S.17 Registration Act | High Court Cannot Exercise Writ Jurisdiction To Alter Or Amend Registered Lease Deed: Supreme Court

The Supreme Court recently held that when a lease deed is executed after compulsory registration under Section 17 of the Registration Act, 1908, it is nowhere open to be altered or amended even by the High Court in exercise of its jurisdiction under Article 226 of the Constitution.

The division bench of Justice Ajay Rastogi and Justice Bela M. Trivedi observed:

“…after the transaction is concluded and the instrument being registered under the law, it was not open to either party to question at least in the writ jurisdiction of the High Court under Article 226 of the Constitution and the mandamus issued by the High Court to execute the lease deed for the remainder of the area without any consideration is completely contrary to the settled principles of law and deserves to be set aside.”

As per the factual matrix of the case, the appellants (Gwalior Development Authority & Anr.) had issued an advertisement and invited bids for grant of leases of different plots under the transport city scheme. The respondent was one of the bidders for MC-2 (Market Complex-2) plot area 27887.50 sq. meters. The offer of the respondent @Rs.725/- per sq. meter being the highest bid was finally accepted.

Consequently, a letter of allotment dated 29th September, 1997 was issued in favour of the respondent whereby it was informed that the bid of the respondent was found to be the highest and it had been decided to lease out the plot area of 27887.50 sq. meters in his favour for a consideration of Rs. 2,06,67,966/-.

The respondent deposited a total sum of Rs.2,02,18,437/- from September, 1997 to the last instalment on August 25, 2005.

It is to be noted that despite the respondent failed to deposit the instalments in terms of conditions of the bid document by October 31, 1999 and the final amount being deposited on August 25, 2005, no action was taken by the appellants either for cancellation of the bid or for forfeiture of the amount deposited by the respondent.

However, the lease deed was finally executed for 18262.89 sq. meters on March 29, 2006 to the extent of principal amount of Rs.1,32,39,356/- @Rs.725/- per sq. meter plus the component of interest for the said amount for the delay in deposit of Rs.69,97,087/- total Rs.2,02,18,437/- and the lease deed was executed by the respondent without any demur.

A writ petition came to be filed by the respondent under Article 226 of the Constitution seeking a mandamus against the appellants to execute the lease deed for the remaining area of 9625.50 sq. meters in addition to the lease earlier executed in favour of the respondent.

The division bench of Madhya Pradesh High Court at Gwalior vide impugned judgment dated April 11, 2011 directed the appellants to execute the lease deed in favour of the respondent for the remaining area of 9625.50 sq. meters without any consideration with liability on the respondent to make payment of interest for the period August 17, 2001 upto March 29, 2006, the day when the lease deed was executed in favour of the respondent, excluding the period of May 27, 2004 to March 29, 2005.

Hence, the appellants filed an appeal before the Supreme Court.

Arguments

Senior Advocate Sanjay Hegde appearing for the appellants submitted that the auction proceedings which were initiated at the first instance on March 13, 1997, finally culminated into execution of the lease deed without demur for 18262.89 sq. meters on March 29, 2006 and the transaction has attained finality. He contended there was no justification for the respondent to open the transaction which was finally concluded, by filing a writ petition under Article 226 of the Constitution and that too after three and half years of the execution of the lease deed on 29th March, 2006.

It was further argued that there was no justification available to invoke the jurisdiction under Article 226 of the Constitution with a direction to execute the lease deed for the remaining area of land i.e. 9625.50 sq. meters without any consideration and that amounts to amendment in the duly registered instrument which was not permissible in law even under the jurisdiction of the High Court under Article 226 of the Constitution.

On the other hand, the counsel appearing for the respondent submitted that once the tender was floated by the appellants for 27887.50 sq. meters and the bid of the respondent @Rs.725/- per sq. meter was accepted by the Authority and the last instalment of August 25, 2005 was accepted, there was no justification available to the appellant to segregate and sever the land which was put to auction into two parcels.

Court’s Observation

The Supreme Court noted that in the ordinary course of business, as the respondent has failed to make the deposit in terms of the tender document, the auction was supposed to be cancelled and the earnest money deserved to be forfeited.

The Court observed:

“We find no reasonable justification in the present facts and circumstances as to what would be the reason for undue indulgence being shown to the respondent while extending him the benefit to deposit the instalment by 25th August, 2005 and we have our strong reservations and such exercise of power by the Authority, in our view, is a clear abuse of discretion which is not only violative of Article 14 of the Constitution, but also smacks of an undue favour which is always to be avoided and whenever there is such a business/commercial transaction, it is always to be examined on the commercial principles where equity has no role to play.”

Coming to the impugned judgment, the Top Court held that once the transaction was completed and instrument was registered, it was neither open for the either party to question the same not for the High Court to issue the writ of mandamus to execute the lease deed for the remainder of the area.

However, considering the pendency of the litigation for long time and keeping in view the escalation in view of the property in question, the Court further held that the first opportunity shall be afforded to the respondent to purchase the remaining area of the land which was a part of the land originally put to auction, and if it is acceptable to the respondent on the present prevalent circle rate notified by the Government, the Authority may consider his request on priority basis.

Accordingly, the Court allowed the appeal and set-aside the impugned judgment passed by the High Court.

Case Title: Gwalior Development Authority & Anr. v. Bhanu Pratap Singh

Coram: Justice Ajay Rastogi and Justice Bela M. Trivedi

Citation : 2023 LiveLaw (SC) 340

Click Here to Read/Download Judgment