Holding

A government company's power to renew a lease under the 1976 Act is not absolute; it must be exercised fairly, reasonably and bona‑fide, and the appellant’s desire was arbitrary and therefore invalid.

Summary

Bharat Petroleum Corporation Ltd., a government company, claimed a statutory right to renew a lease originally granted to Burmah Shell under the Burmah Shell (Acquisition of Undertakings in India) Act, 1976. The lease, with a nominal rent of Rs 50 per month, had expired in 1985 and the company issued a notice in 1989 to renew it for another 30 years. The lessees objected, alleging non‑payment of rent for 17 years and that the renewal was not bona‑fide. Lower courts initially upheld the renewal but were reversed on appeal, holding the renewal arbitrary and unfair. The Supreme Court held that, although the Act confers a power to renew, a State entity must exercise it fairly, reasonably and on objective criteria; the appellant’s desire was not bona‑fide and was arbitrary. Since possession had already been delivered to the respondents, the Court dismissed the appeals with costs.

Issues considered

The extent of the statutory right to renew a lease under s.5(2) and s.7(3) of the Burmah Shell (Acquisition of Undertakings in India) Act, 1976.
Whether the Central Government or a government company may exercise the renewal power subject to the constitutional requirements of fairness, reasonableness and bona‑fide intent.
Whether non‑payment of rent and lack of bona‑fide purpose can defeat the statutory renewal right.
Whether the Supreme Court can interfere with the factual findings of the lower courts regarding the appellant's desire to renew.

Legislation cited

Burmah Shell (Acquisition of Undertakings in India) Act, 1976s. 3, s. 5(2), s. 7(3)
Code of Civil Procedure, 1908s. 100
Constitution of Indias. Article 12, s. Article 14
Transfer of Property Act, 1882s. 107

Subjects

lease renewalgovernment leasestatutory discretionfairnessreasonablenessArticle 12Burmah Shell ActState as landlordnon‑payment of rentconstitutional lawadministrative law

Judgment

" 1 BHARAT PETROLEUM CORPN. LTD. A
V.

MADDULA RA TNAVALLI AND ORS.

APRIL 27, 2007

[S.B. SINHA AND MARKANDEY KA TJU, JJ.] B

. l Burmah Shell (Acuisition of Undertakings in India) Act, '/976-ss. 3,
5(2)and 7-Vesting of right, title and interest of Burmah Shell-lessee in
Central Government and consequent Company-Renewal of lease-Claim of.
by Government Company, on the same terms and condition on which Burmah
c
Shell held the lease-Renewal of lease rejected by High Court since for 17
years during pendency of eviction suit. Government Company did not pay
rent nor proved their bonafides-Held: The desire of Government Company
to renew lease not bona fide and action not fair or reasonable thus claim not
sustainable-Nevertheless, possession of lease holding has already been D
delivered-Order of High Court calls for no interference-Constitution of
India, I950-Articles I2 and 14.

Maxims; Dura Lex Sed Lex-Meaning of-Only because a statute cause
hardship, the same may not be declared ultra vires.
E
Lex injusta non est lex-Meaning of-A statute must be construed
justly-Unjust law is no law at all.

The Burmah Shell (Acquisition of Undertakings in India) Act, 1979
was enacted to provide for acquisition and transfer of the title, right and
~. _, F
interest in the "Burmah Shell Oil Storage and Distributing Company ofIndia
Ltd "to the appellant -Government company. By reason of s. 3 of the Act, the
right, title and interest of Burm ah Shell stood transferred to and vested in
the Central Government which shall be deemed to the lessee or tenant. Under
sub-section (2) of section 5 on the expiry of the terms of any lease or tenancy,
such lease or tenancy shall if so desired by the Central Government be renewed
G
-,.. on the same terms and conditions on which the lease or tenancy was held by
Burmah-Shell. Central Government in exercise of its power conferred upon
it under section 7 directed that the undertaking of the Burmah Shell shall
vest in the appellant.

997 H
998 SUPREME COURT REPORTS [2007] 5 S.C.R.

A Burmah Shell-predecessor-in -interest of the appellant was a lessee for >\ ~

a period of 30 years by virtue of lease deed executed by the respondent. The
stipulated rent was Rs 50/- per month. On expiry of the period of lease, the
appellant issued show cause notice exercising its purported right of renewal
on the same terms and condition on which lessee-Burmah Shell held the lease.
Respondents did not agree. It stated that as rent has not been paid and the
B provisions of the Act have no application, tenancy stood terminated. It called
upon the appellant to vacae and deliver possession of the premises. Appellant
did not deliver the vacant possession of the tenanted premises and as such
)_
eviction suit was filed. Trial Court dismissed the suit holding that the appellant
had a right to continue to occupy the leasehold as a tenant on the same terms
c and conditions on which the tenancy was granted. Respondent filed an appeal
which was allowed. Appellant filed a Second Appeal. High Court dismissed
the same. Hence the present appeal.

Appellant-Government Company contended that by reason of s. 5(2) read
withs. 7(3) of the 1976 Act, it had an unbridlled statutory right to exercise
D its option for renewal of the lease which in terms thereof would be deemed to
have been renewed for another term of30 years from 25.07.1989; and that
the Court can interfere with the 'desire' expressed by the Government
company only when it is actuated by any malice or ill-will but not when the
same was either unfair or unreasonable.
E Respondents contended that an action on the part of the appellant should
conform to the doctrine of fairness and thus, the impugned judgment cannot
be interfered with.

Dismissing the appeals, the Court
F HELD: 1.1. Appellant-Government Company is a 'State' within the '._
meaning of Article 12 of the Constitution of India. Therefore, it is enjoined
with a duty to act fairly and reasonably. Just because it has been conferred
with a statutory power. The same by itself would not mean that exercise thereof
in any manner whatsoever will meet the requirements of law. The statute uses
G the words "if so desired by the Central Government" . Such a desire cannot
be based upon a subjective satisfaction. It must be based on objective criteria. l .
The Burmah Shell (Acquisition of Undertakings in India ) Act, 1976 is a
special statute. It overrides the provisions of section 107 of Transfer of
Property Act, However the action of State must be judged on the touchstone
of reasonableness. [Para 13] [998-E, F, G]
H
BHARAT PETROLEUM CORPN. LTD. 1•. MADDULA RATNAVALLI 999
Bharat Petroleum Corporation Ltd. v. P. Kesavan and Anr., [2004] 9 A
" I sec 772, relied on.
1.2. An executive action must be informed by reason. An unfair executive
action can only survive for a potent reason. An action which is simply unfair
or unreasonable would not be sustained. Objective satisfaction must be the
basis for an executive action. Even subjective satisfaction on the part of a State B
is liable to judicial review. The 'State' acting whether as a 'landlord' or a
'tenant' is required to act bona fide and not arbitrarily, when the same is
'1 ,( likely to affect prejudicially the right of others. [Para 16) [999-D, E)

Amarnath Ashram Trust Society and Anr. v. Governor of UP.and Ors., C
[1998] l sec 591, referred to.

1.3. The legal principal is that only because a statute causes hardship,
the same may not be declared ultra vires. (Dura Lex Sed Lex) . A statute,
however, must be construed justly. An unjust law is no law at all. (Lex injusta
non est lex). [Paras 18 and 20] [1007-A, DJ D
Raghunath Rai Bareja and Anr. v. Punjab National Bank and Ors.,
(2006) 13 SCALE 5ll; Kai/ash Chand and Anr. v. Dharam Dass, [2005] 5
~ SCC 375 and Mis. /spat Industries Ltd. v. Commissioner of Customs. Mumbai,
(2006) 9 SCALE 652, referred to.
E
Rreyer Stephen (2005); Active Liberty Interpreting Our Democratic
Constitution, Knopf Chapter on Statutory Interpretation, P. 99, referred to.

1.4. A statutory order or discretion exercised by a statutory authority
must also be tested on the anvil of the constitutional scheme.
(Para 24) [1008-E] F
1.5. Reasonableness and non arbitrariness are the hallmarks of an
action by the State. Judged from any angle, the action on the part of the
appellant does not satisfy the test of fairness or unreasonableness. It being
wholly arbitrary cannot be sustained. In any event, when two views are possible,
a view which satisfies the constitutional rights or requirements, must be G
preferred. [Paras 26 and 27] [1008-G; 1009-AJ
->

Mis. Dwarkadas Marfatia and Sons v. Board of Trustees of the Port of
Bombay, (1989] 3 SCC 293; Noble Resources Ltd. v. State of Orissa and Anr.,
[2006] IO SCC 236; State of Karnataka and Anr. v. All India Manufacturers
Organisation and Ors., [2006] 4 SCC 683; ML. Kamra v. Chairman-cum- H
1000 SUPREME COURT REPORTS [2007] 5 S.C.R.

A Managing Director, New India Assurance Co. Ltd and Anr., [19921 2 SCC
36, relied on.

1.6. Right of property although is not a fundamental right, nonetheless
remains a constitutional right and any expropriatory legislation must be
construed strued strictly. [Para 291 [1009-D)
B
Hindustan Petroleum Ltd v. Darius Shahpur Chennat and Ors., [20051
5 sec 627, relied on.

1.7. In the instant case, the concurrent finding of fact is that the desire A
of the appellant was not bonajide. Further, the decree passed by the Appellate
C Court as upheld by the Court was put to execution by the respondents on
04.06.2006. The decree has been executed and the respondent has been put
in possession of the decretal premises. In any event. possession of the lease
holding has already been delivered. Respondents have received possession after
a long struggle. Therefore, it is not a case where interference with the
D impugned judgment particularly in view of the finding of fact arrived at by
the courts below is called for. [Para 301 [1009-EI

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2202 of2007.

From the Final Judgment and Order dated 20.04.2006 of the High Court
E of Andhra Pradesh at Hyderabad in Second Appeal No. 80 of 2004.

WITH

C.A. No. 2203 of2007.

Sudhir Chandra, and Parijat Sinha for the Appellant.
F \_ .
Aman Lekhi, Jaspreet Singh, Rajan Chaurasia, G.R.K. Paramahamsa,
Lokesh Kumar, Manoranjan Verma and M.K. Garg for the Respondents.

The Judgment of the Court was delivered by

G S.B. SINHA, J. I. Leave granted.

2. Appellant is a Government company. The Parliament enacted the
Burm ah Shell (Acquisition of Undertakings in India) Act, 1976 (The said Act},
inter alia, to provide for acquisition and transfer of the title, right and interest
H in the "Burmah Shell Oil Storage and Distributing Company of India Ltd "
-~
f
BHARAT PETROLEUM CORPN. LTD. v. MADDULA RATNAVALLI (S.B. SINHA, I.] J00 J

to Bharat Petroleum Corporation Limited. The said Act came into force on A
24.01.1976 which was the 'appointed day' fixed within the meaning of Section
2A(c) of the Act. By reason of Section 3 of the said Act the right, title and
interest of Burmah Shell stood transferred to and vested in the Central
Government. Section 5 of 1976 Act provides that the Central Gcvernment shall
. be deemed to be the lessee or tenant under the circumstances specified
therein. Sub-section (2) of Section 5 which is relevant for our purpose reads B
thus :

-I ,l. "On the expiry of the terms of any lease or tenancy referred to in sub-
section (I) 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 Burmah-Shell immediately the
c
appointed day."

3. It is not in dispute that the Central Government in exercise of its
power conferred upon it under section 7 of the said Act directed that the
undertaking of the Burmah-shell shall vest in the appellant herein which is a D
Government company; the consequences, inter alia, wherefor is laid down in
sub-section (3) thereof which reads as under :
• "The provisions of sub-section (2) of section 5 shall apply to a lease
or tenancy, which vests in a Government company, as they apply to
a lease or tenancy vested in the Central Government and reference E
therein to the "Central Government" shall be construed as a reference
to the Government company."

4. Burmah-shell, the predecessor-in-interest of the appellant was a lessee
for a period of 30 years by virtue of a deed of lease which was executed on
~
or about 25.07.1959 by the respondent. The stipulated rent was Rs.50/- per F
-I
month. On expiry of the period oflease on 30.08.1985, the appellant exercised
its purported right of renewal by issuing a notice on or about 24.05.1989
stating :

"On !st August, 1977, another fresh certificate of incorporation was
issued under the same section of the Companies Act, 1956, effecting G
- ,.
I the change in the name of the Company from Bharat Refineries Ltd.,
to Bharat Petroleum Corporation Ltd., which change as before does
not affect any rights or obligations of the Company.

This is to advise you that in terms of Section 5 and Section 7(3) of
H
1002 SUPREME COURT REPORTS [2007] 5 S.C.R.

A the Bunnah-Shell (Acquisition of Undertaking in India) Act, 1976,
~
'(
extract of which is enclosed for your reference, we desire to renew the
lease for a further period of30 years commencing from 25.7.1989 on
the same tenns and conditions on which the lessee above mentioned
viz. Burrnah-Shell Oil Storage & Distributing Co. of India Ltd., held the
lease immediately before the appointed day viz. 24th January, 1976.
B
May we therefore, request you to let us know when it will be
convenient for you to have the lease registered on tenns similar to
those existing in the current lease. On receipt of your advice in this
)
matter, we shall take further action." •
c 5. Respondents did not agree thereto. They, on the other hand, by a
letter dated 26.08.1990 stated that as the rent in respect of the said land has
not been paid and the provisions of the said Act have no application, the
tenancy shall stand terminated with effect from 24.09.1990. Appellant was
called upon to vacate and deliver possession of the said premises stating :
D "Please therefore take notice that if you fail to vacate and deliver
vacant possession of the said property immediately after 24.09.1990
paying damages for use and occupation at Rs.5,000/- per month and
the costs of this notice to my clients, they will be constrained to file
a suit against you for appropriate reliefs and that you will also be
E liable for all my client's cost."

6. Despite service of the said notice, as the appellant did not deliver
vacant possession of the tenanted premises; a suit for eviction was filed. In
their written statement, the appellants averred:

"The allegations that the lease expired on 24.07.1989, that the plaintiffs
F
demanding delivery of vacant possession and arrears of rent or ~
-
damages, that the plaintiffs require the plaint schedule property for
their bonajide use for construction of shops and carrying on business
are all absolutely false. The alleged requirement of the plaintiffs is
false and its an afterthought and made to lend support of their claim
G for possession contrary to the statutory renewal/protection available
to this defendant."
J. -
7. By reason of a judgment dated 30.12.1999, the learned Senior Civil
Judge, Anakapalle, Andhra Pradesh dismissed the said suit in view of the
provisions of the 1976 Act holding that the appellant had a right to continue
H to occupy the leasehold as a tenant on the same tenns and conditions on -
.,. BHARAT PETROLEUM CORPN. LTD. v. MADDULA RA TNA VALLI [S.B. SINHA,J.] } 003

)'
1 which the tenancy was granted. An appeal preferred thereagainst, however, A
was allowed by the First Appellate Court opining:-

"In the above decision, it was held that the words "if so desired
means if so needed", and it is quite likely that immediately after the
undertakings were taken over by the Central Government, it could not
be possible to obtain suitable alternative premises, for continuing B
business activities of the undertakings of the Caltex (India) and
therefore, the Central Government has to be armed with the power to
..,
A get the leases and tenancies renewed or continued after their expiry
under sub-section (3). So the power under sec.7(3) for renewing or
continuing by the Act of Parliament, and as per the Act, the defendant c
company got right to renew the lease on the same terms and conditions
for a further period of 30 years. He further deposed that they exercised
their option to renew the lease by a letter dt. 24.5.1989. Thus, D. W.
has not explained or given reasons to show that the need for renewal
of lease for a further period of 30 years. In the chief-examination he
stated that there is a bridge viz., Sarda Bridge near lease hold premises, D
and bridge was closed due to heavy traffic and the traffic was diverted
to bye-pass road, and therefore, the rental value of the lease hold
~
premises is reduced. At page-4 he admitted that Subramanyam and
others are the retail dealers of Bharat Petroleum Corporation and after
closure of the bridge the sale of petroleum products are decreased as E
heavy traffic was effected. He stated that the local trade was continuing.

It is, therefore, clear from the above admission of D.W. l that due to
the closure of the bridge near the schedule premises, the highway
traffic is being diverted through the bye-pass road. It is thus clear
... .. from the above evidence that there is no need for renewal of the lease. F
There is no allegation in the written statement that the defendant
needs the premises. Therefore, it is clear from the pleadings, as well
as the evidence of DW.l that there is no need for renewal of lease.
By virtue of the above provision as of right, the defendant-corporation
is not entitled for renewal of lease for a further period of 30 years. It
is against the spirit of the above decisions. The learned Senior Civil G
-- _, Judge, has lost sight of the above aspects and erroneously held that
the defendant Corporation as of right, by virtue of the above
provisions, is entitled for renewal of the lease. Thus the finding of the
lower court that Ex.A. I quit notice is invalid is erroneous.

The object of the Act is to prove better service to the public and the H
A
1004 SUPREME COURT REPORTS [2007] 5 S.C.R.

same can be achieved only when the outlet is situated at a place
where there will be more vehicular traffic but the vehicular traffic at
''(
"
-
the schedule premises is completely closed, and the same has been
diverted into the bye-pass road. Therefore, the defendant cannot
serve the public, as it was earlier by continuing petrol bunk in the
schedule premises. By taking shelter under the above technicality, the
B retailer of the defendant-Corporation Subramanayam and others cannot
be allowed to squat on the property for a poultry (sic paltry) monthly
rent of Rs.50/-."
,\
8. A Second Appeal preferred thereagainst by the appellant has been
dismissed by the High Court of Andhra Pradesh holding :
c
" ... In this case, it is an admitted fact that for 17 long years during the
pendency of this lis, neither the appellant paid the rents nor deposited
to the credit of the suit to prove their bona fides that there is a bona
fide requirement, apart from their legal right to have renewal
D automatically under sections 5(2) and 7(3) of the Act. Further, it is in
the evidence that as soon as the by-pass road had come· up in
Anakapalle, the diesel component of the petrol bunk was closed and
the business of the appellant-company was decreased to a considerable ;
extent. This all shows that since the rent was only Rs.50/- per month
as agreed under Ex.BI lease deed and the appellant though not having
E much business at the present place, just they want to enjoy the suit
land for another 30 years in the guise of sections 5(2) and 7(3) of the
Act, just for a rent of Rs.50/- per month. During the pendency of the
lis, the appellant has not come forward with any proposal to enhance
the rent. In fact, appellant did not deposit even that meager rent of
F Rs.50/- per month for 17 long years. Therefore, it cannot be said that
the appellant acted fairly. The renewal was actuated by unfair and ""
.
unreasonable motives. As such, it cannot be said that in the guise of
section 5(2) of the Act, the appellant is entitled for automatic renewal.

In view of the above discussion, whether mere expressing desire for
G renewal or not furnishing reasons for renewal is necessary to be
examined in this case. May be, in Bharat Petroleum Corporation Ltd.
·-' --
v. P. Kesavan (supra), the point did not arise for consideration directly,
and only as a general discussion, the Apex Court held that in view
of sections 5(2) and 7(3) of the Act, renewal is automatic. Further,
whether sections 5(2) and 7(3) of the Act are to be given a restrictive
H meaning to construe that with an intention to protect the interest of
BHARATPETROLEUM CORPN. LTD. 1·. MADDULA RATNA VALLI [S.B. S!NHA,J.] 1005

the Government of India under the Act, the automatic renewal was A
contemplated of those leases, which were expired around that time i.e.
1976 also need not be gone into in this case. The very conduct of the
appellant is nauseating and does not inspire the confidence of the
Court to show any indulgence. No substantial question of law arises
for consideration under section I00 of the Civil Procedure Code. The
Second Appeal is devoid of merit and liable to be dismissed." B

9. Appellant is, thus, before us.

10. Before embarking upon the rival contentions of the parties we may,
however, notice that the decree passed by the Appellate Court as affirmed by
the High Court was put to execution by the respondents on 04.06.2006. C
Indisputably, the decree has been executed and the respondent has been put
in possession of the decretal premises.

11. Mr. Sudhir Chandra, learned Senior Counsel appearing on behalf of
the appellant submitted that the appellant, by reason of Section 5(2) read with D
Section 7(3) of the 1976 Act, had an unbridlled statutory right to exercis~its
option for renewal of the lease which in terms thereof would be deemed to
hav.e been renewed for another term of 30 years from 25.07.1989 and in that
view of the matter the impugned judgment cannot be sustained.

12. Mr. Aman Lekhi, learned Senior Counsel appearing on behalf of the E
respondents, on the other hand, submitted that an action on the part of the
appellant should conform to the doctrine of fairness and in that view of the
matter, the impugned judgment cannot be interfered with. . •

13. Appellant-company is a 'State' within the meaning of Article 12 of
the Constitution of India. It is, therefore, enjoined with a duty to act fairly and F
reasonably. Just because it has been conferred with a statutory power, the
same by itself would not mean that exercise thereof in any manner whatsoever
will meet the requirements of law. The statute uses the words "if so desired
by the Central Government". Such a desire cannot be based upon a subjective
satisfaction. It must be based on objective criteria. Indisputably, the 1976 Act G
is a special statute. It overrides the provisions of Section 107 of Transfer of
Property Act. The action of the State, however, must be judged on the
touchstone of reasonableness. Learned counsel for both the parties have
relied upon a 3 Judge Bench decision of this Court in Bharat Petroleum
Corporation Ltd. v. P. Kesavan & Anr., [2004) 9 SCC 772 wherein this Court
~W: H
1006 SUPREME COURT REPORTS [2007] 5 S.C.R.

A "The said Act is a special statute vis-a-vis the Transfer of Property
Act which is a general statute. By reason of the provisions of the said '( f

Act, the right, title and interest of Bunnah Shell vested in the Central
Government and consequently in the appellant Company. A lease of
immovable property is also an asset and/or right in an immovable
property. The leasehold right, thus, held by Bunnah Shell vested in
B the appellant. By reason of sub-section (2) of Section 5 of the Act,
a right of renewal was created in the appellant in tenns whereof in the
event of exercise of its option, the existing lease was renewed for a
further tenn on the same tenns and conditions. As noticed hereinbefore,
Section 11 of the Act provides for a non obstante clause."
c 14. Whereas submission of Mr. Sudhir Chandra, learned Senior counsel
-
is that the Court can interfere with the 'desire' expressed by the Government
company only when it is actuated by any malice or ill-will but not when the
same was either unfair or unreasonable. In fine, the contention is that the
State in a matter of this nature is required to act fairly.
D
15. We do not see any incongruity in the said decision. A judgment,
as is well known, must be read in its entirety. It must be construed reasonably
and if necessary, in the light of the constitutional and statutory provisions.

16. An executive action must be infonned by reason. An unfair executive
E action can only survive for a potent reason. An action which is simply unfair
or unreasonable would not be sustained. Objective satisfaction must be the
basis for an executive action. Even subjective satisfaction on the part of a
State is liable to judicial review. The 'State' acting whether as a 'landlord' or
a 'tenant' is required to act bona fide and not arbitrarily, when the same is
likely to affect prejudicially the right of others.
F
17. In Amarnath Ashram Trust Society & Anr. v. Governor of U.P. & ....
Ors., (1998] l SCC 591, it was held:

"... Thus the decision of the Government to withdraw from acquisition
was based upon a misconception of the correct legal position. Such
G a decision has to be regarded as arbitrary and not bona fide. Particularly
in a case where as a result of a decision taken by the Government the
other party is likely to be prejudicially affected, the Government has ,-
to exercise its power bona fide and not arbitrarily. Even though Section
48 of the Act confers upon the State wide discretion it does not pennit
H it to act in an arbitrary manner ... "
BHARATPETROLEUMCORPN. LTD. v. MADDULARATNAVALLl[S.B. SINHA,!.] 1007

t
18. We are, however, not oblivious of the legal principle that only A
I
because a statute causes hardship, the same may not be declared ultra vires.
(Dura Lex Sed Lex). We may, in this regard, notice certain principles :

19. In Raghunath Rai Bareja and Anr. v. Punjab National Bank and
Ors., (2006) 13 SCALE 511, it is stated :
B
"Learned counsel for the respondent-Bank submitted that it will be
very unfair if the appellant who is a guarantor of the loan, and director
of the Company which took the loan, avoids paying the debt. While
~

1" ~ we fully agree with the learned counsel that equity is wholly in favour
of the respondent-Bank, since obviously a Bank should be allowed to
recover its debts, we must, however, state that it is well settled that c
when there is a conflict between law and equity, it is the law which
has to prevail, in accordance with the Latin maxim 'dura lex sed lex',
which means 'the law is hard, but it is the law'. Equity can only
supplement the law, but it cannot supplant or override it."

10. A statute, however, must be construed justly. An unjust law is no
D
law at all (Lex injusta non est lex).
~

i 21. In Kai/ash Chand & Anr. v. Dharam Dass, [2005] 5 SCC 375, Lahoti,
C.J. opined :

"We find it difficult to accept the construction placed on the third E
proviso, in para 14 of the judgment in Molar Mal case. In Rakesh
Wadhawan v. Jagdamba Industrial Corpn. this Court has held that
a statute can never be exhaustive. The legislature is incapable of
contemplating all possible situations which may arise in future litigation
and in myriad circumstances. The scope is always there for the court F
- _, to interpret the law with pragmatism and consistently with the demands
of varying situations. The construction placed by the court on statutory
provisions has to be meaningful. The legislative intent has to be
found out and effectuated.

Law is part of the social reality. G
~ _, (See Law in the Scientific Era by Justice Markandey Katju, 2000
Edn., p. 33.)

Though law and justice are not synonymous terms they have a close
relationship, as pointed out by the American jurist Rawls. Since one
H
1008 SUPREME COURT REPORTS [2007] 5 S.C.R.

A of the aims of the law is to provide order and peace in society, and
since order and peace cannot last long if it is based on injustice, it l( '

follows that a legal system that cannot meet the demands of justice
will not survive long. As Rawls says: Laws and institutions no matter
how efficient and well arranged, must be reformed or abolished if they
are unjust. (ibid., p. 72.)
B
Clearly, law cannot be so interpreted as would cause oppression or
be unjust."

22. The Parliament moreover is presumed to have enacted a reasonable ) ..
statute (see Breyer, Stephen (2005): Active Liberty: Interpreting Our Democratic
c Constitution, Knopf (Chapter on Statutory Interpretation - pg. 99 for
"Reasonable Legislator Presumption" ).

23. We may also notice that recently in M/s. /spat Industries Ltd v.
Commissioner of Customs, Mumbai, (2006) 9 SCALE 652, one of us (Katju,
J.) stated :
D
"In this connection, it may be mentioned that according to the theory
of the eminent positivist jurist Kelsen (The Pure Theory of Law) in
every legal system there is a hierarchy of laws, and whenever there t
is conflict between a norm in a higher layer in this hierarchy and a
norm in a lower layer the norm in the higher layer will prevail (see
E
Kelsen's 'The General Theory of Law and State')."

24. With that we may add that a statutory order or discretion exercised
by a statutory authority must also be tested on the anvil of the constitutional
scheme.
F 25. This Court number of times has laid emphasis on reasonable action
on the part of the State even as a landlord. [See M/s. Dwarkadas Marfatia
t-- -
& Sons v. Board of Trustees of the Port of Bombay, (1989] 3 SCC 293 and in
contractual matters - Noble Resources Ltd v. State of Orissa & Anr., (2006]
10 SCC 236 and State of Karnataka & Anr. v. All India Manufacturers
G Organisation & Ors., [2006] 4 SCC 683].

26. Reasonableness and non-arbitrariness are the hallmarks of an action 'C_ ~

by the State. Judged from any angle, the action on the part of the appellant
does not satisfy the test of fairness or unreasonableness. It being wholly
arbitrary cannot be sustained.
H
BHARAT PETROLEUM CORPN. LTD. 1·. MADDULA RA TNAVALLI [S.B. SINHA, J.] ) 009

27. In any event, when two views are possible, a view which satisfies A
the constitutional rights or requirements, must be preferred.

28. In ML. Kamra v. Chairman-cum-Managing Director, New India
Assurance Co. Ltd. & Anr., [1992] 2 SCC 36, this Court held:

"The Court ought not to interpret the statutory provisions, unless B
compelled by their language, in such a manner as would involve its

-
unconstitutionality, since the legislature or the rule making authority
is presumed to enact a law which does not contravene or violate the
constitutional provisions. Therefore, there is a presumption in favour
of constitutionality of a legislation or statutory rule unless ex facie it
violates the fundamental rights guaranteed under Part III of the C
Constitution. If the provisions of a law or the rule is construed in such
a way as would make it consistent with the Constitution and another
interpretation would render the provision or the rule unconstitutional,
the Court would lean in favour of the former construction.

29. Right of property although is not a fundamental right, nonetheless
D
remains a constitutional right and any expropriatory legislation must be
construed strictly. [See Hindustan Petroleum Corporation Ltd. v. Darius
Shahpur Chennai & Ors., [2005] 7 SCC 627].

30. In the instant case, the concurrent finding of fact is that the desire E
of the appellant was not bona fide. In any event, possession of the lease
holding has already been delivered. Respondents have received possession
after a long struggle. It is, therefore not a case where we should interfere with
the impugned judgment particularly in view of the finding of fact arrived at

- ..
by the courts below.

31. For the aforementioned reasons, these appeals are dismissed with
costs. Counsel's fee assessed at Rs. 50,000/-.
F

NJ. Appeal dismissed.