OP(C) No. 1968 of 2023 (Deepa Narayan, Sudha Kumar, Roopa Srinivas and Kunnathu Parambil Sales and Services v. Hindustan Petroleum Corporation Ltd.)

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** ## **THE HONOURABLE MR.JUSTICE C. JAYACHANDRAN** **WEDNESDAY, THE 22[nd] DAY OF MAY 2024 / 1ST JYAISHTA, 1946 OP(C) NO. 1968 OF 2023** **AGAINST THE ORDER DATED 04.04.2023 IN I.A NO.1538/2018 IN CS NO.45 OF 2020 OF SUB COURT, ERNAKULAM PETITIONERS/ADDL.PLAINTIFFS 2 TO 4** - **1 DEEPA NARAYAN,AGED 52 YEARS,W/O LATE T.V.NARAYANAN, D/O. J.L. BHATIA BUSINESS FROM SANKARALAYAM, THOTTEKKATT ROAD, ERNAKULAM, PIN - 682011 AND ALSO HAVING ADDRESS AT NO.10 GALAXY APARTMENTS B.J.ROAD, BANDRA WEST, MUMBAI, PIN – 400050.** - **2 SUDHA KUMAR,AGED 58 YEARS,D/O LATE T.N.VIJAYARAGHAVAN AND W/O T.N.KUMAR FROM SANKARALAYAM, THOTTEKKATT ROAD, ERNAKULAM, PIN - 682011 ALSO HAVING ADDRESS AT 004, LIBERO APARTMENTS, SEENAPA LAYOUT, R.M.V.LAYOUT 2ND STAGE, NEW BEL ROAD, BANGALORE, PIN – 560094.** - **3 ROOPA SRINIVAS,AGED 50 YEARS,D/O LATE T.N.VIJAYARAGHAVAN AND W/O SRINIVAS CHIDAMBARAM, FROM SANKARALAYAM, THOTTEKKATT ROAD, ERNAKULAM, PIN - 682011 ALSO HAVING ADDRESS AT S-283, UPPER GROUND FLOOR, GREATER KAILASH-2, NEW DELHI - 110 048.** - **BY ADVS. M.P.RAMNATH P.B.KRISHNAN BEPIN PAUL** ## **RESPONDENTS/DEFENDANTS:** - **1 HINDUSTAN PETROLEUM CORPORATION LTD.,PETROLEUM HOUSE, NO.17 JAMSHEDJI TATA ROAD, MUMBAI, PIN-400 020, ALSO HAVING REGIONAL OFFICE AT TATAPURAM P.O. ERNAKULAM, ERNAKULAM VILLAGE, KANAYANNUR TALUK, PIN - 682014 REPRESENTED BY ITS MANAGING DIRECTOR.** - **2 THE SENIOR REGIONAL MANAGER,HINDUSTAN PETROLEUM CORPORATION LTD., TATAPURAM P.O. ERNAKULAM, ERNAKULAM VILLAGE, KANAYANNUR TALUK, PIN - 682014** ## **OP(C) NO. 1968 OF 2023** -: 2 :- **3 KUNNATHU PARAMBIL SALES AND SERVICES,REPRESENTED BY K.S.AUGUSTINE & K.S. BENEDICT SERAPHINE, {EXP. LIC NO: P/ SC/ KL/14/ 1036 ( P-18 2978), OPP. MAHARAJAS COLLEGE GROUND (NORTH OF KRISHNA HOSPITAL BUILDING), M.G.ROAD, ERNAKULAM, ERNAKULAM VILLAGE, KANAYANNUR TALUK, PIN- 682011.** **BY ADVS. GOPIKRISHNAN NAMBIAR M K.JOHN MATHAI(K/413/1984) JOSON MANAVALAN(J-526) KURYAN THOMAS(K/131/2003) PAULOSE C. ABRAHAM(MAH/58/2006) RAJA KANNAN(K/356/2008)** **THIS OP (CIVIL) HAVING COME UP FOR ADMISSION ON 04.04.2024, THE COURT ON 22.05.2024 DELIVERED THE FOLLOWING:** **'C.R.'** **C.JAYACHANDRAN, J. ============================== O.P.(C) No.1968 of 2023 ========================== Dated this the 22[nd] day of May, 2024** ## **JUDGMENT** **Interesting is the issue involved in this Original Petition under Article 227 of the Constitution, which stems from rejection of an application for reference under Section 113, read with Order 46 of the Code of Civil Procedure. The plaintiffs in the suit, C.S No.45/2020 (originally instituted as O.S No.78/2015) of the Sub Court, Ernakulam are the petitioners herein. The suit was for eviction of the lessee and for recovery of the property, as also, for recovery of a sum of Rs.2 Crores towards rent/damages for use and occupation. The essential facts are as follows:** O.P(C) No.1968/2023 2 **2. The plaint schedule property having an extent of 21.850 cents was originally taken on lease by the Standard Vaccum Oil Company, a corporation registered as per laws of the State of Denver of the United State of America. The lease was for a period of ten years commencing from 24.06.1960, as per registered document No.2360/1960 of the S.R.O, Ernakulam and the rent fixed was Rs.185/- per month. The successor of the leasehold rights was the ESSO Standard Eastern Inc. By virtue of ESSO (Acquisition of Undertakings in India)Act, 1974 (the 'ESSO Act', for short), the first defendant, Hindustan Petroleum Corporation Limited, became** **the lessee of the plaint schedule property. In an application preferred by the predecessor-in-interest of the plaintiff under Section 106 of the Kerala Land Reforms Act, 1960** ## O.P(C) No.1968/2023 3 **(the 'KLR Act', for short), the rent was fixed at Rs.1420.25 per month. However, the Appellate Authority(Land Reforms, Alappuzha), by its Order in L.R.A. No. 476 of 1979, modified the Order of Land Tribunal, only as regards the date from which enhanced rent is to be paid.** _**Dehors**_ **the expiry of the lease and the extended period, as envisaged in the ESSO Act, defendants 1 and 2 are continuing in the plaint schedule property for a meagre rent of Rs.65/- per month. It is averred in the plaint that the provisions of the KLR Act is not applicable to the lease arrangement between the plaintiffs and the defendants. The plaint also refers to the reply issued by the defendants to the lawyer's notice issued by the plaintiffs, wherein the defendants claim benefit under Section 106 of the KLR Act, to contend that they are not liable to be evicted from the plaint schedule** O.P(C) No.1968/2023 4 **premises. It is further contended that, pursuant to the promulgation of the ESSO Act, the first defendant opted to enjoy the benefits of renewal under the same and that statutory renewal of lease resulted in implied surrender of the rights under the lease deed bearing No.2360/1960 aforereferred. The plaintiffs also contended that the ESSO Act will prevail over Section 106 of the KLR Act, inasmuch as, the former is a central enactment, which will override the provisions of the State enactment, in case of conflict. The ESSO Act provides only for renewal of lease, whereas Section 106 of the KLR Act entitles the tenant to remain in the property without any threat of dispossession. Under the ESSO Act, the rent cannot be enhanced, whereas the KLR Act provides for enhancement. The KLR Act bars lease of land, whereas the ESSO Act provides for one** O.P(C) No.1968/2023 5 **renewal. Thus, according to the plaintiffs, the two statutory schemes are mutually conflicting, that no harmonious interpretation is possible and therefore, the KLR Act, especially Section 106 thereof, cannot apply to the premises governed by the ESSO Act. The specific contention urged in the plaint is that, Section 106 of the KLR Act is void by operation of Article 254 of the Constitution in the light of the provisions of the ESSO Act.** **3. The defendants filed written statement denying the above claims of the plaintiffs. They re-iterated their right under Section 106 of the KLR Act to resist the eviction sought for by the plaintiffs. It was contended that there was no implied surrender of the lease and that the first defendant stepped into the shoes of the original** O.P(C) No.1968/2023 6 **lessee by virtue of the provisions of the ESSO Act and is accordingly, entitled to all benefits conferred on the original lessee. The provisions of the KLR Act and the ESSO Act are not contradictory to each other. Inasmuch as all the factual requirements to claim the benefit of Section 106 of the KLR Act are satisfied, the defendants are not liable to be evicted, is the contention urged.** **4. The plaintiffs filed Ext. P3 application (I.A No.1538/2018) seeking reference under Section 113, read with Order 46 Rule 1 of the Code of Civil Procedure, in the context of the following additional issue nos.5,6 and 7 raised by the Sub Court:** ## **1) Do the provisions of the ESSO** **(Acquisition of undertakings in India)** O.P(C) No.1968/2023 7 **Act, 1974 prevail over Section 106 of the Kerala Land Reforms Act, 1963?** **2) Do the provisions of the Kerala Land Reforms Act and specifically Section 106 thereof apply to property governed by the ESSO Act, 1974?** **3) Is Section 106 of the Kerala Land Reforms Act void by operation of Article 254 of the Constitution of India by virtue of provisions of the ESSO Act?** **5. It is urged that the above questions of law arise for consideration in the facts and pleadings of the case. On such premise, reference is sought for. As against Ext. P3, Ext. P4 counter affidavit was filed by defendants 1 and 2, i** _**nter alia**_ **contending that there exists no reason/ground to refer the additional issues for the opinion of** O.P(C) No.1968/2023 8 **the High Court and that there is no contradiction between the provisions of the ESSO Act and Section 106 of the KLR Act.** **6. By the impugned Ext.P6 order, the learned Sub Judge refused consideration of Ext.P3 application; and deferred the same, holding that no circumstances exist at that stage of the suit to invoke Section 113, read with Order 46 of the Code of Civil Procedure. The question of reference was left open for consideration at the relevant stage, vide Ext.P6 order. The learned Sub Judge arrived at such a conclusion on the premise that the first defendant will be deprived of the protection under Section 106 of the KLR Act, only if the option under Section 5(2) of the ESSO Act to renew the lease has been exercised by the first defendant. To ascertain the same, evidence, both oral and** O.P(C) No.1968/2023 9 **documentary, to be let in by the parties are to be examined. The learned Sub Judge found that in such circumstances,** _**“Additional Issue No.5 need not be considered and disposed of as a preliminary issue at this stage of the suit and it can be decided after recording of the evidence to be adduced by the parties.”**_ **7. Having heard Adv.P.B.Krishnan on behalf of the petitioners/plaintiffs and Advocate Sri.Joson Manavalan, M/s Menon & Pai on behalf of the respondents, this Court finds that Ext P6 order impugned in this Original Petition cannot be sustained for the reasons expatiated hereunder.** 1) **The question which is sought to be referred for opinion of the High Court is one touching the validity of the KLR Act, especially of the provision contained in** ## O.P(C) No.1968/2023 10 **Section 106 thereof, on the strength of the contention that the said Act/provision is repugnant to the central enactment, the ESSO Act, and is, therefore, void to the extent of such repugnancy. This is not an issue which is liable to be considered in the light of evidence adduced by the parties, especially when additional issue nos. 5, 6 and 7 afore-referred have been raised by the learned Sub Judge. Therefore, deferring the application for reference for being considered at an appropriate stage later, after permitting the parties to adduce evidence, does not appear to be a proper and legal course.** **2) It appears that the learned Sub Judge has misconceived Ext.P3 application as one for consideration of additional issue No.5 as a** O.P(C) No.1968/2023 11 **preliminary issue. The scope of Ext.P3 is completely different, inasmuch as it seeks a reference under Section 113, read with Order** **46 of the Code of Civil Procedure. This Court is persuaded to observe that the point, which has been formulated for consideration in paragraph no.4 of Ext.P6 order, itself is wrong.** **3) Finally, confining the question to additional issue No.5 alone also does not appear to be proper, when the three additional issues, especially the 7[th ] one - which pertains to the validity of the KLR Act by operation of Article 254 of the Constitution - have been framed and taken stock of by the learned Sub Judge. It would appear that additional issue No. 7, which deals with the validity of Section 106 of the KLR Act in the light of the** O.P(C) No.1968/2023 12 **alleged repugnancy with the provisions of the ESSO Act, in the context of Article 254 of the Constitution is a specific question, which squarely falls within the ambit of the proviso to Section 113 of the Code of Civil Procedure.** **8. In the circumstances, Ext.P6 order cannot be sustained and the same is hereby set aside.** **9. However, the discussion cannot be wound up with the above findings, since it is incumbent on the part of this Court to direct the learned Sub Judge as regards the course to be adopted, once the matter is remitted for consideration afresh. The requirements of a reference under Section 113, read with Order 46 of the Code of Civil Procedure has been succinctly laid down by a Division Bench of the Calcutta High Court in** _**Ranadeb Choudhuri v.**_ O.P(C) No.1968/2023 13 _**Land Acquisition Judge and Others [AIR 1971 Calcutta 368]**_ **. The relevant findings are** ## **extracted hereunder:** _**“Scrutinizing this provision of the Civil Procedure Code, the following features should be emphasised. In the first place, ordinarily this power of reference belongs to the subordinate court. Secondly, such power of reference is discretionary in the sense that in such a case the court may state a case and refer the same for the opinion of the High Court. Thirdly, the subordinate court has to be satisfied that a case pending before it involves a question of the validity of any Act. Fourthly, the subordinate court has to be satisfied that the determination of that question of the validity of the Act is necessary for the disposal of the case. Fifthly, the subordinate court has to be of the opinion that such Act is invalid or inoperative. Sixthly, the subordinate court has to be of the opinion that such**_ O.P(C) No.1968/2023 14 _**invalidity or inoperativeness has not been declared either by the High Court to which the court is subordinate or by the Supreme Court. If these conditions are satisfied, then the subordinate Court's power to refer is no longer discretionary but mandatory and the subordinate court shall state a case setting out its opinion and the reasons therefor. In this event the subordinate court will have to express its opinion whether the Act is invalid or inoperative. Unless he comes to that conclusion, the subordinate court is not bound to make a reference to the High Court.”**_ **10. In A1** _**Parry Sanny Wares v. Federal Bank [2006(2) KLT SN 6(C.No.7)]**_ **, a Division Bench of this Court held that a doubt under Order 46, Rule 1 is to be entertained by the Court, which proposition would equally apply to a question as to the validity of an Act contemplated in the** O.P(C) No.1968/2023 15 **proviso to Section 113 as well. This Court has already dealt with the distinction between a reference under the main part of Section 113 read with Order 46 Rule 1 of the Code of Civil Procedure and a reference under the proviso to Section 113 in** _**Sherly Mathai and Another v. Susamma Mathai (O.P(C) No.2266/2017)**_ **.** **11. Having referred to the broad parameters of the scheme of reference under Section 113, read with Order 46, I would now address the specific issue raised by the petitioners/plaintiffs in Ext.P3 application, as also, in this Original Petition. The KLR Act received the assent of the President on 31.12.1963 and Section 106 thereon came into force on 01.04.1964. Section 106 was thereafter amended by Act 35 of 1969. The lease in question between the predecessor of the plaintiff and the** O.P(C) No.1968/2023 16 **predecessor of first defendant was executed on 21.08.1960. The ESSO Act was promulgated in the year 1974 (Act 4 of 1974). The lease agreement dated 21.08.1960 specifically recite that the lease is to carry on trade in petrol, petroleum products etc. The recitals in page no.2 of the lease deed specifically permit the lessee to install, erect and maintain** _**inter alia**_ **a building for the purpose of storing, selling or otherwise carrying on trade in petrol etc. The ESSO Act provides for acquisition and transfer of right, title and interest of ESSO Eastern INC in relation to its undertakings in India, with a view to ensuring co-ordinated distribution and utilisation of petroleum products distributed and marketed in India by ESSO Eastern INC and for matters connected therewith or incidental thereto. Section 3 of the ESSO Act contemplates transfer** O.P(C) No.1968/2023 17 **and vesting in the Central Government all rights, title and interest of ESSO in relation to its undertakings in India. Section 4(1) explains the undertakings referred to in Section 3 to include all assets, rights, powers, authorities and privileges and all other rights and interests in, or arising out of, such property, as also, all borrowings, liabilities, obligations of the ESSO in relation to its undertakings in India. Section 4(3) speaks of deeds, bonds, agreements etc. to which ESSO is a party or which are in favour of ESSO to operate in full force and effect, against or in favour of the Central Government, as if the Central Government had been a party to such bond, deed, agreement etc. The issue of tenancy is specifically referred to in Section 5, which is extracted hereunder.** _**“5.(1) Where any property is held in India by Esso under any lease or under any right**_ O.P(C) No.1968/2023 18 _**of tenancy, the Central Government shall, on and from the appointed day, be deemed to have become the lessee or tenant, as the case may be, in respect of such property as if the lease or tenancy in relation to such property had been granted to the Central Government, and thereupon all the rights under such lease or tenancy shall be deemed to have been transferred to and vested in the Central Government.**_ _**(2) On the expiry of the term of any lease or tenancy referred to in sub-section (1), such lease or tenancy shall, if so desired by the Central Government, be renewed on the same terms and conditions on which the lease or tenancy was held by Esso immediately before the appointed day.”**_ **12. Now, placing reliance upon the interpretation** **of Clause 5(2), it is the contention of the plaintiffs that defendants 1 and 2 are continuing in the lease hold premises on the strength of statutory renewal envisaged in Section 5(2); that** O.P(C) No.1968/2023 19 **there is an implied surrender of the original lease of the year 1960 by virtue of such renewal; that the ESSO Act will prevail over Section 106 of the KLR Act; that the two statutory schemes are mutually conflicting, which permits of no harmonious interpretation; and that Section 106 of the KLR Act is void by operation of Article 254 of the Constitution in the light of the provisions of the ESSO Act. It could thus be seen that inconsistency/repugnancy is essentially alleged in the context of Section 5(2) of the ESSO Act, which according to the plaintiffs contemplates a mandatory renewal, as is decipherable from the term employed 'shall'; and upon such renewal, the original lease, as also, the benefit under Section 106 of the KLR Act cease to exist. Learned counsel for the petitioners/plaintiffs would contend that the ESSO Act is traceable to entry 6, read with** O.P(C) No.1968/2023 20 **entry 42 of List III, the concurrent list, whereas Section 106 of the KLR Act is traceable to entry 6 of the same list. Since both the enactments spring from the legislative competence of the State as well as the Centre envisaged in List III, the state enactment is void to the extent of the repugnancy afore-pointed out, is the argument raised.** **13. As already indicated and held in** _**A1 Parry Sanny Wares**_ **(supra), the existence of the question pertaining to the validity of an Act or a provision therein is a matter to be satisfied by the referring court, failing which, there cannot be any reference under Section 113 of the Code. Therefore, the first issue to be addressed by the learned Sub Judge should be as to whether there exists any repugnancy between Section 106 of the** O.P(C) No.1968/2023 21 **KLR Act and the provisions of the ESSO Act. While addressing this issue, special focus and emphasis has to be made to Section 5(2), as also, to the interpretation thereof. For a correct exercise of that function, the purpose of Section 5(2) has to be borne in mind. Section 5(2) is an enabling provision in favour of the lessee, enabling renewal of the lease on the same terms and conditions on which the lease or tenancy was held by ESSO immediately before the appointed day, on the event of expiry of the term of such lease/tenancy. If it is an enabling provision in favour of the lessee, what is the true scope of the expression 'shall'? Whether 'shall' operates as against the lessor, in the sense that the discretion/choice of the lessor in the matter of renewal of lease has been done away with? Or whether 'shall' operates against the lessee, so as** O.P(C) No.1968/2023 22 **to make renewal of the lease compulsory, as contended for by the learned counsel for the plaintiffs/petitioners? Simultaneous with considering the above questions, the true scope and expression of the terms** _**'if so decided by the Central Government'**_ **as employed in Section 5(2) also has to be ascertained. Does it mean that the Central Government, the lessee, which has stepped into the shoes of the ESSO, is not required to seek renewal, if the circumstances/privileges which vest with ESSO does not mandate such a renewal? To be more precise, if by virtue of Section 106 of the KLR Act, a right is vested upon the ESSO to continue in the leased premises without the threat of dispossession, whether the lessee is still bound to seek renewal or whether the lessee can enjoy the benefit of Section 106, especially when the statute employs the terms** _**'if**_ O.P(C) No.1968/2023 23 _**so decided by the Central Government'**_ **etc. are points to ponder to arrive at a correct conclusion, as to whether there exists any repugnancy between the Central Act(the ESSO Act) and the State Act(the KLR Act). As already indicated, only if such repugnancy exists, the question of reference arises under Section 113, read with Section 46 of the Code of Civil Procedure.** **14. Needless to say that the binding precedents on what amounts to repugnancy between a State Law and a Central Law, as enunciated by a Constitution Bench of the Honourable Supreme Court in 1.** _**M. Karuna Nidhi v. Union of India [AIR 1979 SC 898]**_ **, 2.** _**Rajiv Sarin and Another v. State of Uttarakhand and others [2011(8) SCC 708]**_ **, 3.** _**State of Kerala v. Mar Appraem Kuri Co.Ltd. [2012(2) KLT**_ O.P(C) No.1968/2023 24 _**639 SC]**_ **etc. shall be borne in mind by the learned Sub Judge, to find out whether the provisions of the Central Act and the State Act are fully inconsistent and absolutely irreconcilable.** **15. In the light of the above discussion, the impugned Ext.P6 order is set aside and Ext.P3 application is remitted back to the Sub Court, Ernakulam for consideration afresh, in the light of the binding precedents on the point, as also, the observations contained in this judgment.** **The Original Petition is allowed accordingly.** **Sd/-** **C.JAYACHANDRAN, JUDGE** vdv ## **APPENDIX OF OP(C) 1968/2023** |**PETITIONER EXHIBITS**||| |---|---|---| |**Exhibit P1**|**TRUE**<br>**PHOTOCOPY**<br>**OF**<br>**THE**<br>**PLAINT**|| ||**DT.16.03.2015 IN C.S NO. 45/2020**|| ||**(EARLIER O.S NO. 78/2015 BEFORE **|**THE**| ||**HON'BLE PRINCIPAL SUB COURT ERNAKULAM**|| |**Exhibit P2**|**TRUE PHOTOCOPY OF THE WRITTEN STATEMENT**|| ||**DT. 05.04.2016 IN O.S NO. 78/2015**|**NOW**| ||**C.S.NO.45/2020 BEFORE THE PRINCIPAL**|**SUB**| ||**COURT ERNAKULAM**|| |**Exhibit P3**|**TRUE PHOTOSTAT COPY OF THE APPLICATION**|| ||**DATED**<br>**06.04.2018**<br>**FILED**<br>**AS**|**I.A**| ||**NO.1538/2018 IN O.S NO. 78/2015 BEFORE**|| ||**THE HON'BLE PRINCIPAL SUB COURT**|| ||**ERNAKULAM**|| |**Exhibit P4**|**TRUE PHOTOSTAT COPY OF THE COUNTER**|| ||**AFFIDAVIT DT.05.06.2018 FILED BY **|**THE**| ||**RESPONDENTS 1 & 2 HEREIN IN I.A**|**NO.**| ||**1538/2018 (EXT P3)**|| |**Exhibit P5**|**TRUE PHOTO COPY OF THE JUDGMENT **|**DT**| ||**13.03.2023 IN OP(C) NO.573/2023 OF**|**THE**| ||**HON'BLE HIGH COURT OF KERALA**|| |**Exhibit P 6**|**TRUE PHOTO COPY OF THE ORDER **|**DT**| ||**04.04.2023 IN IA NO.1538/2018 IN**|**C.S**| ||**NO.45/2020 OF THE HON'BLE PRINCIPAL**|**SUB**| ||**COURT, ERNAKULAM**||