In Brief
The Food Corporation of India engaged contractors to build godowns for lease in 1976. The agreement made execution of a lease conditional on FCI's approval of completion and issuance of a completion certificate. FCI inspected the structures and rejected two of six godowns due to defects, taking possession of only four. The contractors later sued for rent on all six godowns and claimed enhanced rent. The Supreme Court held that the 1976 agreement was not a lease but merely an agreement to lease, giving rise only to contractual obligations governed by its express terms. Since FCI's officers found defects and refused possession of two godowns, no rent was payable on them. No contractual provision supported enhanced rent claims. The Court affirmed the High Court's dismissal of the suit.
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