show-cause notice was issued in July 2005 and the allotment was cancelled subsequently which was challenged in the writ petition in the year 2006." : 13 : 9. The learned senior counsel further relied on the matter of Gujarat State Financial Corpn. V/s. M/s. Gujarat State Financial Corpn. V/s. M/s. Gujarat State Financial Corpn. V/s. M/s. Lotus Lotus Lotus Hotels Pvt.Ltd. reported in 1993 (3) Supreme Hotels Pvt.Ltd. reported in 1993 (3) Supreme Hotels Pvt.Ltd. reported in 1993 (3) Supreme Court Court Court Cases Cases Cases (p-379) to show that the estoppel would certainly estop the Corporation from backing out of its obligation arising from a solemn promise made by it to the respondent. Para 9,10 and 11 reads as under:- "9. It was next contended that the dispute between the parties is in the realm of contract and even if there was a concluded contract between the parties about grant and acceptance of loan, the failure of the Corporation to carry out its part of the obligation may amount to breach of contract for which a remedy lies elsewhere but a writ of mandamus cannot be issued compelling the Corporation to specifically perform the contract. It is too late in the day to contend that the instrumentality of the State which would be ’other authority’ under Article 12 of the Constitution can commit breach of a solemn undertaking on which other side has acted and then contend that the party suffering by the breach of contract may sue for damages but cannot compel specific performance of the contract. It was not disputed and in fairness to Mr. Bhatt, it must be said that he did not dispute that the Corporation which is set up under Section 3 of the State Financial Corporation Act, 1955 is an instrumentality of the State and would be ’other authority’ under Article 12 of the Constitution. By its letter of offer dated July 24, 1978 and the subsequent agreement dated February 1, 1979 the appellant entered into a solemn agreement in performance of its statutory duty to advance the loan of Rs.30 lakhs to the respondent. Acting on the solemn undertaking, the respondent proceeded to undertake and execute the project of setting up : 14 : a 4-star hotel at Baroda. The agreement to advance the loan was entered into in performance of the statutory duty cast on the Corporation by the statute under which it was created and set up. On its solemn promise evidenced by the aforementioned two documents, the respondent incurred expenses, suffered liabilities to set up a hotel. Presumably, if the loan was not forthcoming, the respondent may not have undertaken such a huge project. Acting on the promise of the appellant evidenced by documents, the respondent proceeded to suffer further liabilities to implement and execute the project. In the back drop of this incontrovertible fact situation, the principle of promissory estoppel would come into play. In Motilal Padampat Sugar Mills Co.(P) Ltd. V/s. State of U.P. this Court observed as under: (SCC para 8, P.425 : SCC (Tax) P. 160) . The true principle of promissory estoppel, therefore, seems to be that where one party has by his words of conduct made to the other a clear and unequivocal promise which is intended to create legal relations or affect a legal relationship to arise in the future, knowing or intending that it would be acted upon by the other party to whom the promise is made and it is in fact so acted upon by the other party, the promise would be binding on the party making it and he would not be entitled to go back upon it, if it would be inequitable to allow him to do so having regard to the dealings which have taken place between the parties, and this would be so irrespective of whether there is any pre-existing relationship between the parties or not. 10. Thus the principle of promissory estoppel would certainly estop the Corporation from backing out of its obligation arising from a solemn promise made by it to the respondent. 11. Jit Ram Shiv Kumar V/s. State of Haryana which slightly differs from the view taken by this Court in the aforementioned decision at any rate would not help the appellant because it only lays down that the principle of promissory estoppel cannot be invoked for venting the Government from discharging its functions under : 15 : the law. Even then, it was held that when the officer authorised under a scheme enters into an agreement and makes a representation and a person acting on that representation puts himself in a disadvantageous position, the court is entitled to regulate the officer to act according to the scheme and the agreement or the representation. The officer cannot arbitrarily on his mere whim ignore his promise on sorne undefined and undisclosed grounds of necessity or changed in conditions to the prejudice of a person which had acted upon such representation and put himself in a disadvantageous position. On this point, both the decisions concur and the ratio would govern the decision in this appeal. The respondent acting upon the solemn promise made by the appellant incurred huge expenditure and if the appellant is not held to its promise, the respondent would be put in a very disadvantageous position and therefore also the principle of promissory estoppel can be invoked in this case." 10. The senior counsel further relied on in the matter of