Kalu Banda v. Upali
COURT OF APPEAL.YAPA, J.,
CA NO. 150/98.SEPTEMBER 14, 1999.MARCH 19, 1999.
MAY 25, 1999.
Lease of State land – Cancellation – Failure to comply with certain conditions- Should he be given an opportunity to be heard – State Lands Ordinance,S. 2, S. 6, S. 17 (1), S. 110 – Land Settlement Ordinance, s. 106 – 128.
Provision has been made that a hearing should be given to a party beforea lease permit is cancelled.
On the other hand even if there is no provision made for a party to beheard before his lease permit is cancelled, principles of natural justicewill supply the omission of the legislature. The reason being that the courtwill not readily accept the position that the Parliament intended anadministrative authority to exercise a discretion vested in it by Statute insuch manner so as to offend the principles of natural justice.
"Procedure is not a matter of secondary importance. As govermental powerscontinually grow more drastic, it is only by procedural fairness that theyare rendered tolerable."
APPLICATION for a Writ of Certiorari.
Case referred to:
Cooper v. Wandsworth Board of Works – 1863 CB Reports (NS) 13-16- pages 414 at 420.
Sri Lanka Law Reports
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Chula Bandara for the petitioner.
1st respondent absent and unrepresented.
M. Fernando, SSC for 2nd, 3rd and 4th respondents.
Cur. adv. vult.
November 30, 1999.
HECTOR YAPA, J.
In this application the petitioner has prayed for a writ of certiorari toquash the decision of the 2nd respondent to cancel a lease of Stateland given to the petitioner. It would appear that the effect of the twoletters dated 02.02.1998 and 19.01.1998 marked P7 and P8 sent bythe 2nd respondent to the petitioner, will be to cancel the lease permitgranted to the petitioner by the lease instrument dated 15.10.1993produced marked P2. According to P8, the basis of the cancellationof the said lease permit has been the failure of the petitioner to complywith the clause or the condition number 4 of the said lease instrumentor permit (P2) which required the construction of a building worth Rs.500,000 by the petitioner: In addition it has also been stated in thesaid letter (P8) that the land in question is required for a public purposein terms of the clause number 15 of the lease permit (P2) and thereforeit has been decided to acquire it by the State.
According to the petitioner, originally, he was permitted to run amilk bar on a State land 1.5 perches in extent granted to him in termsof an annual permit issued under the provisions of the State LandsOrdinance. The said permit bearing No. 1439/D dated 3rd July, 1971,was produced marked P3. In 1982, while the petitioner was engagedin the said business, a Buddhist shrine room was constructed at alocation close to the petitioner's milk bar and the said Buddhist shrineroom became an obstacle to the petitioner's business. Therefore, hemade representation to the 3rd respondent and obtained another block
Kalu Banda v. Upali (Hector Yapa, J.)
of land 0.012 hectares in extent from another part of same land andthe petitioner was issued with the permit bearing No. 4/10/12347 dated15.10.1993 referred to earlier as P2. According to the said permit (P2)State land had been leased to the petitioner under the Crown/State Lands Ordinance for a period of 30 years commencing from
and the lease rental for the said land was fixed atRs. 1,600 per year. The relevant plan dated 01.12.1992 in respectthis land is produced marked P1. Further, according to the said leasepermit (P2) the petitioner has to use the said land to constructbuildings necessary for the purpose of running a milk bar and suchbuildings have to be constructed according to a plan approved bythe Government Agent and such constructions should conform to theHousing and Town Improvement Ordinance.
The petitioner after obtaining the land on the said lease permit(P2) had submitted a building plan bearing No. 179/A/03 dated
to the 2nd respondent seeking approval for the construc-tion of a building along with his letter dated 03.01.1993. The saidplan and the letter are produced marked P5 and P6. In addition thepetitioner had continued to pay the yearly rentals to the 2nd respondentfor the years 1993 to 1997. By letter dated 08.01.1998, when the2nd respondent had requested the petitioner to pay the rental for theyear 1998, he had gone to the 2nd respondent's office to make thesaid payment, when the petitioner was informed that, since steps werebeing taken to cancel the lease permit given to him, it was not possibleto accept the rental for the year 1998. Thereafter, by the said letterdated 19.01.1998 marked P8 the 2nd respondent has informed thepetitioner that he has failed to construct the building as required bycondition number 4 of P2, that he has failed to seek additional timefor the said construction and further that, since the said land wasnecessary for a public purpose, it has been decided to acquire it bythe State. Therefore, the 2nd respondent requested the petitioner tohand over to him the possession of the land in question with the leasedocument (P2) on or before 27.02.1998. In addition the 2nd respondentby his letter dated 02.02.1998 marked P7 has informed the petitionerto treat the 2nd respondent's letter dated 08.01.1998 requesting thepayment of the annual rental for the year 1998 .as being cancelled.
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Consequent to the receipt of P8, the petitioner has sent a letterdated 29.01.1998 marked P9, informing the 2nd respondent that itwas due to the latter's failure to act in accordance with clause number9 of P2 to approve the plan (P5) sent to him, the petitioner was unableto take any further action in terms of condition number 4 of P2. Thesaid letter (P9) further stated that the construction of a war memorialwas not a public purpose and that as far as the petitioner wasaware, financial facilities have not been set apart for such a purpose.The petitioner, therefore, alleged that the decision taken by the 2ndrespondent to cancel the lease permit (P2) granted to the petitionerwithout giving him an opportunity to show cause was arbitrary,unreasonable and in violation of the principles of natural justice.
The respondents in their objections have taken up the position thatthe petitioner has violated the condition number 4, of the lease permit(P2) by failing to develop the land in question, ie by constructing abuilding required for a milk bar and therefore the respondents wereentitled to have the lease permit cancelled. In addition it was statedby the respondents that the land in question was required for a publicpurpose namely, to construct a war memorial to honour the fallenheroes. Therefore, in terms of clause number 15 of the lease permit(P2) the State could request the petitioner to hand over the land tobe used for the said public purpose. Finally, it has been submittedby the respondents that, having regard to the aforesaid reasons, whenaction is being taken by the 2nd respondent to cancel the lease permit(P2) granted to the petitioner, there was no requirement to give thepetitioner an opportunity to show cause against such cancellation.
At the hearing of this application it was submitted by learnedcounsel for the petitioner that the lease in question had been grantedto the petitioner by the President of the Republic of Sri Lanka in termsof section 6 of the Crown/State Lands Ordinance, and in terms ofsection 6 (3) of the said Ordinance a cancellation of such a leaseis required to be done upon an application to a court of competentjurisdiction. In the present case no such application has been madeto a court. Therefore, counsel contended that the cancellation of the
CAKalu Banda v. Upali (Hector Yapa, J.)395
lease by the 2nd respondent by his letter dated 19.01.1998 (P8) isnot valid in law. On the other hand it was submitted by learned seniorState counsel that the particular lease in question had been givento the petitioner by the President of the Republic under section 2 (2)of the Crown/State Lands Ordinance and therefore the contention ofthe counsel for the petitioner that section 6 of the State LandsOrdinance applied to the lease in question is grossly erroneous.
It would be helpful to examine sections 6 and 2 of the State LandsOrdinance in order to decide this issue. Section 6 (1) of the StateLands Ordinance provides as follows:
A special grant or lease of State land may be made at a nominalprice or rent or gratuitously for any charitable, educational,philanthropic, religious or scientific purpose, or for any other purpose,which the President may approve.
Firstly, it should be observed that this provision has catered forspecial grants and leases. Secondly, such grants or leases are forpurposes such as charitable, educational, philanthropic, religious orscientific purposes and the like. Therefore, the lease given to thepetitioner in this case being a lease for a commercial purpose, it cannotfall within the purview of section 6 (1) of the State Lands Ordinance.On the contrary when one examines section 2 of the State LandsOrdinance, it would appear that section 2 provides for grants or leasesof the type given to the petitioner. Section 2 of the State LandsOrdinance provides as follows:
Subject to the provisions of this Ordinance and of the regulationsmade thereunder, the President may in the name and on behalfof the Republic of Sri Lanka –
make absolute or provisional grants of State land;
sell, lease or otherwise dispose of State land;
396Sri Lanka Law Reports[19d9] 3 Sri L.R.
Further, it is to be observed that the lease instrument or theinstrument of disposition given to the petitioner (P2) itself refers tosection 2 of the Crown/State Lands Ordinance and the regulationsmade thereunder, which would mean that the lease in question hadbeen given to the petitioner in terms of section 2 of the said Ordinance.Therefore, since section 6 of the State Lands Ordinance has noapplication in this case, it would be section 2 of the said Ordinancethat would apply. In the circumstances the submission made bylearned counsel for the petitioner based on the applicability of section6 of the State Lands Ordinance to the lease permit given to thepetitioner, has to fail.
Learned counsel for the petitioner formulated another argument onthe basis that if the lease given to the petitioner was a permit issuedunder the State Lands Ordinance, the 2nd respondent should havetaken steps in terms of section 17 (1) of the said Ordinance to cancelthe lease permit or the instrument of disposition following theprocedure provided in sections 106 to 128 of the Land DevelopmentOrdinance. Learned counsel's contention was that there was arequirement that the petitioner should have been given an opportunityto show cause before such a cancellation of his permit. Section 17(1)of the State Lands Ordinance provides as follows:
Where a Government Agent is of opinion that the grantee ofany permit or licence has failed to observe any condition attachedto any such permit or licence, he may cancel such permit or licence,and eject the grantee in accordance with the procedure prescribedin sections 106 to 128 of the Land Development Ordinance whichshall apply accordingly as though the grantee of a permit or licenceunder this Ordinance were a permit-holder under that Ordinanceand as though the land which is the subject-matter of a permitor licence under this Ordinance were land alienated by a permitissued under that Ordinance:
Kalu Banda v. Upali (Hector Yapa, J.)
Therefore, it would appear according to the section referred toabove that before a cancellation of a permit or a licence due to thefailure of a party to observe any condition attached to such permitor licence, a procedure has been prescribed or provided in terms ofsections 106 to 128 of the Land Development Ordinance. It shouldalso be noted that the effect of a cancellation of a lease permit ora licence involves the cancellation of an instrument of disposition. Theinstrument of disposition has been interpreted in section 110 of theState Lands Ordinance to include a grant, lease, permit or licencerelating to State land.
It is also necessary to take note of the following provisions of theLand Development Ordinance. Section 106 (2) of the Ordinanceprovides as follows:
Where a permit-holder fails to comply with the requirements ofa notice issued under subsection (1), or where a permit-holdercontravenes a condition of the permit on a second or subsequentoccasion, the Government Agent may issue a notice in theprescribed form intimating to the permit-holder that the permitwill be cancelled unless sufficient cause to the contrary is shownto the Government Agent on a date and at a time and placespecified in the notice.
Section 110 (1) of the Ordinance makes provision for the Gov-ernment Agent if he is satisfied after inquiry that there has been abreach of any of the conditions of the permit, to make an ordercancelling the permit. Section 113 of the Ordinance makes provisionfor a permit-holder aggrieved by an order made by the GovernmentAgent under section 110 to appeal to the Land Commissioner. TheChapter IX of the Land Development Ordinance makes provision forthe procedure to be followed in cases of ejectment.
An examination of the provisions referred to above would makeit clear that before a cancellation of a lease permit or an instrumentof disposition, a particular procedure has been clearly laid down in
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sections 106-128 of the Land Development Ordinance. Therefore, interms of section 106 (2) of the Land Development Ordinance the 2ndrespondent in this case was required by law to issue a notice to thepetitioner intimating to him that his lease permit would be cancelledunless sufficient cause to the contrary was shown. However, the 2ndrespondent has failed to take such action in conformity with theprocedure so provided in the present case. It may also be noted thatonce a decision is made by the 2nd respondent to cancel a leasepermit in terms of section 110 (1) of the Land Development Ordinance,provision has been made to grant an appeal from such an order tothe 3rd respondent. The manner in which the 2nd respondent decidedto cancel the lease permit granted to the petitioner in this case hasdenied the petitioner his right of appeal to the 3rd respondent.
The learned Senior State Counsel for the respondents sought toargue that there is no requirement to follow the procedure laid downin sections 106-128 of the Land Development Ordinance. The basisof the learned counsel's argument was that the petitioner had violatedthe condition number 4 of the lease permit (P2) and in addition theland in question is required for a public purpose and therefore in termsof clause number 15 of the lease permit (P2) the petitioner is requiredto hand over the land to the State. In these circumstances it wassubmitted that there was no necessity to give an opportunity to thepetitioner to show cause against the cancellation of the lease permit.Therefore, learned counsel contended that the conduct of the 2ndrespondent in cancelling the lease permit was not arbitrary orunreasonable. It was further submitted that there was no politicalvictimization of the petitioner in taking such a decision to cancelthe lease and take back the land in question by the State.
It is to be remarked here, that after the grant of the lease permitto the petitioner, he had submitted the plan dated 06.08.1992 (P5)along with his letter dated 03.01.1993 (P6) seeking approval for thebuilding to be constructed. In the objections filed by the 2nd respondentin paragraph 7 of his affidavit, he has admitted the receipt of P5 whichis the plan dated 06.08.1992. However, he denies the receipt of the
CAKalu Banda v. Upali (Hector Yapa, J.)399
petitioner's letter dated 03.01.1993 (P6). If this position taken up bythe 2nd respondent is accepted, it is evident that the petitioner hadsubmitted the plan (P5) to the 2nd respondent. Why the 2nd respond-ent failed to take any action on the plan (P5) received by him hasnot been explained. Even assuming that the 2nd respondent did notreceive the petitioner's letter (P6) the failure to take action on theplan (P5) was certainly a lapse on the part of the 2nd respondent.Further, it would appear from the facts of this case that no actionhas been taken by the 2nd and 3rd respondents to inform the petitionerabout the delay in complying with the condition number 4 of P2, untilit was decided by the 2nd respondent to cancel the lease permit on19.01.1998 (P8) without even giving a hearing to the petitioner.
I am unable to subscribe to the view, that a lease permit grantedby the President of the Republic of Sri Lanka, for a period of 30 yearscould be cancelled for whatever reason, without giving an opportunityto the holder of such permit to show cause. As referred to abovethe petitioner in this case is in a position to show that, at least hehad submitted a plan to the 2nd respondent (which is admitted bythe 2nd respondent in his affidavit paragraph 7) for consideration andapproval. Therefore, where provision is made by law in regard to theprocedure to be followed when cancelling a lease permit granted toa person, there is no reason why such procedure should be ignoredor overlooked. Such conduct would be illegal and arbitrary and offendthe fair administrative procedure expected from public authorities.
On the other hand, even if there was no provision made for aparty to be heard before his lease permit is cancelled, principles ofnatural justice will supply the omission of the legislature. The reasonbeing that the court will not readily accept the position that theParliament intended an administrative authority to exercise a discretionvested in it by statute, in such a manner so as to offend the principlesof natural justice. Further, it is worth referring here to the words ofByles, J. in the case of Cooper v. Wandsworth Board of Works01 wherehe stated that "… a long course of decisions, beginning withDr. Bentley's case, and ending with some very recent cases, establish
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that, although there are no positive words in a statute requiring thatthe party shall be heard, yet the justice of the common law will supplythe omission of the legislature." As Wade points out in his bookAdministrative Law 5th edition page 413: "Procedure is not a matterof secondary importance. As governmental powers continually growmore drastic, it is only by procedural fairness that they are renderedtolerable".
In this case, however, law has very clearly made provision thata hearing should be given to a party before a lease permit is cancelled.The decision taken by the 2nd respondent to cancel the lease permitgranted to the petitioner without giving the petitioner an opportunityto show cause is arbitrary, unreasonable and in violation of theprinciples of natural justice. Therefore, the said decision of the 2ndrespondent should be quashed. In these circumstances, it isunnecessary to consider the other points raised by counsel for thepetitioner.
Accordingly, the two letters dated 02.02.1998 and 19.01.1998 markedP7 and P8 are hereby quashed. The 2nd respondent is directed tomake an appropriate order according to law, after providing thepetitioner an opportunity to be heard.