Nilima Hospitality And Caterers Private Limited vs. The State Of Bihar

Facts

Nilima Hospitality and Caterers Private Limited (Petitioner) was allotted a plot of land near the Sky Ropeway in Rajgir for a fast food shop through a tender process initiated by the Bihar State Tourism Development Corporation Limited (Respondent). The Petitioner deposited license fees and GST, and pledged a fixed deposit as security. An allotment letter was issued on October 12, 2018, and a three-year lease agreement was entered into on February 8, 2019. Due to the national lockdown in March 2020, the shop remained closed. The Petitioner's request for waiver of license fees and extension of the contract period was rejected by the Managing Director of the Corporation via an order dated February 10, 2022. This order was passed after the Petitioner had filed a representation following a previous High Court order. The lease period expired on October 11, 2021.

Held

The Court held that parties are bound by the terms of their agreement. In this case, the lease agreement was for a fixed period of three years and did not contain any clause for extension or renewal. Therefore, the Petitioner could not claim an extension of the lease period as a right, and the Court could not issue a direction for such an extension as no such right had accrued under the agreement. The Court found no error or infirmity in the impugned order dated February 10, 2022, passed by the Managing Director of the Bihar State Tourism Development Corporation. The Court also found no violation of the terms and conditions of either the tender or the agreement entered into between the parties. Regarding the waiver of license fees, the Respondent's order indicated that interest on late deposit of license fees was condoned based on a committee's recommendation, a benefit extended to all leaseholders. The Court did not find merit in the Petitioner's claim for a complete waiver of license fees for the lockdown period, implicitly upholding the Corporation's decision based on the agreement's terms and the committee's recommendation regarding interest.

Key Issues

1. Whether the Petitioner is entitled to an extension of the lease period for the fast food shop, considering the closure due to the COVID-19 pandemic lockdown, despite the lease agreement not containing a clause for extension or renewal? 2. Whether the Petitioner is entitled to a waiver of license fees for the period the shop remained closed due to the lockdown? Petitioner's Arguments: The Petitioner argued that they faced complete loss of income due to the lockdown from March 2020 until the end of the lease period, resulting in significant financial loss. Despite this, they deposited the entire lease rent and other dues. The Petitioner contended that their shop remained closed for more than half of the lease period due to government directives on lockdown, and commercial activities, including tourism, were halted. They claimed the Respondent selectively targeted them and others to vacate the premises, while the Petitioner was willing to resume business to recover some financial losses. The Petitioner relied on the previous order of the High Court directing them to file a representation. Respondent's Arguments: The Respondent, through the Managing Director's order, argued that the lease agreement was for a fixed three-year period (October 12, 2018, to October 11, 2021) with no provision for extension or renewal. They also stated that a committee was constituted to consider waiver of license fees for the lockdown period, and as per its recommendation, the interest on late deposit of license fees was condoned and extended to all leaseholders, including the Petitioner. The Respondent cited Clause 28 of the tender conditions, which allowed termination by giving three months' notice or three months' license fee, and Clause 1 of the agreement, which stipulated a three-year lease without extension or renewal provisions.