M.KARPAGA VINAYAGAM, J. - (1.) THE Tata Iron and Steel Company Ltd., the petitioner herein was asked to pay a sum of Rs. 5.97 crore by the order dated 23.01.1996 as additional interest on rent and other dues by the Certificate Officer in respect of the lands leased out to the petitioner by the Government. Seeking for quashing of the same, the petitioner has filed this writ of certiorari.
(2.) THE short facts are as follows: (i) The petitioner entered into a lease agreement with the State Government in respect of the lands situated at Jamshedpur acquired under Land Acquisition Act. (ii) By this agreement, the State Government agreed to lease those lands to the petitioner company on the terms and conditions mentioned therein in pursuance of the provisions of Section 7D and 7E of the Bihar Land Reforms Act. (iii) This agreement was executed on 01.08.1985 and the same was registered on 06.08.1985. (iv) The said lease was granted for 40 years with effect from 01.01.1956. (v) There are two clauses namely, Clause xii and Clause xv, which obliged the petitioner company to make payment of rent dues for the period 01.01.1956 to 31.03.1984. (vi) Clause xii is with respect to the token rent due from the company with regard to main factory, other building and structures maintained by the Company from 01.01.1956 to 31.03.1984. (vii) Clause xv is with regard to the other lands where the Company can have Hats, Bazars, Melas etc. and the rent on the said land between 01.01.1956 and 31.03.1984. (viii) Clause xii provides for the payment of dues and interest at the rate of 9.5% for the period 01.01.1956 to 31.12.1974 and at the rate of 13% for the period from 01.01.1975 to 31.03.1984. Clause (xv) provides for the payment of dues and the interest per annum at the rate of 9.5% for the period 01.01.1956 to 31.12.1974 and at the rate of 13% for the period from 01.01.1975 to 31.03.1984. (ix) On 11.09.1985, calculating the lump sum interest at the rate of 9.5% for the period 01.01.1956 to 31.12.1974 and interest at the rate of 13% for the period 01.01.1975 to 31.03.1984 in respect of lands in Clause (xii) in conformation of Section 7D, the Company was asked to pay Rs. 1.95 crore. (x) On 18.10.1985 the authority asked the Company to pay a sum of Rs. 2.19 crore with reference to the other lands in Clause (xv) which the Company had leased out to various individuals, societies, associations, institutions etc. for holding Hats, Bazars, Melas etc. This included interest per annum at the rate of 9.5% for the period from 01.01.1956 to 31.12.1974 and interest at the rate of 13% for the period 01.01.1975 to 31.03.1984 as mentioned in the agreement. It is in conformity with Section 7E of the Bihar Land Reforms Act. (xi) Thus, the total amount that was paid by the Company towards the rent and interest is 4.14 crore. (xii) After lapse of 7 years, the Senior Officer of the Department formed an opinion that arrears in respect of Clause xii also should be charged with the interest per annum like that of Clause xv and not on the basis of the lumpsum collected earlier. Accordingly, the Senior Officer directed Deputy Commissioner to calculate interest in respect of both the clauses, namely, Clause xii and Clause xv on "per annum" basis and collect the balance amount from the Company. This was on 29.10.1993. (xiii) In pursuance of the said direction, on 10.05.1994, the Certificate Officer sent a demand notice making a new calculation and demanded additional interest of Rs. 5.97 crore on the basis of per annum interest for the arrear of rent provided in Clause xii. (xiv) Challenging the same, the petitioner filed a writ petition before the High Court, which in turn, dismissed the same and directed the Company to file objection for the demand notice before the Certificate Officer. (xv) Company -petitioner filed a Letters Patent Appeal against this order before the Division Bench. While dismissing the Letters Patent appeal, the Division Bench directed the Certificate Officer to decide about the objection uninfluenced by any of the observations made by the learned Single Judge in the writ petition. (xvi) Accordingly, the petitioner filed a detailed objection before the Certificate Officer, denying its liability to pay the amount demanded. (xvii) On consideration of the said objection and after hearing the parties, the Certificate Officer rejected the objection by the order dated 23.01.1996 and confirmed the demand notice by holding that as Clause xv provides for interest to be calculated on "per annum" basis it should be presumed that it would apply to Clause xii as well. (xviii) This order of rejection of objection and confirmation of the demand notice for additional interest has been challenged before this Court in this writ petition by the petitioner seeking for a writ of certiorari. The petitioner has raised mainly two points challenging the order impugned, dated 23.01.1996: (i) Under Clause xii of the lease agreement dated 04.08.1984 executed between the Tata Iron and Steel Company Limited, the petitioner, and the State Government, the interest can be calculated only on "lump sum basis" not "per annum basis" as there is no use of words "per annum" in Clause xii, whereas the word "per annum" is used in Clause xv alone, and therefore, the impugned demand for interest per annum in respect of Clause xii is illegal. (ii) The impugned demand is not a public demand within the meaning of Section 3(6) of the Bihar and Orissa Public Demands Recovery Act and hence the demand is not realizable by certificate proceeding.
(3.) TO substantiate the above two points, the learned Senior counsel for the petitioner has made the following contentions. (i) The gist of the contentions with reference to the first point is as follows: In the agreement for lease to which both petitioner and the State are bound, contains 27 clauses. Out of these clauses, the Clause xii and Clause xv provide for making payment with respect to the rent and interest dues for the period from 01.01.1956 to 31.03.1984. Clause xii says the rent and interest at the rate of 9.5% for the period 01.01.1956 to 31.12.1974 and at the rate of 13% for the period from 01.01.1975 to 31.03.1984. But Clause xv says the rent and interest in respect of other lands, which the petitioner company was allowed to get the profit by holding Melas, Hats, Bazars etc. has to be calculated on the "per annum" basis. Thus, both these clauses speak of interest in different words. The State Government collected 4.14 crore on the correct calculation in respect of the factories situated in the lands under Clause xii on the basis of "lump sum" and in respect of the area of the land under Clause xv on the basis of "per annum" as mentioned in the agreement. Seven years later, i.e., 29.10.1993, the Secretary, Revenue directed the Subordinates to calculate the interest in respect of Clause xii on "per annum" basis instead of "lump sum" basis for the period 01.01.1956 to 31.03.1984. Accordingly the demand for the payment of Rs. 5.97 crore by way of additional interest on "per annum" basis through the letter dated 07.01.1994 was made. Despite objections pointing out the variations between Clause xii and Clause xv with reference to the agreed interest, the order impugned had been passed demanding Rs. 5.97 crore. It is absolutely the domain of the agreeing parties, namely, the petitioner and the State who are the equal partners to fix any rate of interest. Therefore, the terms and conditions of the lease as contained in the agreement have to be interpreted from the context of the words used. The said terms and conditions cannot be modified by any one of the parties to the lease agreement without giving importance to the intention of the parties at the time of execution of the agreement. The variations between Clause xii and Clause xv with reference to the fixing of interest is apparently clear from the wordings contained in these two clauses. Therefore, fixing the additional rate of interest by giving its own interpretation and modifying the tone and tenor of the terms and 16/5/2014 Page 296 Kamal Kant Singh @ K.K.Sinha Versus State Of Jharkhand conditions cannot be construed to be in accordance with the law. Hence, the order impugned is illegal. Interest is a matter of contract and unless governed by any provision of statute, calculation of interest will be according to the terms of the contract. When the contract is reduced in writing the said calculation will be governed by the express words used therein. Admittedly, in the Clause (xii) of the lease deed the omission of the words "per annum" clearly imply that the parties intended that the interest must be charged on lump sum basis. The demand in respect of interest must be governed by the clear language used in the said clause (ii) The gist of the contentions relating to the second point is as follows: As per Section 3(6) of the Bihar and Orissa Public Demands Recovery Act, the word "Public Demand" is defined as any arrear or money mentioned or referred to in Schedule I and includes any interest which may be chargeable by law up to the date the certificate is signed. This means if the arrears of money due from any one has to be coupled with statutory interest under any law only such kind of interest can be recovered. The agreement was entered into or entered upon on the basis of Section 7D and 7E of the Bihar Land Reforms Act. The said provisions would not indicate that interest is charged. No other law including the Interest Act or the Bihar and Orissa Public Demands Recovery Act would provide for the statutory interest to be included. Therefore, the interest, which is being claimed cannot be said to be an interest which is charged either under the Interest Act or the Bihar and Orissa Public Demands Recovery Act or under the provisions of Section 7D and 7E of the Bihar Land Reforms Act. In this case, whatever the arrears was there as per Clause xii, has already been calculated with the interest as per the terms of the agreement even though not chargeable under law. As the main ingredient of the definition "public demand" is absent, the additional interest cannot be claimed as a "public demand". Therefore, the order of demand is illegal. ;