Leaseholder Using Land For Charitable Purpose Can't Be Charged Rent Applicable To Commercial Category Of Lease: Jharkhand High Court To State

The Jharkhand High Court recently observed that a society using a leasehold land for charitable purposes, in this case for charitable educational purpose, cannot be charged premium, rent or service charge at commercial lease rates.Justice Kailash Prasad Deo observed that the State, as instrumentality, cannot act with arbitrariness and it must be just, fair and reasonable in all their activities including those in the field of contracts. "Even while playing the role of a landlord or a tenant, the State and its authorities remain so and cannot be heard or seen causing displeasure or discomfort." The Petitioner-school, namely, Holy Cross Institute Hazaribagh and Holy Cross School had preferred the instant writ petition for setting aside the impugned offer of renewal of lease whereby a demand with regard to payment of premium, annual rent and service charge at par with that applicable to commercial category of lease was raised. It was submitted that 5 acres of land held by Bokaro Steel Limited and , 4 acres of vacant land belonging to Steel Authority of India Limited was taken on lease for expansion of the Holy Cross School and construction was carried out at the institute's own cost. The Respondents on the other and contended that the enhancement in payments was being made after 33 years, that too based on universal policy decision taken by the SAIL for all their properties situated in Bhilai and other places. The Court after perusing all evidence on record and hearing both parties noted that all actions of every public functionary in whatever sphere must be guided by reason and not humour, whim, caprice, or personal predilections of the persons entrusted with the task on behalf of the State and exercise of all powers must be for public good instead of being an abuse of power. "In the teeth of the aforesaid judgments rendered by the Apex court, this Court is of the opinion that the respondent-SAIL authorities cannot relied upon impugned demand as the same is exploitative renewal rate. The principle of fair play and natural justice requires that the respondent-SAIL authority should disclose the affected lessee, the basis on which rent is proposed to be increased and reasons for the same." Court observed that the present institution is a charitable institution imparting education and other facilities for building up the moral of the students, who are the future of the country, as such, it was not inclined to sustain the impugned demand, which seems irrational, exorbitant and not based upon any scientific method.Accordingly, the court directed the respondents-SAIL to reassess the rate through a rational agency, considering the value of the land of the surrounding area. The land leased out for school cannot be treated as for commercial purpose, it ought to have been considered, that it is for educational purposes and the wards of the employees of Bokaro Steel Plants are getting education there, apart from other students of the vicinity, the Court added.Case Title: Holy Cross Institute Hazaribagh and Anr. v. Steel Authority of India Ltd. and Ors.Citation: 2022 LiveLaw (Jha) 79 Click Here To Read/Download Order

Leaseholder Using Land For Charitable Purpose Can't Be Charged Rent Applicable To Commercial Category Of Lease: Jharkhand High Court To State

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