Municipal Corporation Bhilai vs Madhu Memorial Hospital Limited

Heard Ms. Fouzia Mirza, learned Senior Advocate assisted by Ms. Sakshi Mehta and Mr. Ali Afzal Mirza, learned counsel for the appellant. Also heard Mr. Ashish Shrivastava, learned Senior Advocate assisted by Mr. Ankur Diwan and Mr. Udit Khatri, learned counsel appearing for respondent No.1 as well as Mr. Ranbir Singh Marhas, learned Additional Advocate General appearing for the State/respondent No.2.

This writ appeal is presented assailing the order dated 29.01.2024 passed by the learned Single Judge in WP(C) No. 784 of 2023 (Madhu Memorial Hospital Limited vs. State of Chhattisgarh and another) whereby, the writ petition filed by the respondent No.1 / writ petitioner was allowed by the learned Single Judge.

Brief facts necessary for disposal of the case are that respondent No.1 writ petitioner, a company registered under the Companies Act, 1956 and incorporated with a view to establish hospital to provide modern medical facilities to the people of Chhattisgarh region, has taken a decision to establish 200 bedded hospital with an estimated cost of Rs.1252 lakhs. With the report prepared for establishing hospital, writ petitioner / respondent No.1 herein approached Special Area Development Authority, Bhilai (In short 'SADA') constituted under M.P./C.G. Nagar Tatha Gram Nivesh Adhiniyam, 1973 (hereinafter referred to as "the Adhiniyam, 1973") for allotment of land vide its application dated 23.03.1991. The application submitted by writ petitioner / respondent No.1 herein was considered by SADA in its meeting dated 23.07.1992 and decision was taken to allot 10 acres of waste and undeveloped land to writ petitioner on payment of Rs.21.78 lakhs as premium and 5% as ground rent. Writ petitioner /respondent No.1 herein accepted the terms, registered lease agreement was executed in favour of writ petitioner on 28.02.1994. The State Government upon receiving some compliant, took decision to enquire into the allotment of land to educational and charitable institutions and for that purpose appointed Shri Jagatpati, I.A.S., as one member of Enquiry Committee.

The Committee while enquiring the complaint along with allotment to others also examined the lease agreement dated 28.02.1994 of writ petitioner / respondent No.1 herein, gave adverse report. State Government pursuant to the report submitted by Committee, directed for cancellation of lease granted to writ petitioner / respondent No.1 herein, which was unilaterally implemented. Show cause notice was issued to the writ petitioner / respondent No.1 herein by the erstwhile State of Madhya Pradesh, which was put to challenge in the writ petition bearing MP No. 3996 of 1996 before High Court of Madhya Pradesh, which was decided on 28.02.2000. The High Court of Madhya Pradesh directed the respondents therein to take a decision after receiving reply to the show cause notice within specified time. Writ petitioner / respondent No.1 herein thereafter submitted reply to show cause notice and decision was taken on 10.05.2001 setting aside the order passed by the SADA dated 30.11.1992 and successor of SADA i.e. Municipal Corporation, Bhilai was asked to proceed further. The order dated 10.05.2001, cancelling lease agreement, was put to challenge by writ petitioner before this Court in WP No.877 of 2001. Interim relief to writ petitioner / respondent No.1 herein was granted on 17.05.2001 of maintaining status-quo. Aforementioned writ petition was decided on 21.07.2010, whereby the order dated 10.05.2001 was set-aside and respondents therein were directed to reconsider the matter afresh and to pass orders in accordance with law on its own merits. Further observed that, State Government to proceed in accordance with law after considering the reply of writ petitioner / respondent No.1 herein.

The State Government i.e. the Deputy Secretary, Urban Administration and Development Department observing that two others hospital i.e. Chandulal Chandrakar Memorial Hospital and Gurunath Hospital were also allotted the land similar to writ petitioner / respondent No.1 herein and further considering that many other persons were allotted the land only on the basis of application and further considering the case of writ petitioner / respondent No.1 herein to be of similar to that of Chandulal Chandrakar Memoraial Hospital and Gurunath Hospital, Economic Offence Wing (EOW) in its enquiry has not found any mistake while maintaining the order of allotment directed to add three more conditions in the conditions of lease agreement for the land already allotted to writ petitioner / respondent No.1 herein vide order dated 19.11.2010. The State Government issued a letter on 20.05.2013 to Commissioner, Municipal Corporation, Bhilai, the successor of SADA to execute and register the lease agreement pursuant to the order dated 19.11.2010 and its letter dated 06.02.2012, with additional new conditions and to inform the State Government. The Municipal Corporation, Bhilai wrote letter to the State Government seeking certain clarification which was also replied by the State on 03.10.2013 after taking opinion from the Law Department and further directed to initiate proceedings accordingly. Municipal Corporation initiated proceedings on 23.03.2015 and as per the proceedings drawn mentioning that case to be placed before the President-in-Council, which remain pending and again Municipal Corporation wrote letter to the State Government for sanction of allotment of said land to petitioner. Writ petitioner / respondent No.1 herein also wrote several letters to respondent No.2, for giving them information and to allot the land by executing the lease agreement. The registered lease agreement as ordered by the State Government was not executed and thereafter, writ petitioner / respondent No.1 herein wrote letter for renewal of lease agreement as the period of lease agreement originally executed in favour of writ petitioner / respondent No.1 herein was going to expire within short period of time. Subsequently, Municipal Corporation Bhilai has issued letter/order mentioning that lease of land allotted to petitioner is being cancelled w.e.f. from 31.03.2023. Writ petitioner / respondent No.1 herein has initially filed the writ petition challenging the arbitrary action on the part of the respondents in non- executing the amended lease agreement in its favour even after order of the State Government and thereafter the writ petition was amended challenging the order of cancellation of lease of land awarded in favour of writ petitioner / respondent No.1 herein dated 23.07.1992 and registered on 28.02.1994.

Being aggrieved by the same the writ petitioner / respondent No.1 herein filed WPC No.784 of 2023 which was allowed by the learned Single Judge vide order dated 29.01.2024 quashing order/letter dated 29.03.2023 issued by the Municipal Corporation Bhilai cancelling the allotment of land on lease in favour of writ petitioner / respondent No.1 herein and directing the appellant / Municipal Corporation Bhilai to execute amended lease agreement pursuant to the order passed by the State Government dated 19.11.2010 and further clarificatory letter dated 20.05.2013 and 03.10.2013 and thereafter to consider it for its renewal in accordance with law.

Challenging the said impugned order dated 29.01.2024 passed by the learned Single Judge in WPC No. 784 of 2023, the present appeal has been filed by the appellant / Municipal Corporation, Bhilai.

Ms. Fouzia Mirza, learned Senior Advocate for the appellant submitted that the time when the request for establishing 200 bedded hospital in Bhilai with modern facilities and specialties i.e. on 23.03.1991 there was only one hospital, which was run by Bhilai Steel Plant and on considering the then scenario with respect to intense pressure on a single hospital the request was accepted for grant of lease and the lease deed has been executed on 28.02.1994 subject to the terms and conditions of the executed lease deed. It is pertinent to mention here that the execution of lease deed was having an inherent charitable purpose envisaged that 10% of the concession would be given to the employees and officers of SADA and 10% of the bed would be available to the poor / weaker section without charges. She further submitted that the clause 11 of the said lease specifically states that on non-payment of ground rent on time whether it has been notified or not and on failure to follow the terms and conditions by lessee, the lessor has the right to resume the possession of such allotted land as if it has never been leased out under the lease deed. Further, Clause 12 states that if as per Clause 11 the lessor has resumed the possession of the land then with due process of law the land will be liable for public auction again. The respondent no. 1 after the execution of the lease deed did not pay the Annual Rent as per Clause 1(a) to the tune of Rs. 1,08,900/-payable on 1st April Every Year which itself is the violation of clause 11 of the Lease Deed. It is only after passing of almost 18 years the amount of Rent has been sent along with the letter dated 31.05.2012, a cheque bearing no. 140751 IDBI Bank Priyadarshini Parisar Nehru Nagar Chowk to the tune of Rs. 26,89,830 has been sent for the payment of the rent amount which ought to have been paid by them yearly from 1994 but has been paid cumulatively in the year 2012, which itself is the violation of the lease clause no, 11 and 12 and as the matter was subjudice the above cheque has been returned on 18.06.2012. She later submits that though vide order dated 19.11.2010, the state government has directed to add additional terms and conditions in the deed of lease that has been executed on 28.02.1994  but  later  on  it  has  been  clarified  vide  letter  dated 03.10.2013 that the SADA who was the authority at the time of the execution of lease and which now is not in existence and if lease deed would be executed with three additional terms and conditions then it ought to have been signed by the present competent authority and the deed has to be executed as per the prevailing law and rules and thereafter, in compliance to the order passed by the Hon'ble High Court dated 19.11.2010 the execution or the transfer of immovable property has to be done as per Rule 7 of Madhya Pradesh Municipal Corporation (Transfer of Immovable Property) Rules, 1994 and the resolution was passed by the General Assembly and thereafter it was sent to the state government for grant of permission for the execution of lease as per the provision for transfer of immovable property as per Rules 1994.

Learned Senior Advocate for the appellant has also submitted that the learned Single Judge has not taken into consideration Rule 20 and 22 of the Adhiniyam, 1973 while allowing the writ petition by making an observation in paragraph 15 of the impugned order that immediately after allotment of land on lease in favour of petitioner order granting lease was the subject matter of inquiry and the show cause notice was issued in the year 1996 and though till 2023 the land on lease was allotted in favour of petitioner but it was under the cloud as in between there was an order of cancellation of grant of lease in the year 2001. Later, the Mayor in Council passed a resolution on 03.10.2013 for initiating the proceeding as per Rule 7 of Rules 1994, which envisages the transfer immovable property through auction by public notice whereas the land has been allotted to the institution on concessional rates though normally the possession was given after the registration of lease deed and despite the land being in possession of Respondent 1, they have shown no interest in the construction of the hospital and the period of lease is going to expire on 31.03.2023.

Learned Senior Advocate for the appellant contended that a long period of 30 years have been lapsed which has made the very purpose of the execution of the lease deed redundant as many hospitals with better medical facilities have been constructed and is available for the public in general and as per the policies of the state and central government there are many projects under which free and concessional rates of medical facilities are available to public at large and considering all these aspect it would not be in the interest of municipal corporation to renew the lease and hence the lease deed was cancelled with effect from 31.03.2023. The appellant initiated the proceeding on 23.03.2015 as per Chhattisgarh Municipal Corporation (Transfer Of Immovable Property) Rules, 1994 but it remained pending and the letter written by respondents with respect to the renewal of lease agreement on the ground that the lease period would be going to expire within the short span of time remain pending. Further, after the lapse of 30 years the land given on lease to the respondent no. 1 for the construction of the Hospital is now needed by the Municipal Corporation Bhilai in the interest of public at large and now can be utilize for the purpose which is beneficial to the public at large. Later, the order passed by the respondent No. 1 dated 10.05.2001 has pointed out multiple irregularities that led to the cancellation of initial lease agreement dated 30.11.1992- As per Madhya Pradesh Nagar Tatha Gram Nivesh Adhinyam, 1973 (No. 23 of 1973) Rules 5 to 20 have not been followed, the due process for fixation of premium and ground rent has not been followed, financial losses has been incurred due on petitioner's account thus the cancellation of allotment is. just and rightful.

Learned Senior counsel for the appellant further contended that the lessee has the right of renewal under rule 24 and 25 of the Adhiniyam, 1973, however it has been adjudicated by the Hon'ble Apex Court in various case laws that provision does not embody an absolute or indefeasible right of renewal and decisions must be guided by public interest. As a public authority, the decision must be fair, reasonable and guided by public interest. Several aspects bearing upon the public interest were required to be borne in mind, these included the fact that the purpose for which land was originally granted and in the present case the purpose has become futile thus the decision of the appellant Respondent No. 2 dated 29.03.2023 for the cancellation of allotment is just, fair and sustainable in the eyes of law to achieve larger public interest. She also contended that furthermore, the Hon'ble Supreme Court has time again emphasized on the fact that when collective good is in conflict with private interest, then Private interest has to take a back seat and in the present scenario there are already medical institutions in the vicinity providing medical care and the said land can be used for other public purpose where it would suffice and justify the same. Further, the lease has been executed on 28.02.1994 and it has been cancelled vide order dated 10.05.2001, but the respondent no. 1 from 1994 to 2001 has not proceeded or initiated the procedure with regard to the construction of the Hospital, despite the fact that as per Rule 20 & 22 of the Adhiniyam, 1973, the respondent no. 1 ought to have completed the construction within a period of 3 years, though its true that certain enquiry was initiated with respect to the allotment of land, but the lease deed was in existence and the petitioner/ respondent no. 1 was in possession of the land till date. Later, the land admeasuring 10 acres i.e. 4,35,600 sq.ft. is situated in front of Nehru Nagar West between Railway Line & G.E. Road and at present near the above stretch of land many hospitals are in existence and allotment of such a huge area of land without the Charitable purpose now becoming redundant on account of prevailing Central Government and State Government Medical Policies no fruitful purpose would be served to the public at large by the construction of another hospitals, when the area can be utilize by the Municipal Corporation for some useful purpose beneficial to the interest of Municipal Corporation Bhilai. She contended that the treatment of the employees and their family of the State Government Private Hospitals have been accorded sanction for the State Government and hence opening another Hospital would not be in the interest of the public at large when the aforementioned purpose has already been fulfilled by the Hospital situated at Bhilai Durg namely Hi-Tech Hospital Nehru Nagar, E.S.I. Hospital Nehru Nagar, Shankracharya Medical College Hospital Junwani, Gurunath Hospital Priyadashi Parisar, Sparsh Hospital, Ram Nagar Government Hospital Supela, B. M. Shah Hospital Shashtri Nagar, Chandulal Chandrakar Medical College and Hospital etc. These Hospitals are now sufficient and efficient for providing Medical Treatment to the Government Employees and their families.

On the other hand, Mr. Ashish Shrivastava, learned Senior Advocate, appearing for respondent No.1 opposes the submissions made by the learned counsel for the appellant and submits that action on the part of the appellant is per-se illegal and arbitrary. It is submitted that SADA allotted the land on lease to respondent No.1 along with two other hospital i.e. Chandulal Chandrakar Hospital and Gurunath Hospital and other persons, however, the allotment of land to other two hospitals and other persons were not made subject matter of enquiry and the land allotted to respondent No.1 was made subject matter of enquiry due to the political reasons. It is contended that the land allotted to Chandulal Chandrakar Memorial Hospital and Gurunath Hospital is on the lesser rate than to respondent No.1. Chandulal was member of Parliament from Congress party and was once respected leader and therefore, the allotment of land to the said hospital was not being made subject matter of enquiry. This Court considering the nature of grounds raised in writ petition, allowed it, while setting aside the order dated 10.05.2001 cancelling the lease agreement, further directed to consider the grounds raised in the reply to the show cause notice submitted by petitioner/respondent No.1 herein and thereafter to pass an order afresh after affording proper opportunity of hearing to all the parties. State Government upon considering the reply and entire material placed before it came to conclusion that though there is some irregularities in allotment of land but the said irregularities was in allotment of land to all others also including Chandulal Chandrakar Memorial Hospital and Gurunath Hospital, however, no action was taken against them. Further recorded that EOW of the State Government after enquiry has not found any mistake and have ordered maintaining allotment of land dated 23.07.1992 and also directed to add three more conditions mentioned therein also in the lease agreement of allotment of land to writ petitioner/ respondent No.1 herein. The appellant arbitrarily had not issued the amended lease agreement and got it registered along with three additional conditions apart from other conditions already mentioned in the registered lease agreement executed in favour of writ petitioner / respondent No.1 herein, even after several request and letters from State Government.

Mr. Shrivastava further contended that the appellant being successor of the SADA, was under an obligation to execute the lease agreement in favour of writ petitioner with three additional conditions and to get it registered pursuant to the order passed by the State Government in the year 2010, however, even after lapse of 13 years, no action in this regard is taken and on contrary passed an order cancelling lease agreement vide order dated 29.03.2023 w.e.f. 31.03.2023 and therefore, the order dated 29.03.2023 be set-aside and further direction be issued to respondent No.2 to execute the lease agreement as ordered by the State Government with renewal clause in favour of writ petitioner. In support of this contention he also referred to clause 13 of the old lease agreement executed in his favour. He lastly submitted that the learned Single Judge after considering all the aspects of the matter has rightly allowed the writ petition filed by the writ petitioner / respondent No.1 herein, in which no interference is called for.

We have heard learned counsel for the parties and perused the impugned order and other documents appended with writ appeal.

From perusal of the impugned order and materials available on record, it transpires that the writ petitioner submitted an application for grant of lease of the land with SADA. The application was considered and accepted. Lease agreement was executed in favour of the writ petitioner by SADA and the same was registered on 28.02.1994. The dissolution of SADA took place only on 09.06.1998. The allotment of land on lease was subject matter of enquiry and based on some adverse report submitted by Enquiry Officer/Team of Enquiry, the lease agreement executed in favour of writ petitioner was cancelled which was put to challenge in writ petition before the High Court. High Court set-aside the order of cancellation and remitted back the matter for reconsideration. The State Government after receipt of proceeding on remand gave opportunity of hearing to all the parties therein and considering the reply submitted by writ petitioner had passed order on 19.11.2010, in favour of the writ petitioner mentioning therein to add additional three clauses in the registered lease agreement already executed and enhanced the rate of ground rent as 6.5% w.e.f. 28.02.1994. Further in clarification sought by the appellant, the State Government has issued clarificatory letter/order that additional conditions and amended rate is to be made effective from the year 1994 i.e. from the date when the lease agreement was registered in favour of writ petitioner which clearly shows that lease agreement executed in favour of writ petitioner was affirmed. It also transpires that the State Government in its letter dated 03.10.2013 to the appellant has further answered the query made by the appellant and clearly mentioned that as per the opinion of the Law Department three additional conditions as mentioned in the order dated 19.11.2010 would be in addition to the conditions of the earlier conditions of registered lease agreement and further that lease was made effective from the earlier dated itself. It is further clarified the amended lease agreement is to be executed by appellant because the SADA, Bhilai who executed the lease agreement in favour of the writ petitioner is not in existence and it is to be executed by present competent authority and only for the execution of lease agreement the prevailing law will apply. When once SADA, Bhilai is merged with Municipal Corporation, entire area of the SADA is taken over by the Municipal Corporation, all the agreement entered into by the SADA and the lease agreement executed will have the binding force upon the appellant also, as the land within the jurisdiction of the SADA was merged with the appellant by process of law.

The learned Single Judge while allowing the writ petition filed by the writ petitioner / respondent No.1 herein observed that letter dated 29.03.2023 (Annexure P-1A) issued by respondent No.2 cancelling the allotment of land in favour of writ petitioner on lease w.e.f. 31.03.2023 is per-se illegal and arbitrary. The contents of letter shows that the appellant is again examining the validity of the proceedings initiated for allotment of land on lease by SADA which was already decided by the State Government in the year 2010 vide letter/order dated 19.11.2010. The another consideration for decision dated 29.03.2023 is that the writ petitioner / respondent No.1 has not shown his interest for construction of hospital, is also arbitrary in view of the discussion made above and therefore, the said letter/decision is also not sustainable in the eyes of law and accordingly, quashed the order/letter dated 29.03.2023 issued by the Municipal Corporation Bhilai cancelling the allotment of land on lease in favour of writ petitioner / respondent No.1 herein and directed the Municipal Corporation Bhilai to execute amended lease agreement pursuant to the order passed by the State Government date 19.11.2010 and further clarificatory letter dated 20.05.2013 and 03.10.2013 and thereafter to consider it for its renewal in accordance with law.

Considering the aforesaid facts and circumstances of the case and also considering the submissions advanced by the learned counsel for the parties and the finding recorded by the learned Single Judge while allowing the writ petition filed by the writ petitioner / respondent No.1 herein, we are of the considered opinion that the learned Single Judge has not committed any illegality, irregularity or jurisdictional error in the impugned order warranting interference by this Court.

Accordingly, the writ appeal being devoid of merit is liable to be and is hereby dismissed. No cost(s).