Ahmedabad Gymkhana Club V. Union of India

SCA/9772/2021

AI Insights

The case revolves around the Ahmedabad Gymkhana Club, which challenged the termination of its lease by the Defense Estate Officer, citing violations of lease conditions. The lease, originally granted in 1932, was subject to renewal and had been extended multiple times. The government argued that the club violated lease conditions by hosting commercial activities, which led to the termination of the lease. The club contested these allegations, emphasizing that it only hosted events for its members and did not engage in commercial activities. The court examined the legal framework governing the lease, the nature of the club's activities, and the applicable legal principles regarding contractual obligations and public law.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 813186 (HC-GUJARAT)
• Appeal Type: Others
• Pronouncement Date: 21-11-2022
• Assessment Year: misc
• Other Referred Cases: M/s Dwarkadas Marfatia and Sons v. Bombay Port Trust, Oryx Fisheries Pvt Ltd vs. Union of India & Ors., Teri Oat Estated (P) Ltd vs. U.T. Chandigarh & Ors., Hiruben Bijalbhai Harijan & Ors vs. Special Secretary, Revenue Department, Gujarat & Ors., Commissioner of Income Tax, Bihar vs. Bankipur Club Ltd., State of West Bengal & Ors vs. Calcutta Club Ltd., Mohinder Singh Gill & Anr. vs. The Chief Election Commissioner, New Delhi & Ors., Joshi Technologies International Inc. vs. Union of India & Ors., State of Gujarat v. M.P. Shah Charitable Trust, LIC of India v. Escorts Ltd., ABL International Ltd. vs. Export Credit Guarantee Corporation of India Ltd.
• Laws Referred To: Public Premises (Eviction of Unauthorized Occupants) Act, 1971
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: DEVANG VYAS; ANKIT SHAH; D C SEJPAL
• Assessee Lawyers: MIHIR JOSHI; APURVA VAKIL; SALIL THAKORE; NIHAR THAKKAR
• Keywords: Eviction Notice; Lease Renewal; Lease Termination; Cantonment land; Club management; Military officers
• Section: 5; 9; 4

Judgement Text

"C/SCA/9772/2021 CAV JUDGMENT DATED: 21/11/2022 IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/SPECIAL CIVIL APPLICATION NO. 9772 of 2021 With CIVIL APPLICATION (FOR DIRECTION) NO. 1 of 2022 In R/SPECIAL CIVIL APPLICATION NO. 9772 of 2021 With CIVIL APPLICATION (FOR STAY) NO. 3 of 2022 In R/SPECIAL CIVIL APPLICATION NO. 9772 of 2021 FOR APPROVAL AND SIGNATURE: HONOURABLE MR. JUSTICE BIREN VAISHNAV ========================================================== 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the Constitution of India or any order made thereunder ? ========================================================== AHMEDABAD GYMKHANA CLUB Versus UNION OF INDIA ========================================================== Appearance: MR MIHIR JOSHI, SENIOR ADVOCATE WITH MR APURVA VAKIL, MR SALIL M THAKORE AND MR NIHAR THAKKAR for the Petitioner(s) No. 1 for the Respondent(s) No. 1 MR DEVANG VYAS, ADDITIONAL SOLICITOR GENERAL WITH MR ANKIT SHAH (6371) for the Respondent(s) No. 2 MR D C SEJPAL(1322) for the Respondent(s) No. 3 ========================================================== CORAM:HONOURABLE MR. JUSTICE BIREN VAISHNAV Date : 21/11/2022 Page 1 of 38 C/SCA/9772/2021 CAV JUDGMENT DATED: 21/11/2022 CAV JUDGMENT 1 Ahmedabad Gymkhana Club situated on land bearing number 109 admeasuring 1.77 acres in the Cantonment of Ahmedabad has filed this petition challenging the order dated 25.06.2021 by which pursuant to a show cause notice dated 09.01.2017, the Defense Estate Officer, Gujarat Circle, Ahmedabad, determined the lease given to the Club. Also under challenge by way of subsequent amendments is the Eviction Notice dated 04.08.2021 and an order dated 20.05.2022, by which, the application for grant of renewal and extension of lease has been rejected. 2 By way of a separate Civil Application, the petitioner – Club has prayed for suspension of the eviction notice dated 18.10.2022 directing the petitioner club to show cause on or before 25.10.2022 as to why an eviction order should not be made. 3 Facts in brief would indicate that it is the case of the Page 2 of 38 C/SCA/9772/2021 CAV JUDGMENT DATED: 21/11/2022 petitioner that the Ahmedabad Gymkhana Club was established in the year 1885 as one of the Ahmedabad’s oldest recreational club. It is the case of the petitioner that high ranking Army Officers are in the management of the Club. These positions are held by them by virtue of the bye -laws in force. 3.1 It is the case of the petitioner that a lease was granted to the petitioner-Club in 1932 i.e. on 12.01.1932 for a period of 30 years renewable upto 90 years. The lease was renewed for 30 years on 01.10.1962. It is the case of the petitioner that though the Club had applied for renewal in the year 1992, no decision has been taken on such application. On 09.01.2017, a notice was issued by the Defense Estate Officer, asking the petitioner to show cause as to why the lease of the petitioner be not terminated. The grounds on which such termination was sought that, the lease had not been renewed though a request was made and that there is breach of conditions of the lease and the condition 1(5) & (6). The petitioner Page 3 of 38 C/SCA/9772/2021 CAV JUDGMENT DATED: 21/11/2022 replied to the show cause Notice on 06.02.2017 stating that no marriage functions or functions have been organized by the members for their family, no coaching classes or any educational activities has ever been arranged and the Club is only permitting coaching for sports activity like badminton, swimming etc. It is the case of the petitioner that no action was taken thereafter. 3.2 In the meantime, on 10.03.2017, the Government of India, through the Ministry of Defense, came out with a communication that as the Ministry has been working on formulation of a new policy with respect to cantonment lands to deal with leased sights, those whose lease tenure has expired or is expiring soon, and since the formulation of the policy is to take some time, in order to regularize the occupation of these sights, the government has decided to take some interim measures. One of which measure is that where the lease had expired on or before 31.12.2018 such lease will be extended till 31.12.2018. The petitioner requested for extension of lease by letters Page 4 of 38 C/SCA/9772/2021 CAV JUDGMENT DATED: 21/11/2022 dated 26.08.2019 and 02.12.2019. In February, 2021, the interim policy dated 10.03.2017 was extended till 31.12.2021 or till finalization of the new policy. In the meantime, the petitioner sought information on the application for extension of lease. On 25.06.2021, by the notice impugned in this petition, the respondent determined the lease after taking into consideration the response of the petitioner to the show cause notice dated 09.01.2017. On receiving the order, a representation was made on 29.06.2021 stating that there was no breach of the conditions inasmuch as, the leased premises were being used only for a Club. No marriage functions or such functions have been organized since ten years. The activities are in accordance with terms of the lease. During the pendency of the petition, on 04.08.2021 an Eviction Notice was issued under the Public Premises (Eviction of Unauthorized Occupants) Act, 1971. The termination order dated 25.06.2021 and the notice under the Public Premises Act has been stayed by an order dated 26.08.2021 which read as under: Page 5 of 38 C/SCA/9772/2021 CAV JUDGMENT DATED: 21/11/2022 “1. Heard learned Senior Advocate Mr. Mihir Joshi with learned Advocate Mr. Salil M. Thakore for the petitioner, learned Advocate Mr. Ankit Shah for the respondent Nos. 1 and 2 and learned Advocate Mr. D.C. Sejpal for the respondent No.3. 2. Learned Senior Advocate Mr. Mihir Joshi with learned Advocate Mr. Salil M. Thakore for the petitioner request for permission to grant the proposed draft amendment. Permission is granted. Amendment to be carried out within a period of one week. 3. By way of this petition the petitioner seeks to assail an order passed by the respondent No.2 herein whereby the lease deed in favour of the petitioner-Club from the year 1932 has been terminated vide an order dated 25.06.2021. 4. Learned Senior Advocate Mr. Mihir Joshi for the petitioner has drawn the attention of this Court to a show-cause notice issued to the petitioner on 09.01.2017, wherein the main allegations against the petitionerClub, which later on were considered for the purpose of terminating the lease were with regard to the petitioner organizing marriages and coaching classes within the premises of the Club which amounted to using of land for commercial purpose and thus was in violation of lease condition No. 1(6). 5. Learned Senior Advocate has further drawn the attention of this Court to the reply filed by the petitioner dated 06.02.2017, wherein it is inter alia contended that while the marriage functions were organized, but they were by the individual members of the Club and not by the Club itself and whereas it is sought to be contended that such functions have now not been conducted since last more than a decade, more particularly since such functions even have not been permitted by the Cantonment Page 6 of 38 C/SCA/9772/2021 CAV JUDGMENT DATED: 21/11/2022 Authority or the Army Authorities. 6. Learned Senior Counsel has thereafter taken this Court to the impugned order dated 25.06.2021 and it is sought to be contended that the said order has been passed approximately four and a half years after the show-cause notice has been issued and whereas the said order does not reflect any application of mind by the authority concerned as regards the reply given by the present petitioner. It is also sought to be contended that in the reply, the petitioner had also sought for a personal hearing which also had not been granted. Learned Senior Advocate has further drawn the attention of this Court to the recital in the order dated 25.06.2021, wherein it is inter alia mentioned that the reply to the show-cause notice of the petitioner has been duly considered by the competent authority and whereas it is sought to be contended that essentially the order dated 25.06.2021 is only a communication of the impugned order, whereas the impugned order appears to have been passed by the different authority which is not on record. 7. Learned Senior Advocate has thereafter submitted that as far as the allegation in the show- cause notice which has been used as a ground for terminating the lease agreement is concerned, the marriage functions have not been conducted since more than a decade and such pertinent averment in the reply has not been considered at all in the final order. Learned Senior Advocate has further submitted that the Club is an association of persons and whereas there is an element of mutuality where members give service to themselves and all the charges for such services are go to the common use and there is no element of the profit motive. Learned Senior Advocate has further submitted that as far as the allegation of coaching classes is concerned, there is no coaching class per se held within the Page 7 of 38 C/SCA/9772/2021 CAV JUDGMENT DATED: 21/11/2022 premises rather they are sports coaching classes inside the premises for the benefit of the members of the Club. Learned Senior Advocate has further submitted that the such activities are not in violation of the by-laws of the Club and whereas the attention of this Court has also been drawn to the old as well as new by-laws which are part of the petition. Learned Senior Advocate has further submitted that even the lease condition, violation of which is claimed by the respondent authorities, inter alia envisages that the Club can be used even for any other purpose and only requirement is that consent of the Cantonment Authority has to be taken, whereas learned Senior Advocate submits that it is not that the Club was being used for any other purpose, but rather the submission being that even otherwise there was a permissibility element with regard to activity other than as envisaged. Learned Senior Advocate has further assailed the impugned order on the ground of proportionality inasmuch as it is submitted that assuming that the infractions as mentioned in the show-cause notice were accepted then also they were not of such nature that the punishment of termination of the lease would be the natural punishment. It is further submitted that the punishment is highly disproportionate to the charges even if they are held to be correct. Learned Senior Advocate has therefore submitted that these issues have not been taken into consideration by the respondent authorities, and therefore the present petition may be entertained and the impugned order may be quashed and set side and in the interregnum, the same may be stayed. 8. This petition is strongly opposed by the learned Advocate Mr. Ankit Shah for the respondent Nos. 1 and 2 as well as learned Advocate Mr. D.C. Sejpal for the respondent No.3. Learned Advocate Mr. Shah has sought to raise a preliminary objection with regard to maintainability of the petition and has Page 8 of 38 C/SCA/9772/2021 CAV JUDGMENT DATED: 21/11/2022 submitted that since the dispute essentially is of contractual nature, the writ petition would not lie before this Court. As far as the merits are concerned, learned Advocate Mr. Shah has contended that even in the reply to the show-cause notice there is an admission on behalf of the petitioner that the premises of the Club had been used for marriage purposes. It is further submitted by learned Advocate Mr. Shah that the sports coaching classes to the members of the Club was not the reason for termination of lease rather the coaching provided to guests of the members of the Club, which was one of the reasons which has found favour with the respondent authorities for terminating the lease contract. 9. As far as the submission of learned Senior Advocate for the petitioner for no opportunity of being heard having been granted, it has been submitted by learned Advocate Mr. Shah that such the order is administrative in nature and not by quasi judicial authority and therefore there is no occasion for the petitioner to have sought for opportunity of being heard before passing of the order. As far as the issue of proportionality raised by the learned Senior Advocate for the petitioner is concerned, it is submitted by learned Advocate Mr. Shah that since the lease agreement itself contemplates cancellation for violation of any terms, and therefore no lesser penalty could have been imposed upon the petitioner, more particularly since the respondent authorities are of the opinion that there has been a clear violation of provisions of the lease deed. As regards the submission by learned Senior Advocate for the petitioner that the order in question is a mere communication of an order passed by different authority, more particularly with regard to the recital in the impugned order at last para of page 2 as well as the averments made in the affidavit-in-reply at para 15 as well as para 23, it is Page 9 of 38 C/SCA/9772/2021 CAV JUDGMENT DATED: 21/11/2022 submitted by learned Advocate Mr. Shah that both the order as well as the affidavit-in-reply are not happily worded and that the impugned order has been passed by the signatory himself i.e. respondent No.2. It is submitted that other then the said order there is no order passed by any authority to whom the respondent No.2 is subordinate to. Learned Advocate Mr. Shah therefore submits that since the dispute is with regard to the lease is in realm of the contract between the parties and since the order impugned in the petition is a well reasoned order, this Court may not entertain this petition much less grant an interim relief in favour of the petitioner. 10. Learned Senior Advocate Mr. Mihir Joshi in rejoinder has submitted, as regards the preliminary objection raised by the respondents with regard to the maintainability of the petition, that by now is a well settled position that when any authority which is State under Article 12 of the Constitution of India passes any order, then on the ground of the order not being reasonable and lawful, this Court under Article 226 of the Constitution of India would be competent to hear and decide the petition. Learned Senior Advocate has relied upon the observations of the Supreme Court in case of M/s Dwarkadas Marfatia and Sons v. Bombay Port Trust , reported in (1989) 3 Supreme Court Cases 293, more particularly in para 27 thereof, where the Hon'ble Supreme Court has inter alia held thus; \"If a governmental policy or action even in contractual matters fails to satisfy the test of reasonableness, it would be unconstitutional\". 11. As regards the submission that the order as well as the affidavit are not happily worded, it is submitted by learned Senior Advocate Mr. Joshi that the order as well as affidavit-in-reply convey only one meaning i.e. that there was a different authority which was the competent authority and the order Page 10 of 38 C/SCA/9772/2021 CAV JUDGMENT DATED: 21/11/2022 has been passed by such an authority and which was communicated by the respondent No.2, more particularly since the word \"served\" is used in paras 15 and 23 in the affidavit-in-reply. Learned Senior Advocate submits that even otherwise the recital in the order as well as averments made in the affidavit- in-reply can also be read to mean that the authority which has passed the order was acting under the dictates of a different authority and therefore also the order would required to be interfered. 12. Heard learned Advocates for the parties. This Court was appreciated the fact that the lease itself was signed between the then State and the petitioner in the year 1932 and has been continuing in favour of the petitioner all throughout. Prima facie this court is of the opinion that the impugned order, for terminating of the lease does not state any reason therein rather the allegations/charges as levelled against the petitioner in the show-cause notice have been reproduced in the impugned order and further more the reply of the petitioner does not appear to have been considered by the respondent at all. This Court is of the prima faice opinion that the allegations against the petitioner are of having used the Club for the purpose of marriages as well as for coaching classes and for the purpose of entertaining the guest which according to the respondent, was a violation of the lease conditions, whereas it is prima faice the opinion of this Court that conducting marriage inside the premises of Club or conducting coaching classes for the members of the Club or even entertaining the guests of the members of the Club would not fall into the meaning of a commercial activity, more particularly in the context of the dispute raised in the petition. Furthermore, as observed hereinabove, condition No. 1(6) of the lease deed which is being relied upon by the respondent for terminating the contract of lease itself contemplates that even if an activity Page 11 of 38 C/SCA/9772/2021 CAV JUDGMENT DATED: 21/11/2022 which is not within the purpose for which the Club had been created were to be permitted in the Club then the same could not have been with the consent of the Cantonment Authority. Thus, the lease itself envisages that the other activity then for which the lease had been granted could have been conducted by the Club. The only requirement was that permission ought to have been taken. Again in the impugned order neither there is reference to the specific averments in the reply by the petitioner to the show-cause notice that the marriages which are stated to have been conducted in the Club have not been conducted for the last 10 years. On the aspect of preliminary objection, in the considered opinion of this Court, the observations of the Hon'ble Supreme Court referred to hereinabove takes care of the issue, and therefore the preliminary objection is decided against the respondents. 13. In this view of the matter, this Court is of the considered opinion that prima faice case for interfere is made out. Hence, issue Rule, returnable on 20.10.2021. 14. Interim relief in terms of Para 33(B) is granted. 15. Learned Advocate Mr. Shah waives service of Rule on behalf of the respondent Nos. 1 and 2 and learned Advocate Mr. Sejpal waives service of Rule for the respondent No.3.” 3.3 Pending this petition, application for extension of lease was made by the petitioner which application has been rejected by the impugned order of 20.05.2021 on the ground that since the lease has already been determined, there is no question of application for Page 12 of 38 C/SCA/9772/2021 CAV JUDGMENT DATED: 21/11/2022 extension. A subsequent notice dated 18.10.2022 as stated hereinabove is under challenge in the civil application. 4 Mr.Mihir Joshi, learned Senior Advocate with Mr.Apurva Vakil and Mr.Salil Thakore, made the following submissions: 4.1 The Club was established in the year 1885. His members include high ranking members of the armed forces as well as government officers and prominent citizens. The lease was granted by the Cantonment in the year 1932 initially for a period of 30 years and thereafter for a further period of 30 years upto 30.09.2022. 4.2 Mr.Joshi, learned Senior Advocate, would take the Court through the bye-laws of the Club to submit that the Management Committee of the Club comprises of the General Officer Commanding and the Dy. G.O.C. They are the patrons of the Club. It is therefore apparent that being managed by high ranking officials of the army, it Page 13 of 38 C/SCA/9772/2021 CAV JUDGMENT DATED: 21/11/2022 has the traits of the public authority. Mr.Joshi, learned Senior Advocate, would take the Court through the bye- laws to submit that the Club is open to any guest introduced by a member and no guest can enter a Club or use any facility unless accompanied by members. The Club is used for entertainment purposes and the Management Committee shall have the powers to give the use of the Club premises whenever they consider fit at charges decided from time to time. 4.3 He would submit that the Notice of 09.01.2017 is misconceived as over a period of few years, no marriage functions have been held in the Club. Relying on the interim policy of the Government of India dated 10.03.2017 and the extension to such policy by a communication dated 15.02.2021, Mr.Joshi, learned Senior Counsel would submit that it is clear that until a new policy was finalized the lease was deemed to have been extended upto 31.12.2021. The order of termination of lease dated 25.06.2021 was misconceived inasmuch as, Page 14 of 38 C/SCA/9772/2021 CAV JUDGMENT DATED: 21/11/2022 when application for renewal was pending and no action was taken for over a period of four years, pursuant to the show cause notice of 09.01.2017, it was not open for the authorities to state that the lease had already been determined. He would submit that there was no violation of conditions 1(5) & 1(6). 4.4 Mr.Joshi, learned Senior Counsel would submit that permitting the guests on payment of entry fees is an extremely regular practice of all clubs and therefore, such a factor cannot be taken as one which would violate the lease agreement. Even if it is assumed that it amounts to violation of the lease agreement, it would not justify harsh and disproportionate action of termination of lease. He would further submit that the Show Cause Notice dated 09.01.2017 violated the principles of natural justice, inasmuch as, the conclusions for termination of the lease had already been expressed. The entire decision making process therefore was an empty formality. He would further submit that on the one hand, a show cause Page 15 of 38 C/SCA/9772/2021 CAV JUDGMENT DATED: 21/11/2022 notice was issued and under the Public Premises Eviction Act an order dated 25.06.2021 was passed determining the lease whereas no final decision was taken on the application for extension of lease when the formulation of interim policy was still not finalized. Under the guise of the lease having been terminated, in addition to the notice under sub-section 1 of section 4 of the Public Premises Act, by a communication dated 20.05.2022, the application for renewal of lease has also been rejected. There is therefore, a complete exercise of non application of mind, inasmuch as, though even by the last communication of the Ministry dated 20.04.2022, which provided for extension of lease upto 31.12.2022 when the policy was yet not finalized, once the lease was extended upto 31.12.2022 there was inherent contradiction one in rejecting the application for extension and secondly issuing a fresh notice on 18.10.2022 invoking the same section of determining the lease and asking the petitioner to show cause as to why an order of eviction be not made. The act of the authorities to issue such notices when Page 16 of 38 C/SCA/9772/2021 CAV JUDGMENT DATED: 21/11/2022 there was an interim order restraining them from eviction apparently indicates prejudging of the entire issue. 4.5 Mr.Joshi, learned Senior Counsel, in support of his submission that even for exercise of contractual obligations when the same are against the public authority a writ would be maintainable, relied on a decision in the case of M/s. Dwarkadas Marfatia & Sons vs. Board of Trustees of the Port of Bombay., reported in 1989 (3) SCC 293. He would rely on para 27 of the said decision: “27. We are inclined to accept the submission that every activity of a public authority especially in the background of the assumption on which such authority enjoys immunity from the rigours of the Rent Act, must be informed by reason and guided by the public interest. All exercise of discre- tion or power by public authorities as the respondent, in respect of dealing with tenants in respect of which they have been treated separately and distinctly from other landlords on the assumption that they would not act as private landlords must be judged by that standard. If a governmental policy or action even in contractual matters fails to satisfy the test of reasonableness, it would be unconstitutional.” 4.6 In support of his submission that the actions were in Page 17 of 38 C/SCA/9772/2021 CAV JUDGMENT DATED: 21/11/2022 violation of principles of natural justice, Mr Joshi, learned Senior Advocate, relined on a decision in the case of Oryx Fisheries Pvt Ltd vs. Union of India & Ors., reported in 2010 (13) SCC 427. He would submit that the entire proceedings of a show cause notice would get vitiated when definite conclusion of guilt have been reached. He would also place reliance in the case of Teri Oat Estated (P) Ltd vs. U.T. Chandigarh & Ors., reported in (2004) 2 SCC 130 and also in the case of Hiruben Bijalbhai Harijan & Ors vs. Special Secretary, Revenue Department, Gujarat & Ors., reported in AIR 2005 GUJ 516. The last decision would be pressed in to service in regard to the legality of forfeiture of lease. 4.7 In support of his submission that members of the Club when run by them do not undertake any commercial activity, he would rely on decision in the case of Commissioner of Income Tax, Bihar vs. Bankipur Club Ltd., reported in (1997) 5 SCC 394, also in the case of State of West Bengal & Ors vs. Calcutta Club Page 18 of 38 C/SCA/9772/2021 CAV JUDGMENT DATED: 21/11/2022 Ltd., reported in (2019) 19 SCC 107, and also in the case of Mohinder Singh Gill & Anr., vs. The Chief Election Commissioner, New Delhi & Ors., rendered in Civil Appeal NO. 1297 of 1977 dated 02.12.1977. 5 Mr. Devang Vyas, learned Additional Solicitor General with Mr.Ankit Shah, learned advocate for the respondents Nos. 1 and 2 would submit that the land in question is government land belonging to the cantonment. At the relevant point of time, only a token rent was charged. The contention of the petitioner that by virtue of the lease entered into between the parties, the action falls within State action is misconceived. It is neither a State action or a remedy under public law. Reading of the impugned orders would indicate that the orders are passed under the Public Premises Act and the same therefore would be appealable after responding to the show cause notice. Notices have been issued under Sec.4 of the Public Premises Act and after giving an opportunity of hearing. Orders would be passed under Page 19 of 38 C/SCA/9772/2021 CAV JUDGMENT DATED: 21/11/2022 Sec.5 of the Act. Such orders are thereafter appealable under Sec.9 of the Act. Issuance of a show cause notice cannot be said to be a quasi judicial action. The relationship between the petitioner and the respondents is purely contractual. The contention of the petitioner that the notice issued is not of the competent authority is misconceived. He would further submit that no individual can seek extension of a contract by invoking a remedy under Article 226 of the Constitution of India. Mr.Vyas, learned ASG, would rely on a decision in the case of Ms/ Radhakrishna Agarwal & Ors. vs. State of Bihar & Ors., reported in (1977) 3 SCC 457. He also relied on the decision in the case of Reliable Power Systems Pvt Ltd / Hyderabad vs. Govt. of India & Ors., reported in (2003) SCC Online AP 916. He also relied on a decision in the case of Joshi Technologies International Inc. vs. Union of India & Ors., reported in (2015) 7 SCC 728., to submit that in contractual matters the High Court should not interfere. Page 20 of 38 C/SCA/9772/2021 CAV JUDGMENT DATED: 21/11/2022 6 Considering the submissions made by the learned counsels for the respective parties, a few important facets of the dispute need to be appreciated. (I) Ahmedabad Gymkhana Club was allotted 1.77 acres of land belonging to the President of India. It was first given on lease to the Club for a period of 30 years under the Cantonment Land Administration Rules, 1925. A Lease Agreement was executed with effect from 01.10.1932. The lease was last renewed for a period of 30 years for a further period with effect from 01.10.1962 to 30.09.1992. (ii) Undisputedly, the lease has not been renewed in terms of the contract. (iii) It was the case of the Estate Officer, that terms and conditions of the lease were violated. In the perception of the petitioner, no such violation was made whereas according to the Board the violation had given rise to influx of public at large into the cantonment area thereby jeopardizing the security interest of the troops. (iv) Shelter sought to be undertaken by the petitioner Page 21 of 38 C/SCA/9772/2021 CAV JUDGMENT DATED: 21/11/2022 under the interim policy dated 10.03.2017 which indicated that in cases where lease agreements had expired, lease tenures shall be extended pending formalization of new policy and in absence of the framing of such policy, an automatic extension of lease upto October, 2022, will not itself entitle the petitioner to invoke a remedy for enforcement of such a policy in exercise of powers of Article 226 of the Constitution of India. (v) Reading the Policy document indicates that extension of lease was never a matter of right. The extensions were subject to certain conditions, namely, where there were eviction orders issued or where any litigation is ongoing, extensions of lease terms were also not to be regularized where there was breach of these conditions. (vi) In the facts of the case at the time when the new policy to deal with such lease sights were contemplated, the petitioner had already received a show cause notice of 09.01.2017 which indicated that the lease was sought Page 22 of 38 C/SCA/9772/2021 CAV JUDGMENT DATED: 21/11/2022 to be determined for breach of conditions. (vii) Merely because the order of termination of lease was passed four years post the show cause notice would itself not make the petitioner entitled to be continued in occupation of the land by extension of lease hold rights. (viii) Public Premises Eviction Act has been invoked by issuing notices to show cause as to why the petitioner cannot be declared as being an unauthorized occupant. Merely because by a communication dated 20.05.2022 the application for renewal of lease has been rejected, rejection of the extension cannot be said to be an exercise that can be termed as malicious in light of the pending dispute with regard to breach of lease conditions. (ix) Ultimately, the issue at the heart of the dispute is with regard to the relationship of a lessor and a lessee which is in the realm of a contract. Merely because one of the part is a State the principle of law let set out in the case of Dwarkdas Marfatia (supra) will itself not apply. In the case of Radhakrishna Agarwal (supra), paras 19 to 25 read as under: Page 23 of 38 C/SCA/9772/2021 CAV JUDGMENT DATED: 21/11/2022 “19. We do not think that any of these cases could assist the appellants or is at all relevant. None of these cases lays down that, when the State or the officers purport to operate within the contractual field and the only grievance of the citizen could be that the contract between the parties is broken by the action complained of, the appropriate remedy is by way of a petition under Article 226 of the Constitu- tion and not an ordinary suit. There is a formidable array of authority against any such a proposition. In Lekhraj Sathramdas Lalwani v. M.M. Shah, Deputy Custodian-cum- Managing Officer, Bombay & Ors., (supra) this Court said (at p. 337); \"In our opinion, any duty or obligation falling upon a public servant out of a con- tract entered into by him as such public servant cannot be enforced by the machinery of a writ under Art. 226 of the Constitution\". In Banchhanidhi Rath v. The State of Orissa & Ors (1) this Court declared (at p. 845): \"If a right is claimed in terms of a contract such a right cannot be enforced in a writ petition.\" In Har Shankar & Ors. etc. etc. v. The Dy. Excise & Taxation Commr. & Ors.,(2) a Constitution Bench of this Court ob- served (at p. 265): \"The appellant have displayed ingenuity in their search for invalidating circumstances but a writ petition is not an appropriate remedy for impeaching con- tractual obligations\". 20. Learned Solicitor General, appearing for the State, contended that there could be no aspect of Article 14 of the Constitution \"involved in a case where no comparison of the facts and circumstances of a particular petitioner's case with those of other persons said to be similarly situated is involved. In such a case, he submitted, there was no possibility of inferring a discrimination. In reply, learned Page 24 of 38 C/SCA/9772/2021 CAV JUDGMENT DATED: 21/11/2022 counsel for the appellants sought to direct our attention towards some allegations showing that there was discrimination between appellants and other parties gov- erned by similar contracts in other areas. We doubt very much whether the doctrine of discrimination can be at all availed of against the State's section purporting to be taken solely within the contractual field when n6 aspect of any statutory or ConStitutional obligation appears either from incontrovertible facts or applicable legal provisions. Indeed, it has been held fin C.K. Achutan v. State of 'Ker- ala & Ors.,(3) that no question of a violation of Article 14 arises even where one out of the several persons' is: se- lected by the State for a particular contractual transac- tion. Learned counsel for the appellants submitted that there was a conflict between what was laid down here and the law declared by this Court in Erusian Equipment & Chemicals .Ltd.'s case (supra). We think that the two cases are distinguishable on facts. The propositions of law laid down in the two cases must be read in the context of facts established in each case. In any event, the cases before us do. not raise any question of discrimi- nation alleged at the stage of entry into the contractual area which could attract the application of Article 14. 21. In the cases.before us, allegations on which a violation of Article 14 could be based are neither properly made nor established. Before any adjudication on the question wheth- er Article 14 of the Constitution could possibly be said to have been violated, as between persons governed by similar contracts, they must be properly put in issue and estab- lished. Even if the appellants could be said to have raised any aspect of Article 14 of the Constitution and this Arti- cle could at all be held to operate within the contractual field whenever the State enters into such contracts, which we gravely doubt, such questions of fact do not appear to have Page 25 of 38 C/SCA/9772/2021 CAV JUDGMENT DATED: 21/11/2022 been argued before the High Court. And, in any event, they are of such a nature that they cannot be satisfactorily decided without a detailed adduction of evidence, which is only possible in ordinary civil suits, to establish that the State, acting in its executive capacity through its Offi- cers, has discriminated between parties identically situat- ed. On the allegations and affidavit evidence before us we cannot reach such a conclusion. Moreover, as we have al- ready indicated earlier, the correct view is that it is the contract and not the executive power, regulated by the Constitution, which governs the relations of the parties on facts apparent in the cases before us. 22. The real object of the appellants seems to be to hold up any adjudication on the cases before us by taking shelter behind Article 14 so that the stay orders obtained by them, presumably on representations made to this Court that no aspect of enforcement of Article 14 of the Constitution 'was involved. We think that to accede to the prayer on behalf of the appellants to. adjourn the hearing of these cases until after the Emergency is lifted and. yet to continue the stay orders is to permit a circumvention of the Constitutional mandate contained in Article 359 and to countenance a gross abuse of the processes of the Court. 23. A rather desparate argument which has been addressed to us on behalf of the appellants is that they were entitled to an opportunity to. show cause against the cancellation of the leases. It was urged, on the strength of A.K. Kraipak & Ors. etc. v. Union of India & Ors.,(1) that the distinction made between administrative and quasi-judicial action is thin and a vanishing one. This argument appears to. us to be wholly irrelevant inasmuch as a question of the distinc- tion between an administrative and quasi-judicial decision can only arise in the exercise of powers under statutory provisions. Rules of Page 26 of 38 C/SCA/9772/2021 CAV JUDGMENT DATED: 21/11/2022 natural justice are attached to the performance of certain functions regulated by statutes or rules made thereunder involving decisions affecting rights of parties. When a contract is sought to be terminated by the Officers of the State, purporting to act under the terms of an agreement between parties, such action is not taken in purported exercise of a statutory power at all. In Additional District Magistrate, Jabalpur, v. Shiva- kant Shukla,(2)it was pointed out (at p. 1288): \"The principles of natural justice which are so implied must always hang, if one may so put it, on pegs of statutory provisions or necessarily follow from them. They can also be said sometimes to be implied as necessary parts of the protection of equality and equal protection of laws conferred by Article 14 of the Constitution where one of the pillars of Dicey's principles of the Rule of Law is found embodied. Sometimes, they may be implied and read the legislation dealing with rights protected by Article 19 of the Constitution. They could at times, be so implied because 'restrictions on rights conferred by Article 19 of the Constitution have to be reasonable\". 25. The limitations imposed by rules of natural justice cannot operate upon powers which are governed by the terms of an agreement exclusively. The only question which normally arises in such cases is whether the action com- plained of is or is not in consonence with the terms of the agreement. As already pointed out by us, even if by some stretch of imagination some case of unequal or discrimina- tory treatment by the officers of the State of persons governed by similar contracts is sought to be made out', a satisfactory adjudication upon the unusual facts of such a case would necessitate proper pleadings supported by accept- able evidence. In that case, the interim stay order or injunction could Page 27 of 38 C/SCA/9772/2021 CAV JUDGMENT DATED: 21/11/2022 not be justified at all because so long as a Residential Order, under Article 359 of the Constitution, is operative, the enforcement of fundamental rights falling under Article 14 is suspended. In such cases even if a petition or suit is entertained and kept pending no stay order could be passed because that would amount to indirect- ly enforcing the fundamental rights conferred by Article 14 of the Constitution. It is only where a prima facie case for an injunction or stay can be made out, quite apart from a right covered by Article 14 of the Constitution or by any other fundamental right whose enforcement may have been suspended, that an injunction or stay could be granted at all on suitable 'terms. As we have already said it was on such an assumption that this Court had, apparently, granted the interim stay which must now be discharged.” 7 Reading of the aforesaid paras would indicate that when the State Officers purport to operate within the contractual field and the only grievance of the citizen could be that the contract between the parties is broken, the appropriate remedy cannot be a petition under Article 226 of the Constitution of India. The relationship between the parties is governed by the term of the agreement, and therefore, in light of the decision in the case of Joshi Technologies (supra), of which paras 65 to 72 read as under, enforcement of government contracts in respect of Page 28 of 38 C/SCA/9772/2021 CAV JUDGMENT DATED: 21/11/2022 private law rights cannot be permitted by invocation of writ jurisdiction under Article 226 of the Constitution of India. “65. Similarly, in State of Gujarat v. M.P. Shah Charitable Trust[14], this Court reiterated the principles that if the matter is governed by a contract, the writ petition is not maintainable since it is a public law remedy and is not available in private law field, for example, where the matter is governed by a non-statutory contract. 66. At this stage, we would like to discuss at length the judgment of this Court in ABL International Ltd. (supra), on which strong reliance is placed upon by the counsel for both the parties. In that case, various earlier judgments right from the year 1954 were taken note of. One such judgment which the Department in support of their case had referred to was the decision of Apex Court in case LIC of India v. Escorts Ltd.[15] wherein the Court had held that ordinarily in matter relating to contractual obligations, the Court would not examine it unless the action has some public law character attached to it. The following passage from the said judgment was relied upon by the respondents: “If the action of the State is related to contractual obligations or obligations arising out of the tort, the court may not ordinarily examine it unless the action has some public law character attached to it. Broadly speaking, the court will examine actions of State if they pertain to the public law domain and refrain from examining them if they pertain to the private law field. The difficulty will lie in demarcating the frontier between the public law domain and the private law field. It is impossible to draw the line with precision and Page 29 of 38 C/SCA/9772/2021 CAV JUDGMENT DATED: 21/11/2022 we do not want to attempt it. The question must be decided in each case with reference to the particular action, the activity in which the State or the instrumentality of the State is engaged when performing the action, the public law or private law character of the action and a host of other relevant circumstances. When the State or an instrumentality of the State ventures into the corporate world and purchases the shares of a company, it assumes to itself the ordinary role of a shareholder, and dons the robes of a shareholder, with all the rights available to such a shareholder. There is no reason why the State as a shareholder should be expected to state its reasons when it seeks to change the management, by a resolution of the company, like any other shareholder.\" This Court dealt with this judgment in the following manner: “13. We do not think Court in the above case has, in any manner, departed from the view expressed in the earlier judgments in the case cited hereinabove. This Court in the case of Life Insurance Corporation of India (Supra) proceeded on the facts of that case and held that a relief by way of a writ petition may not ordinarily be an appropriate remedy. This judgment does not lay down that as a rule in matters of contract the court's jurisdiction under Article 226 of the Constitution is ousted. On the contrary, the use of the words \"court may not ordinarily examine it unless the action has some public law character attached to it\" itself indicates that in a given case, on the existence of the required factual matrix a remedy under Article 226 of the Constitution will be available.\" Page 30 of 38 C/SCA/9772/2021 CAV JUDGMENT DATED: 21/11/2022 67. Insofar as the argument of the respondents in the said case that writ petition on contractual matter was not maintainable unless it is shown that the authority performs a public function or discharges a public duty, is concerned, it was answered in the following manner: “22. We do not think the above judgment in VST Industries Ltd. (supra) supports the argument of the learned counsel on the question of maintainability of the present writ petition. It is to be noted that VST Industries Ltd. against whom the writ petition was filed was not a State or an instrumentality of a State as contemplated under Article 12 of the Constitution, hence, in the normal course, no writ could have been issued against the said industry. But it was the contention of the writ petitioner in that case that the said industry was obligated under the concerned statute to perform certain public functions, failure to do so would give rise to a complaint under Article 226 against a private body. While considering such argument, this Court held that when an authority has to perform a public function or a public duty if there is a failure a writ petition under Article 226 of the Constitution is maintainable. In the instant case, as to the fact that the respondent is an instrumentality of a State, there is no dispute but the question is: was first respondent discharging a public duty or a public function while repudiating the claim of the appellants arising out of a contract ? Answer to this question, in our opinion, is found in the judgment of this Court in the case of Kumari Shri Lekha Vidyarthi & Ors. vs. State of U.P.& Ors. [1991] (1) SCC 212] wherein this Court held: “The impact of every State action is also on public interest. Page 31 of 38 C/SCA/9772/2021 CAV JUDGMENT DATED: 21/11/2022 XXX XXX XXX 24. It is really the nature of its personality as State which is significant and must characterize all its actions, in whatever field, and not the nature of function, contractual or otherwise which is decisive of the nature of scrutiny permitted for examining the validity of its act. The requirement of Article 14 being the duty to act fairly, justly and reasonably, there is nothing which militates against the concept of requiring the State always to so act, even in contractual matters.\" 23. It is clear from the above observations of this Court, once State or an instrumentality of State is a party to the contract, it has an obligation in law to act fairly, justly and reasonably which is the requirement of Article 14 of the Constitution of India. Therefore, if by the impugned repudiation of the claim of the appellants the first respondent as an instrumentality of the State has acted in contravention of the above said requirement of Article 14 then we have no hesitation that a writ court can issue suitable directions to set right the arbitrary actions of the first respondent.\" 68. The Court thereafter summarized the legal position in the following manner: “27. From the above discussion of ours, following legal principles emerge as to the maintainability of a writ petition :- (a) In an appropriate case, a writ petition as against a State or an instrumentality of a State arising out of a contractual obligation is maintainable. Page 32 of 38 C/SCA/9772/2021 CAV JUDGMENT DATED: 21/11/2022 (b) Merely because some disputed questions of facts arise for consideration, same cannot be a ground to refuse to entertain a writ petition in all cases as a matter of rule. (c) A writ petition involving a consequential relief of monetary claim is also maintainable. 28. However, while entertaining an objection as to the maintainability of a writ petition under Article 226 of the Constitution of India, the court should bear in mind the fact that the power to issue prerogative writs under Article 226 of the Constitution is plenary in nature and is not limited by any other provisions of the Constitution. The High Court having regard to the facts of the case, has a discretion to entertain or not to entertain a writ petition. The Court has imposed upon itself certain restrictions in the exercise of this power [See: Whirlpool Corporation vs. Registrar of Trade Marks, Mumbai & Ors. [1998 (8) SCC 1]. And this plenary right of the High Court to issue a prerogative writ will not normally be exercised by the Court to the exclusion of other available remedies unless such action of the State or its instrumentality is arbitrary and unreasonable so as to violate the constitutional mandate of Article 14 or for other valid and legitimate reasons, for which the court thinks it necessary to exercise the said jurisdiction.\" 69. The position thus summarized in the aforesaid principles has to be understood in the context of discussion that preceded which we have pointed out above. As per this, no doubt, there is no absolute bar to the maintainability of the writ petition even in contractual matters or where there are disputed questions of fact or even when monetary claim is raised. At the same time, discretion lies with the High Court which under certain circumstances, can refuse to exercise. It also follows that under the Page 33 of 38 C/SCA/9772/2021 CAV JUDGMENT DATED: 21/11/2022 following circumstances, 'normally', the Court would not exercise such a discretion: 69.1 The Court may not examine the issue unless the action has some public law character attached to it. 69.2 Whenever a particular mode of settlement of dispute is provided in the contract, the High Court would refuse to exercise its discretion under Article 226 of the Constitution and relegate the party to the said made of settlement, particularly when settlement of disputes is to be resorted to through the means of arbitration. 69.3 If there are very serious disputed questions of fact which are of complex nature and require oral evidence for their determination. 69.4 Money claims per se particularly arising out of contractual obligations are normally not to be entertained except in exceptional circumstances. 70. Further legal position which emerges from various judgments of this Court dealing with different situations/aspects relating to the contracts entered into by the State/public Authority with private parties, can be summarized as under: 70.1 At the stage of entering into a contract, the State acts purely in its executive capacity and is bound by the obligations of fairness. 70.2 State in its executive capacity, even in the contractual field, is under obligation to act fairly and cannot practice some discriminations. 70.3 Even in cases where question is of choice or consideration of competing claims before entering into the field of contract, facts have to be investigated and found before the question of a violation of Article 14 could arise. If those facts are disputed and require assessment of evidence the correctness of which can only be tested satisfactorily by taking detailed evidence, Involving Page 34 of 38 C/SCA/9772/2021 CAV JUDGMENT DATED: 21/11/2022 examination and cross- examination of witnesses, the case could not be conveniently or satisfactorily decided in proceedings under Article 226 of the Constitution. In such cases court can direct the aggrieved party to resort to alternate remedy of civil suit etc. 70.4 Writ jurisdiction of High Court under Article 226 was not intended to facilitate avoidance of obligation voluntarily incurred. 70.5 Writ petition was not maintainable to avoid contractual obligation. Occurrence of commercial difficulty, inconvenience or hardship in performance of the conditions agreed to in the contract can provide no justification in not complying with the terms of contract which the parties had accepted with open eyes. It cannot ever be that a licensee can work out the license if he finds it profitable to do so: and he can challenge the conditions under which he agreed to take the license, if he finds it commercially inexpedient to conduct his business. 70.6 Ordinarily, where a breach of contract is complained of, the party complaining of such breach may sue for specific performance of the contract, if contract is capable of being specifically performed. Otherwise, the party may sue for damages. 70.7 Writ can be issued where there is executive action unsupported by law or even in respect of a corporation there is denial of equality before law or equal protection of law or if can be shown that action of the public authorities was without giving any hearing and violation of principles of natural justice after holding that action could not have been taken without observing principles of natural justice. 70.8 If the contract between private party and the State/instrumentality and/or agency of State is under the realm of a private law and there is no element of public law, the normal course for the aggrieved party, is to invoke the remedies provided Page 35 of 38 C/SCA/9772/2021 CAV JUDGMENT DATED: 21/11/2022 under ordinary civil law rather than approaching the High Court under Article 226 of the Constitutional of India and invoking its extraordinary jurisdiction. 70.9 The distinction between public law and private law element in the contract with State is getting blurred. However, it has not been totally obliterated and where the matter falls purely in private field of contract. This Court has maintained the position that writ petition is not maintainable. Dichotomy between public law and private law, rights and remedies would depend on the factual matrix of each case and the distinction between public law remedies and private law, field cannot be demarcated with precision. In fact, each case has to be examined, on its facts whether the contractual relations between the parties bear insignia of public element. Once on the facts of a particular case it is found that nature of the activity or controversy involves public law element, then the matter can be examined by the High Court in writ petitions under Article 226 of the Constitution of India to see whether action of the State and/or instrumentality or agency of the State is fair, just and equitable or that relevant factors are taken into consideration and irrelevant factors have not gone into the decision making process or that the decision is not arbitrary. 70.10 Mere reasonable or legitimate expectation of a citizen, in such a situation, may not by itself be a distinct enforceable right, but failure to consider and give due weight to it may render the decision arbitrary, and this is how the requirements of due consideration of a legitimate expectation forms part of the principle of non-arbitrariness. 70.11 The scope of judicial review in respect of disputes falling within the domain of contractual obligations may be more limited and in doubtful cases the parties may be relegated to adjudication of Page 36 of 38 C/SCA/9772/2021 CAV JUDGMENT DATED: 21/11/2022 their rights by resort to remedies provided for adjudication of purely contractual disputes. 71. Keeping in mind the aforesaid principles and after considering the arguments of respective parties, we are of the view that on the facts of the present case, it is not a fit case where the High Court should have exercised discretionary jurisdiction under Article 226 of the Constitution. First, the matter is in the realm of pure contract. It is not a case where any statutory contract is awarded. 72. As pointed out earlier as well, the contract in question was signed after the approval of Cabinet was obtained. In the said contract, there was no clause pertaining to Section 42 of the Act. The appellant is presumed to have knowledge of the legal provision, namely, in the absence of such a clause, special allowances under Section 42 would impermissible. Still it signed the contract without such a clause, with open eyes. No doubt, the appellant claimed these deductions in its income tax returns and it was even allowed these deductions by the Income Tax Authorities. Further, no doubt, on this premise, it shared the profits with the Government as well. However, this conduct of the appellant or even the respondents, was outside the scope of the contract and that by itself may not give any right to the appellant to claim a relief in the nature of Mandamus to direct the Government to incorporate such a clause in the contract, in the face of the specific provisions in the contract to the contrary as noted above, particularly, Article 32 thereof. It was purely a contractual matter with no element of public law involved thereunder.” 8 Even otherwise, when notices under Sec.4 of the Public Premises (Eviction of Unauthorized Occupants) Page 37 of 38 C/SCA/9772/2021 CAV JUDGMENT DATED: 21/11/2022 Act, 1971, has been issued, and action is yet to be taken as contemplated under Sec.5 of the Act, and even thereafter when a remedy is available by way of an appeal under Sec.9 of the Act, a writ under Article 226 cannot be used so as to surpass the remedy so available. 9 For all the aforesaid reasons, the petition is dismissed. Connected civil applications stands rejected. Interim relief granted earlier, stands vacated. (BIREN VAISHNAV, J) BIMAL FURTHER ORDER After the pronouncement of judgement, on a request made by the representative of the Ahmedabad Gymkhana Club Shri Hemang B Patel, Secretary, the interim relief granted earlier by this Court on 26.08.2021 is extended upto 03.01.2023. (BIREN VAISHNAV, J) BIMAL Page 38 of 38 "