Facts of the Case

The petitioner, S. Jesudasan Ravi, was the successful bidder for a lease to run a marriage hall constructed by the State Express Transport Corporation (SETC) at Tuticorin, quoting Rs. 1,15,400/- per month; after private negotiation, the monthly lease was fixed at Rs. 1,33,200/- inclusive of GST. Under the lease agreement dated 29.04.2023, the petitioner was required to pay a six-month lease deposit of Rs. 7,99,200/- and Rs. 50,000/- as an electricity advance within 15 days, i.e., by 13.05.2023, along with a bank guarantee of Rs. 3,00,000/-. The petitioner paid the deposit by demand draft on 22.05.2023 and furnished the bank guarantee on 06.06.2023 — after the stipulated deadline. SETC cancelled the lease on 18.05.2023, but the cancellation order was despatched to the petitioner only on 16.06.2023, after the payment and bank guarantee had already been furnished. The petitioner challenged the cancellation.

Issues Involved

  1. Whether the lease could be validly cancelled for a short delay in payment, given that the cancellation order itself was despatched a month after the date it purportedly bears.
  2. Whether the delayed despatch indicated the cancellation was an afterthought triggered by the second-lowest bidder's interest in the property.

Petitioner's Arguments

  • Though there was some delay, the amount was remitted on 22.05.2023 by demand draft, which the respondents never returned.
  • The cancellation order dated 18.05.2023 was despatched only on 16.06.2023, nearly a month later, as evidenced by the despatch cover, suggesting it was passed belatedly as an afterthought at the instance of the second-lowest bidder.

Respondent's Arguments

  • The lease was confirmed on condition that the deposit and GST-inclusive amounts, plus the bank guarantee, be furnished within 15 days; the petitioner's later payment could not confer any right.
  • The writ petition could not be entertained under Article 226 as the amount had already stood forfeited, and the delayed despatch did not mean the cancellation decision itself was taken belatedly.
  • The newly impleaded third respondent (the second-lowest bidder) submitted that, per the cancellation order, the lease ought to go to him as the next bidder.

Court Order / Findings

  • The Court noted the admitted facts: the lease amount due by 13.05.2023 was paid on 22.05.2023, and the bank guarantee was furnished on 06.06.2023 — both before the cancellation order was actually despatched on 16.06.2023.
  • Given this timeline, the Court held it could be presumed the amount was deposited by the petitioner even before the order of cancellation reached him, and the respondents had failed to explain the delay in despatch.
  • Noting the petitioner had been running the marriage hall under an interim stay and paying monthly dues promptly, the Court allowed the writ petition and set aside the cancellation order, with no order as to costs.

Important Clarification

GST features in this case only as part of the lease rent quoted (Rs. 1,33,200/- inclusive of GST) — there is no ruling here on GST rate or classification for such leases. The real takeaway is procedural: a government lessor cannot rely on a cancellation order whose own despatch record shows it was sent out only after the tenant had already cured the default.

Sections Involved

  • Article 226, Constitution of India — writ jurisdiction.
  • No specific GST provision was interpreted; GST was a component of the negotiated monthly lease rent under the lease agreement.

Decision – In Favour of

Decided in favour of the petitioner, S. Jesudasan Ravi; the impugned cancellation order was set aside.

Case Details

Court: Madurai Bench of Madras High Court
Case No.: WP(MD) No. 15021 of 2023
Coram: Hon'ble Mr. Justice B. Pugalendhi
Date of Order: 20.09.2023

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