*HON'BLE SRI JUSTICE C.V.NAGARJUNA REDDY WRIT PETITION No.23109 of 2011 % 17.08.2011 Between: J.Singaraiah And 29 others ..... Petitioner AND Proddutur Municipality, reptd., by its Commissioner, Proddutur, Kadapa District And another .....Respondents Counsel for the Petitioners : Sri Vedula Venkatramana, Learned senior counsel For M/s Bharadwaj Associates Counsel for Respondent No.1: Sri Sashidharan Naidu, For Sri Palle Nageswara Rao, Standing Counsel for Municipalities Counsel for Respondent No.2: AGP for Municipal Administration < Gist: > Head Note: ? CITATIONS: Nil HON'BLE SRI JUSTICE C.V.NAGARJUNA REDDY WRIT PETITION No.23109 of 2011 Date:17.08.2011 Between: J.Singaraiah And 29 others. ..... Petitioners AND Proddutur Municipality, reptd., by its Commissioner, Proddutur, Kadapa District And another. .....Respondents Counsel for the Petitioners : Sri Vedula Venkatramana, Learned senior counsel For M/s Bharadwaj Associates Counsel for Respondent No.1: Sri Sashidharan Naidu, For Sri Palle Nageswara Rao, Standing Counsel for Municipalities Counsel for Respondent No.2: AGP for Municipal Administration The Court made the following: ORDER: This Writ Petition is filed for a Mandamus to declare the action of respondent No.1 in cutting short the lease period of the petitioners vide impugned order, dated 05.08.2011, as illegal and arbitrary. The petitioners sought for a consequential direction to respondent No.1 to forbear from dispossessing the petitioners from their respective municipal shops at Sivalayam street, New Vegetable Market and K.K.Street, Proddutur, Kadapa District, without following due process of law. I have heard Sri Vedula Venkatramana, learned senior counsel for the petitioners and perused the record. The petitioners were granted lease of right to run the shops belonging to respondent No.1 vide separate resolutions for a period of 25 years. The lease periods in respect of some shops ended in 2004 and in other cases in 2007. No proceedings were initiated either for the petitioners’ eviction or for further renewal. The fact remained that till a resolution was passed by respondent No.1 on 21.06.2010 renewing the lease for a further period of three years, no steps were taken either for the eviction of the petitioners or for further renewal of the lease period. The resolution of respondent No.1 was placed before respondent No.2 for approval under Rule 12 (1) of the A.P. Municipalities (Regulation of Receipts and Expenditure) Rules, 1968 (for short ‘the Rules’). The said respondent issued G.O.Ms.No.120, dated 31.03.2011, whereby it has turned down the request of respondent No.1 for approving its resolution and directed the Commissioner and Director of Municipal Administration, Hyderabad, to put the lease of all the shops for public auction wherever the lease period of 25 years have come to an end. As a sequel to the said decision of respondent No.2, notices were issued to the petitioners by respondent No.1 to show cause why the lease shall not be cancelled within seven days from the date of receipt of the said notices and eventually final order, dated 05.08.2011, was passed cancelling its earlier resolution. At the hearing, Sri Vedula Venkatramana, learned senior counsel appearing for the petitioners, submitted that the orders cancelling its earlier resolution passed by respondent No.1 are patently illegal as they were based on improper understanding of G.O.Ms.No.120, dated 31.03.2011. Learned senior counsel further submitted that under the second proviso to Rule 12(1) of the Rules, the Municipal Council is empowered to renew the existing leases for a period of three years at a time, for which Government sanction is not required and that therefore, having renewed the leases for a period of three years, respondent No.1 is not competent to cancel its earlier resolution. I have carefully considered the submissions of the learned senior counsel. In B.Krishna Reddy V. The Government of A.P., reptd., by its Principal Secretary, Municipal Administration Department, Hyderabad, (Writ Petition No.6354 of 2009), the second proviso to Rule 12(1) of the Rules fell for consideration of this Court. On a careful examination of the said provision, the learned Division Bench in unequivocal terms held that on its true construction, the said provision does not permit renewal of lease beyond a period of 25 years with or without the sanction of the Government, without conducting public auction. It is useful to reproduce the opinion of the Division Bench, which reads as under: - “In the considered view of this Court the interpretation presented on behalf of the respondents does not commend acceptance by this Court. It is a trite principle under a constitutional order that all public properties are public assets administered by State actors or instrumentalities in a fiduciary capacity and enjoined to be administered in conformity with fiduciary principles. All discretion conferred on public authorities is a public trust and consecrated for the purpose of its employment in public interest. Certain executive choices may involve balancing of a plurality of public interest choices but whereas in the present case the property of a public authority-the Nalgonda Municipality is intended to be leased out, the sole and exclusive public policy choice is for ensuring the augmentation of the revenues of the Municipality. All other considerations must be excluded. If the second proviso to Rule 12(1) be impregnated with this public policy and law concerns as it must, the construction is compelling that while a Municipal Council may renew a lease for a period of three years at a time, the prior sanction of the Government is required if the renewal is intended for a period in excess of three years, so however that no renewal may be granted for a period exceeding twenty five years, without conducting a public auction. No renewal of lease is therefore permitted even with the sanction of the Government for a period beyond twenty five years without conducting public auction. The phraseology of the second proviso is not ambiguous and in any event this statutory rule must be read consistent with public interest concerns. The construction suggested on behalf of the respondents would expose the second proviso to the risk of conferral of arbitrary discretion with no discernible public policy underpinnings. A construction which invalidates a statutory Rule must be avoided even if its language is ambiguous. This is a settled principle of statutory construction.” (Emphasis supplied) In my considered opinion, having regard to the interpretation placed by the Division Bench on the second proviso to Rule 12(1) of the Rules, with the expiry of the period of 25 years, the Municipal Council of respondent No.1 had no power or authority to pass resolution granting further renewal of leases for a period of three years. Once the period of 25 years comes to an end, there is no option for the respondents except to put the shops to public auction because as held by the Division Bench in the judgment supra, the sole purpose of leasing out the properties of the municipalities is to augment their revenues and public interest warrants that such leases shall be made only through public auction by permitting competitive bidding. In this view of the matter, I do not find any merit in the submission of the learned senior counsel that respondent No.1 has no authority to cancel the renewal earlier made. As respondent No.1 was incompetent to grant further renewal beyond the period of 25 years, the purported resolutions dated 21.06.2010 are nonest in law and no rights came to be accrued to the petitioners on the strength of such resolutions. Respondent No.2 has rightly understood the spirit and purport of the Division Bench judgment of this Court supra in negating the proposal of respondent No.1 for approval of the resolutions for further renewal of the leases in favour of the petitioners. Indeed the petitioners failed to challenge G.O.Ms.No.120, dated 31.03.2011, by which respondent No.2 has conclusively rejected the proposal of respondent No.1 to renew the leases for a further period of three years and the impugned decision of respondent No.1 is only a necessary consequence of the said G.O. issued by respondent No.2. Viewed from any angle, I do not find any reason to interfere with the impugned orders and the Writ Petition is accordingly dismissed. Learned senior counsel made a request to permit the petitioners to remain in possession of their respective shops for a reasonable period to enable them to secure alternative accommodation. Having regard to this request, the petitioners are granted a month’s time from today for handing over vacant possession of the shops in their occupation, failing which, respondent No.1 shall be entitled to take appropriate action in accordance with law for recovery of possession. As a sequel to dismissal of the Writ Petition, W.P.M.P.No.28281 of 2011 filed by the petitioners for interim relief is dismissed as infructuous. __________________________ C.V.NAGARJUNA REDDY, J 17th August, 2011 Note: L.R.Copy to be marked. B/o