Case: State Of U.P.  Vs. United Bank Of India

expectation is not valid at all in the eye of law. Moreover, this Court in number of decisions has held clearly that doctrine of legitimate expectation cannot be invoked by someone who has no dealing or transaction or negotiations with an authority or by someone who has a recognized legal relationship with the authority. Therefore, as the Bank is not having any recognized legal relationship with the State in view of the fact that the mortgage by the ABP in favour of the Bank itself is bad in law, there is no question of invoking doctrine of legitimate expectation in the present case as it applies to a regular, consistent predictable and certain conduct, process or activity of the decision-making authority. The expectation should be legitimate, that is, reasonable, logical and valid. Any expectation which is based on sporadic or casual or random acts, or which is unreasonable, illogical or invalid, cannot be a legitimate expectation.42. The doctrine of legitimate expectation ordinarily would not have any application when the legislature has enacted a statute. The legitimate expectation should be legitimate, reasonable and valid. For the application of doctrine of legitimate expectation, any representation or promise should be made by an authority. A person unconnected with the authority, who had no previous dealing and who has not entered into any transaction or negotiations with the authority cannot invoke the doctrine of legitimate expectation. A person, who bases his claim on the doctrine of legitimate expectation has to satisfy that he has relied on the said representation and the denial of that expectation has worked to his detriment. This Court in the case of Sethi Auto Service Station and another vs. Delhi Development Authority and others, (2009) 1 SCC 180 , while considering the doctrine observed:- “33. It is well settled that the concept of legitimate expectation has no role to play where the State action is as a public policy or in the public interest unless the action taken amounts to an abuse of power. The court must not usurp the discretion of the public authority which is empowered to take the decisions under law and the court is expected to apply an objective standard which leaves to the deciding authority the full range of choice which the legislature is presumed to have intended. Even in a case where the decision is left entirely to the discretion of the deciding authority without any such legal bounds and if the decision is taken fairly and objectively, the court will not interfere on the ground of procedural fairness to a person whose interest based on legitimate expectation might be affected. Therefore, a legitimate expectation can at the most be one of the grounds which may give rise to judicial review but the granting of relief is very much limited. (Vide Hindustan Development Corpn. (1993) 3 SCC 499.” 43. The High Court after having recorded a finding that the Bank being the nominee of the mortgagee has a right to make an application for conversion of Nazul land into a freehold land, without appreciating the fact that the Bank has not having any subsistence interest in the leasehold property obtained a mortgage decree behind the back of the State being the paramount title holder applied the doctrine of legitimate expectation. 44. In the instant case, admittedly, the State never recognized the appellant Bank as a mortgagee. Further the State was not aware about the alleged mortgage said to have been created by the lessee ABP Co. by deposit of Lease document. Moreover, the State never represented or promised either to the lessee or to the Bank to give any benefit under the lease. In such circumstances, we are of the definite opinion that the High Court has committed grave error in applying the doctrine of legitimate expectation in favour of the bank. 45. After considering the entire facts of the case and the submissions made by learned counsel appearing for the parties, we come to the following conclusion:- (i) Indisputably, the property in question i.e. Premises No.19, Clive Road, Allahabad is a Nazul land governed by the Government Grants Act, 1895 and Nazul Rules.(ii) The property was given on lease by the State of U.P.to Mrs. Mortha Anthony and second time the lease was renewed in favour of Ms. Verna Anthony and Ms. Leena Anthony for a further period of 50 years which was valid up to 31.8.1987.(iii) During the subsistence of lease, the leasehold interest was transferred in 1945 in favour of ABP Co. and on the basis of the said transfer a lease was executed in 1949 by the State of U.P. in favour of ABP Co. for the remaining period of lease which expired in 1987.(iv) As against the loan taken by the Company from the Bank, a mortgage was created in respect of the property by the Company in favour of Bank. The lease in respect of the leasehold interest in the property admittedly expired in 1987.(v) The mortgage so created by the Company in favour of the Bank in respect of Nazul land without the sanction of the State of Uttar Pradesh in terms of the lease, is ab initio void, hence no right was created in favour of the Bank by reason of the said mortgage.(vi) Consequently, a mortgage decree obtained by the Bank on the basis of settlement, in absence of and behind the back of the State of U.P. could not have been enforced against the State. The subsequent proceedings of transferring the decree to the Debt Recovery Tribunal and again passing an order for auction sale of the property on the basis of settlement is wholly illegal and without jurisdiction.(vii) The appellant Bank has no right, title or interest in the property so as to claim a right of conversion of the property into a freehold property.(viii) The impugned notice issued by the State of U.P. directing resumption of the property is legal and valid and cannot be quashed at the instance of the Bank.

Court's decision (1 = petition accepted / positive for appellant, 0 = rejected / negative): 1

Reasoning from the judgment:
1[ds]21. It is pertinent to mention here that the land in dispute being a Government property, the appellant-Bank cannot get any right over it. Moreover, neither the appellant-Bank is a lessee of the land in question nor any lease has ever been sanctioned by the Govt, of U.P. in its favour. Hence, the appellant is not entitled to get any right or to keep possession of the properties in question situated at 19, Clive Road and 10, Edmoston Road.22. The contention of the appellant-Bank is that only on the basis of the notice issued on 9.12.1998, the appellant cannot be deprived of its rights. It is pertinent to mention here that the above notice was not issued to the appellant Bank, but was issued to the Secretary/Director of M/s ABP Pvt. Ltd. vide letter No. 56/Nazul-(CL)-XXI-8/11(96-97) dated 19th December, 1998 in relation to the Nazul land No.25 and 25A, Chikatpur, Nasibpur Bakhtiara. Hence, the appellant is not competent to file any petition and challenge the above notice. It is worthwhile to mention that the above show cause notice was issued on the ground of violation of the terms of lease for which a reply was filed by Shri B.P. Tiwari, Secretary of M/s ABP Co. Ltd. dated 13.01.1999. This Court vide order dated 8.1.1999 in the writ petition has stayed further proceedings of the above show cause notice issued on 19.12.1998. It is also worthwhile to mention here that in the case of Nazul Land No.120-1/2 Civil Station (which is situated at 10, Edmoston Road), on violating the terms of lease by raising illegal construction without prior sanction and for other irregularities, a show cause notice vide letter No.448/Nazul-(CL)-XXI-8/51(80-81) dated 14th May, 1999 was sent to the Director/Secretary of M/s ABP Pvt.Ltd through registered post and its reply was given by Shri B.P. Tiwari, Secretary, ABP Pvt. Ltd. on 27.5.1999 and in that reply no justified reasons have been given by the Secretary of the above Company for the violation of the terms of the lease by unauthorisedly raising construction and for unauthorisedly running a workshop for repairing LML Vespa Scooter. Hence, after thorough consideration when it was found that the issuance of new lease in favour of M/s ABP was not in accordance with rules, the name of M/s ABP was cancelled from the above land vide order No. 47/Nazul-CL-XXI-8/51(80-81), dated 9th May, 2005 and the entire area of Nazul Land No.120-1/2 Civil Station has been vested with the Government of Uttar Pradesh. Admittedly, no notice was issued to the appellant Bank by the State. Hence, the appellant was not aggrieved by these notices in any manner. Neither the appellant-Bank is having any relation with both the lands in question nor any lease of the above land has ever been sanctioned in its favour.In the instant case, the renewal of lease dated 25th July, 1940 was prepared as per Form 4 of the Nazul rule. The said lease was renewed in accordance with the terms, conditions and covenants contained in the prescribed forms appended to the said rules.32. The primary question which needs consideration is as to whether there is a valid mortgage created by the ABP Pvt. Ltd in favour of the Union Bank of India?33. As stated above the disputed property, which is a Nazul Land and governed by the Government grant, was given by way of Renewal of Lease to the ABP Co. for 50 years w.e.f. 1st September 1937, which expired on 31st August 1987. Admittedly, ABP Co. mortgaged the said Nazul land in favour of the Bank, in which the ABP Co. had only a leasehold interest in the property. There is nothing on record which shows as to when the alleged mortgage was created by the ABP Co. in favour of the Bank. If we assume that the mortgage was created before the expiry of the lease i.e. before 31st August 1987 then as per the Form 2 read with Form 3 which governs conditions for renewal of lease of the Nazul Rules any transfer or sub-lease by the ABP Co. had to be done with the previous sanction of the State, but in the present case not a single document is produced to show that any such sanction was obtained by the ABP from the State.34. It is admitted fact that the suit property is the Nazul Land, and as per the definition of Nazul, as provided in the Rule 1 of the Nazul Rules, it means any land or building which, being the property of Government is not administered as a State Property.35. Admittedly, lease was renewed in favour of M/s. ABP Co. as per the Government order in accordance with the rules mentioned in the Rules 13 to 16 of the Nazul Rules read with Form 3 of the Nazul Manual which talks about Renewal of a Lease.36. In Form 3 of the Nazul Manual it is mentioned in the renewal lease deed thatpursuance of the premises the lessor hereby demises upto the Lessee all and singular the hereditaments and premises comprised in and demised by the within the written lease, now standing thereon with the same exceptions and reservations as are therein expressed to hold unto the Lease…… and subject to and with the benefit of such and the likeconvenants respectively and the like provisions and conditions in all respects (including the proviso for re-entry) as are contained in the within written lease.37. Thisis the original lease deed as mentioned in the Form 2 of the Nazul Manual. Form 2 of lease of Nazul land for building purposes it is one of the condition between the lessor and the lessee thatThe aforesaid decision makes it clear that this doctrine cannot be applied in cases of invalid expectation, and as in the present case, the mortgage done by the ABP itself is bad in law. We are of the clear view that this expectation is not valid at all in the eye of law. Moreover, this Court in number of decisions has held clearly that doctrine of legitimate expectation cannot be invoked by someone who has no dealing or transaction or negotiations with an authority or by someone who has a recognized legal relationship with the authority. Therefore, as the Bank is not having any recognized legal relationship with the State in view of the fact that the mortgage by the ABP in favour of the Bank itself is bad in law, there is no question of invoking doctrine of legitimate expectation in the present case as it applies to a regular, consistent predictable and certain conduct, process or activity of the decision-making authority. The expectation should be legitimate, that is, reasonable, logical and valid. Any expectation which is based on sporadic or casual or random acts, or which is unreasonable, illogical or invalid, cannot be a legitimate expectation.42. The doctrine of legitimate expectation ordinarily would not have any application when the legislature has enacted a statute. The legitimate expectation should be legitimate, reasonable and valid. For the application of doctrine of legitimate expectation, any representation or promise should be made by an authority. A person unconnected with the authority, who had no previous dealing and who has not entered into any transaction or negotiations with the authority cannot invoke the doctrine of legitimate expectation. A person, who bases his claim on the doctrine of legitimate expectation has to satisfy that he has relied on the said representation and the denial of that expectation has worked to his