Muslim Educational Society v. Fertilizers and Chemicals Travancore Ltd. (Estate Officer) & Others

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR. JUSTICE SUNIL THOMAS** **WEDNESDAY, THE 13TH DAY OF NOVEMBER 2019 / 22ND KARTHIKA, 1941** **OP(C).No.1770 OF 2019** **AGAINST THE ORDER/JUDGMENT IN AS 71/2019 OF ADDITIONAL DISTRICT COURT - VII, ERNAKULAM** ## **PETITIONER:** **THE MUSLIM EDUCATIONAL SOCIETY IMA HALL ROAD, NADAKAVU, KOZHIKODE-673 011, REP. BY ITS GENERAL SECRETARY, PROF. P.O.J LEBBA.** **BY ADVS. SRI.M.N.MANMADAN SRI.AJITH VISWANATHAN SRI.P.VISWANATHAN (SR.)** ## **RESPONDENTS:** **1 ESTATE OFFICER THE FERTILIZERS AND CHEMICALS TRAVANCORE LTD., ELOOR, UDYOGAMANDAL, ERNAKULAM. 2 THE FERTILIZERS AND CHEMICALS TRAVANCORE LTD., ELOOR, UDYOGAMANDAL, ERNAKULAM, KOCHI-683 501, REP. BY ITS SENIOR MANAGER.** **R1-2 BY ADV. SRI.M.GOPIKRISHNAN NAMBIAR R1-2 BY ADV. SRI.K.JOHN MATHAI R1-2 BY ADV. SRI.JOSON MANAVALAN R1-2 BY ADV. SRI.KURYAN THOMAS R1-2 BY ADV. SRI.PAULOSE C. ABRAHAM R1-2 BY ADV. SRI.R.CHETHAN KRISHNA R3 BY ADV. DINESH R.SHENOY** ## **OTHER PRESENT:** ## **SRI.P.VISWANATHAN (SR.) FOR THE PETITIONER** **THIS OP (CIVIL) HAVING BEEN FINALLY HEARD ON 17.07.2019, THE COURT ON 13.11.2019 DELIVERED THE FOLLOWING:** o.p(c).1770/19 2 ## **JUDGMENT** Petitioner, aggrieved by the order in I.A.No.4086 of 2019 in A.S.No.71 of 2019 of the Additional District Court-VII, Ernakulam, has preferred this original petition. 2. According to the petitioner, it is a registered society registered under the Societies Registration Act represented by its General Secretary, Calicut. The second respondent is a company constituted under the Companies Act 1956. First respondent is its senior manager. The second respondent was running schools in Ernakulam district including one at Udyogmandal. Due to financial constraints, administration and management of the school was entrusted to the petitioner on the basis of a license agreement dated 23.03.2004, produced as Ext.P1. The entrustment was pursuant to an open bid among the established institutions. Consequently, a 15 year lease, renewable for a further period of 15 years at the option of the petitioner was entered into. This is evident from clause (iv) of Ext.P1. Before the expiry of the above license period, petitioner invoked clause (iv) of the agreement by Ext.P3 letter dated 23.11.2018 and expressed their willingness for renewal of the agreement. Pursuant to the receipt of it, a committee of six members including three members each of the petitioner and the second o.p(c).1770/19 3 respondent met to explore the terms and conditions, under which, Ext.P1 agreement could be renewed. The committee met on 20.12.2018 to deliberate on it. The copy of the minutes is produced as Ext.P4. According to the petitioner, it was ready and willing to perform its part of the terms and to run the school. Expecting that the license would be renewed, they had made arrangements for running classes in the next academic year also. They claimed that, they have invested huge amounts for the above. In the meanwhile, Ext.P5 letter dated 20.02.2019 was issued by the second respondent directing the petitioner to vacate the building by 31.03.2019. An advertisement inviting new tenders for running the above school was published in the newspaper on 23.02.2019. Though the issue was tried to be sorted out by the petitioner, according to them, it was not successful. Thereafter, Ext.P4 notice under section 4(2) (c) of the Public Premises (Eviction of Unauthorized Occupants) Act (hereinafter referred as “the Public Premises Act”) was issued requesting the petitioner to appear before the first respondent on 27.05.2019. The Secretary at Udyogmandal was served and they filed objection. Notice was served on the petitioner at Calicut only on 28.05.2019, disabling the petitioner from appearing on 27.05.2019. On 29.05.2019, first respondent passed Ext.P7 order invoking section 5(1) of the Public Premises Act, directing the petitioner and its employees to vacate on or before 31.05.2019. Statutory appeals were preferred. I.A.No.4086 of o.p(c).1770/19 4 2019 in A.S.No.71 of 2019 was filed in that, to stay the operation of Ext.P7 order. Respondent filed a counter. Court below by Ext.P12 order dismissed the application, which is assailed in this original petition. 3. Respondents in their counter affidavit had denied the material averments. According to them, the leave and license agreement dated 23.03.2004 was not disputed. According to them, petitioner cannot seek the aid of the court to compel the respondents to renew the agreement. The terms of the minutes of the joint committee dated 20.12.2018 was only subject to the approval of the Board of Directors of the respondents. Since the Board of Directors had resolved not to renew the license, question of renewal of the agreement also does not arise. According to the respondents, the agreement was expected to expire on 31.03.2019 and notice was issued in advance to the petitioner. If they were genuinely interested in running the school during the future academic years also, they should have participated in the tendering process and if they turned to be the highest bidder, agreement would have been executed with the petitioner. In the tender, another institution became the highest tenderer and tender was fixed in their favour. License in favour of the petitioner has expired and the suit itself is not maintainable. It was stated that, by virtue of clause (vi) of the agreement, on the expiry of the license, petitioner was bound to vacate the building and to surrender possession of the building along with its fixtures. Even in the meeting held between o.p(c).1770/19 5 the parties, it was clearly informed that the final decision will be taken only by the approval of the management. Tender process has been completed and it has been confirmed in favour of M/s/Kasturba English Medium (Senior Secondary) School, which was the highest bidder. Since the petitioner refused to vacate the premises, respondents issued show cause notice. It was served on the petitioner and they refused to turn up. It was affixed on the school premises also. On 27.05.2019, petitioner submitted its objection and requested for a personal hearing. Though the e-mail dated 27.05.2019 was sent to the petitioner requesting them to appear for personal hearing on 28.05.2019, petitioner did not turn up for personal hearing. Since license agreement was not renewed, they are not entitled to claim any right. The balance of convenience was in favour of the respondents. 4. Heard the learned senior counsel for the petitioner and the learned senior counsel for the respondents. M/s/Kasturba English Medium (Senior Secondary) School which claimed to be the highest bidder had sought to get itself impleaded. They were not impleaded, were substantially in conformity with contentions of second respondent. 5. The main argument of the learned senior counsel for the original petitioner was that the first respondent purported to act as an Estate Officer and issued notice to the petitioner. Ext.P7 order under the Public Premises Act was issued by the first respondent claiming as the o.p(c).1770/19 6 Estate Officer. It was contended that, same person was a Senior Manager of the second respondent and hence the officer could not be the judge of his own cause. It was contended that, he himself had sought eviction on behalf of the second respondent and he himself heard the petitioner on their objection, in the capacity as the Estate Officer. It was contended that, he was not an Estate Officer as contemplated under the Public Premises Act. No effective notice was issued to the petitioner and no chance of being heard was offered. It was contended that the actions of the respondents were bad, being malafide. Petitioner had vested right to continue. It was contended that the court below did not properly consider the question of balance of convenience. 6. The learned senior counsel for the second respondent contended that though clause (iv) provided for an extension of the agreement at the option of the petitioner, it was not an unqualified right and was subject to mutually accepted terms. That did not confer any vested right on the petitioner. The decision to invite fresh tenders was taken by the Board of Directors in the best interest of the company, to ensure financial transparency and to ensure that the license was awarded in favour of the best suited tenderer. 7. Learned senior counsel for the petitioner, challenging the order contended that, first respondent who had exercised the jurisdiction of the Estate Officer under Public Premises Act was not the Estate Officer o.p(c).1770/19 7 as contemplated under the Act. Ext.P7 order of eviction was issued by the first respondent exercising the jurisdiction of the Estate Officer under the Act. It was contended that the first respondent was the Senior Manager (Estate) of the second respondent and that post is distinct and different from the Estate Officer under the Act. It was contended that the Act provides for a summary procedure for eviction of unauthorized occupation to the public premises. Section 2(b) of the Act defines an Estate Officer as a person appointed as such by the Central Government under section 3. Section 3 provides that, Central Government may by notification in the official gazette appoint such persons, being Gazetted Officers of Government or officers of equivalent rank as it thinks fit, to be Estate Officers for the purposes of this Act. The argument was that a separate officer was contemplated under section 2(b) to ensure that he takes an independent statutory decision and does not get biased and prejudiced by his interest towards the company and there is no merger of interest. It was contended that, first respondent was not appointed by the Central Government by notification as contemplated under section 3 and consequently, he was not the Estate Officer under section 2(b) of the Act. It was hence argued that the order passed by him was non est and no action can be taken. 8. The respondents have no case that the Central Government has issued notification appointing the first respondent as the Estate o.p(c).1770/19 8 Officer. Notification has also not been produced. Learned senior counsel tried to salvage this by strenuously contending that the first respondent was a senior manager of the Central Government undertaking and being so, was appointed as the Estate Manager exercising the jurisdiction under the Public Premises Act also. It was contended that, he was the Estate Officer in relation to the properties of the second respondent. It may be true that, he may be discharging duties of the Estate Manager in relation to the properties of the second respondent. That by itself does not constitute him as Estate Officer as contemplated under section 3 of the Public Premises Act and consequently, he cannot exercise the jurisdiction under the Act, unless he has been so appointed by the Central Government by notification. Hence, respondents are yet to prima facie establish that the first respondent was the Estate Officer as contemplated under the Public Premises Act. 9. Yet another connected contention set up by the learned senior counsel for the petitioner was that the first respondent being the manager of the second respondent had earlier issued notice dated 17.05.2019 directing the petitioner herein to vacate the premises. He himself thereafter exercised the jurisdiction under the Public Premises Act and passed impugned order under section 5(1) of the Public Premises Act. It was contended that, thereby, he has exercised the jurisdiction in dual capacities. It was vehemently contended by the learned senior counsel o.p(c).1770/19 9 that a statutory authority is appointed under the Public Premises Act to exercise the jurisdiction under sections 4 and 5 of the Act and is vested with certain powers, which is bound to be exercised bonafide and impartially. In the case at hand, there was a merger of the interest of the first respondent as the Estate Manager of the second respondent and that also of the purported exercise of the duties of Estate Officer and thereby he was influenced by his interest as an officer of the second respondent. It was contended that the procedure adopted by the officer and the haste with which decision were taken, clearly indicated that, his interest as Manager (Estate) prevailed over his purported exercise of jurisdiction as an Estate Officer expected to be exercised while discharging the statutory functions. Hence, he cannot be considered as an independent person competent to discharge his functions under the Act, even if he is a properly constituted Estate Officer, it was contended. To support this, the learned senior counsel relied on the decision of the Bombay High Court in **Gajanan Shivram Lele v. Dena Bank and another (2015 KHC 2699)** wherein an identical situation arose. 10. The learned senior counsel for the respondents tried to explain this by relying on an affidavit filed along with an application dated 11.07.2019 numbered as I.A.No.2 of 2019. In the affidavit, he has stated that, in the second respondent/company, there is only one post of Manager. Depending on the scale of pay, seniority and eligibility, o.p(c).1770/19 10 designation of such Manager will range from Assistant Manager to the senior Manager (Estate) and Assistant General Manager (Estate). Accordingly, an incumbent in the post of Assistant Manager (estate), when becomes eligible for promotion, his designation will change to Assistant Manager (Estate) to Deputy Manager (Estate). However, he continue to hold all powers and discharge all responsibilities of the Estate Manager. To support this, the learned senior counsel relied on the decision in **New India Assurance Company Ltd. v. Nusli Neville Wadia and another** **(2008 KHC 4533)** in which the Honourable Supreme Court referred to an earlier decision in **Accountant and Secretarial Services v. Union of India (1988(4) SCC 324).** It was held that, challenge on the validity of Public Premises Act on the ground that the provision which permits an officer of the establishment to be appointed as the Estate Officer was bad, since that may lead to personal bias, was liable to be rejected. It was held that personal bias cannot be drawn for that reason alone. Further, there is a provision for appeal to a judicial officer also. 11. I am not at all impressed by this explanation. Though, one officer may be an Manager (Estate) in relation to the affairs of the establishment; that does not enable him to exercise the jurisdiction under the Public Premises Act and he cannot assume on himself the jurisdiction under the Act unless he is so authorized under section 3 of the Act. o.p(c).1770/19 11 12. Ext.P1 is the agreement entered into between the second respondent and MES represented by the then President. However, the signatory on behalf of MES was the General Secretary (MES), Calicut. By Ext.P3, clause (iv) was invoked by the General Secretary of the MES, having its office at Calicut. Ext.P4 shows that a meeting was convened, in which, both sides participated and discussed about the modalities and possible extension on mutually agreed terms. On the side of the petitioner herein, Chairman, General Secretary and Treasurer had participated. Ext.P4 was signed by the General Secretary of MES. Ext.P5 notice of the second respondent was also addressed to General Secretary. However, Ext.P6 show cause notice dated 24.05.2019 was issued by the first respondent to the Secretary, MES School, Udyogmandal. It was evident that the petitioner herein was being represented through its General Secretary at Calicut. However, it seems that, Ext.P6 notice was issued to the Joint Secretary of MES School with copy to MES General Secretary at Calicut. 13. Ext.P7 order passed by the first respondent under section 5 of the Act indicates at paragraph 7 that, though MES school had replied to the notice under section 4(1) of the Act and sought personal hearing, they did not attend the personal hearing held on 28.05.2019. This is explained by the petitioner contending that though personal hearing was fixed to 27.05.2019, Ext.P6 notice dated 24.05.2019 which was sent to the o.p(c).1770/19 12 petitioner was served only on 28.05.2019 at Calicut. By that time, the date of personal hearing had elapsed. The first respondent proceeded to pronounce the order on 29.05.2019 itself, without giving the petitioner an effective opportunity of being heard. According to the learned senior counsel for the petitioner, petitioner was not given an opportunity of being heard. Even though the notice was served on the MES school, whether it can be treated as the imputed notice on licensee is to be considered by the appellate court on the basis of the materials placed before it. 14. According to the first respondent, show cause notice dated 24.05.2019 was issued calling upon the petitioner to answer to the material questions raised in the notice, on or before 27.05.2019. Notice was served on the petitioner by hand on 25.05.2019 and affixed on the conspicuous part of the school on the same day. On 27.05.2019, objection was filed and they requested for a personal hearing. E-mail dated 27.05.2019 is stated to have been issued requesting the petitioner to appear for personal hearing on 28.05.2019. They did not appear and after considering the objections, Ext.P7 order was passed. 15. It is an admitted fact that the petitioner was not heard in spite of specific request for personal hearing. Court below held that they were given an opportunity of being heard, which they did not avail. Court below assumed that the petitioner did not have anything to say more than o.p(c).1770/19 13 what was stated in the written objection. The Court assumed that, otherwise, they would have availed the opportunity of personal hearing. 16. The above observation of the court below seems to be misplaced without considering the question whether an effective notice of hearing was given to the petitioner. Their specific case was that, notice of hearing was not served on them. Though, it was stated that the notice was sent by e-mail, the date on which it was sent, e-mail address in which it was sent and other facts are not forthcoming. There is absolutely nothing on record to show that, prima facie, notice was sent by e-mail. The denial of an effective opportunity of being heard cannot be explained away on a reasoning that the petitioner does not have any further arguments than what was stated in the objections. Personal hearing cannot be an empty formality. 17. The learned senior counsel for the petitioner submitted that the bias on the part of the first respondent while discharging the dual function and the merger of interest is evident from the fast tracking of the entire process. By the show cause notice dated 24.05.2019, which was served on 25.05.2019, they were directed to file objection on 27.05.2019. It is pertinent to note that under section 4(2)(i) of the Act, the outer time limit for filing objection was 7 days. Still only 2 days time was granted. On receipt of the reply, hearing was posted on the next day. The day following it, an order under section 5(1) was passed. It is to be noted o.p(c).1770/19 14 under section 5(1), the occupant can be granted 15 days time to vacate. Under section 5(2), there is a provision to extent the time by further 15 days. Still, first respondent gave only one days time to vacate. In the above background, the contention of the learned senior counsel for the petitioner that the authority was unjustifiably hasty cannot be held to be without any basis. 18. It was further contended by the learned senior counsel for the petitioner that, for invoking the jurisdiction under the Public Premises Act, there must be an unauthorized occupation as contemplated under section 2(g) of the Act. It was submitted that, petitioner was put in possession pursuant to the leave and license agreement and had made constructions therein investing huge amounts. Initial period of agreement was to expire on 01.04.2019. There was an option for renewal for a further period on agreed terms. The option was conveyed by the petitioners. According to the learned senior counsel, they were physically and factually in possession and continuing in possession pursuant to the license agreement. Hence, their possession was only lawful. It can become an unauthorized occupation under section 2(g) only when, pursuant to notice, their continued occupation was declared to be unauthorized. This, according to the learned senior counsel was the sinequo-non for initiating the proceedings under sections 4 and 5 of the Act. It was contended by the learned senior counsel that, notice under section 4 o.p(c).1770/19 15 of the Act issued by the first respondent started on a presumption that the petitioner herein was in unauthorized occupation without a preceding notice, terminating the license and declaring the further continuance as unauthorized. Hence, no action should have been taken, it was argued. It was also contended that, if after the efflux of time, license which was to expire on 01.04.2019, the further continuance was ratified impliedly or expressly, either by accepting license fee or by permitting to make constructions, there was an implied renewal of license and to invoke the jurisdiction under the Public Premises Act, continuance of the possession should be declared as unauthorized. It has not been done in this case, it was contended. This seems to be a matter of evidence and has to be appreciated by the appellate court on the basis of material tendered before it. 19. It was contended by the learned senior counsel for the petitioner that even regarding the order of the court below, there was a clear wrong application of principles of balance of convenience and the court below went wrong in refusing to grant stay on a premise that the continuance of the petitioner in the premises would cause irreparable injury to the second respondent. The reasoning given was that, the academic year has already started and allowing the petitioner herein to remain in premises would cause irreparable injury to the students and their parents. It was held that the highest bidder would opt to enter into o.p(c).1770/19 16 an agreement with the second respondent was ready to start school in both the premises. Their interest would also be effected adversely. 20. According to the learned senior counsel for the petitioner this was a clear instance of wrong application of principles of balance of convenience. It was argued that the petitioner herein has been continuing for the past 15 years. It was stated in the petition that expecting extension, the petitioner had repaired the building and class rooms were upgraded as smart classes. Laboratories and libraries were upgraded. Substantial works were undertaken for renovation of classes, playground, library and money invested for purchase of school buses. New academic session has started. Any abrupt change of the management during the midst of the academic year would cause more injury than by permitting new tenderer taking over the management. Further, petitioner has invested huge amounts for the renovation of the building and providing other benefits to the students. The highest bidder can have only a grievance only if they are put in physical possession and before they are granted the license, they cannot have any grievance higher than that of the petitioners, it was contended. 21. Having evaluated these entire facts, I feel that, court below did not consider the balance of convenience, in its correct perspective. Further, the various contentions referred above have also not been properly considered nor their impact correctly evaluated. Consequently, o.p(c).1770/19 17 conclusions arrived at by the court below is not justifiable. It appears that the petitioner herein has set up an arguable case. The balance of convenience is also in favour of the petitioners. Hence, I feel that, till the appeal is heard on merits, untrammelled by any observations made above, impugned order is liable to be stayed. Accordingly, order of the court below to the extent of dismissing I.A.No.4086 of 2019 is liable to be set aside. Original petition is allowed. Impugned order is set aside. I.A.No.4086 of 2019 stands allowed and operation of Ext.P6 order will remain stayed till the appeal is heard and disposed of by the lower court. Sbna **Sd/SUNIL THOMAS JUDGE** o.p(c).1770/19 18 ## **APPENDIX** ## **PETITIONER'S EXHIBITS:** **EXHIBIT P1** **A TRUE COPY OF THE LICENSE AGREEMENT DATED 22.03.2004 EXECUTED BETWEEN THE PETITIONER AND THE SECOND RESPONDENT.** **EXHIBIT P2 A TRUE COPY OF THE LETTER DATED 08.06.2004 ISSUED BY THE SECOND RESPONDENT TO MR. K. VARGHESE, FOUNDER DIRECTOR, TOC H RESIDENTIAL PUBLIC SCHOOL.** - **EXHIBIT P3 A TRUE PHOTOCOPY OF THE LETTER DATED 22.11.2018, SENT BY THE PETITIONER TO THE SECOND RESPONDENT.** - **EXHIBIT P4 A TRUE COPY OF THE MINUTES DATED 20.12.2018 CONTAINING THE MUTUALLY AGREED TERMS AND CONDITIONS FOR THE RENEWAL OF LICENSE.** - **EXHIBIT P5 A TRUE PHOTOCOPY OF THE LETTER DATED 20.02.2019 ISSUED BY THE SECOND RESPONDENT TO THE PETITIONER.** - **EXHIBIT P6 A TRUE COPY OF THE NOTICE DATED 24.05.2019 ISSUED BY THE FIRST RESPONDENT UNDER SECTION 4(1) OF THE PUBLIC PREMISES (EVICTION OF UNAUTHORIZED OCCUPANTS) ACT 1971.** - **EXHIBIT P7 A TRUE COPY OF THE ORDER DATED 29.05.2019 PASSED BY THE FIRST RESPONDENT UNDER SECTION 5(1) OF THE PUBLIC PREMISES (EVICTION OF UNAUTHORIZED OCCUPANTS) ACT 1971.** **EXHIBIT P8 A TRUE PHOTOCOPY OF THE MEMORANDUM OF APPEAL IN A.S. NO. 71 OF 2019 EXHIBIT P9 A TRUE PHOTOCOPY OF THE I.A. NO. 4086 OF 2019 IN A.S. NO. 71/2019.** o.p(c).1770/19 19 ## **EXHIBIT P10** **A TRUE COPY OF THE COUNTER AFFIDAVIT FILED BY THE RESPONDENTS IN I.A. NO. 4086 OF 2019 IN A.S. NO. 71 OF 2019.** **EXHIBIT P11** **A TRUE COPY OF THE LETTER DATED 17.05.2019 ISSUED BY THE FIRST RESPONDENT TO THE PETITIONER.** **EXHIBIT P12 A TRUE PHOTOCOPY OF THE ORDER DATED 26.06.2019, PASSED BY THE 7TH ADDITIONAL DISTRICT COURT, ERNAKULAM.**