Supreme Court overturns High Court order on land lease: Gwalior Development Authority vs. Bhanu Pratap Singh (2023)

LEGAL ISSUE: Whether a High Court can direct the execution of a lease deed for additional land without consideration, after a lease deed for a portion of the land has been executed without protest by both parties. CASE TYPE: Civil, Land Dispute. Case Name: Gwalior Development Authority vs. Bhanu Pratap Singh. Judgment Date: April 19, 2023

Date of the Judgment: April 19, 2023
Citation: 2023 INSC 393
Judges: Hon’ble Justices Ajay Rastogi and Bela M. Trivedi
Can a High Court order the execution of a lease deed for additional land without any payment, after a previous lease deed for a portion of the land was executed without any objection by either party? The Supreme Court of India addressed this question in a recent civil appeal. The core issue revolved around whether the High Court could direct the Gwalior Development Authority to execute a lease deed for the remaining land, after a lease deed for a portion of the land was already executed. The bench comprised Justices Ajay Rastogi and Bela M. Trivedi, who delivered a unanimous judgment.

Case Background

The Gwalior Development Authority (the Authority) invited bids for leases of different plots under the transport city scheme on March 13, 1997. Bhanu Pratap Singh (the respondent) was the highest bidder for a plot of 27887.50 sq. meters, at a rate of Rs. 725 per sq. meter. The Authority issued a letter of allotment on September 29, 1997, directing the respondent to deposit Rs. 1,91,67,966 in four installments by October 31, 1999, in addition to the earnest money of Rs. 15 lakhs. The respondent failed to deposit the installments on time, but the Authority did not cancel the bid or forfeit the deposited amount. The respondent deposited a total sum of Rs. 2,02,18,437 by August 25, 2005. Eventually, a lease deed was executed on March 29, 2006, for only 18262.89 sq. meters, with the principal amount adjusted against the auction bid and the balance towards interest. The respondent then filed a writ petition in the High Court seeking a lease deed for the remaining 9625.50 sq. meters. The High Court directed the Authority to execute the lease deed for the remaining area, subject to payment of interest for a specific period. The Authority challenged this order in the Supreme Court.

Timeline

Course of Proceedings

The respondent filed a writ petition in the High Court of Madhya Pradesh, Bench at Gwalior, seeking a mandamus against the appellants to execute the lease deed for the remaining area of 9625.50 sq. meters. The High Court allowed the petition and directed the Authority to execute the lease deed for the remaining area, subject to the payment of interest by the respondent for the period between August 17, 2001, and March 29, 2006, excluding the period from May 27, 2004, to March 29, 2005. The Authority then appealed to the Supreme Court.

Legal Framework

The judgment references Section 17 of the Registration Act, 1908, which mandates the compulsory registration of lease deeds. The court also discusses the principle that once a transaction is concluded and the instrument is registered under the law, it cannot be altered or amended, especially in the writ jurisdiction of the High Court under Article 226 of the Constitution of India. The Court also referred to Article 14 of the Constitution, which speaks about equality before the law, stating that the Authority’s actions in granting undue favor to the respondent were violative of this Article.

Arguments

Arguments of the Appellants (Gwalior Development Authority):

• The appellants argued that they had granted undue indulgence to the respondent, who failed to comply with the bid conditions by not depositing the installments by the due date of October 31, 1999. The final payment was made on August 25, 2005.
• The Authority contended that while the auction should have been cancelled due to non-compliance, they showed leniency, and the lease deed was executed for 18262.89 sq. meters on March 29, 2006, without any objection from the respondent.
• The appellants submitted that the transaction had attained finality with the execution of the lease deed, and there was no cause of action for the respondent to file a writ petition after three and a half years.
• They argued that the High Court erred in directing the execution of a lease deed for the remaining area without any consideration, which amounted to amending a registered instrument, which is not permissible under Article 226 of the Constitution.
• The appellants also argued that the land should be disposed of as per the land disposal rules, and they could consider the respondent’s claim for the remaining area only if the respondent was willing to pay the prevalent circle rate.

Arguments of the Respondent (Bhanu Pratap Singh):

• The respondent argued that the tender was for 27887.50 sq. meters, and the Authority could not segregate the land after accepting the bid.
• The respondent contended that the Authority’s action of executing the lease deed for only 18262.89 sq. meters and not taking any action for the remaining land compelled him to invoke the jurisdiction of the High Court.
• The respondent argued that the Authority, being a public authority, should act fairly, even in commercial transactions.
• The respondent submitted that the High Court had balanced the rights and interests of the parties by directing the execution of the lease deed for the remaining area with the liability to pay interest for the interregnum period.
• The respondent also argued that they were now willing to take the remaining land at the circle rate fixed by the State Government as on March 16, 2023.

Issues Framed by the Supreme Court

The Supreme Court did not explicitly frame issues in a dedicated section. However, the core issue addressed by the Court was:

• Whether the High Court was justified in directing the Gwalior Development Authority to execute a lease deed for the remaining area of 9625.50 sq. meters without any additional consideration, after a lease deed for 18262.89 sq. meters was already executed without protest by both parties.

The sub-issue that the Court dealt with was:

• Whether the High Court can amend a registered instrument by directing the execution of a lease deed for the remaining area.

Treatment of the Issue by the Court

The following table demonstrates as to how the Court decided the issues:

Authorities

The Court did not cite any specific case laws or books in its judgment. However, it did discuss the following legal provisions:

• Section 17 of the Registration Act, 1908: This section mandates the compulsory registration of lease deeds. The court used this provision to emphasize that once a lease deed is registered, it cannot be altered or amended, especially in the writ jurisdiction of the High Court.
• Article 14 of the Constitution of India: This article guarantees equality before the law. The Court observed that the Authority’s act of granting undue indulgence to the respondent was violative of this article.
• Article 226 of the Constitution of India: This article confers writ jurisdiction on the High Courts. The Court held that the High Court could not have issued a direction to execute the lease deed for the remaining area in exercise of its writ jurisdiction, as it would amount to amending a registered instrument.

Judgment

The Supreme Court allowed the appeal, setting aside the judgment of the High Court. The Court held that the High Court had erred in directing the execution of a lease deed for the remaining area of 9625.50 sq. meters without any additional consideration. The Court reasoned that the transaction was concluded when the lease deed for 18262.89 sq. meters was executed on March 29, 2006, without any objection from the respondent. The Court also emphasized that a registered instrument cannot be altered or amended in the writ jurisdiction of the High Court. The Court did, however, provide an opportunity for the respondent to purchase the remaining land at the current circle rate.

How each authority was viewed by the Court?

• Section 17 of the Registration Act, 1908: The Court used this provision to emphasize that once a lease deed is registered, it cannot be altered or amended, especially in the writ jurisdiction of the High Court.
• Article 14 of the Constitution of India: The Court observed that the Authority’s act of granting undue indulgence to the respondent was violative of this article.
• Article 226 of the Constitution of India: The Court held that the High Court could not have issued a direction to execute the lease deed for the remaining area in exercise of its writ jurisdiction, as it would amount to amending a registered instrument.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the principle that a concluded transaction, evidenced by a registered lease deed, cannot be altered or amended in the writ jurisdiction of the High Court. The Court emphasized the legal sanctity of registered instruments and the limitations on the High Court’s power under Article 226 of the Constitution. The Court also noted the undue indulgence shown to the respondent by the Authority but did not allow it to influence the legal outcome, focusing instead on the finality of the transaction and the impermissibility of amending a registered instrument. The Court also considered the commercial principles involved and the need to avoid undue favors in such transactions.

The Court considered the following points:

• The High Court’s direction to execute the lease deed for the remaining area was beyond its jurisdiction.
• The transaction concluded with the execution of the lease deed for 18262.89 sq. meters on March 29, 2006.
• A registered instrument cannot be altered or amended in the writ jurisdiction of the High Court.

The Court stated: “the auction was supposed to be cancelled and the earnest money deserved to be forfeited.” and “the judgment passed by the High Court in issuing a mandamus to execute the lease deed in favour of the respondent for the remaining area of 9625.50 sq. meters is completely beyond jurisdiction and such directions, in our view, being contrary to law deserve to be set aside.” and “the transaction was concluded on execution of the lease deed executed without demur for 18262.89 sq. meters on 29th March, 2006 and after the transaction is concluded and the instrument being registered under the law, it was not open to either party to question at least in the writ jurisdiction of the High Court under Article 226 of the Constitution”

There were no dissenting opinions in this judgment. The bench was unanimous in its decision.

Key Takeaways

• Once a lease deed is executed and registered, the transaction is considered concluded.
• A High Court cannot amend a registered instrument in its writ jurisdiction under Article 226 of the Constitution.
• Public authorities should act fairly in commercial transactions, but legal principles must be followed.
• Undue indulgence shown to a party does not override the legal principle of finality of a transaction.
• The Supreme Court provided an opportunity for the respondent to purchase the remaining land at the current circle rate, emphasizing a practical resolution.

Directions

The Supreme Court directed that the respondent be given a first opportunity to purchase the remaining area of the land at the prevalent circle rate notified by the government. If the respondent declines, the Authority is at liberty to dispose of the land as per its land disposal rules.

Development of Law

The ratio decidendi of this case is that once a lease deed is executed and registered, it cannot be altered or amended in the writ jurisdiction of the High Court under Article 226 of the Constitution. This reaffirms the principle of finality in transactions and the limitations on the High Court’s writ jurisdiction. There is no change in the previous position of law, but this judgment clarifies the application of these principles in the context of land lease agreements.

Conclusion

The Supreme Court overturned the High Court’s order, emphasizing that a registered lease deed cannot be amended through a writ petition. The Court upheld the finality of the transaction and provided a practical solution by offering the respondent the first opportunity to purchase the remaining land at the current circle rate. This judgment reinforces the legal principles governing registered instruments and the limitations of High Court’s writ jurisdiction.

Category

• Civil Law
  • Land Dispute
  • Lease Agreements
• Constitutional Law
  • Article 226, Constitution of India
  • Article 14, Constitution of India
• Registration Act, 1908
  • Section 17, Registration Act, 1908

FAQ

Q: What was the main issue in the Gwalior Development Authority vs. Bhanu Pratap Singh case?
A: The main issue was whether the High Court could direct the Gwalior Development Authority to execute a lease deed for additional land without consideration, after a lease deed for a portion of the land had been executed without protest by both parties.

Q: What did the Supreme Court decide in this case?
A: The Supreme Court overturned the High Court’s order, holding that the High Court could not amend a registered lease deed by directing the execution of a lease deed for the remaining area without additional payment. The Court also held that once a transaction is concluded and the instrument is registered under the law, it cannot be altered or amended in the writ jurisdiction of the High Court.

Q: Can a High Court amend a registered lease deed in its writ jurisdiction?
A: No, the Supreme Court held that a High Court cannot amend a registered lease deed in its writ jurisdiction under Article 226 of the Constitution. Once a lease deed is registered, the transaction is considered concluded.

Q: What is the significance of Section 17 of the Registration Act, 1908, in this case?
A: Section 17 of the Registration Act, 1908, mandates the compulsory registration of lease deeds. The court used this provision to emphasize that once a lease deed is registered, it cannot be altered or amended, especially in the writ jurisdiction of the High Court.

Q: What opportunity was given to the respondent by the Supreme Court?
A: The Supreme Court gave the respondent a first opportunity to purchase the remaining land at the prevalent circle rate notified by the government. If the respondent declines, the Authority is at liberty to dispose of the land as per its land disposal rules.

Q: What does this case mean for future land lease agreements?
A: This case reinforces the principle that once a lease deed is executed and registered, the transaction is considered concluded, and it cannot be altered or amended in the writ jurisdiction of the High Court. It also highlights the importance of adhering to legal principles and avoiding undue favors in commercial transactions.