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

2. By the impugned judgment dated 3.11.2009 passed by a Division Bench of the Allahabad High Court, the writ petition filed by the writ petitioner United Bank of India was allowed and necessary directions were issued. Aggrieved by those directions, the appellants have come to this Court.The facts of the case in brief as narrated in the writ petition are that the property in question i.e. Bungalow no.19, Clive Road, Allahabad was initially leased out to one Ms. Mortha Anthony on 11.8.1887 for 50 years and the said period expired on 11.8.1937. On 7.4.1945, the lease was renewed in favour of Miss Verna Anthony and Miss Leena Anthony for another 50 years by the Collector Allahabad, for the Governor of United Provinces, which was made effective from 1.9.1937, and as such, the said lease was valid up to 31.8.1987. Subsequently, on 22.10.1945, the lease was transferred in favour of M/s. Amrita Bazar Patrika Pvt. Ltd. (in short,by means of a registered deed. On the basis of the said transfer deed, a lease deed was executed on 25.07.1949 by the State of Uttar Pradesh in favour of the ABP Company for 50 years from the first day of September 1937 in pursuance of G.O. No.1286/XI-780/45 dated 22.03.1947. Consequent thereupon, the name of the Company was mutated as lessee in respect of the property situated at 19, Clive Road, Allahabad in the Nazul property register. The ABP Company, having its registered office in Calcutta, its Managing Director has been carrying on two businesses of publishing newspapers from Calcutta as well as from Allahabad and other regional offices all over the country. The Company owns two properties at Allahabad being premises no.19, Clive Road, Allahabad and premises no.10, Edmonston Road, Allahabad.5. Further the case of the appellant is that the United Bank of India (in short,) had advanced credit facilities to the Company M/s ABP Pvt. Ltd. and the said Company had taken loan for the purposes of giving salaries to their staff as well as to modernize its printing technology for which the company alleged to have mortgaged their immovable properties at Calcutta and Allahabad, including leasehold property situated at 19, Clive Road, Allahabad by means of deposit of title deeds. Since the Company became irregular in paying the loan instalments, the Bank issued a demand notice calling upon the Company and others to pay the outstanding dues. Thereafter, for recovery of its dues, the Bank had filed a Suit No. 510 of 1990 at Calcutta High Court in the capacity of mortgagee of the various properties of the said Company including 19, Clive Road, (25 and 25-A Chikatpur Nasibpur Bakhtiyara), Allahabad, which was held by the said Company as lessee. The said suit was decreed on 09.10.1991 and a mortgage decree was passed in favour of Bank. It would be relevant to mention here that the paramount title holder namely the State of Uttar Pradesh was not made party in the suit and the mortgage decree was passed on the basis of settlement arrived at between the parties.The Bank alleged that it had further granted credit facilities to the ABP Company on the request made by it along with four other banks in order to rehabilitate the Company. In the meanwhile, the Additional District Magistrate (F & R) Allahabad issued a show cause notice dated 19.12.1998 to the Company M/s. ABP Pvt. Ltd. as to why their lease right over 19, Clive Road, may not be terminated. The lessee namely M/s ABP Pvt. Ltd. did not challenge the notice. The appellant on the basis of the mortgage decree challenged the notice by filing Writ Petition No. 775 of 1999 for quashing the above show cause notice. The Bank further requested that as per the G.O. dated 01.12.1998 issued by the State Government, which lays down a detailed policy along with various provisions about entitlement for getting conversion of lease land into free hold status, the property situated at 19, Clive Road may be converted into free hold. The Bank as a mortgagee decree holder and as a nominee of the lessee Company subsequently submitted an application along with relevant challans in respect of part-payment of free hold charges depositing a sum of Rs.21,85,200.00 on 15.06.1999 in the State Bank of India, Allahabad Main Branch. Moreover, in paragraphs 14, 16 and 22 of the counter affidavit filed by the Company in Writ Petition No.775/99, it has been admitted that the appellant Bank is their nominee.It appears that pursuant to the order dated 11.02.2004 an auction sale notice was published on 17/18.5.2004 in respect of the immovable property situated at Clive Road, Allahabad, inviting prospective purchasers to participate in the auction sale of the property allegedly mortgaged to the appellant United Bank of India.12. In pursuance to the aforesaid sale notice, one M/s. Jvine Development Pvt. Ltd. and several other persons deposited the earnest money and the offer of Jvine Development Pvt. Ltd. was finally accepted and they were asked to deposit 25 % of the bid amount within 15 days and remaining 75% within 3 months. Although the said Jvine Development Pvt. Ltd. deposited the 25 % amount, it did not deposit the remaining amount. The Jvine Co. then asked the Bank to first get the said property converted into freehold or have a transferable right in respect of the said property. Thereafter, a show cause notice was issued by the Bank upon the Jvine Development Pvt. Ltd. on 30.09.2004. In this connection, a writ petition was filed by the Company before the High Court and the High Court stayed the show cause notice.13. The District Magistrate, Allahabad rejected the application of the Bank for grant of free hold right in respect of the land in question i.e. 19, Clive Road, Allahabad on the ground that Bank does not come within the eligibility criteria under G.O. dated 01.12.1998. Pursuant to the order passed by the District Magistrate, Allahabad, the Bank made a representation to the State Government on 30.08.2005 under Paragraph 7 of G.O. dated 17.02.1996 merged in G.O. dated 01.12.1998 for passing orders for grant of free hold rights. It was argued by the writ-petitioner before the High Court that the legal opinion sought by the State Government from its Law Department in the aforesaid matter has also recommended that the said property may be converted into freehold but the District Magistrate, Allahabad did not pay any heed to the aforesaid opinion as well as on the recommendation given by the State Government. Before the High Court, it was pleaded by learned counsel for prospective auction purchaser Jvine Development Ltd. that after the decree of Calcutta High Court and subsequent order of Debt Recovery Tribunal, Kolkata all the rights, title and interest of M/s. Amrit Bazar Patrika Pvt. Ltd. ceased and it vested with the Bank and the Bank had acquired first charge over the aforesaid property. As per the order of Debt Recovery Tribunal, Kolkata, a sale committee was formed, which started its function by calling bids for the aforesaid property. Accordingly, a sale notice was published on 18.5.2004 in ‘The Times ofin respect of the immovable properties situated at 19, Clive Road, Allahabad. In reply to this auction sale notice, the writ-petitioner deposited the earnest money by way of bank draft and also submitted the tender.14. The State of U.P. for the first time after having come to know about all the aforementioned developments when it was made party in the writ petition, filed a detailed counter affidavit. According to the State of U.P. the suit property is a Nazul Land No. 25 and 25A which was given on lease to ABP and the period of lease expired on 31.08.1987 and on account of expiry of the lease and for violation of the terms of lease a show cause notice was issued on 14.05.1999 for resumption of the property. The case of the State of U.P. is that the proposed decision for renewal of lease was not given effect to and the same was finally rejected by order dated 09.05.2005.15. The Division Bench of the High Court allowed the writ petitions preferred by the Bank and M/s. Jvine Development Pvt. Ltd. The operative portion of the order passed by the High Court is quoted hereinbelow

Reasoning:
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