Case Note & Summary
The petitioners, Vidyut Metallics Ltd. and another, challenged an order dated 28.07.2015 passed by the Maharashtra Industrial Development Corporation (MIDC) terminating a lease agreement dated 11.07.1975 and directing the petitioners to hand over possession of the plot for non-use for a long period. The petitioners had been in possession of the plot since 23.07.1962 based on earlier agreements, even before the establishment of MIDC under the Maharashtra Industrial Development Act, 1961. After formation of MIDC, they entered into a 99-year lease agreement. The petitioners established a factory and started using the plot, but on 04.04.2010, a fire accident destroyed the factory, which had 350 employees, rendering them unable to use the plot further. The MIDC issued the termination order without giving any notice or opportunity of hearing to the petitioners. The court noted that the petitioners had placed substantial material on record to show continuous use of the plot and that the non-use was due to the fire accident. The court held that the termination order was unsustainable as it violated principles of natural justice and failed to consider the force majeure event. The court set aside the impugned order and directed the parties to maintain status quo, with the petitioners continuing in possession. The petition was allowed.
Headnote
A) Lease Law - Termination of Lease - Natural Justice - The termination of a 99-year lease by MIDC for non-use of plot without giving notice or opportunity of hearing to the lessee is violative of principles of natural justice and cannot be sustained. (Paras 4-5) B) Lease Law - Force Majeure - Fire Accident - Non-use of leased property due to a fire accident on 04.04.2010, which destroyed the factory, constitutes a force majeure event and cannot be a ground for termination of lease. (Para 3) C) Lease Law - MIDC Act - Section 3 of Maharashtra Industrial Development Act, 1961 - The lease agreement dated 11.07.1975 was executed under the MIDC Act, and the lessee had been in possession since 23.07.1962 based on prior agreements. The termination order dated 28.07.2015 was set aside. (Paras 2-3, 5)
Issue of Consideration
Whether the termination of a 99-year lease agreement by MIDC on the ground of non-use of the plot for a long period is sustainable when the non-use was due to a fire accident and without affording an opportunity of hearing to the lessee.
Final Decision
The impugned order dated 28.07.2015 is quashed and set aside. The petition is allowed. Rule made absolute. No order as to costs.
Law Points
- Lease termination without notice and opportunity of hearing is violative of principles of natural justice
- Force majeure event like fire accident justifies non-use of leased property
- MIDC cannot unilaterally terminate lease without considering material on record
