HC order on NL House Kol, a breakthrough: Govt

The government of Nagaland has claimed a breakthrough in the “bitter and prolonged litigation” against the contractor-cum-tenant, M/s Civil Engineers Enterprises Pvt. Ltd (CEEPL), related with one-sided tenancy agreement over the Nagaland House Complex annexe at Shakespeare Sarani Kolkata.
DIPR on Monday, reported that the government expected a favourable judgment “against an entity (CEEPL) that is trying to exploit some loopholes in the law” by paying only a paltry sum as rent. The government attributed its confidence to the efforts by its legal team led by state Advocate General K.N. Balgopal, assisted by advocate Nitya Nambiar and advocate Vitso Rio.
The genesis of the scam was after the then government began construction sometime in 1979. However, after work began, the government, could not provide funds. Mid-way during the “crisis” in 1982, the contractor– M/s Engineers India Ltd- pioneered and floated by a former retired engineer under the government of Nagaland, made a deal to ‘save the project’ by getting SBI loan but on the condition, he was given the power of attorney over the entire premises for the purpose of obtaining loan.
This power of attorney was the sell out deed by which the contractor exploited but the state government, for whatever reasons chose to ignore.
The Nagaland House Kolkata scam was highlighted through several issues of this newspaper since 1992 to which former Governor Lok Nath Misra formed a panel to fight the case in court to regain back the complex. However, it proved an impossible task since the state government had decided to legally hand over such a highly valued prime property through hopelessly one-sided lease agreements with Engineers India Pvt. Ltd (1982) now Civil Engineers Enterprises Pvt. Ltd (CEEPL).
The lease involved the complex (by the side of Nagaland Guest House Kolkata) comprising of many buildings including State Bank of India and the 10-floor Nightingale Hospital. DIPR revealed that the then government had, in 1997 renewed the lease deed in favour of CEEPL for the Nagaland House complex at No.11 Shakespeare Sarani for 20 years. The re-newed lease commenced on January 1,1998 and expired on December 31,2017 for a rented area measuring 1,05,000 sq.ft located at the heart of Kolkata.
DIPR also disclosed that as per Clause 3 of the renewed lease, the rent was fixed at Rs.5 lakhs per month or Rs.60 lakhs per year under the West Bengal Premises Tenancy Act 1997 (Amended).
However, after the lease ended on December 31,2017 the tenant C-CEEL- approached the state government for renewal as per the West Bengal Premises Tenancy Act 1997 with the same rate but the government issued notice for enhancing the rent to Rs.2.2 crore as per prevalent market rate. The state government’s stand was the West Bengal Premises Tenancy Act 1997 does not apply to Nagaland state’s property since the Act does not apply to state and central government properties.
The government viewed that the 1997 lease deed looked more like a sale deed since the lessee (CEEPL) had “supreme rights over the property. Therefore, when the state issued notice on CEEPL about lease being terminated by efflux of time for not paying the enhanced rate, CEEPL then filed a civil suit in the Calcutta High Court in 2018. In the suit, CEEPL sought relief of specific performance of the 1997 lease in which there was a clause for renewal of rent payment under the West Bengal Premises Tenancy Act which was rejected by the state government.
DIPR mentioned that the renewed ‘one-sided lease agreement’ signed in 1997 gave CEEPL right to sublet the premises to third parties as per the lease deed; also entitled CEEPL to mort-gage the state property and take loans by using the property as collateral security. To top it all, DIPR mentioned that CEEPL was given 1500 sq.ft area “free of cost” for the entire duration of the 1997 lease.
The High Court then passed an order on May 6, 2022 directing that the case be referred to arbitration and for which an arbitrator was appointed. DIPR said CEEPL attempted to obtain a stay but the state government opposed it on the ground that the High Court has no jurisdiction to decide on the matter anymore since the case was already referred to arbitration.
It was mentioned that after the court order, the CEEPL did not allow state government officials to inspect the leased premises nor furnish details of sent deeds/taxes etc.
It may be noted that the Nagaland House complex was a turnkey project under Development Authority of Nagaland (DAN). As per the narrative description of the project, it was pro-posed to be a commercial-cum-guest House complex, comprising of an 11 storied office building of 12764 M2, a four storied Nursing Home of 832 M2, a six-storied VIP guest house of Nagaland government, a three storied office building of Nagaland government and a four-storied staff quarters of Nagaland government. As per architect consultants, the project started in 1979 and completed in September 1984 (phase I) and May 1988 (Phase II). Mid-way during construction, the state government ran out of money.
It may be mentioned that CEEPL has been in possession of the complex through one-sided rent lease agreements signed by the state under various governments. The PDA government through the state Cabinet at a meeting on February 5, 2020 authorized chief secretary to file for eviction orders through court.