Lessee Cannot Be Allowed To Accept Beneficial Terms & Conditions Of Lease While Avoiding Terms Which Are Against His Interests: J&K High Court

In dismissing an appeal challenging a decision by a Single Judge regarding the payment of premium for the transfer of leasehold rights Justice Tashi Rabastan & Justice Mohammad Yousuf Wani observed,

“Learned Writ Court has very rightly observed that appellant/petitioner cannot accept the beneficial terms and conditions of the lease and avoid those which are unpalatable or may not be profitable to him…Permitting the petitioner/appellant to do so would be allowing him to approbate and reprobate which conduct is not countenanced by law”.

Background of the Case

The appellant, who was also the petitioner before the Writ Court, had challenged an order from the Custodian Department. This order sanctioned the transfer of leasehold rights in the subject property to the appellant from the original lessee at a premium of Rs. 1.28 crore, with an advance payment of Rs. 20 lakhs already made by the appellant. The appellant contended that he should not be liable for the premium because he was not granted a fresh lease, instead, the leasehold rights were merely transferred to him.

The Single Judge had dismissed the appellant's writ petition, noting that the appellant had the option to reject the Custodian General's offer but chose to accept it except for the payment of the remaining premium amount. The writ court pointed out that the appellant had taken possession of the land and used it beneficially since 2013, hence his plea against paying the premium was untenable under the law.

Assailing the judgment the appellant argued that no premium was due because the lease commenced on March 1, 1985, before the enactment of SRO 149 of 1985, which mandates premium payments. Additionally, the appellant cited Rule 13-C of the Rules of 2008 under the Jammu and Kashmir State Evacuee (Administration of Property) Act, 2006, arguing that the rule applies only to fresh allotments or leases.

The respondents, however, contended that the premium payment was justified under Section 10-A(3) of the Act, effective from 1977. They argued that the Custodian Department was within its rights to fix the premium upon the transfer of leasehold rights.

Observations of the Court:

Upon consideration, Justice Yousuf Wani authoring the judgment for the bench concurred with the respondents and observed that the argument against the premium, based on the lease being in effect before April 5, 1985, was invalid since Section 10-A(3) allowed for premium payments since 1977.

"..there was no bar for the respondent-department to fix the premium in terms of the provisions of Section 10-A Clause (3) while making the allotment of the leasehold rights in respect of subject land upon transfer in favour of the present appellant." Justice Wani maintained.

The court further noted that the leasehold rights were effectively allotted to the appellant by Order No. 217 of 2015 dated 15.02.2013, and the nature of the allotment being a transfer did not exempt the appellant from paying the premium. The Division Bench highlighted that the rules framed under the Act in 1951 allowed for the fixing of premiums and ground rent for evacuee land leases.

Additionally, the court pointed out that the appellant's actions like entering into possession and paying Rs. 20 lakhs as part of the premium indicated consent to the terms of the order. Consequently, the appellant was estopped from disputing the premium payment condition.

“..the present appellant in our view has consented to the order dated 15.02.2013 which is evidenced by his entering into the possession of the subject land and more especially the deposition of Rs. 20.00 lacs by way of an advance part payment of premium”, pointed Justice Wani writing for the bench.

Dismissing the appellant's claim that the lease duration from the original lessee should exempt him from the premium the bench pointed out the decisions reported to have been taken by the Government on 25th June, 2010 whereby the leasehold rights in evacuee property are liable to be transferred to a third party on payment of premium at 70% and 50% auctionable value of the structures for commercial and residential purpose respectively.

Accordingly, the court stated,

“The contention of the appellant that the lease was granted in favour of the appellant for the remaining period of the lease of the erstwhile lessee- Farooq Ahmad Rather, operates as no legal bar for fixation of premium as according to the provisions of Rule 13-C, lease of any evacuee vacant land can be made for a period not exceeding 40 years”.

In alignment with these observations, the bench dismissed the appeal and authorised the respondent department to take appropriate action in case the appellant fails to settle the remaining premium balance within a reasonable timeframe.

Case Title: Abdul Rashid Zargar Vs Union Territory of J&K & Ors

Citation: 2024 LiveLaw (JKL) 131

Mr. Z. A. Shah, Sr Advocate with Mr. Asif Feroz Bhat, Advocate appeared for the appellant, Mr. G.J. Bala, Advocate with Ms. Maleeha Zainab, Advocate represented the respondents

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