V. Dhanapalan, J.@mdashAs the issues and questions involved in these Writ Petitions are common and as they arise out of the same cause of action, they are taken up together for disposal and decided by a common order.
2. Heard Mr. S. Ramesh, learned Counsel appearing for the Petitioners; Mr. S. Gopinathan, learned Additional Government Pleader and Mr. R. Neelakandan, learned Government Advocate appearing for the 1st Respondent in W.P. No. 12778 of 2010 and for the 1st and 2nd Respondents in W.P. No. 20304 of 2010; Mr. L.S.M. Hasan Fizal, learned Government Advocate appearing for the 2nd Respondent in W.P. No. 12778 of 2010 and the 3rd Respondent in W.P. No. 20304 of 2010 and Mr. A. Mohammed Ismail, learned Counsel appearing for Respondents 3 to 11 in W.P. No. 12778 of 2010.
3. Challenging the impugned Notifications dated 07.06.2010 and 16.08.2010 passed by the Executive Officer, Periyanaickenpalayam Selection Grade Town Panchayat, Coimbatore, seeking to quash the same and for a direction to the Respondents to renew the shops belonging to them for a further period of 3 years from 01.06.2010 to 30.06.2013 and from 01.09.2010 to 31.08.2013, respectively, by accepting 15% enhanced rent, the Petitioners have filed these Writ Petitions.
4. It is the case of the Petitioners that they are lessees of shops in Annai Indira Gandhi Commercial Complex, Periyanaickenpalayam Coimbatore District, which were leased out by the Executive Officer, Periyanaickenpalayam Selection Grade Town Panchayat, Coimbatore by conducting public auction, initially for a period of three years and thereafter, the same being extended periodically by accepting the enhanced rate of rent as per G.O.(2D) No. 147, Municipal Administration & Water Supply Department, dated 30.12.2000. As per the said Government Order, it is for the concerned local body to conduct public auction to grant lease or to renew the lease in respect of existing lessees by accepting enhanced rent @ 15% over and above the existing rent. Subsequent orders have been passed by the Government in G.O. Ms. No. 92, Municipal Administration and Water Supply (MA4) Department, dated 03.07.2007 directing that the period of lease should be automatically extended for every three years by accepting the enhanced rent @ 15% for a period of three years and even after the expiry of 9 years period, the lease has to be extended in favour of the existing lessees by revising the rent on the basis of market value.
4a. According to the Petitioners, the orders of the Government came to be passed with a laudable object of protecting the members who took the shops in lease from various local bodies by incurring huge expenditure/investment and to gain goodwill from the public, and they should not be made to suffer by dispossessing them within a short span of time. The Petitioners submit that they have also paid the rent to the Respondent Panchayat without any default. When the period of lease came to an end on 30.06.2010 and on 30.09.2010, respectively, the Petitioners made individual representations to the Executive Officer, Periyanaickenpalayam Selection Grade Town Panchayat by Registered Post seeking renewal of lease for a further period of 3 years by accepting 15% enhanced rent as per the orders of the Government in G.O. Ms. No. 92, dated 03.07.2007 and G.O. Ms. No. 181, dated 19.09.2008. However, the Executive Officer, Periyanaickenpalayam Selection Grade Town Panchayat, has not passed any orders granting extension of lease in favour of the Petitioners by considering the representations made by them.
4b. While that be so, in contradiction to the orders passed by the Government, the Executive Officer, Periyanaickenpalayam Selection Grade Town Panchayat, issued auction Notifications dated 07.06.2010 and 16.08.2010, respectively, to conduct public auction in respect of 19 shops and 7 shops, respectively in Annai Indira Gandhi Commercial Complex by scheduling the auction on 21.06.2010 and 07.09.2010, respectively. The Petitioners would contend that the impugned auction Notifications are ex-facie illegal, arbitrary and against law inasmuch as they have been passed in violation to the orders passed by the Government. They would submit that they have obtained lease through public auction at the inception and they have made huge investment to carry out the business. The fact remains that the Periyanaickenpalayam Selection Grade Town Panchayat has also granted lease for TASMAC to run the wine shop within the complex for which another two shops have been converted as Bar and thereby the entire complex has become unfriendly to the general public due to the roaring business by the liquor shop. In view of the same, the business of the Petitioners during the last several years was greatly affected and they could not be able to get returns even to maintain the shops.
4c. It is the further case of the Petitioners that though they made several representations to remove the TASMAC shop from the complex to ensure good business for all other shops, the same has not been considered by the Executive Officer, Periyanaickenpalayam Selection Grade Town Panchayat, Coimbatore. While so, the impugned Notifications to conduct public auction came to be passed. According to the Petitioners, when all the Town Panchayats within the State of Tamil Nadu are complying with the orders passed by the State Government and granting renewal of lease, they alone are being discriminated without any rhyme or reason. Hence, having no other efficacious alternative remedy, the Petitioners are before this Court by way of the present Writ Petitions.
5. The Executive Officer, Periyanaickenpalayam Selection Grade Town Panchayat, Coimbatore has filed Counter Affidavit, wherein, it is stated as follows:
(i) The Petitioners are lessees of the Shops at Indira Gandhi Commercial Complex belonging to the Periyanaickenpalayam Selection Grade Town Panchayat. The said Commercial Complex Building was constructed under Integrated Urban Development Project (IUDP) Scheme of the Government in the year 1988. The 19 shops and 7 shops which are located in the ground floor of the said Commercial Complex were leased out by way of conducting a Public Auction in the year 1989-1990 initially for a block period of 3 years. The Writ Petitioners had taken the respective shops on lease in the said Public Auction held in the year 1989-1990 initially for a block period of 3 years. The Petitioners in W.P. No. 12778 of 2010 have been in occupation of the respective shops from 1989-1990, their lease having been extended from time to time for a block period of every 3 years. The last of such block period of 3 years expired on 30.06.2010 in respect of the shops covered in W.P. No. 12778 of 2010 and on 31.08.2010 in respect of the shops covered in W.P. No. 20304 of 2010. The name of the complex is "Indira Gandhi Commercial Complex" and not "Annai Indira Gandhi Commercial Complex" as alleged by the Petitioners.
(ii) It is further stated that Public Auction was conducted in the year 1989-1990 and from that date onwards, the Petitioners are squatting over the shops of the Periyanaickenpalayam Town Panchayat, thereby dimnishing the value of the shops and preventing the Town Panchayat from getting higher end market rents as on date. Since the Petitioners had been squatting over the said shops, the Executive Officer of the Periyanaickenpalayam Selection Grade Town Panchayat and the Periyanaickenpalayam Selection Grade Town Panchayat Council had thought it fit to conduct public auction in the said 19 shops and 7 shops, in order to augment revenue to the Periyanaickenpalayam Town Panchayat so as to implement various welfare measures of the Government. Hence, the Periyanaickenpalayam Selection Grade Town Panchayat Council unanimously passed a Resolution bearing No. 34, dated 31.05.2010 to lease the said 19 Shops in Public Auction. Pursuant to the said Resolution, Notifications in Na. Ka. No. 696/2009/Al, dated 07.06.2010 and Na. Ka. No. 696/09 A1, dated 16.08.2010 were issued by the Executive Officer, Periyanaickenpalayam Selection Grade Town Panchayat, which are valid, legally sustainable, intra-vires the law and there is no violation of any Government Order as alleged by the Petitioners. Without challenging the unanimous Resolution of the Periyanaickenpalayam Selection Grade Town Panchayat Council, the Petitioners have challenged only the consequential Notifications, which cannot stand aloof.
(iii) Assuming without admitting, even if the Petitioners are entitled for the benefit of G.O. Ms. No. 92, dated 03.07.2007, the initial period of lease for 9 years stipulated therein had expired as early as in 1998 in the case on hand. The lease of the Petitioners had been extended for nearly thrice the period specified in the said Government Order. Hence, the question of consideration for further extension with the low rate of rent to the Petitioners does not arise in the case on hand. The said Government Order does not stipulate automatic extension of lease. Even though the Government Order was for laudable objects, it will not help people like the Petitioners, who wanted to squat over the property for years together without opportunity to others and thereby preventing augmentation of revenue to the 2nd Respondent. The said Government Order cannot be misquoted by the Petitioners to Suit their whims and fancies.
(iv) It is also stated that necessary notices were issued to the Petitioners informing them to remit the arrears of lease amount. Even after receipt of notices, the Petitioners have not responded. Without paying the arrears of lease amounts to the Respondent-Town Panchayat, the Petitioners have approached this Court. They wanted to continue occupying the Shops by paying a very cheap rent for eternal period either by hook or crook. Therefore, renewal of lease for a further block period of 3 years by enhancing 15% of rent is not applicable as per orders of the Government. Even according to G.O. Ms. No. 92, dated 03.07.2007, after the expiry of 9 years, the lease may be extended by revising the rent on the basis of present market value and none of the Petitioners have come forward to extend the lease by revising the rent on the basis of the present market value. It is stated that the Executive Officer, Periyanaickenpalayam Selection Grade Town Panchayat is not bound by the actions of other Panchayats, including Thudiyalur Town Panchayat, since a general, rigid yardstick cannot be applied to all Town Panchayats in the State and each case has to be examined in its peculiar context and not otherwise.
6. On behalf of the Petitioners, rejoinder Affidavit is filed, wherein, the Petitioners have denied the averment of the Respondents that their applications seeking renewal was rejected and they were informed of the same. At page 7 of the Counter, in para 12(iii), the Respondents have stated that the cyclostyled representations of the Petitioners were rejected and the same was informed to the Petitioners. According to the Petitioners, till date, they have not received any such rejection letter. Further, the averment of the Respondents at paragraph 7 that the 1st Petitioner has to pay a sum of Rs. 48,616/- as arrears of lease amount is false and there are no dues payable by the 1st Petitioner herein as stated in the Counter Affidavit.
7. Learned Counsel for the Petitioners would submit that as per G.O. Ms. No. 92, dated 03.07.2007, the Town Panchayats and Municipalities in the State of Tamil Nadu are directed to renew lease of shops in respect of existing lessees by accepting 15% enhanced rent for every three years and that the Petitioners have made representations to the authority concerned for renewal of lease as early as on 31.03.2010 and on 09.07.2010, respectively, much before the expiry of lease period, i.e. on 30.06.2010 and on 30.09.2010, respectively in the belief that their lease will be renewed in compliance to the orders passed by the Government. It is his contention that when all the Town Panchayats have granted extension of lease for all the shops in favour of the existing lessees, the Petitioners cannot be discriminated by not granting extension of lease of shops and by bringing the shops into public auction. According to the learned Counsel, the decision taken by the Government should be necessarily complied with in the interest of the lease of shops like that of the Petitioners. Therefore, the action of the Executive Officer, Periyanaickenpalayam Selection Grade Town Panchayat, Coimbatore is highly discriminatory and violative of rights available to the Petitioners as per the orders of the Government and the impugned auction is liable to be interfered with.
7a. In support of his case, learned Counsel for the Petitioners has relied on the following:
(i) a decision of this Court reported in the case of Tamil Nadu Municipal Shop Merchants'' Association, etc. v. State of Tamil Nadu and Ors. AIR 2000 Mad. 393:
55. The other contention is that it is an occupied field and when it is an occupied filed, 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 question 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 for 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 bid being the highest in the auction. Therefore, having come into possession by way of public auction, they cannot now oppose public auction.
(ii) yet another decision of this Court reported in the case of M.K.M. Geeyavudeen and Ors. v. Commissioner, Pudukottai Municipality, Pudukottai, 2008 (1) MLJ 682:
6. The rationale behind such steep increase made all of a sudden without any uniformity, is not clear. All that the Municipality says is that the revision was made by the Municipal Council based upon the market rate of rent prevailing in the locality in respect of privately owned buildings.
7. But such fixation does not appear to be a scientific method of fixation of fair rent for the shops in question. The term "Market Rate" is an abstract entity to which one can infuse life only if it is determined on the basis of several factors such as the value of land in the locality, cost of construction, amenities provided in the building, the accessibility by Public Transport Systems, etc. It appears that the Council fixed the fair rent in respect of the shops in question on the basis of oral enquiries made in the locality, which in my considered view could never have formed the basis for fixing the fair rent for the Municipal Shops.
19. Curiously, the aforesaid Government Order G.O. Ms. No. 147, dated 30.12.2000 does not specify as to whether it was issued in exercise of any of the powers conferred under the aforesaid rules namely "The Conduct of Election of Municipal Councillors Rules, 1962". As stated earlier, the only rule which deals with the determination of assessment, ground-rent or quit-rent for the properties leased out by Municipalities, is in paragraph 12-8 of the aforesaid Rules. But the said paragraph 12-8 does not appear to delegate the power to fix ground-rent or quit-rent upon the Government. Therefore, the aforesaid Government Order does not trace its existence to any delegation of powers either under the Statute or under the Rules. But neverthless the aforesaid Government Order made two things clear namely,--
(a) that the Market rental value should be fixed on the basis of certain parameters such as (i) the rent that the municipal shops fetched in an auction conducted in the past one year, (ii) the rent fixed for private shops or for the buildings owned by the Government or Government owned institutions; and
(b) that the enhancement of rent should be atleast by 15% of the existing rent
20. In modification of the aforesaid Government Order, the Government issued another order in G.O. Ms. No. 92 Municipal Administration and Water Supply Department dated 03.07.2007. Under para 4(ii) of the said Government Order, the Government directed that the municipal shops could be leased out for a period of 3 years at a time and that the lease could be renewed automatically on the expiry of 3 years. The renewals could continue for a total period of 9 years and the rent could be enhanced by 15% once in 3 years. Para 4(iii) of the said Government Order directed that the rent should be re-determined after 9 years and that such re-determination shall be on the basis of the market rate of rent.
(iv) a decision of the Supreme Court reported in the case of
4. The only point which we are called upon to decide is whether before the fixation of a fair rent of any premises the municipality was bound to make assessment in the light of the provisions contained in the Rent Acts. A subsidiary question has also arisen whether the Courts below were justified in referring to and passing the decrees keeping in view of the Rent Acts which were in force prior to the enactment of the Andhra Pradesh Buildings (Lease, Rent and Eviction) Control Act, 1960, hereinafter called the "Act". Now Section 82(2) of the Municipalities Act, as stated before, makes provision for the fixation of annual value according to the rent at which lands and buildings may reasonably be expected to be let from month to month or from year to year less the specified deduction. The test essentially is what rent the premises can lawfully fetch if let out to a hypothetical tenant. The municipality is thus not free to assess any arbitrary annual value and has to look to and is bound by the fair or the standard rent which would be payable for a particular premises under the Rent Act in force during the year of assessment. In The Corporation of Calcutta v. Smt. Padma Debi and Ors. it was held that on a fair reading of the express provisions of Section 127(a) of the Calcutta Municipal Act, 1923, the annual rent could not be fixed higher than the standard rent under the Rent Control Act. There the Rent Control Act of 1950 came into force before the assessment was finally determined and it was observed that the Corporation had no power to fix the annual valuation of the premises higher than the standard rent under that Act. The learned Counsel for the Appellant has not made any attempt; indeed he could do so to contest the above view. What has been stressed by him is that Section 7 of the Act makes it clear that it is only after the fixation of the fair rent of a building that the landlord is debarred from claiming or receiving the payment of any amount in excess of such fair rent. It is urged that so long as the fair rent of a building or premises is not fixed the assessment of valuation by a municipality need not be limited or governed by the measure provided by the provisions of the Act for determination of fair rent. Logically such buildings ore premises as are not let out to a tenant and are in the self-occupation of the landlords would also fall within the same principle if no fair rent has even been fixed in respect of them.
6. There is a good deal of confusion in the judgments of the Trial Court and the First Appellate Court with regard to the Rent Acts the provisions of which would have to be kept in view for the assessment of valuation for the purpose of Section 82(2) of the Municipalities Act. The decrees which have been granted suffer from the same infirmity. It has been pointed out by the learned Counsel for the Respondents that according to the rules contained in the fourth schedule to the Municipalities Act, the assessment books have to be revised once in every five years and the quinquennial assessment thus made enures for that period. But it appears from the rules that a procedure has been prescribed for changing the assessment whenever a case is made out for doing so. We are not concerned with the procedural difficulties which may be experienced; we have to declare what the law is and as appears to be well-settled the assessment of valuation for the purpose of tax must be made in accordance with and in the light of the provisions of the Rent Act which would be in force during the period of assessment.
8. On the other hand, learned Government Advocate appearing for the Periyanaickenpalayam Selection Grade Town Panchayat would contend that the Petitioners are in arrears of huge lease amounts in respect of the shops occupied and sub-let by them and necessary notices were issued to the Petitioners informing them to remit the arrears of lease amount. Even after receipt of notices, the Petitioners have not responded and they have approached this Court by suppressing vital material facts. He would further contend that even if the Petitioners are entitled for the benefit of G.O. Ms. No. 92, dated 03.07.2007, the initial period of lease for 9 years stipulated therein had expired as early as in the year 1998. The lease of the Petitioners had been extended for nearly thrice the period specified in the said Government Order. Hence, the question of consideration for further extension with low rate of rent to the Petitioners does not arise in the case on hand.
8a. To substantiate his stand, learned Government Advocate has relied on a Supreme Court decision reported in the case of
18. The next question for our consideration is: does the principle of predatory pricing apply to the contract of the like involved in this Appeal ? The learned Single Judge who applied this principle had obviously in mind the law laid down by this Court in the case of
19. It goes without saying that the Government while entering into contracts is expected not to act like a private individual but should act in conformity with certain healthy standards and norms. Such actions should not be arbitrary, irrational or irrelevant. The awarding of contracts by inviting tenders is considered to be one of the fair methods. If there are any reservations or restrictions then they should not be arbitrary and must be justifiable on the basis of some policy or valid principles which by themselves should be reasonable and not discriminatory. (See para 7 of Hindustan Development case.) The said judgment also states that any act which excluded competition from any part of the trade or commerce by forming cartels should not be permitted.
20. Probably, from the above observations of this Court in the case of Hindustan Development, the learned Single Judge in this case came to the conclusion that in the instant case any offer made which is over and above the realistic value of the contract would be predatory or speculatory in nature. The question for our consideration is: Is there any factual basis for coming to this conclusion that the bids offered in this case were either predatory or is the bid of a cartel. For this purpose, we will now examine what is the nature of contract involved in the present case.
9. Learned Additional Government Pleader appearing for the Director of Town Panchayats, Chennai and the Assistant Director of Town Panchayats, Coimbatore District has relied on the following:
(i) a First Bench decision of this Court reported in the case of
9. Thus, the law is very clear that ordinarily all contracts by the Government or by an instrumentality of the State should be granted only by public auction or by inviting tenders, after advertising the same in well known newspapers having wide circulation, so that all eligible persons will have opportunity to bid in the same.
14. Even at the cost of repetition, we reiterate that the award of Government contracts through public auction/public tender is the rule and award of such contracts through ''private negotiations'', except under certain contingencies mentioned above, must be frowned upon as it will give rise to speculations in the minds of the general public of some surreptitious, illegal or corrupt practices in collusion with the authorities concerned. Nowadays, the Government contracts or contracts awarded by instrumentalities of the State are often worth crores and crores of rupees and unless there is transparency in awarding of such contracts, there is bound to be great dis-satisfaction and speculation in the minds of the general public of some underhand dealing. This would also be violative of Article 14 of the Constitution.
(ii) yet another First Bench decision of this Court reported in the case of DCW Ltd v. The State of Tamil Nadu and Ors. AIR 2005 Mad. 264:
21. It is well settled that purely administrative orders, which have no statutory force, are not enforceable in a Court of law, vide
22. Apart from the above, we may also mention that no Government Order can violate Article 14 of the Constitution. Article 14 is a constitutional provision and no rule or Government Order can override this constitutional provision. We are of the view that if the period of a time bound lease or grant expires, there should be a fresh public auction/public tender so that all eligible persons can apply and there may not be a monopoly in favour of any one, otherwise Article 14 of the Constitution will be violated. We have not been shown the relevant rules or G.O. relating to grant of land for salt manufacturing, but whatever these rules or G.O. may be they cannot override Article 14 of the Constitution which ordinarily envisages, grant/lease of public land by public auction/public tender after wide publicity so that there may be transparency in the matter.
23. Moreover, in our opinion the Petitioner''s conduct also disentitles it for relief under the discretionary jurisdiction of Article 226 of the Constitution. When a person remains in occupation of a property, even after his grant has expired, he is not acting in a fair manner. There was no fresh grant or renewal in favour of the Petitioner after the 12 years period, which expired on 31.03.2003. Without a fresh grant of lease, the occupation of the land in question by the Petitioner thereafter was totally illegal and unauthorised. We are not inclined to exercise our discretion under Article 226 of the Constitution in favour of such unauthorised occupants, whatever may be merits of the case. Writ jurisdiction is a discretionary jurisdiction vide,
(iii) a decision of this Court reported in the case of C. Jayanthi v. The Commissioner, Mettur Municipality, Mettur Dam, Salem District and Anr. 2006 (5) CTC 236:
12. It is a well settled principle laid down by the Supreme Court and this Court that contracts by the State, its Corporations, instrumentalities and agencies must be normally granted through public auction/public tender by inviting tenders from eligible persons and the Notification of the public auction or inviting tenders should be advertised in well-known dailies having wide circulation in the locality, with all relevant details such as date, time and place of auction, subject matter of auction, estimated cost, Earnest Money Deposit, etc. The main background of the award of the Government contracts through public auction/public tender is to ensure transparency, in the public procurement, to maximise economy and efficiency in Government procurement, to promote healthy competition among the tenderers, to provide for fair and equitable treatment of all tenderers, and to eliminate irregularities interference and corrupt practices by the authorities concerned. This is required by Article 14 of the Constitution. However, in rare and exceptional cases, for instance during natural calamities and emergencies declared by the Government, where the procurement is available from a single source only, where the supplier or contractor has exclusive rights in respect of the goods or services and no reasonable alternative or substitute exists, where the auction was held on several dates but there were no bidders or the bids offered were too low, etc., this normal rule may be departed and such contracts may be awarded through private negotiations.
19. In this case, the Municipality has acted keeping in mind its revenue prospects and the welfare of the public at large. Further, the second Respondent has availed of the option which is provided under Tender Condition No. 18(a) and in such a view of the matter, the contention of the Petitioner that the Municipality cannot go on calling tenders one after another does not hold good in view of the specific tender conditions as well as the power of the Municipality to go for re-auction.
(iv) a Division Bench decision of this Court reported in the case of D. Kantian and Ors. v. The Commissioner of Municipal Administration, Chepauk and Anr., CDJ 2010 MHC 1636:
15. For discharging its civic responsibilities, Municipality will have to augment its revenue only from proper property tax, toll and rent from its shopping complex. Holding that claim of lessee for extension by lease by enhancement of rent by 15% of previous rent is liable to be rejected in
2. ... The extension granted earlier by the Panchayat, to the Appellant would not mean that the Appellant is entitled to continue in possession of the premises in question forever by paying ridiculously low rent. We are of the view that the extension of the lease to the Appellant is against the interest of the Panchayat. As already noticed the rental income from the properties owned by the Panchayat is one of the sources of income to the Panchayat. Therefore, the interest of the Panchayat cannot be jeopardized by permitting the Appellant to continue in possession of the premises in question at the enhanced rate of 15 per cent as prayed for. There are absolutely no merits in this Writ Petition and the same is dismissed.
10. Yet another Supreme Court decision reported in the case of
12. Let us put into focus the clearly demarcated approach that distinguishes the use and disposal of private property and socialist property. Owner of private property may deal with it in any manner he likes without causing injury to any one else. But the socialist or if that word is jarring to some, the community or further the public property has to be dealt with for public purpose and in public interest. The marked difference lies in this that while the owner of private property may have a number of considerations which may permit him to dispose of his property for a song. On the other hand, disposal of public property partakes the character of a trust in that in its disposal there should be nothing hanky panky and that it must be done at the best price so that larger revenue coming into the coffers of the State administration would serve public purpose viz. the welfare State may be able to expand its beneficient activities by the availability of larger funds. This is subject to one important limitation that socialist property may be disposed at a price lower than the market price or even for a token price to achieve some defined constitutionally recognised public purpose, one such being to achieve the goals set out in Part IV of the Constitution. But where disposal is for augmentation of revenue and nothing else, the State is under an obligation to secure the best market price available in a market economy. An owner of private property need not auction it nor is he bound to dispose it of at a current market price. Factors such as personal attachment, or affinity, kinship, empathy, religious sentiment or limiting the choice to whom he may be willing to sell, may permit him to sell the property at a song and without demur. A welfare State as the owner of the public property has no such freedom while disposing of the public property. A welfare State exists for the largest good of the largest number more so when it proclaims to be a socialist State dedicated to eradication of poverty. All its attempt must be to obtain the best available price while disposing of its property because the greater the revenue, the welfare activities will get a fillip and shot in the arm. Financial constraint may weaken the tempo of activities. Such an approach serves the larger public purpose of expanding welfare activities primarily for which the Constitution envisages the setting up of a welfare State....
11. I have heard the learned Counsel on either side, analysed the relevant provisions of law, perused the records and relevant materials for consideration, gone through the various decisions relied on by the learned Counsel on either side and gave thoughtful consideration to them.
12. A close scrutiny of the facts of the case would reveal that the Petitioners are lessees of shops in Indira Gandhi Commercial Complex belonging to Periyanaickenpalayam Selection Grade Town Panchayat, Coimbatore District, which was constructed under the scheme called ''Integrated Urban Development Project (IUDP)'' in the year 1988. It is seen that the Petitioners in both Writ Petitions were leased out 19 shops and 7 shops, respectively, located in the ground floor of the said commercial complex, initially for a block period of three years, after conducting public auction in the year 1989-1990. The Petitioners occupied the said shops and continued their business and their lease was extended from time to time for a block period of every 3 years and the last block period of 3 years in respect of the said 19 shops and 7 shops leased out to the respective Petitioners was over by 30.06.2010 and 31.08.2010, respectively.
12a. It is further seen that the Petitioners paid only a meagre amount as lease and also there were arrears of lease amounting to various sums in respect of each of the Petitioners. Moreover, the Petitioners insisted upon the Respondents to allow them to continue in the existing shops by paying a very cheap rent for eternal period. The Petitioners'' claim for renewal of lease for a further block period of 3 years with the enhanced rent @ 15% was not considered by the Periyanaickenpalayam Town Panchayat on the ground that even as per the Government Orders, their claim for renewal for three block periods totalling 9 years have lapsed as early as in the year 1998 itself. Hence, the Periyanaickenpalayam Town Panchayat Council unanimously passed a Resolution in Resolution No. 34, dated 31.05.2010 to lease the said shops in public auction. After the said Resolution, they issued Notifications of public auction to the Petitioners on 07.06.2010 in respect of 19 shops and on 16.08.2010 in respect of 7 shops, respectively and conducted public auction on 21.06.2010 and on 07.09.2010, respectively. The said Notifications of public auction are under challenge in these Writ Petitions.
13. Without challenging the Resolution of the Town Panchayat Council dated 31.05.2010, the Petitioners have challenged the said Notifications of public auction claiming that as per the Government Order in G.O. Ms. No. 92, dated 03.07.2007, their request for renewal of lease by accepting the enhanced rent @ 15% has to be considered automatically and the same should be extended for three years. It is not in dispute that the Petitioners herein have occupied the shops in the Complex belonging to Periyanaickenpalayam Town Panchayat as early as in the year 1988-1989 and that they were doing business in the said shops till 30.06.2010 and 30.09.2010, respectively. Even assuming that the Petitioners'' claim for extension of renewal of lease for a block period of over three years is as per the above Government Order, it is seen that the maximum limit of extension of renewal of lease is three block periods, i.e. 9 years, which was over by 1998. In the guise of extension of renewal of lease, the Petitioners'' claim to accept the enhanced rent @ 15% only is contrary to the Government Orders, for the reasons that they are continuing in the said shops for more than 9 years against the prescribed limitation and that they are paying rent at a cheap rate and are not willing to pay rent at the market rate.
14. Section 303 of the Tamil Nadu District Municipalities Act empowers the State Government to make Rules, under which Rule 12(1)(3)(c) relating to the Receipts and Expenditure of the Municipal Councils, Tamil Nadu was framed, which provides for lease of property by the Municipal Council including renewal of lease. But, 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. When the Petitioners herein are in arrears of rent and they have not paid the rent as agreed upon, they cannot seek for extension of renewal. The Petitioners came to enjoy right over the shops pursuant to the contract and after its expiry, Respondents 3 to 11 in W.P. No. 12778 of 2010 have proceeded to bid at the public auction and the successful bidder is awaiting orders from the Respondent Town Panchayat.
15. The legal position in respect of matters of fixation of rent at which lands and buildings may reasonably be expected to be let from month to month or from year to year has to be considered by the concerned local body. The extension of lease to the Petitioners cannot be against the interest of the Panchayat, since the rental income from the properties owned by the Panchayat is one of the sources of income to the Panchayat. For discharging its civic responsibilities, the Respondent-Town Panchayat will have to augment its revenue only from proper property tax, toll and rent from its shopping complex. Therefore, the interest of the Panchayat cannot be jeopardized by permitting the Petitioners to continue in possession of the premises in question at the enhanced rate of 15 per cent as claimed.
16. What is challenged in these Writ Petitions is only the Notifications for public auction. Law is well settled that the contracts by the State, its Corporations, instrumentalities and agencies must be normally granted through public auction by inviting tenders from eligible persons and it should be advertised after following the principle laid down in conducting public auction in order to promote healthy competition among the tenderers, to provide for fair and equitable treatment of all tenderers, and to eliminate irregularities, interference and corrupt practices by the authorities concerned. In rarest of rare cases, when there is a violation of Principles of Natural Justice, interfering in a matter of contract and invoking jurisdiction under Article 226 of the Constitution is very limited. As in the case of the Petitioners herein, who are in occupation of the shops in question for a longer period, merely because their applications for extension of renewal of lease is pending or even if they are rejected, they have no right to remain in occupation of the shops. Therefore, the claim of the Petitioners cannot be countenanced in the light of the limitation prescribed in the Government Order in G.O. Ms. No. 92. In the absence of any challenge to the Resolution to the Town Panchayat Council, the Notifications for public auction which are legally carried out by the authority concerned by following the Rules and procedures contemplated are perfectly valid, legally sustainable, intra vires the law and there is no violation of the Government Order as claimed by the Petitioners.
17. The ratio laid down by the Supreme Court in the case of
18. In the instant case, the Respondent Town Panchayat being a local authority under the State has acted in a manner known to law as per the Government Order, which was for a laudable object and it does not stipulate automatic extension of lease. Therefore, the Petitioners cannot be allowed to squat over the property for years together without opportunity to others. The Government Order in G.O. Ms. No. 92, dated 03.07.2007 clearly states that after the expiry of 9 years, the lease may be extended by revising the rent on the basis of the present market value. In the case on hand, the Petitioners have claimed to renew their lease by accepting the rent at the rate of 15% enhancement only and not on the basis of the present market value, which otherwise prevents the augmentation of revenue to the Town Panchayat. In such a situation, the public auction on the Notifications dated 07.06.2010 and 16.08.2010, which has been transparently conducted to provide fair and equitable treatment of all tenderers and to eliminate irregularities, interference and corrupt practices by the authorities concerned, which is the aim and requirement of Article 14 of the Constitution, cannot be assailed. While that being so, this Court cannot find any reasons to interfere with the Notifications impugned in these Writ Petitions as per the ratio laid down by this Court in the case of C. Jayanthi v. The Commissioner, Mettur Municipality, Mettur Dam, Salem District and Anr. 2006 (5) CTC 236.
19. For the foregoing reasons and discussion made above and on analysing the various legal principles laid down by the Supreme Court, this Court, on considering the materials available on record, is of the considered opinion that these Writ Petitions deserve no merit consideration and are liable to be dismissed. Accordingly, these Writ Petitions are dismissed. No costs. Consequently, connected M.P. Nos. 1 to 3 of 2010 in W.P. No. 12778 of 2010 and M.P. No. 2 of 2010 in W.P. No. 20304 of 2010 are closed.
