Andhra Pradesh High Court - Amravati
Koganti Ramakrishna, vs Vijayawada Municipal Corporation, on 11 March, 2020
Author: M.Satyanarayana Murthy
Bench: M.Satyanarayana Murthy
THE HON'BLE SRI JUSTICE M.SATYANARAYANA MURTHY
WRIT PETITION Nos. 2524, 2566 & 2570 OF 2020
COMMON ORDER:
All these there writ petitions are filed by different petitioners who are in occupation of shop rooms as tenants in Commercial Complex of the Vijayawada Municipal Corporation, questioning the Notices dated 09.01.2020 issued by the Estate Officer, Vijayawada Municipal Corporation, calling for objections within seven days from the date of receipt of notice. It was also made clear in the notices that, if no objection is received within the time stipulated, further process will be continued for calling tenders presuming that he/she does not have any objection.
As the relief claimed in all these three writ petitions is identical under Article 226 of the Constitution of India, and therefore, I find it expedient to decide these writ petitions by common order.
Since, the question involved in these writ petitions is one and the same, W.P.No.2524 of 2020 is taken as leading case.
It is alleged that the petitioners are lessees of the shops in Saibaba Temple Shopping Complex, Vijayawada, which in turn belongs to Vijayawada Municipal Corporation. Initially, the leasehold rights of the shops were put to public auction as per the rules in force and in accordance with A.P. Municipalities (Regulation of Receipts and Expenditure) Rules, 1968. Initially the lease was granted for a period of three years and after expiry of the period of lease, the Corporation has renewed the lease every three years by enhancing the lease amount by 33 1/3 over the existing rent. It is submitted that, in the year 2003, the Corporation has transferred the lease in favour of petitioner Nos.2,4,5,6 and at that time, the MSM,J W.P. Nos. 2524, 2566 & 2570 OF 2020 2 Corporation has collected 18 months lease amount for transfer of the lease and also collected 6 months rent as security deposit. In respect of the first petitioner, the lease was transferred in the name of his father in the year 2003 and after his demise in the year 2010, the first petitioner is in occupation of the shop and continuing business of his father and the Corporation is accepting the lease amount. Similarly, in respect of the third petitioner, application for transfer of lease was made in the year 2014 and 2016 and so far no orders have been passed and the respondents are accepting the lease from the petitioners. On 01.04.2016, the lease amount was enhanced by 33 1/3 percent and the petitioners are paying the said amount at enhanced rate. However, three years period was expired by 31.03.2019 and thereafter, the Corporation has enhanced the lease amount by 33 1/3 percent, from 01.04.2019, the petitioners have been paying the lease amount to the respondents and the same is being accepted by the first respondent.
While the matter stood thus, the second respondent/Estate Officer issued the impugned Notices Rc.N5-143143/2019 (3 to 7 & 9 to 11) dated 09.01.2020, wherein a reference was made to G.O.Ms.No.120 MA & UD (J1) Department dated 31.03.2011, G.O.Ms.No.56 MA & UD (J1) Department dated 05.02.2011, Lr.Roc.No.1148/2015/J1 dated 11.02.2015 of the Commissioner and Director of Municipal Administration, Andhra Pradesh and office proceedings Rc.N5-27836/1992 dated 04.06.2016, alleging that the lease period cannot be extended beyond 25 years and the lease was expired by 31.03.2019 and asked the petitioner to vacate the premises within fifteen days from the date of receipt of the notice, since the premises has to be re-auctioned. It is further mentioned in MSM,J W.P. Nos. 2524, 2566 & 2570 OF 2020 3 the notice that, if the lessee has any objection with regard to the period of the lease, he may get necessary clarification by representing to the Estate Officer, Vijayawada Municipal Corporation at this office within 7 days from the date of receipt of the said notice. Thereupon, the petitioners have approached the second respondent and stated that issuance of impugned notices is illegal and arbitrary and requested to continue the lease for further period and the second respondent refused to accept the show cause notices issued to these petitioners. It is contended that, eviction notice granting short period is not legal and the same is arbitrary.
It is specifically contended that lease of these petitioners was expired by 31.03.2019 and thereafter, the Corporation has enhanced the lease amount by 33 1/3 percent, started collecting the lease amount. By virtue of the said action of the respondents, the petitioners had a legitimate expectation that the lease would be for a period of 3 years. the respondents without giving sufficient time to the petitioners, have issued the impugned notices. The G.Os referred in the letter are not put to the notice of these petitioners on 31.03.2019. On the other hand, the petitioners have continued the business under an impression that the lease would be for a period of three years and have altered their positions and have given credit sales and also purchased material sufficient for quite long period. Therefore, the action of the respondents is illegal.
It is further contended that, vide G.O.Ms.No.56 dated 05.02.2011, the State has amended the Rules. Clause 4 in G.O.Ms.No.56 dated 05.02.2011 deals with regard to renewal of lease of immovable properties and a reading of the said clause, it is clear that the council may renew the lease for a period of three years at MSM,J W.P. Nos. 2524, 2566 & 2570 OF 2020 4 one time and with the prior sanction of the government for a period exceeding 3 years and not exceeding 25 years at a time. A reading of the above rule, it is clear that the rule would operate only in case the lease is granted for a period of 25 years at one go and not in respect of leases which are renewed every 3 years. Hence, the G.Os have no application to the present facts of the case, consequently, the demand made by the respondents by issuing impugned notices to the petitioners is illegal, arbitrary and set-aside the same by exercising discretionary power under Article 226 of the Constitution of India and requested to issue a direction not to evict these petitioners in pursuance of the notices dated 09.01.2020, and declare the same as illegal and arbitrary.
The respondents did not file any counter, but advanced arguments.
During hearing, learned counsel for the petitioners Sri O. Manohar Reddy specifically contended that the respondents having allowed these petitioners to pay rent at enhanced rate i.e. 33 1/3% on the existing rate of rent, collected the same, created a fresh relationship of lessee and lessor, thereby, the petitioners are entitled to continue for another period of three years. apart from that, on account of such collection of rent at enhanced rate, the petitioners entered into several business transactions with their suppliers and customers, in view of purchase materials sufficient for a long period. In case the petitioners are evicted suddenly, they will be put to serious inconvenience, besides financial loss and requested to set- aside the notices impugned in these writ petitions.
Whereas, Sri M. Manohar Reddy, learned Standing Counsel for the Vijayawada Municipal Corporation contended that, when a tenant MSM,J W.P. Nos. 2524, 2566 & 2570 OF 2020 5 is continuing for a period of 25 years, they are not entitled to continue on the same rent or rent at enhanced rent and such lease of the shop rooms have to be auctioned in terms of the provisions of Municipal Corporation Act, more particularly, Rule 12(4) of the A.P. Municipalities (Regulation of Receipts and Expenditure) Rules, 1968 (for short '1968 Rules') and in support of his contention, learned Standing Counsel for the Vijayawada Municipal Corporation, he relied on the judgment of the High Court of Judicature at Hyderabad in Kotha Sambasiva Rao v. State of Andhra Pradesh, rep. by its Principal Secretary, Municipal Administration and Urban Development Department, Amaravathi, Krishna District1 and on the basis of the above judgment, sought for dismissal of the writ petitions.
Considering rival contentions, perusing the material available on record, the point that arise for cosndieration is as follows:
"Whether acceptance of rent at enhanced rent from the petitioners after expiry of lease period be termed as tenant by holding over. If not, whether the action proposed by the respondents for eviction of the petitioners from the possession of the shops in their occupation belonging to the respondents is in accordance with law?"
P O I N T:
Admittedly, the petitioners are in possession and enjoyment of various shops in Saibaba Temple Shopping complex belonging to Vijayawada Municipal Corporation/first respondent, as lessees for the last more than 25 years and the period of 25 years has expired by 31.03.2019. Some of the petitioners succeeded the tenancy from their forefathers and some of them obtained transfer of lease from the 1 2017 (4) ALT 564 (D.B) MSM,J W.P. Nos. 2524, 2566 & 2570 OF 2020 6 original lessees and they are continuing in possession and enjoyment of the same.
The petitioners continuation in various shops of Saibaba Temple complex, Vijayawada for more than 25 years is not in dispute. In the entire writ affidavit, the petitioners did not allege that their lease is beyond 25 years. when the petitioners are continuing as lessees either by succession or otherwise for more than 25 years, they are bound by the provisions of Municipal Corporation Act and the G.Os issued from time to time.
In the exercise of the powers conferred by Section 326(1) of the 1965 Act, the Government of A.P, enacted 1968 Rules. Rule 12(1)(e) thereof stipulates that leases of buildings, shops or godowns and of land belonging to the Municipal Council, the rents of which are expected to exceed Rs.200/- per annum, shall be effected by public auction which shall be conducted by the Commissioner or by a person duly authorised by him; the bids at the auction shall be placed by the Commissioner, before the competent authority, to enter into a contract under Section 43 of the 1965 Act; the said authority shall determine which of the bids at the auction shall be accepted; and, where the bid accepted is not the highest bidder, the reasons for rejecting a bid or bids higher than the one accepted shall be recorded in writing.
Rule 12(4), inserted into the 1968 Rules by G.O.Ms. No.56 MA & UD dated 05.02.2011, deals with renewal of lease of immovable properties, and the Municipal Council has been conferred power there under to renew the lease of immovable properties for a period of three years at one time and, with the prior sanction of the Government, to renew the lease for a period exceeding three years MSM,J W.P. Nos. 2524, 2566 & 2570 OF 2020 7 and not exceeding twenty five years at a time without conducting public auction, if the lessee agrees to renew the lease in his favour at the rent as fixed under the Rules, and for revision of the rent once in three years as per the procedure specified.
In the present facts of the case, rent of 33 1/3% is applicable to the shops.
Section 2(42-a) defines 'transitional area' or a smaller urban area means such area as the Governor may, having regard to the population of the area, the density of the population therein, the revenue generated for local administration, the percentage of employment in non-agricultural activities, the economic importance of such other factors as he may deem fit, specify by public notification for the purposes of this Act, subject to such rules as may be made in this behalf.
Section 3 deals with Constitution of Municipalities. According to Sub-section (1) of Section 3, where a notification is issued specifying an area as a smaller urban area under clause (42-a) of Section 2, a Municipality shall be deemed to have been constituted for such area.
The 1981 Act came into force on 06.06.1981. The Vijayawada Municipal Corporation is a municipal corporation constituted under Section 3(1) of the 1981 Act and, in terms thereof, the local area included in the Vijayawada Municipality shall constitute the city of Vijayawada for the purposes of the 1981 Act and, on and from such commencement, a Municipal Corporation shall be deemed to have been came into existence. Therefore, those Rules have applicability to the present Vijayawada Municipal Corporation.
Section 124 of the Act deals with Power of the Commissioner to execute contracts on behalf of the Corporation. Lease is a special MSM,J W.P. Nos. 2524, 2566 & 2570 OF 2020 8 contract between the tenant and landlord or lessee or lessor. When the Commissioner is empowered to enter into contracts, the petitioners entered into contract with Municipal Authorities for obtaining lease of shops in their occupation admittedly in the year 1993.
Section 148 of the Act deals with disposal of property of the Corporation. According to Sub-section (1), the Commissioner may dispose of by sale or exchange any movable property belonging to the Corporation the value of which does not exceed Rs.25,000/- in each instance, or grant for any term not exceeding twelve months a lease of any immovable property belonging to the Corporation or lease or concession of any right of fishing or grazing or of gathering and taking fruit and the like, provided that every such disposal, lease or concession made or granted by the Commissioner shall be reported to the Standing Committee within fifteen days.
Sub-section (2) of Section 148 says that, with the sanction of the Standing Committee, the Commissioner may dispose of by sale or exchange any movable property belonging to the Corporation [the value of which exceeds rupees twenty five thousand but does not exceed such sum as may be specified by the Government by notification, from time to time] in each instance, or grant for any term not exceeding three years a lease of any immovable property belonging to the Corporation or a lease or concession of any such right as aforesaid.
Sub-section (3) further says that, In cases not covered by sub- section (1) or sub-section (2), the Commissioner shall not lease, sell or otherwise dispose of any movable or immovable property belonging to the Corporation without the previous sanction of the Corporation and of the Government, Provided that in no case the lease period of MSM,J W.P. Nos. 2524, 2566 & 2570 OF 2020 9 immovable property shall exceed twenty five years.
In the present facts of the case, the lease period was initially for a period of three years and being renewed from time to time and the total period is exceeding 25 years, which expired on 31.03.2019. The Division Bench of this Court in Kotha Sambasiva Rao v. State of Andhra Pradesh (referred supra), interpreted Section 148(3) and proviso thereto as follows:
"while the Commissioner can, after obtaining approval of the Vijayawada Municipal Corporation and the Government of Andhra Pradesh, grant lease of the immovable property of the Vijayawada Municipal Corporation for a period exceeding three years but not exceeding 25 years, the proviso to Section 148(3) places an embargo, and prohibits grant of lease of immovable property belonging to the Vijayawada Municipal Corporation for a period exceeding 25 years. Even the Government of Andhra Pradesh cannot permit the Commissioner to grant lease, of any immovable property of the Vijayawada Municipal Corporation, for a period exceeding 25 years."
In the above judgment, the lease of Shadhikhana initially for a period of three years; thereafter the lease period was extended upto 21.04.2008, to compensate for the 208 days during which the respondents had used the subject premises as a D.P.L. centre and for distribution of ration cards. But the Court still held that, when the lease period was expired, though extended by payment of enhanced rate of rent, that would not enure any benefit to the lessee in occupation of the premises. When once the total lease period of 25 years has expired, the Vijayawada Municipal Corporation has to conduct auction of the lease hold rights and the Court is not justified in issuing a Writ of Mandamus to the Corporation to consider the writ petitioners request for extension of lease.
Turning to the facts of the present case, the lease period was initially for three years and being extended from time to time without entering into fresh lease. However, the respondents accepted the leae amount at enhanced rate of 33 1/3 % over the existing lease and MSM,J W.P. Nos. 2524, 2566 & 2570 OF 2020 10 even after expiry of 25 years, thereby, allegedly created a fresh lease from the date of expiry of lease and contended that the petitioners are entitled to continue for another three years. Mere acceptance of the amount paid by these petitioners would not create a fresh lease or they cannot claim the status of a tenant by holding over. The provisions relating to the leases contained in Transfer of Property Act, 1882, are applicable only in the absence of any contract to the contrary. In the instant case, there is a contract between the petitioners and the respondents, fixing specified period of lease, but being extended from time to time at enhanced rate of rent. Allowing the tenants to continue in possession as a tenant or lessee would not confer any benefit to claim right to continue in propriety either on payment of enhanced rate of rent or otherwise.
When the lease between the petitioners and respondents is governed by the provisions of Municipal Corporation Act, which prohibits grant of lease to any person continuously for a period of 25 years by subsection (3) of Section 148 of the 1981 Act, the leases cannot be continued. But, this interpretation is doubtful, however, the government issued G.Os referred above, which disabled the Municipal Commissioner to enter into contract of lease for a period exceeding than 25 years. In pursuance of the G.Os, the petitioners are not entitled to claim lease for another period of three years from the date of expiry i.e. from 31.03.2019. But, the learned counsel for the petitioners Sri O. Manohar Reddy contended that the lease period referred under Section 148(3) i.e. 25 years is a lease at once or at a time, but not periodical extensions.
In the present facts of the case, there is absolutely no material to show that extensions of leases of the petitioners were placed before the Standing Committee for approval and whether such extension MSM,J W.P. Nos. 2524, 2566 & 2570 OF 2020 11 was in confirmation by the Standing Committee or not is not known. In the absence of approval by placing the alleged extension for more than three years from time to time, or even after the expiry of period of 25 years as on 31.03.2019 was not placed before the Standing Committee, as required under Section 148. In such case, the petitioners cannot claim any right to continue the lease for another three years period. In the absence of any material to establish that the extension was with the approval of the Standing Committee, as required under the Rules referred above. Mere acceptance of rent at the enhanced rate would not create a fresh tenancy or lease between the petitioners and the respondents. As the lease between the petitioners and the respondents is governed by the Municipalities Act, the petitioners are not entitled to claim benefit of Transfer of Property Act.
One of the contentions urged before this Court is that, when the respondents accepted rent at enhanced rate of 33 1/3 % over the existing rent, the respondents are estopped to contend that the petitioners have to vacate the shop premises by applying the Principle of Estoppel.
The Principle of Estoppel is only a Rule of evidence, but not a Rule of legitimate expectation and the same cannot be accepted for the reason that the act of the respondents in accepting the rents at enhanced rate of 33 1/3 % over the existing rent is not with the approval of the Standing Committee, as required by law. Such act of the officials of the respondents is contrary to the law, thereby such act will not enure any benefit to these petitioners to claim extension of lease period.
Yet another contention of the learned counsel for the petitioners is that, the petitioners have entered into contracts with MSM,J W.P. Nos. 2524, 2566 & 2570 OF 2020 12 the third parties to carry on business in the premises, expecting three years extension of lease. But, that by itself is not a ground to extend the lease and by now, the petitioners would have made alternative arrangements.
In any view of the matter, mere acceptance of lease amount at enhanced rate of 33 1/3 % after expiry of period of lease, ignoring 25 years without acceptance of Standing Committee is an illegality and the petitioners are not entitled to take advantage of the illegality committed by the employees of the first respondent/Municipal Corporation.
When a lease is expired and not extended with the approval of Standing Committee, issuance of notice, calling upon the petitioners to vacate the premises within 15 days while permitting them to raise objections within seven days from the date of receipt of notice before the Estate Officer of Vijayawada Municipal Corporation itself is non- compliance of principles of natural justice. But, for one reason or the other, the petitioners did not raise any objection in writing with the second respondent/Estate Officer against the show cause notices impugned in the writ petitions. Having maintained silence without raising any objections all these days, the petitioners are bound by the show cause notices and vacate the premises as demanded by the respondents.
As the lease was expired long ago and by now, six months time has elapsed, however, their continuation in perpetuity is contrary to the Rules referred above. Therefore, taking into consideration the difficulties of the petitioners, in the event of their sudden eviction from their shops, I deem it appropriate to grant time till 30.04.2020 to the petitioners to vacate the premises in their occupation, on payment of rent being paid as on date, together with arrears, if any.
MSM,J W.P. Nos. 2524, 2566 & 2570 OF 2020 13 In the event of non-compliance of the above direction, the respondents are at liberty to take possession of the shops of the petitioners as per the provisions of A.P Municipal Corporation Act and the Rules framed there under.
With the above direction, writ petitions are dismissed. No costs. Consequently, miscellaneous applications pending if any, shall stand dismissed.
__________________________________________ JUSTICE M. SATYANARAYANA MURTHY Date:11.03.2020 sp