Madras High Court
Tamil Nadu Municipal Shop Merchants ... vs State Of Tamil Nadu And Ors. on 6 April, 2000
Equivalent citations: AIR2000MAD393, AIR 2000 MADRAS 393
ORDER A. Raman, J.
1. These writ petitions are filed to quash the Notification of auction published by the respondents and direct the respondents to grant renewal of lease for a further period.
2. The reliefs asked for in these writ petitions are mainly based upon the Judgment of the Apex Court rendered in Civil Appeal Nos. 1991-94 of 1991 arising out of SLP (G) Nos. 2509/86 etc. The Judgment was rendered by the Supreme Court on 23-4-1991. It runs as follows :--
"Leave granted in SLPs. and Rule Nisi issued in writ petition.
It is not in dispute that the petitioners are in occupation of municipal buildings, shops, bunks, stall etc. having obtained the same by public auction. They have been occupying the premises for more than five to six years. They have been paying the rent which was determined at the public auction. It is the case of the Municipality that the petitioners have no right to continue in the premises and the Municipality wants to bring those premises to public auction again so that more rent could be secured from the new bidders.
It may be relevant to note that the Government has made an order dated 29th April, 1985 stating that the existing leases in Municipal properties shall be extended from theyear 1985-86 and the lease amount shall be calculated for 1985-86 and the lease amount shall be calculated for 1985-86 at an increased rate 15% more than the lease amount for 1984-85 at an increased rate 15% more than the lease amount for 1984-85. The counsel for the petitioners submits that the petitioners are agreeable to pay the increased rate 15% for once in three years and they should be allowed to continue in their respective premises.
We have given our anxious consideration to the contentions urged by both the parties. It seems to us that there is no point in dispossessing the petitioners if they are prepared to pay the enhanced rent as per the said Government Order. They are in the premises doing business apparently with considerable investment. The periodical changes of premises seems to be detrimental to their interests. If the municipality is assured of reasonable rent, it is proper that the petitioners be allowed to continue in the premises. They must however, pay the rent at the increased rate 15% more than the amount which is payable once in a block period of three years commencing from 1-4-1998. The Increased rate of 15% for the period from 1-4-1988 to 1-4-1991 shall be payable within three months from today.
The appeals and the writ petitions are accordingly allowed, setting aside the judgment of the High Court."
3. According to the petitioners, the decision of the Supreme Court is the law declared by the Supreme Court under Article 141 and therefore, it is binding on all the Courts and authorities concerned. In fact, the main platform upon which the case of the petitioners is hoisted is the above decision of the Supreme Court.
4. A reading of the Judgment of the Supreme Court would show that the decision was not rendered on a consideration of the issues nor in that Judgment, reasons are given. There is no ratio decidendi. On the other hand, a reading of the decision would show that it was a decision in the nature of consent. For we find that the Supreme Court has observed as follows :--
"The counsel for the petitioners submits that the petitioners are agreeable to pay the Increased rate 15% for once in three years and they should be allowed to continue in their respective premises."
5. The questions whether the petitioners are under law entitled to insist upon extension of lease/licence, whether after the expiry of the period, they are entitled to continue in the premises and force the local bodies to further extend the period, whether the local bodies have such a power to grant extension of lease and what is the scope and effect of Rules 12(1)(3)(c) of the Rules framed under Tamil Nadu Municipalities Act, were not decided either directly or by implication. The Judgment proceeds to State that there will be no point in dispossession the petitioners if they are prepared to pay the enhanced rent as per the G.O. Therefore, their Lordships have held that that the periodical change of premises may be detrimental to the interests of the licencees. and as the municipality is assured of reasonable rents, it is proper that the petitioners be allowed to continue in the premises. Therefore, it is in the nature of a Just solution Indicated by the Apex Court and it cannot be termed as a decision rendered on merits, so that it can be brought under Article 141.
6. A reading of the said order of the Apex Court would show that it cannot be brought under Article 141. It appears more in the nature of a consent order. Therefore. I am unable to accept the contention that Article 141 is attracted. A decision will be available as a precedent only if it decides the question of law. The Judgment must be read as a whole and the observations in the Judgment have to be considered in the light of questions which were before the Court and in the peculiar context of facts that were before Court. It is a decision, which is not expressed and which is not founded on reasons but proceeds on a sympathetic consideration of the difficulties experienced by the licencee. Only if there is aratio decidendi. such a decision will have force under Article 141, vide (State of U. P. v. Synthetics and Chemicals Ltd.) and (Orient Paperv. State of Orissa).
7. The Judgment of the Supreme Court referred to above was considered in certain decisions of this Court. There are two decisions rendered by the Benches of this Court, wherein the Apex Court's Judgment came to be considered. In Writ Appeal No. 435 of 1999, a Bench of this Court to which 1 was one of the parties, held that the Judgment would not apply sinee it appears to be restricted to the facts of that case. Another Bench of this Court in W.A. No. 1739 of 1998 consisting of N. K. Jain. J. and P. Salhasivan, J. did not accept the Judgment of the Apex Court as a law laid down under Article 141.
8. Of course, there is an earlier Bench decision in a batch of W.A. No. 91 of 1986, wherein a direction was issued to the Panchayat, directing to grant lease as per the orders of the Supreme Court. But, even in that decision, the Bench did not consider the nature of the order passed by the Supreme Court or whether it must be deemed as a law laid down by the Apex Court under Article 141. On the other hand, a reading of para No. 2 of the said order, which is extracted below would show that the above aspect never arose for consideration. For the operative portion of the order of the Bench, after extracting the judgment of the Apex Court, runs as follows :--
"The counsel appearing for the parties/ appellants in these writ petitions submit that their clients will be content if orders similar to the above are made in these writ Appeals also. We do not propose and we do notventure to add anything more than what has been expressed in the order of the Highest Court in the land and we order these Writ Appeals in the (sic).
9. Therefore, the Bench proceeded to dispose of the writ appeals on the basis of the Supreme Court's Order since apparently the respondents in the Writ Appeals did not object to the Bench passing a similar order to that of the order of the Apex Court. Therefore, in such circumstances, I have to, with great respect to the Order of the Apex Court, say that the order passed is only in the nature of a consent or compromise order intended to give reliefs to the parties concerned in that proceedings whose hardship was taken into account by the Supreme Court and thus, it is an order passed on compassionate grounds and not on merits of the case.
10. The decision of the Supreme Court relied upon by the petitioners is not applicable for more than one reasons. Those are cases where the lease was granted either in the year 1986 or prior to 1986. The decision was rendered in the year 1990. We are in the year 2000. We have to consider the request of the petitioner for extension of lease or licence for a period of three years from 1-4-2000. Thus, the persons, who now claim, have come into it only long after the Judgment of the Supreme Court. There is no record now produced to show that the facts are Identical and the terms and conditions in those cases are identical to the terms and conditions of the auction in these cases. We cannot say that the petitioners who have come before this Court are placed in similar position. Therefore, the decision of the Supreme Court can hardly be relied upon by the petitioners as a decision that would govern squarely the facts and circumstances relating to the petitioners.
11. Learned Senior Counsel for the petitioner no doubt relied upon Rule 52(12) (1) (c). Chapter-IV of the Rules relates to Receipts and Expenditure. Rule 52(6) relates to fees from markets, carts stands, slaughterhouses and fisheries. Rule 52(12) relates to lease and licences.
12. By G. O. Ms. No. 436 dated 5-3-1973, Rule 12(3)(1) was amended. This amendment provided that the lease by public auction shall be held and given effect to for a period of not exceeding three years at a time in the first instance and if the existing lessee desires the continuance of the lease in his favour, a declaration in writing to be given to the Executive authority sufficiently in advance not less than 60 days before the existing period. The lease shall be renewed accordingly for a period not exceeding three years at a time, subject to the condition that the total duration of the lease should not in any case exceed a continuous period of 9 years from the commencement of the lease as granted under this sub-rule or from 1-4-1966. This was subsequently amended by another G.O. viz., G.O. Ms. No. 474. Thereafter, another G.O. was passed on 5-3-1977 in G.O.Ms. No. 395. stating that the lease of vacant lands and buildings including bunks and stalls shall be granted in public auction for one year in the first instance and that the Municipal Councils, on request by the lessees, may renew the lease subject to the following conditions :--
"Application for such renewal of lease should reach the Executive Authority prior to the expiry of lease period. The period of such renewal from its commencement shall not exceed three years at a time. The lease amount for the first year of such renewal shall be fixed by the council on the basis of market rate or value for such shops, sites and shops in the vicinity after providing for an escalation of not less than 10% per year for the subsequent period of two years, and in all old cases the leases should be renewed only in favour of the present occupants. New shops and sites should be leased out in public auction only,"
The above G.O. was published on 5-3-1977. Thereafter, on 16-02-1982, an Executive Order was passed with regard to leases and this was followed by G.O. Ms. No. 285, which was the Government Order challenged before the Supreme Court. The said G.O. has been struck down, with the result it is only the G.O. dated 5-3-1977, whereby certain amendments were brought in, thus covers the field as on today.
13. The G.O. dated 5-3-1977, has amended Rule 12(1) Sub-rule (3) for Clauses (b) and (c) and follows :--
"Clause (b) :-- The lease of vacant lands and buildings including bunks and stalls shall be granted only in public auction for one year in the first instance :
Provided that this sub-rule shall not apply for a period of one year from 1st April 1976 in respect of the following cases of leases :--
(1) leases for the year 1976-77 already leased in public auction;
(ii) leases already renewed for 1976-77 for the first time increasing the lease amount by 10 per cent over that of 1975-76;
Provided further that the Inspector of Municipalities in special cases where the Municipal Councils come with a specific request may order for renewal of leases and fixation of lease amount as per Clause (c).
(c) The Municipal Councils, on request by the lessees, may renew the lease subject to the following conditions :--
(1) application for such renewal of lease should reach the Executive Authority 90 days prior to the expiry of lease period.
(2) The period of such renewal from its commencement shall not exceed three years at a time.
(3) The lease amount for the first year of such renewal shall be fixed by the council on the basis of market rate or value for such shops sites and shops in the vicinity after providing for an escalation of not less than 10% per year for the subsequent period of two years.
(4) prior approval of the Inspector of Municipalities for such renewal of lease and fixation of lease amount in each case should be obtained.
If the Inspector of Municipalities modifies the lease amount fixed by the Council, the lease amount as modified by the Inspector of Municipalities shall be adopted by the council.
Provided that renewal of lease shall not be admissible if in the opinion of the Inspector of such renewals are given in an irregular manner or by abuse of powers."
14. Now, it is these Rules which hold the field now. Therefore, the lease has to be granted, following the Rule which now has the sway. If the petitioners demand that the Rules should be complied and pray for a mandamus for such direction, they must in the first instance show that they have complied with the Rules and are prepared to comply with the Rules. Admittedly in none of these cases, the petitioners have submitted any application, making a request for renewal of the lease by 31-12-1999. The Council has not so far fixed the market rate or value for such shops. Moreover, the recommendation of the council is not the final thing since prior approval of the Inspector of Municipalities for renewal of lease and fixation of lease amount has to be obtained. Not only that, the Inspector of municipalities has power to modify the lease amount and if he is of the opinion that the renewals are given in an irregular manner by abuse of power, renewal is not admissible. Therefore, the Rules would show that there is no absolute right granted to the petitioners under the Rules to call upon the Municipalities to execute or grant further period of licence or lease in favour of the petitioners, moreso when the petitioners have not complied with the Rules and without complying with the conditions outlined in the Rules, they cannot come up with such request before Court for issuance of mandamus. These are not the writ petitions, wherein the petitioners are challenging the validity of the Rules as they stand. Therefore, the argument of the learned counsel for the petitioner relying upon Rule 12(c) or contending that Rule 12(c) imposes a duty upon the Municipality without corresponding obligation to grant further lease/licence, is in my opinion, not acceptable. Since the prior approval of the Inspector of Municipalities is essential, the recommendation of the council is not conclusive or final. The recommendation of the council does not invest the licencee with any higher right nor make it a concluded thing. It is at best only a recommendation and has no legal flavour.
15-16. Therefore, the only G.O. which now holds the field is the G.O. dated 5-3-1977. G.O. Ms. No. 285 has been quashed by the Apex Court. Only if the petitioners satisfy the conditions of the G.O. dated 5-3-1977 and fulfil the parameters set down in the G.O., only then they can have a legal platform to put up their request for renewal. But, that is not to be. For the petitioners have neither complied with the conditions of the G.O. nor have offered to abide by the conditions of the G.O. Nor there is any fixation of market value by the council. The matter was also not placed before the Inspector of Municipalities. Yet they want a blanket order in their favour, directing the Municipality to grant them licence for a further period.
17. There is another aspect of the matter. The petitioners came to enjoy the right pursuant to a contract. They bid at the auction and became successful bidders pursuant to which they were permitted to occupy the shops or stalls and run their business. Admittedly, in all these cases, the period for which the bid was made has ended. The petitioners all claim that they must be granted a further period and that they are prepared to pay enhanced rent or licence fee as the case may be at 15%. The right of the petitioners therefore arises out of a contract. The right is civil in nature. At best, it is contractual in its effect. Time and again the Apex Court has held that a judjcial review of contractual obligations or enforcement of contractual obligations cann.pt be permitted under Article-226. Therefore, the petitioners cannot maintain a claim under Article 226 for the enforcement of the contractual obligations. It is not possible to accept the contention of the learned counsel for the petitioner that he can approach the Court under Article 226. The local bodies cannot be compelled under law to grant leases/ licences in favour of the petitioners forever.
18. Section 260 of the Tamil Nadu District Municipalities Act refers to public markets and provides that the council may in any public market levy any one or more of the following fees at such rates and may place the collection of such fees under the management of such person as may appear to it proper or may farm out such fees for any period not exceeding three years at a time and of such terms and subject to such conditions as it may deem fit. It sets out the fees for the use of or for the right to expose goods for sale in such markets; fees for the use of shops, stalls, pens or stands in such markets; fees on vehicles or pack-animals carrying, or on persons bringing goods for sale in such markets, fees on animals brought for sale into, or sold in such market; licence fees on brokers, commission agents, welghmen and measurers practising their calling in such markets and Section 260(3) provides that the council, may with the sanction of the State Government close any public market or part thereof.
19. Section-261 provides that no person shall without the permission of the executive authority or if the fees have been farmed out of the farmer sell or expose for sale any animal or article within any public market. Section 270 (b) relates to provision of public cart-stands. It reads as follows :--
"The Municipal Council may conduct or provide and maintain public landing places, halting places and cart-stands and may levy fees for the use of the same.
The council may place the collections of any such fees under the management of such persons as may appear to it proper; or farm out the collection of any such fees for any period not exceeding three years at a time and on such terms and conditions as it may think fit.
It further provides that car stand shall for the purpose of this Act include a stand for carriages including motor vehicles within the meaning of the Indian Motor Vehicles Act."
Thus District Municipalities Act recognises the power of the Municipal Council to levy certain fees and regulate the functioning of the market and fix the duration for the exercise of such right, A reading of the relevant provisions would show that exercise of such power cannot be questioned by persons like the petitioners under the pretext of renewal. So long there is no arbitrariness and so long there is no illegality and there is no colourful exercise of power, it cannot be questioned by the petitioners. Only if it is shown that they are singled out for different treatment, the petitioners can succeed in questioning the right of the Municipality to auction out. Tamil Nadu Panchayats Act, under Sections 147 and 154 deal with markets and halting places. Section 220 deals with licenses.
20. Learned counsel for the petitioner submits that leasing out is not a sovereign exercise, but it is like any other act of an ordinary individual and therefore, the Municipality or to the public bodies cannot claim any higher right. He further contended that it is a normal commercial activity and therefore, there cannot be two different standards adopted for such activity. He further submits that it will be opposed to public interest to deny the right of the petitioners to obtain renewals. If they are denied further renewal, they will be uprooted and their livelihood will be affected. He also contended that there is no provision to require the licencee to pay certain amounts as deposit or pay certain amount as rent. Further, the Municipality cannot reauctlon since they cannot take possession and they cannot take possession unless they give a notice to the lessees already in.possession and therefore, the claim of the petitioners cannot be ignored.
21. These submissions made by the learned counsel for the petitioner, in my opinion, cannot hold good. It is the larger Interest of the society that has to be taken into account. If certain persons, merely because they bid at the auction and became successful bidders and thereby became entitled to enjoy the right for certain period, are allowed to contend that they must be granted renewal, then there will be no control for the public bodies. Persons let into possession would like to continue as long as it is possible, and then their heirs will be let into possession and it will likewise become a heritable right. It cannot be permitted at all. The properties of local bodies cannot be allowed to be fettered by perpetuity.
22. The Apex Court has held in the decision reported, in (M. C, Mehta v. Union of India) that provisions of an Act have to be so construed as to keep individual or a class interest subordinate to the larger public interest. One has to take into consideration the larger Interest of the people at large or the Society. Public bodies have the right to put the properties belonging to them in auction and augment their income and thus deal with it in a manner more advantageous to them. Any direction not to hold auction or to renew the lease will not only put an unwarranted limit on their right but would work against the larger interest of the Society. Further, it will lead to monopoly. For if such a right is allowed, it amounts to nudging out other con tenders. Thus, a few people can hold the entire local body to ransom by getting into the property and dictating their terms. It is always necessary and desirable that such rights are auctioned out by way of public auction. In fact, such public auction would put an end to monopoly. Few persons, who get into the property, because they happened to be successful bidders for a particular period, cannot be allowed to close the doors.
23. Every citizen must have a right to participate in the auction. There is no fundamental right inhering in a person to claim that he must be always the chosen person for such a right. Otherwise, it will lead to monopoly and result in loss to public bodies. It is desirable and necessary that every citizen gets a right to participate in the public auction. For, if the property is auctioned out, there would be more transparency. Such public auctions are likely to yield higher Income. If the contention of the counsel for the petitioners is accepted, then once a person comes into the property as a licence in a public auction, he would continue to be in possession and enjoyment forever and in that process would nudge out others. Having had his fingers in the pie, he would only like to cling to it and have the whole pie for himself. It is in the fitness of things that everybody has a taste of the pie.
24. There is one other aspect to be noted in this regard. The petitioners are there now because of the public auction. In other words pursuant to the public auction held, they being the highest bidders were allotted the shops to enjoy the right. Therefore, when they owe their entry to a public auction, is it open to them to say that no public auction should be held. Can they say "it is all right, I have, come into the property, thanks to a public auction, "Let us have no more auctions". I don't think that the petitioners under law will be entitled to put forward such a contention. Their entry into the properly is because of a public auction and they cannot claim that such an entry should be barred for others, enabling them to remain in the property forever. They are estopped from putting forward such a contention.
25. Learned counsel for the petitioner would submit that there is no monopoly in this case. According to him, it is just like a lease under the Tamil Nadu Buildings (Lease and Rent Control) Aet, there once a tenant is let into possession he cannot be evicted unless he has defaulted to make payment of rent and where the landlord requires the premises bona fide and in those cases we do not say that there is monopoly and therefore, in these cases as well, there is no monopoly as such.
25-A. This contention in my opinion is in the nature of a double talk. The nature of right and relationship contemplated between the tenant and the landlord under the Tamil Nadu Buildings (Lease and Rent Control) Act is quiet different. That Act was brought into existence as a temporary measure to control the situation that arose immediate after the II World War. But here, we are not concerned with any such right. In fact, the nature of right the petitioners are granted cannot be equated to that of the right of a tenant under the Tamil Nadu Buildings (Lease and Rent Control) Act. In fact, here it is not a lease but only a licence, I do not propose to consider at length the nature of right granted to the petitioners since thai does not arise for consideration directly in these writ petitions. This is only to point out that this is completely a different situation to which the analogy of the Tamil Nadu Buildings (Lease arid Rent Control) Act can hardly be applied.
26. The Municipalities or the Panchayats as the case may be, put up buildings in the bus stand or in the parking stands. In some cases, they also put up some shopping complexes. There are stalls in the public markets where the right to expose goods are leased out. In W. P. Nos. 4904 and 4905 of 2000 the Municipal Council is not made a party. The property vests with the Municipal Council, who are the owners. The Director of Municipal Administration is but an authority having some powers over the Municipal Council. The Director of Municipal Administration cannot become the owner of the property, though he may have some right or power to issue directions to the Municipal Council now and then in that regard. A reading of Sections 260 and 261 to which I have already referred to would show that the council may provide places for use of public markets and may farm out the same and the control of which will be only with the Executive Authority. But surprisingly enough, the Municipalities have not been made parties. Merely because Director of Municipal Administration has got a controlling power over the Executive authority of the local body, without impleading the concerned Municipalities, the petitioners cannot ask this Court to issue directions.
27. The Judgment in the batch of Writ Appeal Nos, 70, 76 and 85 of 1976 is very heftily relied upon by the learned senior counsel for the petitioner to advance the contention that the appellants are entitled to renewal of lease. There, this Court has observed as follows :
"It is clear that the intention of the rule is that generally the lease should by public auction. But, there is an important proviso to Rule 12(3)(b) on the construction of which will depend the result of this appeal."
After quoting the proviso which runs to the following effect.
"provided existing lease except to the extent otherwise provided may be continued and renewed annually, subject to the following conditions."
the Bench was of the view that the proviso enables the existing lessee to continue by having his lease renewed annually." But, the Rule 12(3) (b) has been subsequently amended and substituted by G, O. dated 5-3-1977. In those Writ Appeals. G.O. Ms. No. 474 dated 9-3-1975 came to be considered. But, in view of the G.O. dated 5-3-1977, which now holds the field, the lease of vacant lands and buildings including bunks and stalls shall be granted only in public auction for one year. Rule 12(3) Clauses B and C are substituted by G.O. Ms. No. 395 dated 5-3-1977, which is to the following effect.
"(b) The lease of vacant lands and buildings including bunks and stalls shall be granted only in public auction for one year in the first instance.
Provided that this sub-rule shall not apply for a period of one year from 1 -4-1976 in respect of the following cases of leases :--
(i) Leases for the year 1976-77 already leased in public auction
(ii) leases already renewed for 1976-77 for the first time increasing the lease amount by 10% over that of 1975-76.
Provided further that the Inspector of Municipalities in special cases where the municipal councils come within a specific request may order for renewal of leases and fixation of lease amount as per Clause (c)."
"The Municipal Councils on request by the lessees, may renew the lease subject to the following conditions :--
(i) Application for such renewal of lease should reach the Executive Authority 90 days prior to the expiry of lease period.
(ii) The period of such renewal from its commencement shall not exceed three years at a time.
(iii) The lease amount for the first year of such renewal shall be fixed by the council on the basis of market rate or value for such shops, sites and shops in the vicinity after providing for an escalation of not less than 10% per year for the subsequent period of two years.
(iv) Where the shops built by Municipal Councils were given out on lease in an irregular manner or by abuse of powers, they should only be auctioned out for the year 1976-77.
(v) in all old cases, the leases should be renewed only in favour of the present occupants and otherwise that there are no benami transactions.
(vi) New shops and sites should be leased out in public auction only.
(vii) The above scheme will exclude municipal councils which have already conducted the auction unless they approach the Inspector of municipalities in accordance with the above scheme.
(viii) The Government order the defendant of auctions in order to fit in the above scheme,"
Therefore, in the context of the substitution of the relevant Rules, by later G.O. the decision rendered in the writ appeal cited by the learned counsel for the petitioner will not be of any avail. The Rule is clear that it must be only by public auction.
28. Learned counsel for the petitioner referred to the decision (Ramakrishnan v. Assistant Director of Ex. S.W. Board) where it has been held that the tenant in possession of leasehold property on the termination of the lease cannot be dispossessed by force except under due authority of law, This decision is no longer a good law in view of the decision of the Bench of this Court.
29. Learned counsel for the petitioner relied upon the decision rendered by a single Judge of this Court in WP. Nos. 3349, 4012 and 4013 of 1992. There this Court has held that G.O. Ms. No. 194 dated 16-2-1932 cannot be given effect to against the petitioners and the Government Order cannot be applied to the petitioners as the Rules concerned have not been amended. Therefore, this Court held that it is only a executive direction and as the Rules themselves have not been amended, it cannot be applied to the petitioners. Such a situation does not obtain in this case on hand.
30. The other decision is that rendered by a Bench of this Court in W.A. Nos. 91, 175. 236. 245 batch, wherein, the Bench after referring in extenso to the order of the Supreme Court dated 23-04-1991, have observed as follows :--
"The counsel appearing for the parties/ appellants in these writ appeals, submit that their clients will be content if orders similar to the above are made in these writ appeals also. We do not propose and we do not venture to add anything more than what has been expressed in the order of the highest Court in the land and we order the writ appeals in the terms as per the above order of the highest Court in the land."
Therefore, I am unable to accept the contention of the learned counsel for the petitioners that by this decision, the Bench has laid down any law.
31. The decision reported in (1994) 1 Mad LW 571 (Balakrishnan, V. S. v. Pudukkottai, Municipality, rep. by the Commissioner, Pudukkottai, Pudukkottai Dist. is a case where the auction of the right to collect fees in a weekly market by a Municipality was held to be mere licence and not a lease. The said decision may not apply to the facts of this case. The decision rendered in (1994) 1 Mad LW 463 (Sekaran, T. v. Managing Director, Thiruvaalluvar Transport Corporation, Madras.) is a decision under Section 52 of the Easements Act, where it was held that document giving right only to use the property in a particular manner viz., to run a restaurant amounted only to a licence and not a lease.
32. Learned counsel for the petitioner relied upon the decision of a single Judge of this Court rendered in W. P. No. 3465 of 1997, where the application of G.O. dated 16-02-1982 was considered. In the decision reported in 1998 Writ LR 69 (Kannan v. Panruti Municipality), a single Judge of this Court has held that the Municipality has got absolute powers over the property and the Government has only supervisory powers over it and it is for the Municipality to decide as to how its properties should be dealt with and the petitioners cannot claim that they should be permitted to continue in shops in the very same place.
33. The decision reported in 1999 Writ LR 155 (V. Chellappa v. Commissioner, Tirunelveli Municipal Corporation) is to the effect that non-statutory contracts and right touching an immovable property cannot be enforced and Article 226 of the Constitution and that the petitioners cannot resist the right of the Municipality to auction and that the Municipality can hold the properties and put it to better use to augment more income in public interest in the manner most advantageous to it and that any direction not to hold auction or renew the licence is nothing but putting a limit on such right, which is impermissible in law.
34. The decision of a single Judge of this Court rendered in W. P. No. 934 of 1989 is again based upon G.O. Ms. No. 285. The decision rendered by a single Judge of this Court in W.P. No. 14893 of 1989 is but an order passed by this Court in the light of the decision of the Apex Court. In a batch of cases in WP. Nos. 5175 to 5180 of 1998, a single Judge of this Court has held as follows :--
"I don't think that by invoking the powers of Articles 226 of the Constitution, this Court can give any such direction. Second respondent is the owner of the building and it is for the Panchayat to decide whether the petitioner should be allowed to continue there or not and even if they are allowed to continue, it is for the second respondent alone to decide the terms for such occupation. It is true that the 2nd respondent is a public authority and it has to act in fairness. But, to act in fairness does not mean that it should act to its own detriment, nor does it mean that it can allow the occupants to continue despite their refusal to pay reasonable enhancement of rent.
All these petitioners rely on G. O. Ms. No. 285, M/A and W. S. Dept., dated 29-4-1995. I do not think that the said G.O. has any relevance to this case, when the building in question absolutely belongs to the Panchayat. In various decisions of this Court, it has been held that G.O.Ms. No. 285 is not a bar for the local authority to bring the leased premises for auction. This Court has also taken the view that there is always a presumption of fairness and openness in bringing the leased premises for public auction. The Court has also further held that the occupants are also entitled to participate in the auction, and if there is a bid for an equivalent amount, the occupants will be given preference. Except for that limited right, petitioners cannot compel this Court for the issuance of writ of mandamus."
35. In yet another batch of writ petitions in W. P. Nos. 2428 to 2431 of 1997, another single Judge of this Court has held that where the properties are put to auction in order to augment more income for the benefit of the public, the petitioners are not entitled to any relief from this Court. Auction is a policy decision of the authority to enable the new persons to enter into the business and to discourage the monopoly of the old and established method of earning more income resorting to sub-leases of public property and that it would be travesty of justice to permit jurisdiction under Article 226 of the Constitution to be invoked to perpetuate their occupation of public property by at the cost of public revenue.
36. In W.A. Nos. 902 and 1032 of 1995, a Division Bench of this Court has held that when the parties agree and enter into a written lease containing the terms and conditions for renewal, they are bound by it and the Government order in question cannot have the effect of altering the bilateral contracts. Similarly, a Bench of this Court in W. A. No. 1510 of 1998. held as follows :
"There is no provision under the District Municipalities Act which has been pointed out that the rights or lease granted to the appellants were perpetual under the District Municipalities Act. The Municipal Authorities, it has been statutorily provided by the illustration, may grant for six years i.e., three years and three years and no more. The argument advanced by the learned counsel for the appellants, if accepted that after the expiry of three years, the lease has lobe extended, it is nothing but a lease perpetuity. Lease in perpetuity or extension or renewal without time limit amounts to lease in perpetuity which is not permissible in law and in terms of the statutory provisions. This is not the intention of the statute and this will create a monopoly in favour of a person who has once taken the lease in an open auction. This apart it causes a loss, the local authority, when the property can be auctioned at much higher price and the appellants arc not debarred from participating in the auction."
37. In yet another case in W. P. No. 3465 of 1997, a single Judge of this Court has held that since the lessees or licencees under the statutory bodies have no right to compel the statutory bodies to accept the enhanced rent and permit them to continue in their possession, it is always open to the statutory bodies to auction the lease hold right in the property. In W. A. No. 435 of 1999, a Bench of this Court to which 1 was a party, held that it cannot be gainsaid that the appellants cannot perpetual the lease by taking part in the auction and winning the bid only once. Once the lease was only for three years, there is absolutely no right in the appellant to get the said lease extended for an indefinite period merely by agreeing to pay the enhanced rent. Again, a Division Bench of this Court in W. A. No. 1739 of 1998 has held that it is not open to the appellants to raise a contention that they are entitled to renewal on payment of 15% enhanced amount for a block period of three years as a perpetual lease.
38. The question of renewal and the question of transfer of lease came up for consideration in W. P. No. 10038 of 1999, where this Court held that a careful reading of the provisions would show thai the Municipality lease out the property only by way of public auction. Further referring to transferor assignment, this Court held that when the lease deed specifies that the transfer or sub-letting cannot be made without the prior permission of the Municipal Authorities and when prior permission is contemplated for such transfer or assignment, the petitioners herein cannot claim as if they have got a vested right to effect transfer or assignment of the lease. Here, the Rules provides for prior approval of renewal of lease.
39. Learned counsel for the petitioner therefore submitted that there arc two sets of Rulings of this Court. Thus different views are taken as regards the applicability and binding nature of the decision of the Apex Court. Therefore, in such circumstances, it is necessary that the matter be referred to a full Bench, so that the law can be settled.
40. 1 am unable to accept this request. For 1 have already indicated that in the circumstances of the case, the derision of the ApexCourt in the SLPs. cannot be brought under Article 141. Further. 1 have stated, that the petitioners have not given any petition to have a renewal of licence/lease by intimating the counsel 90 days prior to the date of expiry. The council has not fixed the market value for such shops, slalls or sites as contemplated under Rules 12(1)(c)(3). There is no prior approval of the Inspector of Municipalities for such renewal. No request was sent for prior approval nor obtained for such renewal. Thus, the conditions set out have not been satisfied or complied with. Moreover, the petitioners have obtained the right of enjoyment to run the shops, stalls as the case may be only by way of public auction and where it not for such public auction, they will not be where they are now. Therefore, it is not open to them to turn down and say that all right, now that I have now come in, close the doors. Therefore, in my opinion, in the context of the above circumstances, it is not necessary to refer the matter to a full Bench. When it is admitted that G.O. Ms. No. 285 dated 29-4-1985 has been struck down and it is the Rules as amended by G.O. Ms. No. 395 dated 5-3-1977 that is holding the field, and when those conditions have not been complied with, the petitioners cannot say that decision of the Apex Court relating to G.O. Ms. No. 285 holds the field and it should be made applicable to them. Hence, in that context, I have to hold that there is neither any necessity nor any warrant for referring the matter to a Full Bench. On the other hand, the view has been taken consistently that the licencee or lessees as the case may be, cannot insist upon the grant of renewal of lease tn their favour.
41. I am unable to accept the contention that there is any artificial classification or that there is any discrimination. In W. P. No. 5344, the prayer is forbearing the respondents from dispossessing the petitioner and for a direction to renew the lease. Here, the petitioners are not challenging the G.O. Ms. No. 395 dated 5-3-1977 as void or ultra-vires. Therefore, the content ion whether there is a classification or discrimination does not arise.
42. The writ petition in W. P. No. 5314 of 2000 is only for quashing the Notification dated 22-3-2000, whereby the 3rd respondent in the W. P. made a publication to conduct auction on 28-3-2000 and 29-3-2000. and consequently to direct the 3rd respondent to grant renewal of lease al 15% increased rent. In this writ petition also, neither the Rules nor any of the provisions of the Panchayat Act relating to lease or licence as the case may be or the District Municipalities Act are challenged.
43. Writ Petition No. 4904 of 2000 has been filed by the Tamil Nadu Municipal Shop Merchants Association, whereby they challenge G.O. Ms. No. 165 dated 29-6-1999. Writ Petition No. 4905 of 2000 is by the same Association for a writ of mandamus or any other writ, forbearing the respondents and other Municipal Councils from terminating or dispossessing ihe members of the petitioner/association from their respective leasehold properties.
44. G.O. Ms. No. 165 dated 29-6-99 relates to transfer. It runs as follows :--
(Vernacular matter is omitted .....Ed.)
45. This is a non-statutory contract, giving rise to rights touching immovable properties. It cannot be enforced under Article 226, as held by the Apex Court in (Bhawani Singh's case). In this case on hand, the petitioners have not produced the agreement entered into by them with the local body or the terms and conditions of the auction. But, it can be presumed that there will be an undertaking that they will not transfer any such leasehold rights or licence as the case may be to third parties. We frequently come across cases, where the original allottee transfers his right in favour of third parly, after receiving huge amounts. If such a thing is permitted, there will be no end to the same and the local bodies will lose control. Persons who did not bid at the auction will then enter through the back-door by entering into an arrangement with the original allottee. Therefore, with a view to prevent such unlawful transactions and unjust enrichment by the allottees, the Government has taken a decision to prohibit any transfer and permit such transfer in favour of legal representatives of the allottees till the expiry of the period of lease or licence. The classification made by the Government with regard to those in whose favour, the transfer has already been recognised or recognising the transfer in favour of the legal representatives cannot be termed as unreasonable or arbitrary. Each would form a distinct class by themselves. The G.O. that is impugned here cannot be challenged as arbitrary or unreasonable. As the ultimate owners of the property and as the custodians, the local bodies are entitled to make such prohibition or impose such conditions as are necessary to safeguard the larger interest of the Municipality and to assure of income. In all the cases, where the licencees or lessees have sub-let or sub-leased, they have done it without the knowledge and consent of the local bodies. It cannot be stated that any Rule of estoppel would arise. When the original allottee or licencee as the case may be has no authority to transfer his right, the transferee cannot claim a better right or a legal right to continue in possession and enjoyment. When for consideration such transfers are effected without the knowledge and consent the local body cannot remain as pitiless spectator. G.O. Ms. No. 165 only brings about a discrimination between the recognised lessees and the unrecognised lessees. The Government apparently in its wisdom thought that to safeguard the interest of the local bodies and at the same time to protect the interest of legal representatives of the allottees has passed the G.O. Therefore, the purport of the G.O. is only to prohibit such transfers and prevent unauthorised sub-leasing and transfers and to regulate the matter and safeguard the interest of the local bodies. Persons, who have come into possession into the property in an unauthorised manner without the knowledge and consent of the lessor or the licensor have no right to maintain a writ petition, questioning the validity of the G.O. I am unable to accept the contention that the G.O. Is in excess of powers of the State.
46. In fact, a single Judge of this Court in W.P. No. 6914/99 batch and in W.P. No. 10038 of 1999 has upheld the G.O. In fact, in W. P. No. 10038 of 1999, Rules 12(4) of Sub-clause (2) and 12 (8) were considered in the light of the G.O. and it was held by this Court that the said G.O. Is neither illegal nor it transgresses the powers of the local bodies. Originally G.O. Ms. No. 67 Municipal Admn. and Water Supply Department dated 24-3-1999 was promulgated and later it has been amended by G.O. Ms. No. 165 dated 29-6-1999, which is challenged here. This G.O. only restricts the assignment of lease hold rights with regard to particular categories of lessees. Here, the petition is filed by an Association. We do not know the categories of lessees forming members of the Association. Therefore, as held by this Court in W. P. No. 10038/99, the Writ Petition filed by the petitioner Association cannot be maintained. Moreover, there is no vested right in anyone of the licensees or lessees to claim transfer. The right to effect transfer of a licence or lease is a discretionary power of the local body. Without prior permission and without the knowledge and consent of the local bodies most of the people have come into possession. Therefore, they cannot claim any such right as a matter of legal right. It is for the original licencee or lessee to ask for assignment or transfer in favour of a third party and thereafter it is for the local body to consider the same. II is not known how a writ petition can be maintained by an Association when a decision has to be taken Individually on merit concerning each and every licencee or lessee or stall holders.
47. It is to be pointed out that the council has been given power under the Rules. It is for the council to decide either to grant or not. As I already pointed out, the Municipal Councils have not been made parties. The petitions filed in WP. Nos. 5314 and 5344 are of course by individuals, but joining together. May be, the relief asked for is common in the sense they all request for grant of renewal for a further period in their favour. But, the claim of each petitioner is an independent claim, and it has to be decided independently without reference to the claim of the others. Therefore, it is for the Municipal Council to decide the request individually and there is no question of any unity of claim of title in such cases. The applications are not filed individually and therefore, there is lacuna.
48. As pointed out already, G.O. Ms. No. 165 has been upheld by this Court earlier on two occasions. Sections 260 and 279 of the District Municipalities Act arm the local bodies with the necessary power. The power is exercised by the Municipalities/local bodies in the larger interest. It does not suffer from any arbitrariness.
49. Learned counsel for the petitioner pointed out that there is no uniform policy followed in this regard that certain Municipalities agree to grant renewals, while certain other Municipalities only want to farm out the right by way of public auction. The Corporations have been following a particular procedure. Thus, there is no uniform policy and there is an arbitrary exercise bf power.
50. I cannot agree with this contention. There are number of Municipalities, town Panchayats and Corporations. They own buildings, stalls etc. either located in the bus-stand or in the shandy or in other public places, cart-stands etc. Some of the public bodies have their own shopping complexes. The situation is peculiar to each local body. There is no uniformity in the same. One cannot expect all the local bodies to have a uniform practice though it may be desirable to have such uniform practice. The local bodies have to act according to the exigencies of the time, their set up, the situation they have to face and the circumstances that govern them. It cannot be the same for all the local bodies. Some local bodies may have certain peculiar problems in that field. In fact, the learned Senior Counsel Mr. Masilamani at the beginning of his argument submitted that the local bodies are only like private land owners. If they can be equated to private land owners, then, it has to be equally stated that one private land owner need not, will not and does not act as the other private owner and that the approaches will be different. The Local Council being the absolute owners are entitled to decide in what manner they should lease out the property and how to augment their income. Merely because there is no uniform policy, the exercise of power by local bodies cannot be termed arbitrary in nature.
51. I am not able to accept the contention that there is any violation of Article 14 in that regard. There is no discrimination. For every classification is in some degree likely to produce some inequity and mere production of inequity is not an abrogation of Article 14. It is only a reasonable exercise of power by the Local Body. The Government has only the Supervisory power. The Government has the Rule making power under the Act and with aview to stream-line the procedure, the Government issues administrative instructions and brings about amendments to the Rules regarding leases and lincences. Hence. It is not possible to expect an uniform authority. What holds good to a petitioner Municipality may not hold good to another Municipality. What holds good for licence relating to a restaurant in a Municipal bus-stand may not hold good when applied to a licence to exposed goods in market. The policy of fixity of tenure cannot be also achieved in such cases. Because, that would defeat the very purpose of public auction. Normally, it is only granted for a period of one year or three years. It cannot be stated that the present policy is not to the benefit of the people. If certain person with open eyes take properties in a public auction, knowing fully well that the period of licence or lease is only for a period of three years and if such persons are to make investments, they cannot turn round lateron to say that they have made huge investments and therefore, on that ground they must be granted further extension of lease. If that argument is to be accepted, then it will be easy for every one who comes into the picture at the first instance, make a show of investment and claim that he has made huge investments and continue to be in the property forever. Rightly or wrongly and knowing fully well about the terms and conditions of the lease, and the period of lease, they have come into the properties. If they are foolish enough to make huge Investments in the hope that they will be able to get further extension of lease, they have to blame themselves. They cannot be allowed to take advantage of their own false sense of hope. Nor they can on that ground, be allowed to get away with the same.
52. Learned Senior Counsel Mr. G. Masilamani contended that leasing is not a sovereign exercise of the Government, but it is Just like any other act of an ordinary individual, and that the local bodies who are like ordinary citizens cannot claim any higher right.
53. The local bodies herein are not claiming any higher right. All the parties have entered into a contract which had come into existence after they became the highest bidders in the auction. Therefore, the petitioners are bound by the contracts. Therefore. when parties are governed by contracts, the parties can only resort to terms and conditions of the lease to ventilate their grievance or seek redressal. They cannot resort to a procedure under Article 226. Contractual obligations can never be enforced through Article 226. Further, the local bodies are not seeking to exercise any superior right or power. The leases/licenses have expired only by efflux of time. They want to reauction the properties. It is the common and ordinary right of the owner of the property to enjoy the property in the manner he wants. If the property is leased out for a particular period, the owner is entitled to reclaim the property after the expiry of the period and take further steps with regard to the same. Therefore, this is not a case where it can be stated that the local bodies are claiming any higher right. But what they want to exercise is only their rights under the terms and conditions of the lease. The contention that there cannot be two different standards with regard to normal activity is, in my opinion, not well founded. For there are no different standards at all obtaining. If we term the action of the local bodies in auctioning out the rights by way of public auction as a normal commercial activity, then, they are entitled to do so. Such a lease cannot be compared to a lease under the Tamil Nadu Buildings (Lease and Rent Control) Act. The contention of the learned counsel based upon the view of the matter from the angle of the Tamil Nadu Buildings (Lease and Rent Control) Act is only a misplaced argument. They are two different fields, where different reasons govern the matter. It may be that the landlord under the Tamil Nadu Buildings (Lease and Rent Control) Act cannot claim more rent than that fixed unless he resorts to the provisions of the Act. It is also true that since the property is leased out, the tenant can hold the property forever unless the landlord claims that he requires the premises bona fide or the tenant commits default in payment of rent. The petitioners counsel cannot draw an analogy from that to contend that since the property is leased out to the petitioners, they can continue to he in possession of the property for indefinite period of time and that they cannot be asked to pay over and above than what they were paying prior to that. The two enactments operate in two different fields. They cannot be mixed up. Nor an inspiration can be drawn to contend that there is any discrimination and different norms with regard to lessees and licencees of the local bodies.
54. The other contention that it is opposed to public interest and it would uproot the persons and affect their livelihood, is also not acceptable. The larger interest of the public is to lease out the properties by public auction. For, competition will bring in the best price, which will only enure to the benefit of the public. On the other hand, if the argument of the learned counsel for the petitioner is accepted, then persons, who once come into the scene will continue to be there forever, with the result that it will become a lease in perpetuity for which there is no provision in the Act. Then the local bodies will be at the mercy of such persons and they cannot claim reasonable return. Further, if the right is leased out by public auction, everyone will have a chance to participate. The petitioners can also participate in the same. On the other hand, if it is renewed in favour of those who were already there, the right of others to participate in the auction would be taken away. Thus, an equal opportunity to everyone wilt be denied. The contention that if the lease is not renewed, the persons who are already there will be uprooted and their livelihood will be affected, cannot be accepted. There is no right inhering in the petitioners to demand permanent lease in their favour. With open eyes, they have bid at the auction, knowing it is only for three years. They came into the picture only by way of public auction. Therefore, it is not open to them to contend that they will be uprooted. The deprivation of livelihood is not there. For, there was no assurance to the petitioners at any point of time by the local bodies that the lease will be permanent in nature. By clinging to the property forever, the petitioners will be only depriving the opportunity of those who in law are entitled to bid at the auction and become successful bidders. Therefore, there is no uprooting of the persons, but there is only uprooting of avarice of the individuals.
55. The other contention is that it is an occupied field and when it is an occupied field, there is no power with the Government to issue instructions. I don't accept the contention that it is an occupied field. Rule making power is given to the State. The Rules has been amended with a view to regulate and stream-line the procedure. It is not the legislation. Nor there is the quest ion of occupied field arising in this case. No doubt Rule 12(1)(3)(c) speaks of renewal. But a renewal can be only in accordance with the Rules as they stand now. If the conditions set out there are satisfied, one will be entitled to claim renewal. But, it is neither the case of the petitioners, nor on facts, it can be stated that the conditions have been complied with or satisfied by the petitioners. When the petitioners have not complied with the provisions nor satisfied the same, they cannot ask lor any direction at the hands of this Court to enforce the renewal without reference to the conditions embodied in the amended Rules.
56. The other contention that only a short notice of auction was given is not a tenable contention. For, it is for the Council to decide as to how much time they should give and it is for them to decide how they go about it. As already pointed out it is not the petitioners case that the petitioners have been granted possession and enjoyment pursuant to the decision of the Apex Court. On the other hand, they have come into the property only pursuant to their hid being the highest in the auction. Therefore, having come into possession by way of public auction, they cannot now oppose public unction.
57. The other contention that the local bodies cannot re-auction unless they take possession, is without merit. The lease/ licence expires by efflux of time, and immediately on expiry of the same, the petitioners are bound to hand over possession. If they hesitate to do so. the authorities are entitled to take over the same. There is no formality needed for the local bodies to take possession. Rule 12{1) was never amended. It was only Rule 12(1)(3)(b) and (c), which were amended. Rule 12(1)(b) clearly says that the lease of vacant lands and buildings including bunks and stalls etc. shall be effected only by way of public auction. It is only Rule 12(1), Sub-rule (3), Clauses (b) and (c) have been amended. As already pointed out, it is not the claim of any of the parties herein that they have been in possession prior to the pronouncement of judgment of the Apex Court.
58. Therefore, on an analysis, I am satisfied that these writ petitions are not maintainable. Nor, the Writ Petitioners are entitled to the reliefs asked for. The claim made is only an extravagant claim unsupported by Rule. Nor by legal fiction. Nor it is supportable on equity. Hence, these Writ Petitions are disrnissed. However, there is no order 'as to cost. Consequently, the connected WMPs. will stand closed.