Supreme Court Upholds Lease Termination Policy for Ex-Servicemen Shops: Chandro Devi & Ors. vs. Union of India & Ors. (2017)

Date of the Judgment: September 8, 2017

Citation: (2017)

Judges: Madan B. Lokur, J. and Deepak Gupta, J.

Can a government policy limiting the lease period for shops allotted to ex-servicemen and their families be considered valid? The Supreme Court of India addressed this question in a case involving the termination of leases for shops in defense colonies. The core issue revolved around whether the government’s decision to not renew leases beyond a five-year period was justified and non-discriminatory. The judgment was delivered by a bench comprising Justice Madan B. Lokur and Justice Deepak Gupta, with Justice Deepak Gupta authoring the opinion.

Case Background

The case involves several writ petitions filed by ex-servicemen who had suffered injuries during war or active service, or who had retired after completing their service. Some petitioners were family members of deceased army personnel. These individuals were rehabilitated by being allotted shops in colonies where defense personnel reside, managed by the Station Commander. The leases were initially granted for 11 months with a renewal clause. However, a policy introduced on April 13, 2007, limited lease extensions to a maximum of five years, after which lessees could reapply after a three-year gap. The leases of the petitioners were cancelled as they had held the shops for more than five years.

Timeline:

Course of Proceedings

The original writ petitions were dismissed by the learned Single Judge of the Delhi High Court. The letter patent appeals filed by the lessees, including the appellant, were also dismissed by the Division Bench. Some of the original writ petitioners filed special leave petitions before the Supreme Court, which were also dismissed. However, these petitioners were granted time to vacate the premises until November 30, 2011. Chandro Devi, the present appellant, did not approach the Supreme Court in the initial round of litigation. After the Supreme Court’s decision, review petitions were filed, which were also dismissed, leading to the current special leave petitions.

Legal Framework

The judgment discusses the following key legal provisions and policies:

• Standard Operating Procedure (SOP) dated August 10, 2001: Clause 17 of this SOP stated that renewal of lease deeds would be done on the recommendation of residential associations and that the Station Commander may renew the lease for the subsequent year. However, the lease could be terminated at any time at the Station Commander’s discretion.
• Policy dated April 13, 2007: Clause 18 of this policy stated that no extension beyond five years would be given under any circumstances. However, the same person could apply after a gap of a minimum of three years.
• Government of India letter dated February 25, 2005: This letter stated that the management of shopping complexes would be exercised by the government through the concerned services. It also stated that guidelines/rules regarding operation, maintenance, and allotment of shops would be formulated by the Ministry of Defence.
• Defence Shopping Complexes (Maintenance and Administration) Rules, 2006: These rules were framed by the Ministry of Defence, but the appellant argued that they were not applicable to shops constructed on defense lands by public funds.

The court also considered the principle of legitimate expectation, which was raised by the appellant.

Arguments

Appellant’s Arguments:

• The judgments of the Single Judge and the Division Bench were based on a letter dated September 4, 2008, which was a ‘Draft Government Letter’ (DGL) and not official guidelines.
• The Union of India committed fraud by presenting a draft letter as official guidelines.
• The Station Commander had no authority to issue the second SOP for management and control of shopping complexes on April 13, 2007, in view of the letter dated February 25, 2005.
• The appellant had a legitimate expectation that their leases would be renewed as a matter of course.

Respondent’s Arguments:

• The letter dated September 4, 2008, was not fraudulently introduced.
• Even if the letter is ignored, the appellant cannot benefit as the SOP of 2001 and 2007 were valid.
• The policy of limiting leases to five years was not arbitrary and was meant to rehabilitate more ex-servicemen and their families.
• The SOP of 2001 allowed the Station Commander to renew leases on a yearly basis and there was no inherent right to continue as a lessee in perpetuity.

Submissions Table

Issues Framed by the Supreme Court

The Supreme Court did not explicitly frame issues in a separate section, but the core issue was whether the policy of limiting lease extensions to a maximum of five years was valid and non-discriminatory. The court also considered the argument of fraud and legitimate expectation.

Treatment of the Issue by the Court

The following table demonstrates how the Court dealt with the issues:

Authorities

The court considered the following authorities:

Judgment

How each submission made by the Parties was treated by the Court?

How each authority was viewed by the Court?

• Standard Operating Procedure (SOP) dated August 10, 2001: The court relied on this to show that the Station Commander had the authority to renew leases on a yearly basis and had the discretion to terminate the lease.
• Policy dated April 13, 2007: The court upheld this policy, stating that it was not arbitrary and was meant to rehabilitate more ex-servicemen and their families.
• Government of India letter dated February 25, 2005: The court clarified that this letter did not invalidate the SOP of 2007, as the guidelines mentioned in the letter were not framed.
• Defence Shopping Complexes (Maintenance and Administration) Rules, 2006: The court noted the appellant’s argument that these rules were not applicable to the shops in question.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the need to ensure equitable distribution of resources and opportunities for ex-servicemen and their families. The court emphasized that the policy change was not arbitrary but a measure to provide rehabilitation to a larger number of individuals. The court also considered the fact that the leases were not intended to be perpetual and that the Station Commander had the discretion to renew them.

Fact:Law Ratio

The court’s reasoning was based on the following points:

• The policy of limiting leases to five years was not arbitrary or discriminatory.
• The Station Commander had the authority to amend the SOP of 2001.
• There was no specific representation that leases would be automatically renewed.
• The need to rehabilitate a larger number of ex-servicemen and their families justified the policy change.

“The learned Single Judge as well as the Division Bench did place reliance on this letter and since this letter is now said to be a draft government letter only, we may ignore it for the purposes of deciding this case. Even if we were to ignore this letter, the appellant cannot benefit.”

“It was the case of the appellant that till the policy of 13th April, 2007 was introduced, as a matter of course renewals were being granted. This policy became effective from 30th April, 2007.”

“On going through the SOPs of 2001 and 2007, we do not find that the appellant had any vested right to continue in possession even after 5 years.”

Logical Reasoning

Key Takeaways

• The Supreme Court upheld the government’s policy of limiting lease renewals for shops allotted to ex-servicemen and their families to a maximum of five years.
• The court found that the policy was not arbitrary and was meant to rehabilitate a larger number of ex-servicemen and their families.
• The court rejected the argument that the Station Commander lacked the authority to amend the SOP.
• The court also rejected the claim that the lessees had a legitimate expectation of automatic renewal of their leases.

Potential Future Impact: This judgment reinforces the government’s power to make policy changes in the interest of public welfare, even if it affects existing leaseholders. It also clarifies that there is no inherent right to perpetual renewal of leases in such cases.

Directions

No specific directions were given by the Supreme Court in this case.

Development of Law

The ratio decidendi of the case is that the government’s policy to limit lease renewals for shops allotted to ex-servicemen and their families to a maximum of five years is valid and non-discriminatory. This judgment clarifies that there is no inherent right to perpetual renewal of leases and that the government can make policy changes in the interest of public welfare. There is no change in the previous position of law.

Conclusion

The Supreme Court dismissed the appeals, upholding the Delhi High Court’s decision. The court found no merit in the appellant’s claims of fraud, lack of authority, or legitimate expectation. The judgment reinforces the government’s right to make policy changes for the benefit of a larger group, even if it affects existing leaseholders. The court emphasized the importance of rehabilitating more ex-servicemen and their families, justifying the policy change.

Category

Parent Category: Property Law

Child Category: Lease Agreements

Child Category: Government Policy

Child Category: Legitimate Expectation

Parent Category: Defence

Child Category: Ex-Servicemen Welfare

Parent Category: Standard Operating Procedure

Child Category: SOP of 2001

Child Category: SOP of 2007

Parent Category: Property Law

Child Category: Lease Agreements

Parent Category: Government Policy

Child Category: Policy of 2007

Parent Category: Defence

Child Category: Rehabilitation

Parent Category: Defence

Child Category: Letter dated 25th February 2005

Parent Category: Defence

Child Category: Defence Shopping Complexes (Maintenance and Administration) Rules, 2006

FAQ

Q: What was the main issue in the Chandro Devi vs. Union of India case?

A: The main issue was whether the government’s policy to limit lease renewals for shops allotted to ex-servicemen and their families to a maximum of five years was valid and non-discriminatory.

Q: What did the Supreme Court decide?

A: The Supreme Court upheld the government’s policy, stating that it was not arbitrary and was meant to rehabilitate a larger number of ex-servicemen and their families.

Q: Did the court find any fraud by the Union of India?

A: No, the court did not find any fraud. It stated that the presentation of the draft letter was an improper act but not a fraudulent one.

Q: What is the implication of this judgment for ex-servicemen and their families who have been allotted shops?

A: This judgment means that the government can limit the lease period for these shops to a maximum of five years. Ex-servicemen and their families do not have a right to perpetual renewal of their leases.

Q: Can the government change policies that affect existing leaseholders?

A: Yes, the Supreme Court’s judgment reinforces the government’s power to make policy changes in the interest of public welfare, even if it affects existing leaseholders.