Andhra HC (Pre-Telangana)
Sri Kamineni Sankara Rao vs The State Of Andhra Pradesh, Rep. By Its ... on 18 February, 2012
Author: Nooty Ramamohana Rao
Bench: Nooty Ramamohana Rao
THE HON'BLE SRI JUSTICE NOOTY RAMAMOHANA RAO W.P. No. 4758 of 2013 18.02.2012 Sri Kamineni Sankara Rao The State of Andhra Pradesh, rep. by its Secretary, Municipal Administration and Urban Development Department, Hyderabad & others. Counsel for the petitioner: Sri P. Durga Prasad Counsel for the respondents 1 to 3: GP for Municipal Administration Counsel for respondents 4 and 5: Ms. Shanti Neelam <GIST: >HEAD NOTE: ?Cases referred ORDER:
This writ petition is filed seeking a writ of mandamus for declaring the orders contained in Memo dated 23-11-2012, issued by the Government of Andhra Pradesh in its Municipal Administration and Urban Development Department, observing that extension of lease by 25 years more in favour of the petitioner as not advisable, as bad in law.
The Commissioner, Srikakulam Municipality, pursuant to a notice issued in his Rc.No.4241/2009/A4, conducted public auction for conferring the leasehold rights on two of the immovable properties, in the form and shape of kalyana Mandapams, available with it at two different locations. The petitioner is concerned with the kalyana mandapam situate near the Zilla Parishad Guest House. Auctions were conducted on 18-12-2009 and the petitioner emerged as the highest bidder for his bid of Rs.67,000/-. Accordingly, leasehold rights for a period of three years are conferred upon him by executing a lease deed in his favour on 12-04-2010. It will be important to notice that the three-year period of lease has commenced on 01-05-2010 to end by 30-04-2013. In the mean time, the petitioner has pointed out that the leased premises is not the same extent, as is notified in the public auction, and consequently, he sought for reduction of the lease amount proportionately.
In fact, no such request should have been entertained by the respondents, but however, they were considerate and granted the leasehold rights for a reduced rate of Rs.45,500/- per month. The petitioner continued to pay the said amount and there is no default committed by him. While so, he sought for extension by at least a further period of three more years, subject to the condition that he will pay the enhanced lease amount at 33% more than the rate at which he is currently paying the lease amount. It is also the case of the petitioner that such a request has been forwarded for consideration by the Director of Municipal Administration to the State Government, but it is the State Government, which has turned down such a request through the impugned memo, which gave rise to the present lis.
Heard Sri P. Durga Prasad, learned counsel for the writ petitioner, the learned Government Pleader for Municipal Administration as well as the learned Standing Counsel for Srikakulam Municipality Ms. Shanti Neelam.
Sri P. Durga Prasad pressed into service the decision announced by the State Government, through their G.O.Ms.No.56, Municipal Administration and Urban Development (J1) Department, dated 05-02-2011 and would urge that the petitioner is entitled to be granted extended lease period, inasmuch as he has agreed to the proposal of the Srikakulam Municipality to enhance the lease amount by 33 1/2 % and the Director of Municipal Administration also considered such a feature as advisable to be accepted as it would be in the best interest of the Municipality, but however, the State Government has turned down the same and hence, this writ petition.
The facts are not in dispute. The petitioner has participated in the public auctions that were conducted on 18-12-2009 and emerged as the highest bidder. The bid was accepted, but however, he could succeed in persuading the respondents to scale down his offer proportionately on the ground that the kalyana mandapam is not having 6000 square feet carpet area as notified in the public auction. When the offer made by the petitioner was found to be the most responsive, they initially granted him the leasehold rights and then, reduced his monthly payable lease amount substantially, which will be in proportion to the existing dimensions of the structure.
Surely, the measure taken by the local municipality in reducing the lease amount itself amounts to tilting the balance in favour of the petitioner to the exclusion of the other bidders. If only the other bidders have come to know that the dimensions of the kalyana mandapam are less than what have been notified, perhaps, there would have been still the competitive edge retained in the matter of bidding. When once he secured possession of an immovable property belonging to the municipality by participating in public auction, that should be the only mode through which the subsequent occupancy rights may also get regulated. Otherwise, a person, who has emerged as the highest bidder at one public auction can continue to be the lessee over a long period of time, thus, deriving the entire benefits therefrom. If the other bidders are also aware that the lease period is likely to get extended or prolonged beyond the notified three-year period, the edge of competitive bidding would have fetched better prospects and results. I am therefore, of the view that no extension can be sought for, as a matter of right, of the leasehold rights, nor can that be considered by the respondents for the mere asking.
Insofar as the orders passed by the State Government through their G.O.Ms.No.56, Municipal Administration and Urban Development (J1) Department, dated 05-02- 2011, are concerned, they are, in fact, amendments carried to the Andhra Pradesh Municipalities (Regulation of Receipts and Expenditure) Rules, 1968. Suitable amendments have been made to Rule 12 of the said Rules. Sub-rule (2) of Rule 12 dealt with the amendment of fixing the upset price. The upset price for lease of immovable properties for the first time or renewal of lease of immovable properties shall be fixed by the Municipal Council in the following manner, is what has been specified therein. Clause (c) thereof is as under:
"In case of renewal of lease of immovable properties, the upset price shall be fixed wither at the rent mentioned in clause (a) or (b) or rent at 33 1/3 rent above the earlier rent whichever is higher."
In my opinion, fixing an upset price, while undertaking public auctions, is the most essential feature. The bidders must be informed about this upset price before hand. When once an upset price is fixed, no bid, which has come for any amount less than the upset price, can be acted upon at all. In other words, all bidders are required to ensure that their bids do not dip in value than the upset price. But however, when it comes to the question of renewal, I cannot understand as to the necessity of fixing an upset price. Fixing an upset price is essentially required where there are prospects of more than one offer being received. In the case of renewal of an existing lease, the question of receiving more than one offer would not arise. The existing lessee either desires extension of the lease period or declines. Therefore, fixation of an upset price in the matter of renewal of the leasehold rights is a totally un- understandable concept.
At best, the State, perhaps, wanted to communicate that even in the matter of renewals, such renewal requests will not be considered unless proposal comes seeking renewal of the existing leasehold rights duly enhancing the lease amount at least by 33 1/3 %, if not more than that. Otherwise, the question of fixing an upset price for renewal, as the said expression is commonly and normally understood, would not arise. Therefore, Rule 13 and in particular, clause (c) of sub-rule (2) of Rule 12 of the Rules does not create any right, much less a vested right in favour of the petitioner to seek for automatic extension of the leasehold rights in his favour.
Leasehold rights of all public properties belonging to a local body, must be granted by duly following an open tender or public auction system. That will ensure a competitive edge amongst the prospective seekers of such leasehold rights. Further, it will also add to the transparency of the entire proceedings. Therefore, leasehold rights can only be granted by undertaking an open auction or tendering process, but not otherwise.
In principle, I can visualize various situations and circumstances where the leasehold rights might require to be extended to secure complete justice amongst the parties. It is not unusual that the circumstances would turn hostile after the leasehold rights were conferred by public auction, thus causing irreparable hardship to the leaseholders. In such extraordinary circumstances, as a measure of mitigating the hardship faced by the lease holders, an extension of the leasehold rights by a reasonable length of period can be conceded. In the absence of such mitigating circumstances or factors, the normal mode of conferring leasehold rights through public auction or tendering process, alone can be adopted, but not otherwise. Any step to the contra would confer an undue advantage and benefit upon the "one time participant" in public auctions. Participation in a public auction once upon a time cannot be a premium and hence, I do not see any justifiable reason for grant of extension of leasehold rights in favour of the petitioner.
What is leased out to the petitioner is a kalyana mandapam. The lessee is supposed to maintain it properly and in good condition. He, in turn, would be entitled to licence it in favour of various 3rd parties. Therefore, by conducting public auctions, the Srikakulam Municipality will secure the most competitive price, but not by grant of extension of the leasehold rights. It is, therefore, open to the petitioner also to participate at any such public auction and should he emerge as the highest bidder, the respondents would unhesitatingly allow him to continue to occupy the leased out premises for the further licence period, but not by way of extension. If, on the other hand, some other 3rd party emerges as the highest bidder, the petitioner would do well to quietly and peacefully deliver possession of the leased out premises to the 4th respondent- Srikakulam Municipality not later than 01-05-2013 as his present period of lease expires by 30-04-2013.
With this, the writ petition stands disposed of. No costs. Consequently, the miscellaneous applications, if any shall also stand disposed of.
__________________________ NOOTY RAMAMOHANA RAO, J.
Date.18.02.2013.