Priya Gour
Published on: 16 August, 2022 at 20:13 IST
The Jharkhand high court bench of Justice Kailash Prasad Deo recently held that rent or any other premium cannot be charged at commercial rates to societies leasing the land for charitable educational purposes. The state must be fair in all its contracts.
The bench noted:
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 Case: Holy Cross Institute, Hazaribagh and Anr. v. Steel Authority of India Ltd. and Ors.
An instant writ petition was filed by the school, namely, Holy Cross Institute Hazaribagh and Holy Cross School, seeking to set aside the offer of renewal of lease whereby a demand was made for payment of premium, annual rent, and service charge at par with commercial leases.
The plea said that 5 acres of land held by Bokaro Steel Limited and 4 acres of vacant land belonging to Steel Authority of India Limited were leased to the Holy Cross School and construction was carried out by the school at its own cost. It was claimed by the respondents that the increase in payments was being made after 33 years, as per the universal policy decision taken by the SAIL for all their properties in Bhilai and other places.
The Court, after due examination of evidence on record and hearing from both parties, noted that all actions of every public functionary must be for the public good instead of being an abuse of power. The state must not lose sight of its overall welfare goal.
In the teeth of the aforesaid judgments rendered by the Apex court, this Court is of the opinion that the respondent-SAIL authorities cannot rely upon the impugned demand as the same is an exploitative renewal rate. The principle of fair play and natural justice requires that the respondent-SAIL authority should disclose to the affected lessee, the basis on which rent is proposed to be increased and reasons for the same. “
The court held that the state’s demand was exorbitant and not based upon any scientific method. To make a demand on a charitable educational institution is immoral. The objective of the institution is to impart education for the betterment of the children’s future.
Even if the land is commercial land, it can not be treated for commercial purposes for a charitable school meant for the wards of the workers and the nearby areas.
Thus, the court ordered the respondents-SAIL that it reassess the rate through a rational agency, considering the value of the land of the surrounding area.