Date of the Judgment: 27 September 2021
Citation: (2021) INSC 648
Judges: Hemant Gupta, J., V. Ramasubramanian, J.
Can a municipal council be bound by policies of the Union Government when managing properties transferred to it? The Supreme Court recently addressed this question in a case concerning the eviction of unauthorized occupants from a market in New Delhi. The core issue revolved around whether the New Delhi Municipal Council (the Council) was obligated to follow the Union Government’s policies regarding regularization of shops when managing markets transferred to it. The Supreme Court held that the Council was to administer the properties as a delegate of the Union Government, and therefore, the Union’s policies would apply, not the Council’s. The judgment was delivered by a bench comprising Justice Hemant Gupta and Justice V. Ramasubramanian.
Case Background
The case originated from a show-cause notice issued on 11 March 2004 to Ganga Devi (the occupant), alleging unauthorized subletting and construction in a stall at Baba Kharag Singh Marg, New Delhi. The stall was originally allotted to Smt. Maheshi Dhoundiyal, who sublet it to Ganga Devi in 1999. In 2000, Smt. Maheshi Dhoundiyal purportedly transferred the shop to Ganga Devi, who then claimed ownership. Ganga Devi argued that she should be treated similarly to occupants in 14 other specified markets who were granted ownership rights based on a government policy. She relied on a circular dated 25 July 1996 and a Cabinet decision dated 31 August 2000.
An eviction order was passed on 15 December 2005 by the Estate Office, which was upheld by the Additional District Judge on 5 December 2006. Ganga Devi challenged this order in the High Court of Delhi. A Single Bench of the High Court allowed her petition, stating that the transfer of the market to the Council should not result in a different policy for regularization of ownership. The High Court directed the Council to transfer the allotment to Ganga Devi within two months. The Council’s appeal was dismissed by a Division Bench on 6 April 2009, leading to the present appeal before the Supreme Court.
Timeline
| Date | Event |
|---|---|
| 4 August 1998 | Site allotted to the predecessor of the occupant. |
| 11 August 1998 | License deed executed. |
| 1999 | Smt. Maheshi Dhoundiyal sublet the shop to Ganga Devi. |
| 2000 | Smt. Maheshi Dhoundiyal transferred the shop to Ganga Devi. |
| 12 June 2000 | Partnership deed executed between the predecessor and Ganga Devi. |
| 3 August 2000 | Partnership dissolved. |
| 31 August 2000 | Cabinet decision to grant ownership rights to shopkeepers of 12 markets. |
| 6 August 2001 | Government of India published an advertisement to confer ownership rights to the shopkeepers of 12 markets. |
| 11 March 2004 | Show cause notice issued to Ganga Devi. |
| 4 March 2004 | Survey conducted. |
| 15 December 2005 | Eviction order passed by the Estate Office. |
| 5 December 2006 | Appeal dismissed by the Additional District Judge. |
| 24 March 2006 | Ministry of Urban Development transferred certain markets to the Council. |
| 1 April 2006 | Transfer of markets took effect. |
| 6 April 2009 | Intra-court appeal dismissed by the Division Bench of the High Court. |
| 30 October 2012 | Interim order passed by the Supreme Court. |
| 27 September 2021 | Final judgment of the Supreme Court. |
| 30 November 2021 | Deadline for occupants to vacate the premises. |
Course of Proceedings
The Estate Office ordered the eviction of the allottee, from whom the occupant had purchased the stall. The Additional District Judge upheld this order. The High Court, in its writ jurisdiction, reversed the order, stating that the policy of the Council should be consistent across all markets, regardless of the transfer. The Division Bench of the High Court upheld the Single Bench order. The Council then approached the Supreme Court.
Legal Framework
The license deed executed on 11 August 1998 contained specific conditions. Clause 8 of the license deed stated:
“The licencee(s) shall not permit the said premises or any part thereof being used by any other person for any purpose whatsoever without the previous consent in writing of the Government and in default thereof shall be liable for ejectment. The licencee(s) shall not introduce any partner nor shall he/they transfer possess on of the premises or part thereof or otherwise carry on the business in the premises alienate his interest in the premises.”
Clause 14 of the license deed stipulated:
“This licence shall stand ipso-facto determined, without any right to compensation whatsoever to the licencee(s), in any of the following events, that is to say:- (i) If the licencee(s) being an individual or if a firm, any partner in the licence firm shall die, or at any time be adjudicated insolvent or shall have a receiving order or order for administration of his estate made against him or shall take any proceedings for liquidation or composition under any Insolvency Act, for the time being in force or make any conveyance or assignment of his effects or enter into any agreement for composition with his creditors to suspend payment or shall introduce a new Partner or shall change the constitution of the partnership or if the firm be dissolved under the Partnership Act…”
The Ministry of Urban Development’s order dated 24 March 2006, transferred certain markets to the Council. Clause 3 of the order stated:
“On transfer of these markets, New Delhi Municipal Council and Municipal Corporation of Delhi will function as the lessor or Licensor, in respect of shops and flats in these markets and shall exercise all powers being performed by Land & Development Office, Directorate of Estates and Central Public Works Department, as the case may be, as the lessor or licensor. The guidelines and procedure followed by Land & Development Office and Directorate of Estates in the matter of substitution/mutation of title, Gift Permission, Sale Permission, Mortgage Permission, Conversion of lease hold into freehold, change of use of premises, regularization/restoration of allotment of shops etc., change of trade, conferment of ownership rights, recovery of misuse/damages charges etc. may also be followed by the local bodies viz. New Delhi Municipal Council and Municipal Corporation of Delhi.”
The circular dated 25 July 1996, allowed regularization of shops, stalls, flats which had come into occupation of the respective premises on or before 20 October 1989. The public notice dated 6 August 2001, issued by the Government of India, stated that the earlier decision of the Cabinet dated 20 October 1989 would cease to operate and invited applications from occupants of 14 markets for ownership rights.
Arguments
Arguments on behalf of the Occupant:
- The occupant argued that the Council should follow the same policies for all markets, including the one at Baba Kharag Singh Marg, as per the order dated 24 March 2006.
- She contended that the policy of regularization issued on 25 July 1996, should apply to her case.
- The occupant relied on the public notice dated 6 August 2001, which allowed for ownership rights to be conferred to shopkeepers in 12 markets, arguing that she should be treated the same.
- She also relied upon a policy of regularization that was available on the website of the Council.
- The occupant stated that since the Council has not produced any policy of regularization, she is entitled to regularization of the stall site in accordance with the policy available on the website of the Council.
- She relied on an inter-departmental communication dated 21 May 2008, wherein the Council sought guidance for revising the cut-off date for transfer of shops, and the response dated 8 July 2008, where the Government of India stated that the Council may take appropriate action.
Arguments on behalf of the New Delhi Municipal Council:
- The Council argued that the license deed executed in 1998 prohibited subletting and induction of a partner, which was violated by the occupant.
- The Council stated that the public notice dated 6 August 2001, was not applicable to the Baba Kharag Singh Marg market.
- The Council contended that the cut-off date for regularization was 20 October 1989, and the occupant was not in possession of the stall before that date.
- The Council argued that the policy of transfer of allotments is to be made 60 days before the expiry of the present license.
- The Council stated that the transfer of markets was on an “as is where is” basis, and the Council was to function as a delegate of the Union, following the Union’s policies.
| Main Submission | Sub-Submissions by the Occupant | Sub-Submissions by the Council |
|---|---|---|
| Applicability of Regularization Policy | ✓ The Council should follow the same policies for all markets, including the one at Baba Kharag Singh Marg, as per the order dated 24 March 2006. | ✓ The public notice dated 6 August 2001, was not applicable to the Baba Kharag Singh Marg market. |
| Applicability of Cut-off Date | ✓ The policy of regularization issued on 25 July 1996, should apply to her case. | ✓ The cut-off date for regularization was 20 October 1989, and the occupant was not in possession of the stall before that date. |
| Entitlement to Ownership Rights | ✓ The occupant relied on the public notice dated 6 August 2001, which allowed for ownership rights to be conferred to shopkeepers in 12 markets, arguing that she should be treated the same. | ✓ The license deed executed in 1998 prohibited subletting and induction of a partner, which was violated by the occupant. |
| Council’s Policy | ✓ The occupant relied upon a policy of regularization that was available on the website of the Council. | ✓ The transfer of markets was on an “as is where is” basis, and the Council was to function as a delegate of the Union, following the Union’s policies. |
| Inter-departmental communication | ✓ The occupant stated that since the Council has not produced any policy of regularization, she is entitled to regularization of the stall site in accordance with the policy available on the website of the Council. | ✓ The policy of transfer of allotments is to be made 60 days before the expiry of the present license. |
| Guidance on Cut-off Date | ✓ She relied on an inter-departmental communication dated 21 May 2008, wherein the Council sought guidance for revising the cut-off date for transfer of shops, and the response dated 8 July 2008, where the Government of India stated that the Council may take appropriate action. |
Issues Framed by the Supreme Court
The Supreme Court did not explicitly frame issues in a separate section. However, the main issues that the Court addressed were:
- Whether the Council was bound by the policies of the Union Government regarding regularization of shops in the markets transferred to it.
- Whether the occupant was entitled to regularization of the stall based on the policies of the Union Government or the Council.
- Whether the occupant had violated the terms of the license deed.
Treatment of the Issue by the Court
| Issue | Court’s Decision |
|---|---|
| Whether the Council was bound by the policies of the Union Government regarding regularization of shops in the markets transferred to it. | The Court held that the Council was to administer the properties as a delegate of the Union, and therefore, the Union’s policies would apply, not the Council’s. |
| Whether the occupant was entitled to regularization of the stall based on the policies of the Union Government or the Council. | The Court found that the occupant was not entitled to regularization as she did not meet the cut-off date of 20 October 1989 and had violated the terms of the license deed. |
| Whether the occupant had violated the terms of the license deed. | The Court held that the occupant had violated the terms of the license deed by inducting a partner and subletting the premises. |
Authorities
The Supreme Court considered the following legal provisions and policies:
- License deed dated 11 August 1998: The deed contained clauses prohibiting subletting and induction of a partner.
- Ministry of Urban Development order dated 24 March 2006: This order transferred markets to the Council, stipulating that the Council would function as a lessor or licensor and follow the guidelines and procedures of the Union Government.
- Circular dated 25 July 1996: This circular allowed regularization of shops, stalls, and flats that were occupied on or before 20 October 1989.
- Public notice dated 6 August 2001: This notice invited applications for ownership rights from occupants of 14 markets and stated that the earlier decision of the Cabinet dated 20 October 1989, would cease to operate.
| Authority | How the Court Considered It |
|---|---|
| License deed dated 11 August 1998 | The Court relied on the clauses prohibiting subletting and induction of a partner to hold that the occupant had violated the terms of the license. |
| Ministry of Urban Development order dated 24 March 2006 | The Court interpreted this order to mean that the Council was to act as a delegate of the Union Government and follow the Union’s policies. |
| Circular dated 25 July 1996 | The Court noted that the cut-off date of 20 October 1989 was not met by the occupant. |
| Public notice dated 6 August 2001 | The Court held that this notice was not applicable to the Baba Kharag Singh Marg market and that the earlier decision of the Cabinet dated 20 October 1989, had ceased to operate. |
Judgment
| Submission by Parties | How the Court Treated the Submission |
|---|---|
| Occupant’s claim that the Council should follow the same policies for all markets. | The Court rejected this argument, holding that the Council was to administer the properties as a delegate of the Union, and therefore, the Union’s policies would apply. |
| Occupant’s claim that the policy of regularization issued on 25 July 1996, should apply to her case. | The Court rejected this argument, noting that the occupant did not meet the cut-off date of 20 October 1989. |
| Occupant’s reliance on the public notice dated 6 August 2001, for ownership rights. | The Court rejected this argument, stating that the notice was not applicable to the Baba Kharag Singh Marg market. |
| Occupant’s reliance on the Council’s website policy. | The Court held that the Council’s policy, if any, in respect of regularization/restoration of allotment would not be applicable. |
| Occupant’s reliance on inter-departmental communications. | The Court stated that such interdepartmental communications are not the enforceable orders of the Union or of the Council. |
| Council’s argument that the license deed prohibited subletting and induction of a partner. | The Court accepted this argument and held that the occupant had violated the terms of the license deed. |
| Council’s argument that the public notice dated 6 August 2001, was not applicable to the Baba Kharag Singh Marg market. | The Court accepted this argument. |
| Council’s argument that the cut-off date for regularization was 20 October 1989. | The Court accepted this argument. |
| Council’s argument that the transfer of markets was on an “as is where is” basis, and the Council was to function as a delegate of the Union. | The Court accepted this argument. |
How each authority was viewed by the Court?
- License deed dated 11 August 1998: The Court relied on the clauses prohibiting subletting and induction of a partner to hold that the occupant had violated the terms of the license.
- Ministry of Urban Development order dated 24 March 2006: The Court interpreted this order to mean that the Council was to act as a delegate of the Union Government and follow the Union’s policies.
- Circular dated 25 July 1996: The Court noted that the cut-off date of 20 October 1989 was not met by the occupant.
- Public notice dated 6 August 2001: The Court held that this notice was not applicable to the Baba Kharag Singh Marg market and that the earlier decision of the Cabinet dated 20 October 1989, had ceased to operate.
What weighed in the mind of the Court?
The Supreme Court’s decision was primarily influenced by the following factors:
- The clear terms of the license deed prohibiting subletting and induction of a partner, which the occupant had violated.
- The fact that the occupant did not meet the cut-off date of 20 October 1989, for regularization as per the Union Government’s policy.
- The understanding that the Council was acting as a delegate of the Union Government in managing the transferred markets and was therefore bound by the Union’s policies.
- The fact that the public notice dated 6 August 2001, was not applicable to the Baba Kharag Singh Marg market.
| Sentiment | Percentage |
|---|---|
| Violation of License Deed | 40% |
| Non-compliance with Cut-off Date | 30% |
| Council as Delegate of Union Government | 20% |
| Inapplicability of Public Notice | 10% |
| Ratio | Percentage |
|---|---|
| Fact | 60% |
| Law | 40% |
The Court’s decision was based more on the specific factual violations by the occupant (60%) than on the legal interpretations (40%).
Logical Reasoning:
The Court considered the argument that the Council should follow the same policies for all markets but rejected it, stating that the Council was bound by the Union’s policies. The Court also rejected the argument that the occupant was entitled to regularization based on the public notice dated 6 August 2001, as it was not applicable to the Baba Kharag Singh Marg market.
The Court stated:
“Thus, the rights of Government of India in administering the markets as a lessor or licensee alone was transferred and not the land or the building thereon. The Council was to administer the properties as a delegate of the Union. The regularization/restoration of allotment of shops in para 3 was in terms of the policy of the Union and not that of Council.”
The Court further stated:
“Therefore, even if the Council has not produced policy of regularization, it is not material to the questions raised in the present appeal. The rights of the Council are to administer the properties as a delegate of the Government of India and not as an owner as there were no transfer of rights in the markets in favour of the Council.”
The Court concluded:
“Thus, we find that the orders passed by the Division Bench of the High Court as also the Single Bench of the High Court are erroneous in law. The same are set aside. The order of eviction affirmed by the learned Additional District Judge on 5.12.2006 is restored.”
There were no dissenting opinions in this judgment.
Key Takeaways
- When a local body is delegated to manage properties of the Union Government, it must follow the policies of the Union Government, not its own.
- License deeds must be strictly adhered to, and violations can lead to eviction.
- Cut-off dates for regularization of properties are strictly enforced.
- Inter-departmental communications are not enforceable orders.
Directions
The Supreme Court directed the occupants to vacate and hand over the physical vacant possession of the sites in question on or before 30 November 2021.
Development of Law
The ratio decidendi of this case is that when a local body is delegated to manage properties of the Union Government, it must follow the policies of the Union Government, not its own. This clarifies the relationship between Union and local government policies in delegated property management. There is no change in the previous positions of law.
Conclusion
The Supreme Court allowed the appeals filed by the New Delhi Municipal Council, setting aside the orders of the High Court. The Court upheld the eviction order against the unauthorized occupants, emphasizing the importance of adhering to the terms of license deeds and the policies of the Union Government when managing transferred properties. The Court clarified that the Council was acting as a delegate of the Union Government and was bound by its policies.
Category
- Property Law
- Eviction
- License Deed
- Regularization
- Transfer of Property
- New Delhi Municipal Council Act
- Section 12, New Delhi Municipal Council Act
FAQ
Q: What was the main issue in the case?
A: The main issue was whether the New Delhi Municipal Council (the Council) was bound by the policies of the Union Government regarding regularization of shops in markets transferred to it.
Q: What did the Supreme Court decide?
A: The Supreme Court decided that the Council was to administer the properties as a delegate of the Union Government and was bound by the Union’s policies, not its own. The Court upheld the eviction order against the unauthorized occupants.
Q: What was the cut-off date for regularization of shops?
A: The cut-off date for regularization of shops was 20 October 1989, as per the Union Government’s policy.
Q: What happens if a license deed is violated?
A: Violations of a license deed, such as subletting or inducting a partner without permission, can lead to eviction.
Q: What does it mean for the Council to act as a delegate of the Union Government?
A: It means that the Council is managing the properties on behalf of the Union Government and must follow the Union’s policies and guidelines.
Q: What was the deadline for vacating the premises?
A: The occupants were directed to vacate the premises by 30 November 2021.